Budget and Economic Statement Implementation Act, 2007 (S.C. 2007, c. 35)
Full Document:
Assented to 2007-12-14
60. (1) Paragraph 214(8)(a) of the Act is replaced by the following:
(a) that is described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3), or on which the interest would have been exempt under subparagraph 212(1)(b)(iii) or (vii) as they applied to the 2007 taxation year;
(2) Subsection 214(11) of the Act is repealed.
(3) Subsections (1) and (2) apply after 2007.
61. (1) Section 220 of the Act is amended by adding the following after subsection (3.2):
Marginal note:Joint election — pension income split
(3.201) On application by a taxpayer, the Minister may extend the time for making an election, or grant permission to amend or revoke an election, under section 60.03 if
(a) the application is made on or before the day that is three calendar years after the taxpayer’s filing-due date for the taxation year to which the election applies; and
(b) the taxpayer is resident in Canada
(i) if the taxpayer is deceased at the time of the application, at the time that is immediately before the taxpayer’s death, or
(ii) in any other case, at the time of the application.
(2) The portion of subsection 220(3.5) of the Act before paragraph (a) is replaced by the following:
Marginal note:Penalty for late filed, amended or revoked elections
(3.5) Where, on application by a taxpayer or a partnership, the Minister extends the time for making an election or grants permission to amend or revoke an election (other than an extension or permission under subsection (3.201)), the taxpayer or the partnership, as the case may be, is liable to a penalty equal to the lesser of
(3) Subsections (1) and (2) applies to the 2007 and subsequent taxation years.
62. (1) Subsection 221(1) of the Act is amended by adding the following after paragraph (d.1):
(d.2) requiring any class of persons to make information available to the public for the purpose of making information returns respecting any class of information required in connection with assessments under this Act;
(2) Subsection (1) applies to information in respect of taxation years of taxpayers and fiscal periods of partnerships that end on or after July 4, 2007.
63. The portion of subsection 231.2(1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Requirement to provide documents or information
231.2 (1) Notwithstanding any other provision of this Act, the Minister may, subject to subsection (2), for any purpose related to the administration or enforcement of this Act (including the collection of any amount payable under this Act by any person), of a comprehensive tax information exchange agreement between Canada and another country or jurisdiction that is in force and has effect or, for greater certainty, of a tax treaty with another country, by notice served personally or by registered or certified mail, require that any person provide, within such reasonable time as stipulated in the notice,
64. (1) Subparagraph 241(4)(e)(xii) of the Act is replaced by the following:
(xii) a provision contained in a tax treaty with another country or in a comprehensive tax information exchange agreement between Canada and another country or jurisdiction that is in force and has effect;
(2) Subsection 241(4) of the Act is amended by striking out the word “or” at the end of paragraph (o), by adding the word “or” at the end of paragraph (p) and by adding the following after paragraph (p):
(q) provide taxpayer information to an official of the government of a province solely for the use in the management or administration by that government of a program relating to earning supplementation or income support.
65. (1) The definition “NISA Fund No. 2” in subsection 248(1) of the Act is replaced by the following:
“NISA Fund No. 2”
« second fonds du compte de stabilisation du revenu net »
“NISA Fund No. 2” means the portion of a taxpayer’s net income stabilization account
(a) that is described in paragraph 8(2)(b) of the Farm Income Protection Act, and
(b) that can reasonably be considered to be attributable to a program that allows the funds in the account to accumulate;
(2) Subsection 248(1) of the Act is amended by adding the following definitions in alphabetical order:
“designated stock exchange”
« bourse de valeurs désignée »
“designated stock exchange” means a stock exchange, or that part of a stock exchange, for which a designation by the Minister of Finance under section 262 is in effect;
“functional currency”
« monnaie fonctionnelle »
“functional currency” of a taxpayer for a particular taxation year has the meaning assigned by section 261;
“recognized stock exchange”
« bourse de valeurs reconnue »
“recognized stock exchange” means
(a) a designated stock exchange, and
(b) any other stock exchange, if that other stock exchange is located in Canada or in a country that is a member of the Organisation for Economic Co-operation and Development and that has a tax treaty with Canada;
(3) Subsection 248(29) of the Act is repealed.
(4) Subsection (1) applies to the 2008 and subsequent taxation years.
(5) The definitions “designated stock exchange” and “recognized stock exchange” in subsection 248(1) of the Act, as enacted by subsection (2), and subsection (3) apply on and after the day on which this Act is assented to.
(6) The definition “functional currency” in subsection 248(1) of the Act, as enacted by subsection (2), applies in respect of taxation years that begin on or after the day on which this Act is assented to.
66. (1) Paragraph (a) of the definition “qualified security” in subsection 260(1) of the Act is replaced by the following:
(a) a share of a class of the capital stock of a corporation that is listed on a stock exchange or of a class of the capital stock of a corporation that is a public corporation by reason of the designation of the class by the corporation in an election made under subparagraph (b)(i) of the definition “public corporation” in subsection 89(1) or by the Minister in a notice to the corporation under subparagraph (b)(ii) of that definition,
(2) Paragraph 260(8)(a) of the Act is amended by adding the word “and” at the end of subparagraph (i) and by replacing subparagraphs (ii) and (iii) with the following:
(ii) the security is deemed to be a security described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3) if the security is described in paragraph (c) of the definition “qualified security” in subsection (1), and
(3) Section 260 of the Act is amended by adding the following after subsection (9):
Marginal note:Non-arm’s length compensation payment
(10) For the purpose of Part XIII, where the lender under a securities lending arrangement is not dealing at arm’s length with either the borrower under the arrangement or the issuer of the security that is transferred or lent under the arrangement, or both, and subsection (8) deems an amount to be a payment of interest by a person to the lender in respect of that security, the lender is deemed, in respect of that payment, not to be dealing at arm’s length with that person.
(4) Subsection (1) applies on and after the day on which this Act is assented to.
(5) Subsections (2) and (3) apply after 2007.
67. (1) The Act is amended by adding the following after section 260:
Marginal note:Definitions
261. (1) The definitions in this subsection apply in this section.
“Canadian currency year”
« année de déclaration en monnaie canadienne »
“Canadian currency year” of a taxpayer means a taxation year of the taxpayer in respect of which subsection (4) did not apply to the taxpayer.
“Canadian tax results”
« résultats fiscaux canadiens »
“Canadian tax results” of a taxpayer for a particular taxation year of the taxpayer means
(a) the amount of the income of the taxpayer for the particular taxation year;
(b) the amount of the taxable income of the taxpayer for the particular taxation year;
(c) the amount (other than an amount payable on behalf of another person under subsection 153(1) or section 215) of tax or other amount payable under this Act by the taxpayer in respect of the particular taxation year;
(d) the amount (other than an amount refundable on behalf of another person in respect of amounts payable on behalf of that person under subsection 153(1) or section 215) of tax or other amount refundable under this Act to the taxpayer in respect of the particular taxation year; and
(e) any amount that is relevant in determining the amounts described in respect of the taxpayer under paragraphs (a) to (d).
“consolidated financial statements”
« états financiers consolidés »
“consolidated financial statements” of a taxpayer for a taxation year means the financial statements of the taxpayer that are prepared in accordance with generally accepted accounting principles that are applicable to that taxation year.
“currency exchange rate”
« taux de change monétaire »
“currency exchange rate” on a particular day means, in respect of a conversion of an amount determined in a particular currency into an amount determined in another currency, the average, for the 12 month period ending on the particular day,
(a) where the particular currency is Canadian currency, of the rate of exchange (calculated by reference to the rate of exchange quoted by the Bank of Canada at noon on each business day in the period) for the exchange of the Canadian dollar for a unit of the other currency or such rate or rates of exchange acceptable to the Minister;
(b) where the other currency is Canadian currency, of the rate of exchange (calculated by reference to the rate of exchange quoted by the Bank of Canada at noon on each business day in the period) for the exchange of a unit of the particular currency for the Canadian dollar or such rate or rates of exchange acceptable to the Minister; or
(c) where neither the particular currency nor the other currency is Canadian currency, of the rate of exchange (calculated by reference to the rates of exchange quoted by the Bank of Canada at noon on each business day in the period for the exchange of the Canadian dollar for a unit of each of those currencies) for the exchange of a unit of the particular currency for a unit of the other currency or such rate or rates of exchange acceptable to the Minister.
“functional currency”
« monnaie fonctionnelle »
“functional currency” of a taxpayer for a particular taxation year of the taxpayer means the currency of a country other than Canada if that currency is
(a) a qualifying currency;
(b) the currency that is, more often than any other currency, used in the conduct of the taxpayer’s principal business activities in the particular taxation year; and
(c) the currency in which the financial results of the taxpayer for the particular taxation year are computed in the taxpayer’s consolidated financial statements and legal-entity financial statements for the particular taxation year.
“functional currency year”
« année de déclaration en monnaie fonctionnelle »
“functional currency year” of a taxpayer means a taxation year of the taxpayer in respect of which subsection (4) applies to the taxpayer.
“generally accepted accounting principles”
« principes comptables généralement reconnus »
“generally accepted accounting principles” means the accounting principles established or recommended by the Accounting Standards Board of Canada or such other accounting principles as are determined to be acceptable by the Minister.
“initial functional currency year”
« année initiale de déclaration en monnaie fonctionnelle »
“initial functional currency year” of a taxpayer means a functional currency year of the taxpayer if the particular taxation year of the taxpayer ending immediately before the beginning of that functional currency year of the taxpayer was a Canadian currency year of the taxpayer.
“initial reversionary year”
« année initiale de déclaration en monnaie canadienne »
“initial reversionary year” of a taxpayer means the first taxation year of the taxpayer that begins immediately after the last functional currency year of the taxpayer.
“last Canadian currency year”
« dernière année de déclaration en monnaie canadienne »
“last Canadian currency year” of a taxpayer means the last taxation year of the taxpayer that ends before the beginning of the initial functional currency year of the taxpayer.
“last functional currency year”
« dernière année de déclaration en monnaie fonctionnelle »
“last functional currency year” of a taxpayer means a functional currency year of the taxpayer if the particular taxation year of the taxpayer beginning immediately after the end of that functional currency year is a Canadian currency year of the taxpayer.
“legal-entity financial statements”
« états financiers individuels »
“legal-entity financial statements” of a taxpayer for a taxation year means the financial statements of the taxpayer that would be prepared for that taxation year in accordance with generally accepted accounting principles that are applica-ble to that taxation year if those generally accepted accounting principles did not require consolidation.
“qualifying currency”
« monnaie admissible »
“qualifying currency” of a taxpayer for a taxation year means each of
(a) the currency of the United States of America;
(b) the currency of the European Monetary Union;
(c) the currency of the United Kingdom; and
(d) a prescribed currency.
“reversionary exchange rate”
« taux de change canadien »
“reversionary exchange rate” of a taxpayer for a functional currency year of the taxpayer means the average, for the 12-month period ending on the last day of the functional currency year of the taxpayer, of the rate of exchange (quoted by the Bank of Canada at noon on each business day in the period) for the exchange of a unit of the functional currency of the taxpayer for the functional currency year for the Canadian dollar.
“tax credit”
« crédit d’impôt »
“tax credit” means an amount deductible in computing a taxpayer’s tax payable, or deemed to have been paid on account of a taxpayer’s tax payable, under any Part of this Act for a taxation year.
“transitional exchange rate”
« taux de change transitoire »
“transitional exchange rate” of a taxpayer means the average, for the 12-month period ending on the last day of the last Canadian currency year of the taxpayer, of the rate of exchange (calculated by reference to the rate of exchange quoted by the Bank of Canada at noon on each business day in the period) for the exchange of the Canadian dollar for a unit of the functional currency of the taxpayer for the initial functional currency year of the taxpayer.
Marginal note:Canadian currency requirement
(2) Subject to subsections (3) to (10),
(a) the Canadian tax results of a taxpayer for a particular taxation year are to be determined using Canadian currency; and
(b) subject to subsection 79(7), paragraphs 80(2)(k) and 142.7(8)(b), if a particular amount that is relevant in computing the taxpayer’s Canadian tax results for the particular taxation year is an amount expressed in a currency other than Canadian currency, that amount is to be converted to an amount expressed in Canadian currency using the rate of exchange quoted by the Bank of Canada at noon on the day on which that amount first arose for the exchange of a unit of that other currency for a unit of Canadian currency or such other rate of exchange as is acceptable to the Minister.
Marginal note:Application of subsection (4)
(3) Subsection (4) applies to a taxpayer in respect of a particular taxation year of the taxpayer if
(a) the taxpayer is, throughout the particular taxation year, a corporation (other than an investment corporation, a mortgage investment corporation or a mutual fund corporation) resident in Canada;
(b) the taxpayer has elected that subsection (4) apply to the taxpayer in respect of the particular taxation year, or a preceding taxation year, and each subsequent taxation year of the taxpayer and has filed that election with the Minister in prescribed form and manner on or before the taxpayer’s filing due date
(i) for the taxation year immediately preceding the first taxation year in respect of which the election was made, or
(ii) where there was not a taxation year immediately preceding the first taxation year in respect of which the election was made, for the first taxation year in respect of which the election was made;
(c) there is a functional currency of the taxpayer for the particular taxation year;
(d) where the taxpayer’s taxation year immediately preceding the particular taxation year was a functional currency year of the taxpayer, the functional currency of the taxpayer for that preceding taxation year is the same as the functional currency of the taxpayer for the particular taxation year; and
(e) where the taxpayer’s taxation year immediately preceding the particular taxation year was a Canadian currency year of the taxpayer, no preceding taxation year of the taxpayer was a functional currency year of the taxpayer.
Marginal note:Functional currency reporting
(4) If, because of subsection (3), this subsection applies to a taxpayer for a particular taxation year of the taxpayer,
(a) the taxpayer’s Canadian tax results for the particular taxation year are to be determined using the taxpayer’s functional currency for the particular taxation year;
(b) each reference in the Act or the regulations to a particular amount expressed in Canadian dollars is to be read as a reference to a particular amount expressed in the taxpayer’s functional currency for the partic-ular taxation year determined by applying the currency exchange rate in respect of the conversion of Canadian currency into that functional currency as of the first day of the particular taxation year;
(c) subject to subsection 79(7), paragraphs 80(2)(k) and 142.7(8)(b), if a particular amount that is relevant in computing the taxpayer’s Canadian tax results for the particular taxation year is an amount expressed in a currency other than the taxpayer’s functional currency for the particular taxation year, that amount is to be converted to an amount expressed in the taxpayer’s functional currency for the particular taxation year by using the rates of exchange quoted by the Bank of Canada at noon on the day that the particular amount first arose for the exchange of the Canadian dollar for a unit of each of those currencies or such other rate of exchange as is acceptable to the Minister;
(d) each reference in subsection 79(7), paragraph 80(2)(k) and subsections 80.01(11) and 80.1(8) to “Canadian currency” is to be read as a reference to “the taxpayer’s functional currency”;
(e) the reference in subsection 39(2) to “the value of the currency or currencies of one or more countries other than Canada relative to Canadian currency, a taxpayer has made a gain or sustained a loss in a taxation year” is to be read as reference to “the value of the currency or currencies of one or more countries (other than the taxpayer’s functional currency for the taxation year) relative to a taxpayer’s functional currency for a taxation year, the taxpayer has made a gain or sustained a loss in the taxation year” and the references in that subsection to “currency of a country other than Canada” shall be read as references to “currency other than the taxpayer’s functional currency for the taxation year”;
(f) the definition “foreign currency” in subsection 248(1) is, in respect of the taxpayer, to be, at any time in the particular taxation year, read as:
- “foreign currency”
“foreign currency” in respect of a taxpayer, at any time in a particular taxation year, means a currency other than the taxpayer’s functional currency for the particular taxation year;
(g) where a taxation year of a foreign affiliate of the taxpayer ends in the particular taxation year of the taxpayer, the references in section 95 and in regulations made for the purposes of that section (other than subsection 5907(6) of the Regulations) to “Canadian currency” shall be read, in respect of the foreign affiliate, as a reference to “the taxpayer’s functional currency for the particular taxation year ”.
Marginal note:Converting Canadian currency amounts
(5) In applying this Act to a taxpayer for a particular functional currency year of the taxpayer
(a) subject to subparagraph (10)(b)(iii), in determining the amount (expressed in the taxpayer’s functional currency for the partic-ular functional currency year) that may be deducted, or relevant in determining the amount that may be deducted, under subsection 37(1) or 66(4), section 110.1 or 111 or subsection 126(2), 127(5), 129(1), 181.1(4) or 190.1(3) in the particular functional currency year, each amount (determined in Canadian currency) that is relevant to the determination and that was determined for a taxation year of the taxpayer that preceded the initial functional currency year of the taxpayer, is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(b) in determining, at any time in the particular functional currency year, the cost (expressed in the taxpayer’s functional currency for the particular functional currency year) to the taxpayer of a property that was acquired by the taxpayer before the beginning of the taxpayer’s initial functional currency year, the cost (determined in Canadian currency) to the taxpayer of the property at the end of the last Canadian currency year of the taxpayer is to be converted to the taxpayer’s functional currency for the partic-ular functional currency year using the transitional exchange rate of the taxpayer;
(c) in determining, at any time in the particular functional currency year, the adjusted cost base (expressed in the taxpayer’s functional currency for the particular functional currency year) to the taxpayer of a capital property that was acquired by the taxpayer before the beginning of the taxpayer’s initial functional currency year, each amount (determined in Canadian currency) that was required by section 53 to be added or deducted in computing, at any time before the beginning of the initial functional currency year of the taxpayer, the adjusted cost base of the property to the taxpayer is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(d) in determining, at any time in the particular functional currency year, the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of the taxpayer’s undepreciated capital cost of depreciable property of a prescribed class, cumulative eligible capital in respect of a business, cumulative Canadian exploration expense (within the meaning assigned by subsection 66.1(6)), cumulative Canadian development expense (within the meaning assigned by subsection 66.2(5)), cumulative foreign resource expense in respect of a country other than Canada (within the meaning assigned by subsection 66.21(1)) and cumulative Canadian oil and gas property expense (within the meaning assigned by subsection 66.4(5)), (each of which is referred to in this paragraph as a “pool amount”) each amount (determined in Canadian currency) that was added to or deducted from a particular pool amount of the taxpayer in respect of a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(e) in determining any amount (expressed in the taxpayer’s functional currency for the particular functional currency year) that has been deducted or claimed as a reserve in computing the income of the taxpayer for its last Canadian currency year, that amount (determined in Canadian currency) deducted or claimed as a reserve is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(f) in determining the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of any outlay or expense referred to in subsection 18(9) that was made or incurred by the taxpayer and the amount that was deducted in respect of that outlay or expense in respect of a taxation year preceding the initial functional currency year of the taxpayer, such amounts of outlay or expense or deductions (determined in Canadian currency for those years) are to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;
(g) in determining, at any time in the particular functional currency year, the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of the taxpayer’s paid-up capital in respect of any class of shares of its capital stock, any amount (determined in Canadian currency) added or deducted in computing the taxpayer’s paid-up capital in respect of the class in a taxation year preceding the initial functional currency year of the taxpayer is to be converted to the taxpayer’s functional currency for the partic-ular functional currency year using the transitional exchange rate of the taxpayer;
(h) where the taxpayer issued a debt obligation in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer, in determining the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) for which the obligation was issued, the principal amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of the obligation, any amount (expressed in the taxpayer’s functional currency for the particular functional currency year) paid in satisfaction of the principal amount of the obligation in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer, and the amount (determined in the taxpayer’s functional currency for the partic-ular functional currency year) of any gain or loss attributable to the fluctuation in the values of currencies,
(i) where the obligation was issued in the taxpayer’s functional currency for the particular functional currency year, the amount (determined in the taxpayer’s functional currency for the particular functional currency year) for which the obligation was issued, the principal amount (determined in the taxpayer’s functional currency for the particular functional currency year) of the obligation and the amounts (determined in the taxpayer’s functional currency for the particular functional currency year) paid in satisfaction of the principal amount of the obligation, in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer are those amounts determined in those years in the taxpayer’s functional currency for the particular functional currency year,
(ii) where the obligation was issued in Canadian currency, the amount for which the obligation was issued (determined in Canadian currency), the principal amount (determined in Canadian currency) of the obligation and the amounts (determined in Canadian currency) paid in satisfaction of the principal amount of the obligation, in a taxation year preceding the initial functional currency year are to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer, and
(iii) where the obligation was issued in a currency (referred to in this subparagraph as the “third currency”) other than Canadian currency or the taxpayer’s functional currency for the particular functional currency year, the amount (determined in the third currency) for which the obligation was issued, the principal amount (determined in the third currency) of the obligation and the amounts (determined in the third currency) paid in satisfaction of the principal amount of the obligation in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer, are to be converted to the taxpayer’s functional currency for the particular functional currency year using the currency exchange rate in respect of a conversion of an amount determined in the third currency into an amount determined in the taxpayer’s functional currency for the particular functional currency year on the last day of the last Canadian currency year of the taxpayer;
(i) in determining the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of tax payable under Part I for a Canadian currency year for the purpose of determining the taxpayer’s first instalment base or second instalment base for the taxpayer’s initial functional currency year, the amount (determined in Canadian currency) of tax payable is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer; and
(j) any amount (expressed in Canadian currency), other than an amount referred to in paragraphs (a) to (i), determined under the provisions of this Act in or in respect of a taxation year preceding the initial functional currency year of the taxpayer that is relevant in determining the Canadian tax results (expressed in the taxpayer’s functional currency for the particular functional currency year) of the taxpayer for the particular functional currency year is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer.
Marginal note:Deferred amounts relating to debt
(6) In applying this Act to a taxpayer for a particular functional currency year of the taxpayer
(a) where, at any time in the particular functional currency year, the taxpayer has made a particular payment (expressed in the taxpayer’s functional currency for the partic-ular functional currency year) on account of the principal amount (expressed in the taxpayer’s functional currency for the partic-ular functional currency year) of a debt obligation that was issued by the taxpayer in a Canadian currency year of the taxpayer that ended before the beginning of the initial functional currency year of the taxpayer
(i) the taxpayer is deemed to have a capital gain under paragraph 39(2)(a) or income, as the case may be, attributable to the fluctuation in the values of currencies in respect of the particular payment for the particular functional currency year equal to the amount determined by the formula
A × B/C
where
- A
- is the amount determined by the formula
D × E
where
- D
- is the amount (expressed in Canadian currency), if any, that would have been determined to be the taxpayer’s capital gain under paragraph 39(2)(a) or income, as the case may be, if the principal amount of the debt obligation outstanding (determined in Canadian currency), immediately before the end of the last Canadian currency year of the taxpayer, had been settled by a payment by the taxpayer to the holder of the obligation of an amount equal to that outstanding principal amount at that time, and
- E
- is the transitional exchange rate of the taxpayer,
- B
- is the amount of the particular payment (expressed in the taxpayer’s functional currency for the particular functional currency year), and
- C
- is the principal amount of the debt obligation outstanding (determined in the taxpayer’s functional currency for the particular functional currency year) at the beginning of the initial functional currency year of the taxpayer,
(ii) the taxpayer is deemed to have a capital loss under paragraph 39(2)(b) or a loss, as the case may be, attributable to the fluctuation in the values of currencies in respect of the particular payment for the particular functional currency year equal to the amount determined by the formula
F × G/H
where
- F
- is the amount determined by the formula
I × J
where
- I
- is the amount (expressed in Canadian currency), if any, that would have been determined to be the taxpayer’s capital loss under paragraph 39(2)(b) or loss, as the case may be, if the principal amount of the debt obligation outstanding (determined in Canadian currency), immediately before the end of the last Canadian currency year of the taxpayer, had been settled by a payment by the taxpayer to the holder of the obligation of an amount equal to that outstanding principal amount at that time, and
- J
- is the transitional exchange rate of the taxpayer,
- G
- is the amount of the particular payment (expressed in the taxpayer’s functional currency for the particular functional currency year), and
- H
- is the principal amount of the debt obligation outstanding (determined in the taxpayer’s functional currency for the particular functional currency year) at the beginning of the initial functional currency year of the taxpayer, and
(iii) where a debt obligation is denominated in a currency other than the taxpayer’s functional currency for the particular functional currency year, any amount determined under element B in the formula in subparagraph (i) or element G in the formula in subparagraph (ii) is to be determined with reference to the relative value of that currency and the taxpayer’s functional currency for the particular functional currency year at the beginning of the initial functional currency year of the taxpayer, and
(b) notwithstanding paragraph 80(2)(k), where an obligation of the taxpayer was issued in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer in a currency other than the taxpayer’s functional currency for the partic-ular functional currency year, a forgiven amount arising at any time in the particular functional currency year in respect of the obligation is to be determined by reference to the currency exchange rate on the last day of the taxpayer’s last Canadian currency year in respect of a conversion of an amount determined in the other currency into an amount determined in the taxpayer’s functional currency for the particular functional currency year.
Marginal note:Amounts payable or refundable in respect of a functional currency year
(7) Notwithstanding subsection (4),
(a) if, at any particular time, an amount (determined in the taxpayer’s functional currency for the particular functional currency year) first becomes payable under this Act by a taxpayer to the Receiver General in respect of a particular functional currency year of the taxpayer,
(i) that amount (determined in the taxpayer’s functional currency for the partic-ular functional currency year) is to be converted to Canadian currency using the currency exchange rate on the earlier of the day the amount is so paid and the day that includes the particular time in respect of a conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year into an amount determined in Canadian currency, and
(ii) the amount so determined in Canadian currency under subparagraph (i) is to be paid to the Receiver General in Canadian currency; and
(b) if, at any particular time, an amount (determined in a taxpayer’s functional currency for the particular functional currency year) first becomes payable under this Act to the taxpayer by the Minister, for a particular functional currency year of the taxpayer, or is deemed to be paid on account of an amount payable by the taxpayer under the Act for that particular functional currency year,
(i) that amount (determined in the taxpayer’s functional currency for the partic-ular functional currency year) is to be converted to Canadian currency using the currency exchange rate on the day that includes the particular time in respect of the conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year into an amount determined in Canadian currency, and
(ii) the amount so determined in Canadian currency under subparagraph (i) is to be paid to the taxpayer by the Minister or is deemed to have been paid to the taxpayer by the Minister, as the case may be, in Canadian currency.
Marginal note:Application of subsection (9)
(8) Subsection (9) applies to a taxpayer for a particular Canadian currency year that begins after the last functional currency year of the taxpayer.
Marginal note:Converting functional currency amounts
(9) Where, because of subsection (8), this subsection applies to a taxpayer for a particular Canadian currency year of the taxpayer, in applying this Act to the taxpayer for that particular Canadian currency year, the following rules apply:
(a) subject to subparagraph (10)(a)(iii), in determining the amount (expressed in Canadian currency) that may be deducted, or relevant in determining the amount that may be deducted, under subsection 37(1) or 66(4), section 110.1 or 111 or subsection 126(2), 127(5), 129(1), 181.1(4) or 190.1(3) in the particular Canadian currency year,
(i) each amount (determined in the taxpayer’s functional currency for the functional currency year of the taxpayer) that is relevant to the determination and that was first required to be determined in a functional currency year of the taxpayer that preceded the particular Canadian currency year, is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) each amount (determined in Canadian currency) that is relevant to the determination and that was first required to be determined in a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;
(b) in determining, at any time in the particular Canadian currency year, the cost (expressed in Canadian currency) to the taxpayer of a property,
(i) where the property was acquired by the taxpayer in a functional currency year of the taxpayer preceding the particular Canadian currency year, the cost (determined in the taxpayer’s functional currency for the functional currency year) to the taxpayer of the property is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) where the property was acquired by the taxpayer in a Canadian currency year of the taxpayer preceding the particular Canadian currency year, the cost (determined in Canadian currency) to the taxpayer of the property is the cost so determined in Canadian currency in that Canadian currency year;
(c) in determining, at any time in the particular Canadian currency year, the adjusted cost base (expressed in Canadian currency) to the taxpayer of a capital property
(i) each amount (determined in the taxpayer’s functional currency for the functional currency year) that is required by section 53 to be added or deducted in computing the adjusted cost base of the property to the taxpayer and was first required by that section to be added or deducted at any time in a functional currency year of the taxpayer preceding the particular Canadian currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) each amount (determined in Canadian currency) that is required by section 53 to be added or deducted in computing the adjusted cost base of the property to the taxpayer and was first required by that section to be added or deducted at any time in a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;
(d) in determining, at any time in the particular Canadian currency year, the amount (expressed in Canadian currency) of the taxpayer’s undepreciated capital cost of depreciable property of a prescribed class, cumulative eligible capital in respect of a business, cumulative Canadian exploration expense (within the meaning assigned by subsection 66.1(6)), cumulative Canadian development expense (within the meaning assigned by subsection 66.2(5)), cumulative foreign resource expense in respect of a country other than Canada (within the meaning assigned by subsection 66.21(1)) and cumulative Canadian oil and gas property expense (within the meaning assigned by subsection 66.4(5)), (each of which is referred to in this paragraph as a “pool amount”),
(i) each amount (determined in the taxpayer’s functional currency for the functional currency year) that is required to be added to or deducted from a particular pool amount of the taxpayer and was first required to be added or deducted in respect of a functional currency year of the taxpayer preceding the particular Canadian currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) each amount (determined in Canadian currency) that is required to be added to or deducted from a particular pool amount of the taxpayer and was first required to be added or deducted in respect of a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;
(e) in determining any amount (expressed in Canadian currency) that has been deducted or claimed as a reserve in computing the income of the taxpayer for its last functional currency year preceding the particular Canadian currency year, that amount (determined in the taxpayer’s functional currency for the last functional currency year) deducted or claimed as a reserve for that last functional currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that last functional currency year;
(f) in determining the amount (expressed in Canadian currency) of any outlay or expense referred to in subsection 18(9) that was made or incurred by the taxpayer and the amount that was deducted by the taxpayer in respect of that outlay or expense in respect of a taxation year of the taxpayer preceding the particular Canadian currency year,
(i) such of those amounts (determined in the taxpayer’s functional currency for the functional currency year) that were first made or incurred or deducted by the taxpayer in or in respect of a functional currency year of the taxpayer preceding the particular Canadian currency year are to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) such of those amounts (determined in Canadian currency) that were first made or incurred or deducted by the taxpayer in or in respect of a Canadian currency year of the taxpayer preceding the particular Canadian currency year are the amounts that were so determined in Canadian currency in that Canadian currency year;
(g) in determining, at any time in the particular Canadian currency year, the amount (expressed in Canadian currency) of the taxpayer’s paid-up capital in respect of any class of shares of its capital stock,
(i) any amount (determined in the taxpayer’s functional currency for the functional currency year) that was first added or deducted in computing the taxpayer’s paid-up capital in respect of the class in a functional currency year of the taxpayer preceding the particular Canadian currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) any amount (determined in Canadian currency) that was first added or deducted in computing the taxpayer’s paid-up capital in respect of the class in a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;
(h) where an obligation was issued in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer, in determining, at any time in the particular Canadian currency year, the amount (expressed in Canadian currency) for which an obligation was issued, the principal amount (expressed in Canadian currency) of the obligation, the amounts (expressed in Canadian currency) paid in satisfaction of the principal amount of the obligation, and the amount (determined in Canadian currency), if any, of any gain or loss attributable to the fluctuation in the value of the Canadian currency relative to the value of the currency in which the obligation was issued,
(i) subject to paragraph (i), where the obligation was issued in a currency other than Canadian currency,
(A) the amount (determined in the currency in which the obligation was issued) for which the obligation was issued and the principal amount (determined in the currency in which the obligation was issued) of the obligation are
(I) where the taxation year of the taxpayer in which the obligation was issued was a Canadian currency year of the taxpayer, the amounts (determined in Canadian currency) that were so determined in Canadian currency in that Canadian currency year, or
(II) where the taxation year of the taxpayer in which the obligation was issued was a functional currency year of the taxpayer, the amounts determined by converting those amounts (determined in the taxpayer’s functional currency for the functional currency year) to Canadian currency by using the reversionary exchange rate of the taxpayer for that functional currency year, and
(B) the amounts (determined in the currency in which the obligation was issued) paid at any time in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer in satisfaction of the principal amount of the obligation are
(I) where the taxation year of the taxpayer in which an amount was paid was a Canadian currency year of the taxpayer, the amount (determined in Canadian currency) that was so determined in Canadian currency in that Canadian currency year, or
(II) where the taxation year of the taxpayer in which an amount was paid was a functional currency year of the taxpayer, the amount determined by converting that amount (determined in the taxpayer’s functional currency for the functional currency year) to Canadian currency by using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) where the obligation was issued in Canadian currency, the amount (determined in Canadian currency) for which the obligation was issued, the principal amount (determined in Canadian currency) of the obligation and the amounts (determined in Canadian currency) paid, in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer, in satisfaction of the principal amount of the obligation, are the amounts so determined in Canadian currency in those preceding years;
(i) where an obligation was issued in a currency other than Canadian currency in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer, in determining, in respect of subsection 79(7) or paragraph 80(2)(k) or 142.7(8)(b), the amount (expressed in Canadian currency) for which the obligation was issued, the principal amount (determined in Canadian currency) of the obligation, and the amounts (determined in Canadian currency) paid in satisfaction of the principal amount of the obligation, at any time in the particular Canadian currency year, those amounts are to be determined as if subsections (1) to (7) had not applied to the taxpayer for any preceding taxation year;
(j) where the particular Canadian currency year is the initial reversionary year of the taxpayer, for the purpose of determining the taxpayer’s first instalment base or second instalment base in the particular Canadian currency year, the amount (determined in the taxpayer’s functional currency for the functional currency year) of tax payable by the taxpayer under Part I for the last functional currency year of the taxpayer is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that last functional currency year; and
(k) in determining any amount (determined in Canadian currency and referred to in this paragraph as the “specified amount”), at any time in the particular Canadian currency year, other than an amount referred to in paragraphs (a) to (j), that is relevant in determining the Canadian tax results of the taxpayer for the particular Canadian currency year
(i) any amount (determined in the taxpayer’s functional currency for the functional currency year) that is relevant in determining the specified amount and was first determined in or in respect of a functional currency year of the taxpayer preceding the particular Canadian currency year, is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and
(ii) any amount (determined in Canadian currency) that is relevant in determining the specified amount and was first determined in or in respect of a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year.
Marginal note:Functional currency and Canadian currency amounts carried back
(10) In determining an amount that a taxpayer may claim under section 111 or subsection 126(2), 127(5), 181.1(4) or 190.1(3), for a particular taxation year of the taxpayer, the following rules apply:
(a) if the particular taxation year is a Canadian currency year of the taxpayer, the amount that may be claimed (determined in Canadian currency) is to be determined,
(i) by converting each amount (determined in the taxpayer’s functional currency for the particular functional currency year) of a loss incurred, tax credit arising and expenditure made in or in respect of a particular functional currency year of the taxpayer that ends after the particular taxation year to Canadian currency using the currency exchange rate in respect of the conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year into an amount determined in Canadian currency on the last day of that particular functional currency year,
(ii) as if each amount (determined in Canadian currency) of a loss incurred, tax credit arising, expenditure made and deduction claimed in or in respect of a Canadian currency year of the taxpayer were the amount of that loss incurred, tax credit arising, expenditure made and deduction claimed in Canadian currency in or in respect of that Canadian currency year of the taxpayer, and
(iii) by converting each amount (determined in the taxpayer’s functional currency for the particular functional currency year) claimed in or in respect of a particular functional currency year of the taxpayer preceding the initial reversionary year of the taxpayer (in respect of an amount of loss incurred, tax credit arising or expenditure made by a taxpayer in or in respect of a Canadian currency year) to Canadian currency using the currency exchange rate on the last day of the Canadian currency year of the taxpayer in or in respect of which the amount claimed arose in respect of the conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year to an amount determined in Canadian currency; and
(b) if the particular taxation year is a functional currency year of the taxpayer, the amount that may be claimed (determined in the taxpayer’s functional currency for the particular taxation year) is to be determined,
(i) by converting each amount (determined in Canadian currency) of a loss incurred, tax credit arising and expenditure made in or in respect of a particular Canadian currency year of the taxpayer that ends after the particular taxation year to the taxpayer’s functional currency for the particular taxation year using the currency exchange rate in respect of the conversion of an amount determined in Canadian currency into an amount determined in the taxpayer’s functional currency for the particular taxation year on the last day of that particular Canadian currency year,
(ii) as if each amount (determined in the taxpayer’s functional currency for the particular taxation year) of a loss incurred, tax credit arising, expenditure made and deduction claimed in or in respect of a functional currency year of the taxpayer were the amount of that loss incurred, tax credit arising, expenditure made and deduction claimed in the taxpayer’s functional currency for the particular taxation year, and
(iii) by converting each amount (determined in Canadian currency) claimed in or in respect of a particular Canadian currency year of the taxpayer preceding the initial functional currency year of the taxpayer (in respect of an amount of loss incurred, tax credit arising or expenditure made by a taxpayer in or in respect of a functional currency year of the taxpayer) to the taxpayer’s functional currency for the particular taxation year using the currency exchange rate on the last day of the functional currency year of the taxpayer in or in respect of which the amount claimed arose in respect of the conversion of an amount determined in Canadian currency to an amount determined in the taxpayer’s functional currency for the particular taxation year.
Marginal note:Subsection 88(1) wind-ups — effect on subsidiary
(11) Subsection (12) applies to a corporation (referred to in this subsection and subsection (12) as the “subsidiary”) that has been wound up into another corporation (referred to in this subsection as the “parent”) if
(a) subsection 88(1) applied to the subsidiary and the parent in respect of the winding-up of the subsidiary;
(b) the taxation year of the subsidiary (referred to in this subsection and subsection (12) as the “distribution year of the subsidiary”) in which any portion of a property (such portion of the property referred to in this subsection as the “distributed property”) of the subsidiary was distributed to the parent, or any portion of an obligation (such portion of the obligation referred to in this subsection as the “assumed obligation”) of the subsidiary was assumed by the parent, on the winding-up of the subsidiary would, were this section read without reference to this subsection, be a functional currency year of the subsidiary; and
(c) either
(i) where the taxation year of the parent (referred to in this paragraph as the “acquisition year of the parent”) in which the subsidiary distributed the distributed property to the parent, or the assumed obligation of the subsidiary was assumed by the parent, on the winding-up of the subsidiary was a functional currency year of the parent, the functional currency for the acquisition year of the parent was not the functional currency of the subsidiary for the distribution year of the subsidiary, or
(ii) the acquisition year of the parent was not a functional currency year of the parent.
Marginal note:Taxation year of subsidiary
(12) Where, because of subsection (11), this subsection applies to the subsidiary, for the purposes of this section
(a) the last taxation year of the subsidiary that ends before the beginning of the distribution year of the subsidiary is deemed to be the last functional currency year of the subsidiary; and
(b) subsection (4) is deemed not to apply to the subsidiary for each taxation year of the subsidiary commencing after the end of the last functional currency year of the subsidiary described in paragraph (a).
Marginal note:Amalgamations — effect on predecessor corporations
(13) Subsection (14) applies to a corporation (referred to in this subsection and subsection (14) as the “specified predecessor”) that has merged with one or more other corporations to form one corporate entity (referred to in this subsection as the “new corporation”) if
(a) the merger was an amalgamation (within the meaning assigned by subsection 87(1));
(b) the taxation year of the specified pred- ecessor (referred to in this subsection and subsection (14) as the “last taxation year of the specified predecessor”) that ended immediately before the amalgamation would, were this section read without reference to subsection (14), be a functional currency year of the specified predecessor; and
(c) either
(i) where the taxation year of the new corporation (referred to in this paragraph as the “first taxation year of the new corporation”) that began at the time of the amalgamation was a functional currency year of the new corporation, the functional currency of the new corporation for the first taxation year of the new corporation was not the functional currency of the specified predecessor for the last taxation year of the specified predecessor, or
(ii) the first taxation year of the new corporation was not a functional currency year of the new corporation.
Marginal note:Taxation year of specified predecessor
(14) Where, because of subsection (13), this subsection applies to the specified predecessor, for the purposes of this section
(a) the taxation year of the specified pred- ecessor that ends immediately before the beginning of the last taxation year of the specified predecessor is deemed to be the last functional currency year of the specified predecessor; and
(b) subsection (4) is deemed not to apply to the specified predecessor corporation for each taxation year of the specified predecessor commencing after the end of the last functional currency year of the specified predecessor described in paragraph (a).
Marginal note:Deemed continuation on winding-up or amalgamation
(15) For the purpose of this section,
(a) subject to subsection (16), where there has been a winding-up of a taxpayer (referred to in this subsection and subsection (16) as the “subsidiary”) into another taxpayer (referred to in this subsection and subsection (16) as the “parent”) to which subsection 88(1) has applied, the parent is deemed to be the same corporation as and a continuation of the subsidiary; and
(b) subject to subsection (17), where there has been an amalgamation (within the meaning assigned by subsection 87(1)) of two or more corporations (each such taxpayer referred to in this subsection and subsection (17) as a “predecessor”) to form one corporate entity (referred to in this subsection and subsection (17) as the “new corporation”) the new corporation is deemed to be the same corporation as and a continuation of each such predecessor corporation.
Marginal note:Exception to deemed continuation — winding-up
(16) Where the parent would not, in a taxation year of the parent ending after the time the subsidiary was wound up, satisfy the requirements of paragraph (3)(e) because the last functional currency year of the subsidiary referred to in subsection (12) in respect of the winding-up is, because of paragraph (15)(a), the last functional currency year of the parent, paragraph (15)(a) shall not apply, for the purposes of paragraph (3)(e), to the parent in respect of the subsidiary if the total of all amounts each of which is the cost amount, at the end of the taxation year of the parent in which the property of the subsidiary was distributed to the parent in the course of winding-up, to the parent of a property that was distributed to the parent on the winding-up (or property substituted for such property) is less than 50% of the total of all amounts each of which is the cost amount, at the end of that taxation year, to the parent of a property of the parent.
Marginal note:Exception to deemed continuation — amalgamation
(17) Where the new corporation would not, in a taxation year of the new corporation commencing on or after the time of the amalgamation, satisfy the requirements of paragraph (3)(e) because the last functional currency year of the predecessor referred to in subsection (14) in respect of the amalgamation is, because of paragraph (15)(b) the last functional currency year of the new corporation, paragraph (15)(b) shall not apply, for the purposes of paragraph (3)(e), to the new corporation in respect of the predecessor if the total of all amounts each of which is the cost amount, at the end of the taxation year of the new corporation that began at the time of the amalgamation, to the new corporation of a property that, immediately before the amalgamation, was a property of the predecessor (or property substituted for such property) is less than 50% of the total of all amounts each of which is the cost amount, at the end of that taxation year of the new corporation, to the new corporation of a property of the new corporation.
Marginal note:Anti-avoidance
(18) Where, at any time, all or substantially all of the property (referred to in this subsection as the “transferred property”) of a business (referred to in this subsection as the “transferred business”) of a taxpayer has been disposed of by the taxpayer (referred to in this subsection as the “transferor”) and acquired, either directly or indirectly by a corporation resident in Canada (referred to in this subsection as the “transferee”) that, immediately after the acquisition, was related to the taxpayer, and a taxation year of the transferor beginning before that time was a functional currency year of the transferor, for the purposes of this section, the transferee is deemed to be the same corporation as and a continuation of the transferor if the total of all amounts each of which is the cost amount, at the end of the taxation year of the transferee in which the transferred business was transferred, to the transferee of a property that was a transferred property (or property substituted for such property) is greater than 50% of the total of all amounts each of which is the cost amount, at the end of that taxation year of the transferree, to the transferree of a property of the transferree.
Marginal note:Authority to designate stock exchange
262. (1) The Minister of Finance may designate a stock exchange, or a part of a stock exchange, for the purposes of this Act.
Marginal note:Revocation of designation
(2) The Minister of Finance may revoke the designation of a stock exchange, or a part of a stock exchange, designated under subsection (1).
Marginal note:Timing
(3) A designation under subsection (1) or a revocation under subsection (2) shall specify the time at and after which it is in effect, which time may, for greater certainty, precede the time at which the designation or revocation is made.
Marginal note:Publication
(4) The Minister of Finance shall cause to be published, by posting on the Internet website of the Department of Finance or by any other means that the Minister of Finance considers appropriate, the names of those stock exchanges, or parts of stock exchanges, as the case may be, that are or at any time were designated under subsection (1).
Marginal note:Transition
(5) The Minister of Finance is deemed to have designated under subsection (1) each stock exchange and each part of a stock exchange that was, immediately before the day on which this section came into force, a prescribed stock exchange, with effect on and after that day.
(2) The definition “Canadian tax results” in subsection 261(1), and subsection 261(2), of the Act, as enacted by subsection (1), apply for all taxation years.
(3) Subsection 261(1) (other than the definition “Canadian tax results”), and subsections 261(3) to (18), of the Act, as enacted by subsection (1), apply in respect of taxation years that begin on or after the day on which this Act is assented to.
(4) Subsection 261(10) of the Act, as enacted by subsection (1), applies on and after the day on which this Act is assented to.
(5) Section 262 of the Act, as enacted by subsection (1), applies on and after the day on which this Act is assented to.
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