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Budget Implementation Act, 2009 (S.C. 2009, c. 2)

Assented to 2009-03-12

  •  (1) Section 403 of the Regulations is amended by adding the following after subsection (3):

    • (4) For the purposes of subsection (1), if in a taxation year an insurance corporation has no permanent establishment in a particular country other than Canada, but provides insurance on property in the particular country or has a contract for insurance, other than on property, with a person resident in the particular country, each net premium for the taxation year in respect of the insurance is deemed to be a net premium in respect of insurance on property situated in, or from contracts with persons resident in, as the case may be, the province in Canada or country other than Canada in which is situated the permanent establishment of the corporation to which the net premium is reasonably attributable in the circumstances.

  • (2) Subsection (1) applies to the 2009 and subsequent taxation years.

  •  (1) Subsection 413(1) of the Regulations is replaced by the following:

    • 413. (1) In this Part, if a corporation is not resident in Canada, “salaries and wages paid in the year” by the corporation does not include salaries and wages paid to employees of a permanent establishment outside Canada.

  • (2) Subsection (1) applies to the 2009 and subsequent taxation years.

  •  (1) The Regulations are amended by adding the following after section 413:

    International Banking Centre Exception

    413.1 Despite any other provision in this Part, a corporation’s taxable income earned in a taxation year in a particular province is equal to the total of

    • (a) the corporation’s taxable income earned in the taxation year in the particular province (determined without reference to this section), and

    • (b) the positive or negative amount determined by the formula

      A – B

      where

      A 
      is the total of all amounts that are, because of the application of section 33.1 of the Act to a business carried on in a branch or office situated in the particular province, not allowed to be deducted in computing the corporation’s income for the taxation year, and
      B 
      is the total of all amounts that are, because of the application of section 33.1 of the Act to a business carried on in a branch or office situated in the particular province, not required to be added in computing the corporation’s income for the taxation year.
  • (2) Subsection (1) applies to the 2009 and subsequent taxation years.

  •  (1) The heading before section 414 and sections 414 and 415 of the Regulations are replaced by the following:

    Provincial SIFT Tax Rate

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

      “general corporate income tax rate”

      “general corporate income tax rate”, in a province for a taxation year, means

      • (a) for Quebec, 0%;

      • (b) for the Newfoundland offshore area, the highest percentage rate of tax imposed under the laws of Newfoundland and Labrador on the taxable income of a public corporation earned in the taxation year in Newfoundland and Labrador;

      • (c) for the Nova Scotia offshore area, the highest percentage rate of tax imposed under the laws of Nova Scotia on the taxable income of a public corporation earned in the taxation year in Nova Scotia; and

      • (d) for each other province, the highest percentage rate of tax imposed under the laws of the province on the taxable income of a public corporation earned in the taxation year in the province. (taux général d’imposition du revenu des sociétés)

      “province”

      “province” includes the Newfoundland offshore area and the Nova Scotia offshore area. (province)

      “taxable SIFT distributions”

      “taxable SIFT distributions”, for a taxation year, means

      • (a) in the case of a SIFT trust, its non-deductible distributions amount for the taxation year; and

      • (b) in the case of a SIFT partnership, its taxable non-portfolio earnings for the taxation year. (montant des distributions imposables)

    • (2) In determining the amount of a SIFT trust’s or SIFT partnership’s taxable SIFT distributions for a taxation year earned in a province

      • (a) except as provided in paragraph (b), this Part applies in respect of the SIFT trust or SIFT partnership as though

        • (i) each reference to “corporation” (other than in the expression “subsidiary controlled corporation”) were read as a reference to “SIFT trust” or “SIFT partnership”, as the case may be,

        • (ii) each reference to “taxable income” were read as a reference to “taxable SIFT distributions”,

        • (iii) each reference to “its incorporating documents or bylaws” were read as a reference to “the agreement governing the SIFT trust” or “the agreement governing the SIFT partnership”, as the case may be, and

        • (iv) “subsidiary controlled corporation” in respect of a SIFT trust or a SIFT partnership meant a corporation more than 50% of the issued share capital of which (having full voting rights under all circumstances) belongs to the SIFT trust or SIFT partnership, as the case may be; and

      • (b) subsection 400(1), section 401, subsections 402(1) and (2) and sections 403 to 413 do not apply.

    • (3) Subject to subsection (4), in applying the definition “provincial SIFT tax rate” in subsection 248(1) of the Act in respect of a SIFT trust or SIFT partnership for a taxation year, the prescribed amount determined in respect of the SIFT trust or SIFT partnership for the taxation year is

      • (a) if the SIFT trust or SIFT partnership has no permanent establishment in a province in the taxation year, 0.10;

      • (b) if the SIFT trust or SIFT partnership has a permanent establishment in a province in the taxation year and has no permanent establishment outside that province in the taxation year, the decimal fraction equivalent of the general corporate income tax rate in the province for the taxation year; and

      • (c) if the SIFT trust or SIFT partnership has a permanent establishment in the taxation year in a province, and has a permanent establishment outside that province in the taxation year, the amount, expressed as a decimal fraction, determined by the formula

        A + B

        where

        A 
        is the total of all amounts, if any, each of which is in respect of a province in which the SIFT trust or SIFT partnership has a permanent establishment in the taxation year and is determined by the formula

        C/D × E

        where

        C 
        is its taxable SIFT distributions for the taxation year earned in the province,
        D 
        is its total taxable SIFT distributions for the taxation year, and
        E 
        is the decimal fraction equivalent of the general corporate income tax rate in the province for the taxation year, and
        B 
        is the amount determined by the formula

        (1 – F/D) × 0.1

        where

        F 
        is the total of all amounts each of which is an amount determined under the description of C in the description of A in respect of a province in which the SIFT trust or SIFT partnership has a permanent establishment in the taxation year.
    • (4) If a SIFT trust or a SIFT partnership has a permanent establishment in Quebec in a taxation year, paragraph (a) of the definition “general corporate income tax rate” in subsection (1) does not apply in determining the prescribed amount under subsection (3) in respect of the SIFT trust or the SIFT partnership for the taxation year for the purposes of applying the definition “provincial SIFT tax rate” in determining:

      • (a) in the case of the SIFT partnership, the amount of a dividend deemed by paragraph 96(1.11)(b) of the Act to have been received by it in the taxation year; and

      • (b) in the case of the SIFT trust, the amount of its taxable SIFT trust distributions for the taxation year.

  • (2) Subsection (1) applies to the 2007 and subsequent taxation years, except that paragraph 414(4)(b), as enacted by subsection (1), shall not apply for the taxation years of a SIFT trust that end before February 3, 2009.

  •  (1) The heading “Policy Reserves for Pre-1996 Policies” before section 1401 of the Regulations is replaced by the following:

    Amounts Determined
  • (2) Subsection (1) applies to taxation years that begin after September 2006.

  •  (1) The portion of subsection 1401(1) of the Regulations before subparagraph (c)(i) is replaced by the following:

    • 1401. (1) For the purposes of section 307 of the Regulations and subsection 211.1(3) of the Act, the amounts determined under this subsection are,

      • (a) in respect of deposit administration fund policies, the aggregate of the insurer’s liabilities under those policies calculated in the manner required for the purposes of the insurer’s annual report to the relevant authority for the year or, where the insurer was throughout the year subject to the supervision of the relevant authority but was not required to file an annual report with the relevant authority for the year, in its financial statements for the year;

      • (b) in respect of a group term life insurance policy that provides coverage for a period not exceeding 12 months, the unearned portion of the premium paid by the policyholder for the policy at the end of the year determined by apportioning the premium paid by the policyholder equally over the period to which that premium pertains;

      • (c) in respect of a life insurance policy, other than a policy referred to in paragraph (a) or (b), the greater of

  • (2) The portion of paragraph 1401(1)(c.1) of the Regulations before subparagraph (i) is replaced by the following:

    • (c.1) in respect of a group life insurance policy, the amount (other than an amount in respect of which a deduction may be claimed by the insurer pursuant to subsection 140(1) of the Act because of subparagraph 138(3)(a)(v) of the Act in computing its income for the year) in respect of a dividend, refund of premiums or refund of premium deposits provided for under the terms of the policy that will be used by the insurer to reduce or eliminate a future adverse claims experience under the policy or that will be paid or unconditionally credited to the policyholder by the insurer or applied in discharge, in whole or in part, of a liability of the policyholder to pay premiums to the insurer, which is the least of

  • (3) The portion of paragraph 1401(1)(d) of the Regulations before subparagraph (i) is replaced by the following:

    • (d) in respect of a policy, other than a policy referred to in paragraph (a), in respect of a benefit, risk or guarantee that is

  • (4) The portion of paragraph 1401(1)(d) of the Regulations after subparagraph (ix) and before subparagraph (x) is replaced by the following:

    equal to the lesser of

  • (5) Subsection 1401(1) of the Regulations is amended by adding “and” at the end of paragraph (c.1) and by repealing paragraphs (d.1) to (e).

  • (6) Subsection 1401(1.1) of the Regulations is repealed.

  • (7) Subsections 1401(3) and (4) of the Regulations are repealed.

  • (8) Subsections (1) to (7) apply to taxation years that begin after September 2006.

 
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