• (i) for the purposes of paragraphs 12(1)(d), (e), (e.1), (i) and (s), subsection 12.5(8), paragraphs 20(1)(l), (l.1), (p) and (jj) and 20(7)(c), subsections 20(22) and 20.4(4), sections 138, 138.1, 140, 142 and 148 and Part XII.3, the parent is deemed to be the same corporation as, and a continuation of, the subsidiary, and

Marginal note:Application

• 88.1 (1) Subsection (2) applies to a trust’s distribution of property to a taxpayer if

  • (a) the distribution is a SIFT trust wind-up event;

  • (b) the trust is

    • (i) a SIFT wind-up entity whose only beneficiary, at all times at which the trust makes a distribution that is a SIFT trust wind-up event, is a taxable Canadian corporation, or

    • (ii) a trust whose only beneficiary, at all times at which the trust makes a distribution that is a SIFT trust wind-up event, is another trust described by subparagraph (i);

  • (c) where the trust is a SIFT wind-up entity, the distribution occurs no more than 60 days after the earlier of

    • (i) the first SIFT trust wind-up event of the trust, and

    • (ii) the first distribution to the trust that is a SIFT trust wind-up event of another trust; and

  • (d) if the property is shares of the capital stock of a taxable Canadian corporation,

    • (i) the property was not acquired by the trust on a distribution to which subsection 107(3.1) applies, and

    • (ii) the trust elects in writing, filed with the Minister on or before the trust’s filing-due date for its taxation year that includes the time of the distribution, that this section apply to the distribution.

• Marginal note:SIFT trust wind-up event

  (2) If this subsection applies to a trust’s distribution of property to a taxpayer, subsections 88(1) to (1.7), and section 87 and paragraphs 256(7)(a) to (e) as they apply for the purposes of those subsections, apply, with any modifications that the circumstances require, as if

  • (a) the trust were a taxable Canadian corporation (in this subsection referred to as the “subsidiary”) that is not a private corporation;

  • (b) where the taxpayer is a SIFT wind-up entity, the taxpayer were a taxable Canadian corporation that is not a private corporation;

  • (c) the distribution were a winding-up of the subsidiary;

  • (d) the taxpayer’s interest as a beneficiary under the trust were shares of a single class of shares of the capital stock of the subsidiary owned by the taxpayer;

  • (e) paragraph 88(1)(b) deemed the taxpayer’s proceeds of disposition of the shares described in paragraph (d) and owned by the taxpayer immediately before the distribution to be equal to the adjusted cost base to the taxpayer of the taxpayer’s interest as a beneficiary under the trust immediately before the distribution;

  • (f) each trust, a majority-interest beneficiary (in this subsection, within the meaning assigned by section 251.1) of which is another trust that is by operation of this subsection treated as if it were a corporation, were a corporation; and

  • (g) except for the purposes of subsections 88(1.1) and (1.2), the taxpayer last acquired control of the subsidiary and of each corporation (including a trust that is by operation of this subsection treated as if it were a corporation) controlled by the subsidiary at the time, if any, at which the taxpayer last became a majority-interest beneficiary of the trust.

“general rate income pool”

« compte de revenu à taux général »

“general rate income pool” at the end of a particular taxation year, of a taxable Canadian corporation that is a Canadian-controlled private corporation or a deposit insurance corporation in the particular taxation year, is the positive or negative amount determined by the formula

A – B

where

A

is the positive or negative amount that would, before taking into consideration the specified future tax consequences for the particular taxation year, be determined by the formula

C + D + E + F – G

where

C

is the corporation’s general rate income pool at the end of its preceding taxation year,

D

is the amount, if any, that is the product of the corporation’s general rate factor for the particular taxation year multiplied by its adjusted taxable income for the particular taxation year,

E

is the total of all amounts each of which is

• (a) an eligible dividend received by the corporation in the particular taxation year, or

• (b) an amount deductible under section 113 in computing the taxable income of the corporation for the particular taxation year,

F

is the total of all amounts determined under subsections (4) to (6) in respect of the corporation for the particular taxation year, and

G

is

• (a) unless paragraph (b) applies, the amount, if any, by which

  • (i) the total of all amounts each of which is the amount of an eligible dividend paid by the corporation in its preceding taxation year

  exceeds

  • (ii) the total of all amounts each of which is an excessive eligible dividend designation made by the corporation in its preceding taxation year, or

• (b) if subsection (4) applies to the corporation in the particular taxation year, nil, and

B

is the amount determined by the formula

H × (I – J)

where

H

is the corporation’s general rate factor for the particular taxation year,

I

is the total of the corporation’s full rate taxable incomes (as would be defined in the definition “full rate taxable income” in subsection 123.4(1), if that definition were read without reference to its subparagraphs (a)(i) to (iii)) for the corporation’s preceding three taxation years, determined without taking into consideration the specified future tax consequences, for those preceding taxation years, that arise in respect of the particular taxation year, and

J

is the total of the corporation’s full rate taxable incomes (as would be defined in the definition “full rate taxable income” in subsection 123.4(1), if that definition were read without reference to its subparagraphs (a)(i) to (iii)) for those preceding taxation years;

• (iii) where the particular time is after March 31, 1977, an amount equal to the paid-up capital in respect of that class of shares at the particular time, computed without reference to the provisions of this Act except subsections 51(3) and 66.3(2) and (4), sections 84.1 and 84.2, subsections 85(2.1), 85.1(2.1) and (8), 86(2.1), 87(3) and (9), 128.1(2) and (3), 138(11.7), 139.1(6) and (7), 192(4.1) and 194(4.1) and section 212.1,

“adjusted taxable income”

« revenu imposable rajusté »

“adjusted taxable income” of a corporation for a taxation year is the amount determined by the formula

A – B – C

where

A

is

• (a) unless paragraph (b) applies, the corporation’s taxable income for the taxation year, and

• (b) if the corporation is a deposit insurance corporation in the taxation year, nil,

B

is the amount determined by multiplying the amount, if any, deducted by the corporation under subsection 125(1) for the taxation year by the quotient obtained by dividing 100 by the rate of the deduction provided under that subsection for the taxation year, and

C

is

• (a) if the corporation is a Canadian-controlled private corporation in the taxation year, the lesser of the corporation’s aggregate investment income for the taxation year and the corporation’s taxable income for the taxation year, and

• (b) in any other case, nil;

“general rate factor”

« facteur du taux géneral »

“general rate factor” of a corporation for a taxation year is the total of

• (a) that proportion of 0.68 that the number of days in the taxation year that are before 2010 is of the number of days in the taxation year,

• (b) that proportion of 0.69 that the number of days in the taxation year that are in 2010 is of the number of days in the taxation year,

• (c) that proportion of 0.70 that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year, and

• (d) that proportion of 0.72 that the number of days in the taxation year that are after 2011 is of the number of days in the taxation year;

Marginal note:Adjusted cost base of share of foreign affiliate

• 92. (1) In computing, at any time in a taxation year, the adjusted cost base to a taxpayer resident in Canada of any share owned by the taxpayer of the capital stock of a foreign affiliate of the taxpayer,

  • (a) there shall be added in respect of that share any amount included in respect of that share under subsection 91(1) or (3) in computing the taxpayer’s income for the year or any preceding taxation year (or that would have been required to have been so included in computing the taxpayer’s income but for subsection 56(4.1) and sections 74.1 to 75 of this Act and section 74 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952); and

  • (b) there shall be deducted in respect of that share

    • (i) any amount deducted by the taxpayer under subsection 91(2) or (4), and

    • (ii) any dividend received by the taxpayer before that time, to the extent of the amount deducted by the taxpayer, in respect of the dividend, under subsection 91(5)

    in computing the taxpayer’s income for the year or any preceding taxation year (or that would have been deductible by the taxpayer but for subsection 56(4.1) and sections 74.1 to 75 of this Act and section 74 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952).

“antecedent corporation”

« société antécédente »

“antecedent corporation” of a particular corporation means

• (a) a predecessor corporation (within the meaning assigned by subsection 87(1)) in respect of an amalgamation to which subsection 87(11) applied and by which the particular corporation was formed,

• (b) a predecessor corporation (within the meaning of subsection 87(1)) of the corporation (referred to in this definition as the “first amalco”) that was formed on an amalgamation of the predecessor corporation and another corporation, where

  • (i) shares of the capital stock of the predecessor corporation that were not owned by the other corporation, or by a corporation of which the other corporation is a subsidiary wholly-owned corporation, were exchanged on the amalgamation for shares of the capital stock of the first amalco that were, during the series of transactions or events that includes the amalgamation, redeemed, acquired or cancelled by the first amalco for money,

  • (ii) the first amalco was a predecessor corporation (within the meaning assigned by subsection 87(1)) in respect of an amalgamation to which subsection 87(11) applied and by which the particular corporation was formed, and

  • (iii) the amalgamation referred to in subparagraph (i) occurred in a series of transactions or events that included the amalgamation referred to in subparagraph (ii),

• (c) a corporation that was wound-up into the particular corporation in a winding-up to which subsection 88(1) applied, or

• (d) an antecedent corporation of an antecedent corporation of the particular corporation;

“calculating currency”

« monnaie de calcul »

“calculating currency” for a taxation year of a foreign affiliate of a taxpayer means

• (a) the currency of the country in which the foreign affiliate is resident at the end of the taxation year, or

• (b) any currency that the taxpayer demonstrates to be reasonable in the circumstances;

“designated acquired corporation”

« société acquise désignée »

“designated acquired corporation” of a taxpayer means a particular antecedent corporation of the taxpayer if

• (a) the taxpayer or another antecedent corporation of the taxpayer acquired control of

  • (i) the particular antecedent corporation, or

  • (ii) a corporation (referred to in this definition as a “successor corporation”) of which the particular antecedent corporation is an antecedent corporation, and

• (b) immediately before the acquisition of control or a series of transactions or events that includes the acquisition of control, the taxpayer, the other antecedent corporation or a corporation resident in Canada of which the taxpayer or the other antecedent corporation is a subsidiary wholly-owned corporation, as the case may be, dealt at arm’s length (otherwise than because of a right referred to in paragraph 251(5)(b)) with the particular antecedent corporation or the successor corporation, as the case may be;

“specified person or partnership”

« personne ou société de personnes déterminée »

“specified person or partnership”, in respect of a taxpayer, at any time means the taxpayer or a person (other than a designated acquired corporation of the taxpayer), or a partnership, that is at that time

• (a) a person (other than a partnership) that is resident in Canada and does not, at that time, deal at arm’s length with the taxpayer,

• (b) a specified predecessor corporation of the taxpayer or of a specified person or partnership in respect of the taxpayer,

• (c) a foreign affiliate of

  • (i) the taxpayer,

  • (ii) a person that is at that time a specified person or partnership in respect of the taxpayer under this definition because of paragraph (a) or (b), or

  • (iii) a partnership that is at that time a specified person or partnership in respect of the taxpayer under this definition because of paragraph (d), or

• (d) a partnership a member of which is at that time a specified person or partnership in respect of the taxpayer under this definition;

“specified predecessor corporation”

« société remplacée déterminée »

“specified predecessor corporation” of a particular corporation means

• (a) an antecedent corporation of the particular corporation,

• (b) a predecessor corporation (within the meaning assigned by subsection 87(1)) in respect of an amalgamation by which the particular corporation was formed, or

• (c) a specified predecessor corporation of a specified predecessor corporation of the particular corporation;

• (f) except as otherwise provided in this subdivision and except to the extent that the context otherwise requires, a foreign affiliate of a taxpayer is deemed to be at all times resident in Canada for the purposes of determining, in respect of the taxpayer for a taxation year of the foreign affiliate, each amount that is the foreign affiliate’s

  • (i) capital gain, capital loss, taxable capital gain or allowable capital loss from a disposition of a property, or

  • (ii) income or loss from a property, from a business other than an active business or from a non-qualifying business;

• (f.1) in computing an amount described in paragraph (f) in respect of a property or a business, there is not to be included any portion of that amount that can reasonably be considered to have accrued, in respect of the property (including for the purposes of this paragraph any property for which the property was substituted) or the business, while no person or partnership that held the property or carried on the business was a specified person or partnership in respect of the taxpayer referred to in paragraph (f);

• (f.11) in determining an amount described in paragraph (f) for a taxation year of a foreign affiliate of a taxpayer,

  • (i) if the amount is described in subparagraph (f)(i), this Act is to be read without reference to section 26 of the Income Tax Application Rules, and

  • (ii) if the amount is described in subparagraph (f)(ii),

    • (A) this Act is to be read without reference to subsections 14(1.01) to (1.03), 17(1) and 18(4) and section 91, except that, where the foreign affiliate is a member of a partnership, section 91 is to be applied to determine the income or loss of the partnership and for that purpose subsection 96(1) is to be applied to determine the foreign affiliate’s share of that income or loss of the partnership, and

    • (B) if the foreign affiliate has, in the taxation year, disposed of a foreign resource property in respect of a country, it is deemed to have designated, in respect of the disposition and in accordance with subparagraph 59(1)(b)(ii) for the taxation year, the amount, if any, by which

      • (I) the amount determined under paragraph 59(1)(a) in respect of the disposition

      exceeds

      • (II) the amount determined under subparagraph 59(1)(b)(i) in respect of the disposition;

• (f.12) a foreign affiliate of a taxpayer shall determine each of the following amounts using its calculating currency for a taxation year:

  • (i) subject to paragraph (f.13), each capital gain, capital loss, taxable capital gain and allowable capital loss of the foreign affiliate for the taxation year from the disposition, at any time, of a property that, at that time, was an excluded property of the foreign affiliate,

  • (ii) its income or loss for the taxation year from each active business carried on by it in the taxation year in a country, and

  • (iii) its income or loss that is included in computing its income or loss from an active business for the taxation year because of paragraph (a);

• (f.13) where the calculating currency of a foreign affiliate of a taxpayer is a currency other than Canadian currency, the foreign affiliate shall determine the amount included in computing its foreign accrual property income, in respect of the taxpayer for a taxation year of the foreign affiliate, attributable to its capital gain or taxable capital gain, from the disposition of an excluded property in the taxation year, in Canadian currency by converting the amount of the capital gain, or taxable capital gain, otherwise determined under subparagraph (f.12)(i) using its calculating currency for the taxation year into Canadian currency using the rate of exchange quoted by the Bank of Canada at noon on the day on which the disposition was made;

• (f.14) a foreign affiliate of a taxpayer shall determine using Canadian currency each amount of its income, loss, capital gain, capital loss, taxable capital gain or allowable capital loss for a taxation year, other than an amount to which paragraph (f.12) or (f.13) applies;

• (f.15) for the purpose of applying subparagraph (f.12)(i), the reference in subsection 39(2) to “the currency or currencies of one or more countries other than Canada relative to Canadian currency” is to be read as a reference to “one or more currencies other than the calculating currency relative to the calculating currency” and the references in that subsection to “of a country other than Canada” are to be read as references to “other than the calculating currency”;

• Marginal note:Qualifying interest throughout year

  (2.2) For the purposes of paragraphs (2)(a) and (g), a non-resident corporation that is not a foreign affiliate of a taxpayer in respect of which the taxpayer has a qualifying interest throughout a particular taxation year is deemed to be a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout that particular taxation year if

• Marginal note:Controlled foreign affiliate throughout year

  (2.201) For the purposes of paragraphs (2)(a) and (g), a non-resident corporation is deemed to be a controlled foreign affiliate of a taxpayer throughout a taxation year of the non-resident corporation if

  • (a) in the taxation year, a person or partnership acquires or disposes of shares of the capital stock of a corporation and, because of the acquisition or disposition, the non-resident corporation becomes or ceases to be a controlled foreign affiliate of the taxpayer; and

  • (b) at either or both of the beginning and end of the taxation year, the non-resident corporation is a controlled foreign affiliate of the taxpayer.

• Rule for the definition “specified person or partnership”

  (2.6) For the purposes of paragraphs (a) to (d) of the definition “specified person or partnership” in subsection (1), if a person or partnership (referred to in this subsection as the “taxpayer”) is not dealing at arm’s length with another person or partnership (referred to in this subsection as the “particular person”) at a particular time, the taxpayer is deemed to have existed and not to have dealt at arm’s length with the particular person, nor with each specified predecessor corporation of the particular person, throughout the period that began when the particular person or the specified predecessor corporation, as the case may be, came into existence and that ends at the particular time.