Budget Implementation Act, 2009 (S.C. 2009, c. 2)
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Assented to 2009-03-12
PART 1AMENDMENTS IN RESPECT OF INCOME TAX
R.S., c. 1 (5th Supp.)Income Tax Act
36. (1) The definition “investment” in subsection 122.1(1) of the Act is replaced by the following:
“investment”
« placement »
“investment”, in a trust or partnership,
(a) means
(i) a property that is a security of the trust or partnership, or
(ii) a right which may reasonably be considered to replicate a return on, or the value of, a security of the trust or partnership; but
(b) does not include
(i) an unaffiliated publicly-traded liability of the trust or partnership, nor
(ii) regulated innovative capital.
(2) The portion of paragraph (a) of the definition “non-portfolio property” in subsection 122.1(1) of the Act before subparagraph (i) is replaced by the following:
(a) a security of a subject entity (other than a portfolio investment entity), if at that time the trust or partnership holds
(3) Paragraph (a) of the definition “qualified REIT property” in subsection 122.1(1) of the Act is replaced by the following:
(a) a real or immovable property;
(4) Subparagraph (c)(i) of the definition “qualified REIT property” in subsection 122.1(1) of the Act is replaced by the following:
(i) legal title to real or immovable property of the trust or of another subject entity all of the securities of which are held by the trust (including real or immovable property that the trust or the other subject entity holds together with one or more other persons or partnerships), and
(5) Paragraphs (c) and (d) of the definition “real estate investment trust” in subsection 122.1(1) of the Act are replaced by the following:
(c) not less than 75% of the trust’s revenues for the taxation year are derived from one or more of the following:
(i) rent from real or immovable properties,
(ii) interest from mortgages, or hypothecs, on real or immovable properties, and
(iii) capital gains from dispositions of real or immovable properties; and
(d) at each time in the taxation year an amount, that is equal to 75% or more of the equity value of the trust at that time, is the amount that is the total fair market value of all properties held by the trust each of which is real or immovable property, indebtedness of a Canadian corporation represented by a bankers’ acceptance, property described by either paragraph (a) or (b) of the definition “qualified investment” in section 204, or a deposit with a credit union.
(6) Subparagraph (a)(ii) of the definition “rent from real or immovable properties” in subsection 122.1(1) of the Act is replaced by the following:
(ii) payment for services ancillary to the rental of real or immovable properties and customarily supplied or rendered in connection with the rental of real or immovable properties, and
(iii) a payment that is included under paragraph 104(13)(a) in computing the recipient’s income and that was made from the part of a trust’s income (determined without reference to subsection 104(6)) that was derived from rent from real or immovable properties; but
(7) The portion of the definition “SIFT trust” in subsection 122.1(1) of the Act before paragraph (a) is replaced by the following:
“SIFT trust”
« fiducie intermédiaire de placement déterminée »
“SIFT trust”, being a specified investment flow-through trust, for a taxation year means a trust (other than an excluded subsidiary entity, or a real estate investment trust, for the taxation year) that meets the following conditions at any time during the taxation year:
(8) Subsection 122.1(1) of the Act is amended by adding the following in alphabetical order:
“equity”
« capitaux propres »
“equity”, of an entity, means
(a) if the entity is a corporation, a share of the capital stock of the corporation;
(b) if the entity is a trust, an income or capital interest in the trust;
(c) if the entity is a partnership, an interest as a member of the partnership;
(d) a liability of the entity (and, for purposes of the definition “publicly-traded liability” in this section, a security of the entity that is a liability of another entity) if
(i) the liability is convertible into, or exchangeable for, equity of the entity or of another entity, or
(ii) any amount paid or payable in respect of the liability is contingent or dependent on the use of or production from property, or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation, or to income or capital paid or payable to any member of a partnership or beneficiary under a trust; and
(e) a right to, or to acquire, anything described in this paragraph and any of paragraphs (a) to (d).
“excluded subsidiary entity”
« filiale exclue »
“excluded subsidiary entity”, for a taxation year, means an entity none of the equity of which is at any time in the taxation year
(a) listed or traded on a stock exchange or other public market; nor
(b) held by any person or partnership other than
(i) a real estate investment trust,
(ii) a taxable Canadian corporation,
(iii) a SIFT trust (determined without reference to subsection (2)),
(iv) a SIFT partnership (determined without reference to subsection 197(8)), or
(v) an excluded subsidiary entity for the taxation year.
“portfolio investment entity”
« entité de placement de portefeuille »
“portfolio investment entity” at any time means an entity that does not at that time hold any non-portfolio property.
“publicly-traded liability”
« dette transigée publiquement »
“publicly-traded liability”, of an entity, means a liability that is a security of the entity, that is not equity of the entity and that is listed or traded on a stock exchange or other public market.
“regulated innovative capital”
« capital innovateur réglementé »
“regulated innovative capital” means equity of a trust, where
(a) since November 2006, the equity has been authorized, by the Superintendent of Financial Institutions or by a provincial regulatory authority having powers similar to those of the Superintendent, as Tier 1 or Tier 2 capital of a financial institution (as defined by subsection 181(1));
(b) the terms and conditions of the equity have not changed after August 1, 2008;
(c) the trust has not issued any equity after October 31, 2006; and
(d) the trust does not hold any non-portfolio property other than
(i) liabilities of the financial institution, and
(ii) shares of the capital stock of the financial institution that were acquired by the trust for the sole purpose of satisfying a right to require the trust to accept, as demanded by a holder of the equity, the surrender of the equity.
“unaffiliated publicly-traded liability”
« dette non affiliée transigée publiquement »
“unaffiliated publicly-traded liability”, of an entity at any time means a publicly-traded liability of the entity if, at that time the total fair market value of all publicly-traded liabilities of the entity that are held at that time by persons or partnerships that are not affiliated with the entity is at least 90% of the total fair market value of all publicly-traded liabilities of the entity.
(9) Subsections (1) to (8) are deemed to have come into force on October 31, 2006.
37. (1) Paragraph (c) of the definition “eligible individual” in subsection 122.51(1) of the Act is replaced by the following:
(c) the total of whose incomes for the year from the following sources is at least $2,500:
(i) offices and employments (computed without reference to paragraph 6(1)(f)),
(ii) businesses each of which is a business carried on by the individual either alone or as a partner actively engaged in the business, and
(iii) the program established under the Wage Earner Protection Program Act.
(2) Subsection (1) applies to the 2008 and subsequent taxation years.
38. (1) Paragraph (b) of the definition “working income” in subsection 122.7(1) of the Act is replaced by the following:
(b) all amounts that are included, or that would, but for paragraph 81(1)(a), be included, because of paragraph 56(1)(n) or (o) or subparagraph 56(1)(r)(v) in computing the individual’s income for a period in the taxation year; and
(2) Subsection (1) applies to the 2008 and subsequent taxation years.
39. (1) Subsection 125(2) of the Act is replaced by the following:
Marginal note:Business limit
(2) For the purpose of this section, a corporation’s business limit for a taxation year is $500,000 unless the corporation is associated in the taxation year with one or more other Canadian-controlled private corporations, in which case, except as otherwise provided in this section, its business limit is nil.
(2) Paragraph 125(3)(a) of the Act is replaced by the following:
(a) if the total of the percentages assigned in the agreement does not exceed 100%, $500,000 multiplied by the percentage assigned to that corporation in the agreement; and
(3) In applying subsection 125(5) of the Act to a corporation for a 2009 or 2010 taxation year of the corporation that began before 2009, subparagraph 125(5)(a)(i) of the Act is to be read as follows:
(i) the amount that would have been its business limit determined under subsection (3) or (4) for the first such taxation year ending in the calendar year if the reference to $400,000 in subsection (3), as it applied in respect of that first such taxation year, had been read in the same manner as it is read in respect of the particular taxation year ending in the calendar year, and
(4) The description of M in the definition “specified partnership income” in subsection 125(7) of the Act is replaced by the following:
- M
- is the lesser of
(i) $500,000, and
(ii) the product obtained when $1,370 is multiplied by the total of all amounts each of which is the number of days in a fiscal period of the partnership that ends in the year, and
(5) Subsection (1) applies to the 2009 and subsequent taxation years except that, for a 2009 or 2010 taxation year that began before 2009, the reference in subsection 125(2) of the Act, as enacted by subsection (1), to “$500,000” shall be read as a reference to the total of
(a) that proportion of $400,000 that the number of days in the taxation year that are before 2009 is of the number of days in the taxation year, and
(b) that proportion of $500,000 that the number of days in the taxation year that are after 2008 is of the number of days in the taxation year.
(6) Subsection (2) applies to the 2009 and subsequent taxation years except that, for a 2009 or 2010 taxation year that began before 2009, the reference in paragraph 125(3)(a) of the Act, as enacted by subsection (2), to “$500,000” is to be read as a reference to “the amount that would, if the corporation were not associated in the year with any other corporation, be its business limit for the year determined without reference to subsections (5) and (5.1)”.
(7) Subsection (4) applies to fiscal periods of a partnership that end after 2008.
40. (1) Paragraph (a) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act is replaced by the following:
(a) that is a Canadian exploration expense incurred by a corporation after March 2009 and before 2011 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2011) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition “mineral resource” in subsection 248(1),
(2) Paragraphs (c) and (d) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act are replaced by the following:
(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2009 and before April 2010, and
(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2009 and before April 2010;
(3) Paragraph 127(9.01)(b) of the Act is replaced by the following:
(b) the number that is the total of 10 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 1997 exceeds 11.
(4) Paragraph 127(9.02)(b) of the Act is replaced by the following:
(b) the number that is the total of 9 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 1997 exceeds 11.
(5) The formula in subsection 127(10.2) of the Act is replaced by the following:
($8 million – 10A) × [($40 million – B)/$40 million]
(6) Paragraph (a) of the description of A in subsection 127(10.2) of the Act is replaced by the following:
(a) $500,000, and
(7) Subparagraphs (a)(i) and (ii) of the description of B in subsection 127(10.2) of the Act are replaced by the following:
(i) if the particular corporation is not associated with any other corporation in the particular taxation year, the amount that is its taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) for its immediately preceding taxation year, or
(ii) if the particular corporation is associated with one or more other corporations in the particular taxation year, the amount that is the total of all amounts, each of which is the taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) of the particular corporation for its, or of one of the other corporations for its, last taxation year that ended in the last calendar year that ended before the end of the particular taxation year, or
(8) Subsection 127(10.22) of the Act is replaced by the following:
Marginal note:Deemed non-association of corporations
(10.22) If a particular Canadian-controlled private corporation is associated with another corporation in circumstances where those corporations would not be associated if the Act were read without reference to paragraph 256(1.2)(a), the particular corporation has issued shares to one or more persons who have been issued shares by the other corporation and there is at least one shareholder of the particular corporation who is not a shareholder of the other corporation or one shareholder of the other corporation who is not a shareholder of the particular corporation, the particular corporation is deemed not to be associated with the other corporation for the purpose of determining the particular corporation’s expenditure limit under subsection (10.2).
(9) Paragraph 127(10.6)(c) of the Act is replaced by the following:
(c) for the purpose of subsection (10.2), where a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, the taxable income of the corporation for the year shall be determined by multiplying that amount by the ratio that 365 is of the number of days in that year.
(10) Paragraph 127(36)(b) of the Act is replaced by the following:
(b) the number that is the total of 10 and the number of taxation years or fiscal periods, as the case may be, by which the number of taxation years or fiscal periods of the taxpayer that have ended after 1997 exceeds 11.
(11) Subsections (1) and (2) apply to expenses renounced under a flow through share agreement made after March 2009.
(12) Subsections (3), (4) and (10) apply in respect of the 2008 and subsequent taxation years.
(13) Subsections (5) and (6) apply to the 2010 and subsequent taxation years, except that the expenditure limit in subsection 127(10.2) of the Act in respect of a corporation for 2010 taxation years that begin before 2010, be determined by the formula
A + [(B – A) × (C/D)]
where
- A
- is the expenditure limit of the corporation for the taxation year determined in accordance with the formula in subsection 127(10.2) of the Act as that subsection read in its application to taxation years that end in 2009;
- B
- is the expenditure limit of the corporation for the taxation year determined in accordance with the formula in subsection 127(10.2) of the Act, as that subsection would apply to the taxation year in the absence of this exception;
- C
- is the number of days in the taxation year that are after 2009; and
- D
- is the total number of days in the taxation year.
(14) Subsection (7) applies to taxation years that end on or after February 26, 2008.
(15) Subsections (8) and (9) apply to taxation years that end on or after March 9, 2009.
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