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
49. (1) Section 142.6 of the Act is amended by adding the following after subsection (1.3):
Marginal note:Change in status — prescribed payment card corporation share
(1.4) If, at any particular time in a taxation year of a taxpayer that is a financial institution for the taxation year, a property becomes a mark-to-market property of the taxpayer for the taxation year because it ceased, at the particular time, to be a prescribed payment card corporation share of the taxpayer,
(a) the taxpayer is deemed
(i) to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and
(ii) to have acquired the property, at the particular time, at a cost equal to those proceeds; and
(b) subsection 142.5(1) does not apply to the disposition under subparagraph (a)(i).
Marginal note:Change in status — prescribed securities exchange investment
(1.5) If, at any particular time in a taxation year of a taxpayer that is a financial institution for the taxation year, a property becomes a mark-to-market property of the taxpayer for the taxation year because it ceased, at the particular time, to be a prescribed securities exchange investment of the taxpayer,
(a) the taxpayer is deemed
(i) to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and
(ii) to have acquired the property, at the particular time, at a cost equal to those proceeds; and
(b) subsection 142.5(1) does not apply to the disposition under subparagraph (a)(i).
Marginal note:Change in status — significant interest
(1.6) If, at the end of a particular taxation year of a taxpayer that is a financial institution for the taxation year, the taxpayer holds a share of the capital stock of a corporation, the taxpayer has a significant interest in that corporation at any time in the particular taxation year and the share is mark-to-market property of the taxpayer for the immediately following taxation year, the taxpayer is deemed to have,
(a) disposed of the share immediately before the end of the particular taxation year for proceeds of disposition equal to the fair market value, at that time, of the share; and
(b) acquired the share at the end of the particular taxation year at a cost equal to those proceeds.
(2) Subsection 142.6(2) of the Act is replaced by the following:
Marginal note:Deemed disposition not applicable
(2) For the purposes of this Act, the determination of when a taxpayer acquired a share shall be made without regard to a disposition or acquisition that occurred because of subsection 142.5(2) or subsection (1), (1.1), (1.2), (1.4), (1.5) or (1.6).
(3) Subsection 142.6(1.4) of the Act, as enacted by subsection (1), applies to taxation years that end after February 22, 1994.
(4) Subsection 142.6(1.5) of the Act, as enacted by subsection (1), applies to taxation years that begin after 1998.
(5) Subsection 142.6(1.6) of the Act, as enacted by subsection (1), applies to taxation years that begin after September 2006.
(6) Subsection (2) applies to taxation years that begin after September 2006.
50. (1) Subsection 143.1(1) of the Act is replaced by the following:
Marginal note:Definitions
143.1 (1) The definitions in this subsection apply in this section.
“amateur athlete”
« athlète amateur »
“amateur athlete” at any time means an individual (other than a trust) who is, at that time,
(a) a member of a registered Canadian amateur athletic association;
(b) eligible to compete, in an international sporting event sanctioned by an international sports federation, as a Canadian national team member; and
(c) not a professional athlete.
“professional athlete”
« athlète professionnel »
“professional athlete” means an individual who receives income that is compensation for, or is otherwise attributable to, the individual’s activities as a player or athlete in a professional sport.
“qualifying performance income”
« revenu de performance admissible »
“qualifying performance income” of an individual means income that
(a) is received by the individual in a taxation year in which
(i) the individual was, at any time, an amateur athlete, and
(ii) the individual was not, at any time, a professional athlete;
(b) may reasonably be considered to be in connection with the individual’s participation as an amateur athlete in one or more international sporting events referred to in the definition “amateur athlete”; and
(c) is endorsement income, prize money, or income from public appearances or speeches.
“third party”
« tiers »
“third party” in respect of an arrangement described in paragraph (1.1)(b) means a person who deals at arm’s length with the amateur athlete in respect of the arrangement.
Marginal note:Where subsection (1.2) applies
(1.1) Subsection (1.2) applies where, at any time,
(a) a national sport organization that is a registered Canadian amateur athletic association receives an amount for the benefit of an individual under an arrangement made under rules of an international sport federation that require amounts to be held, controlled and administered by the organization in order to preserve the eligibility of the individual to compete in a sporting event sanctioned by the federation; or
(b) an individual enters into an arrangement that
(i) is an account with an issuer described in paragraph (b) of the definition “qualifying arrangement” in subsection 146.2(1), or that would be so described if that definition applied at that time,
(ii) provides that no amount may be deposited, credited or added to the account, other than an amount that is qualifying performance income of the individual or that is interest or other income in respect of the property deposited, credited or added to the account,
(iii) provides that a third party is a mandatory signatory on any payment from the account, and
(iv) is not a registered retirement savings plan or a TFSA.
Marginal note:Amateur athletes’ reserve funds
(1.2) If this subsection applies in respect of an arrangement referred to in subsection (1.1),
(a) an inter vivos trust (in this section referred to as the “amateur athlete trust”) is deemed
(i) to be created on the day on which the first amount referred to in paragraph (1.1)(a) or (b) is received by the sport organization or by the issuer, as the case may be, in respect of the arrangement, and
(ii) to exist until subsection (3) or (4) applies in respect of the trust;
(b) all property held under the arrangement is deemed to be the property of the amateur athlete trust and not property of any other person;
(c) if, at any time, the sport organization or the issuer, as the case may be, receives an amount under the arrangement and the amount would, in the absence of this subsection, be included in computing the income of the individual in respect of the arrangement for the taxation year that includes that time, the amount is deemed to be income of the amateur athlete trust for that taxation year and not to be income of the individual;
(d) if, at any time, the sport organization or the issuer, as the case may be, pays or transfers an amount under the arrangement to or for the benefit of the individual, the amount is deemed to be an amount distributed at that time to the individual by the amateur athlete trust;
(e) the individual is deemed to be the beneficiary under the amateur athlete trust;
(f) the sport organization or the third party, as the case may be, in respect of the arrangement is deemed to be the trustee of the amateur athlete trust; and
(g) no tax is payable under this Part by the amateur athlete trust on its taxable income for any taxation year.
(2) Subsection (1) applies to the 2008 and subsequent taxation years except that, if the individual in respect of an amateur athlete trust elects under this subsection in writing filed with the Minister of National Revenue on or before the individual’s filing-due date for the 2008 taxation year, in its application to the individual and the amateur athlete trust for the 2008 taxation year, paragraph 143.1(1.2)(c) of the Act, as enacted by subsection (1), is to be read as follows:
(c) if, at any time before March 3, 2009, the sport organization or the issuer, as the case may be, receives an amount under the arrangement and the amount would, in the absence of this subsection, be included in computing the income of the individual in respect of the arrangement for the 2008 taxation year, the amount is deemed to be income of the amateur athlete trust for its 2009 taxation year and not to be income of the individual;
51. (1) Paragraph (b) of the definition “earned income” in subsection 146(1) of the Act is replaced by the following:
(b) an amount included under paragraph 56(1)(b), (c.2), (g) or (o) or subparagraph 56(1)(r)(v) in computing the taxpayer’s income for a period in the year throughout which the taxpayer was resident in Canada,
(2) The description of D in paragraph (b) of the definition “unused RRSP deduction room” in subsection 146(1) of the Act is replaced by the following:
- D
- is the total of all amounts each of which is an amount deducted by the taxpayer,
(i) under subsection (5) or (5.1) or paragraph 60(v), in computing the taxpayer’s income for the year, or
(ii) under paragraph 10 of Article XVIII of the Canada-United States Tax Convention signed at Washington on September 26, 1980 or a similar provision in another tax treaty, in computing the taxpayer’s taxable income for the year, and
(3) Section 146 of the Act is amended by adding the following after subsection (8.91):
Marginal note:Deduction for post-death reduction in value
(8.92) If the annuitant under a registered retirement savings plan dies before the maturity of the plan, there may be deducted in computing the annuitant’s income for the taxation year in which the annuitant dies an amount not exceeding the amount determined, after all amounts payable out of or under the plan have been paid, by the formula
A – B
where
- A
- is the total of all amounts each of which is
(a) the amount deemed by subsection (8.8) to have been received by the annuitant as a benefit out of or under the plan,
(b) an amount (other than an amount described in paragraph (c)) received, after the death of the annuitant, by a taxpayer as a benefit out of or under the plan and included, because of subsection (8), in computing the taxpayer’s income, or
(c) a tax-paid amount in respect of the plan; and
- B
- is the total of all amounts paid out of or under the plan after the death of the annuitant.
Marginal note:Subsection (8.92) not applicable
(8.93) Except where the Minister has waived in writing the application of this subsection with respect to all or any portion of the amount determined in subsection (8.92) in respect of a registered retirement savings plan, that subsection does not apply if
(a) at any time after the death of the annuitant, a trust governed by the plan held a non-qualified investment; or
(b) the last payment out of or under the plan was made after the end of the year following the year in which the annuitant died.
(4) Subsection (1) applies to the 1997 and subsequent taxation years, except that in its application to the 1997 to 2007 taxation years, paragraph (b) of the definition “earned income” in subsection 146(1) of the Act, as enacted by subsection (1), is to be read without reference to “or subparagraph 56(1)(r)(v)”.
(5) Subsection (2) applies to the 2009 and subsequent taxation years.
(6) Subsection (3) applies in respect of a registered retirement savings plan in respect of which the last payment out of the plan is made after 2008.
52. (1) Paragraph (h) of the definition “regular eligible amount” in subsection 146.01(1) of the Act is replaced by the following:
(h) the total of the amount and all other eligible amounts received by the individual in the calendar year that includes the particular time does not exceed $25,000, and
(2) Paragraph (g) of the definition “supplemental eligible amount” in subsection 146.01(1) of the Act is replaced by the following:
(g) the total of the amount and all other eligible amounts received by the individual in the calendar year that includes the particular time does not exceed $25,000, and
(3) Subsections (1) and (2) apply to the 2009 and subsequent taxation years in respect of withdrawals made after January 27, 2009.
53. (1) Subparagraph (b)(ii) of the definition “qualifying arrangement” in subsection 146.2(1) of the Act is replaced by the following:
(ii) an annuity contract with an issuer that is a licensed annuities provider, or
(2) Subsections 146.2(3) to (9) of the Act are replaced by the following:
Marginal note:Paragraphs (2)(a), (b) and (e) not applicable
(3) The conditions in paragraphs (2)(a), (b) and (e) do not apply to the extent that they are inconsistent with subsection (4).
Marginal note:Using TFSA interest as security for a loan
(4) A holder of a TFSA may use the holder’s interest or, for civil law, right in the TFSA as security for a loan or other indebtedness if
(a) the terms and conditions of the indebtedness are terms and conditions that persons dealing at arm’s length with each other would have entered into; and
(b) it can reasonably be concluded that none of the main purposes for that use is to enable a person (other than the holder) or a partnership to benefit from the exemption from tax under this Part of any amount in respect of the TFSA.
Marginal note:TFSA
(5) If the issuer of an arrangement that is, at the time it is entered into, a qualifying arrangement files with the Minister, before March of the calendar year following the calendar year in which the arrangement was entered into, an election in prescribed form and manner to register the arrangement as a TFSA under the Social Insurance Number of the individual with whom the arrangement was entered into, the arrangement becomes a TFSA at the time the arrangement was entered into and ceases to be a TFSA at the earliest of the following times:
(a) the time at which the last holder of the arrangement dies;
(b) the time at which the arrangement ceases to be a qualifying arrangement; or
(c) the earliest time at which the arrangement is not administered in accordance with the conditions in subsection (2).
Marginal note:Trust not taxable
(6) No tax is payable under this Part by a trust that is governed by a TFSA on its taxable income for a taxation year, except that, if at any time in the taxation year, it carries on one or more businesses or holds one or more properties that are non-qualified investments (as defined in subsection 207.01(1)) for the trust, tax is payable under this Part by the trust on the amount that would be its taxable income for the taxation year if it had no incomes or losses from sources other than those businesses and properties, and no capital gains or capital losses other than from dispositions of those properties, and for that purpose,
(a) “income” includes dividends described in section 83; and
(b) the trust’s taxable capital gain or allowable capital loss from the disposition of a property is equal to its capital gain or capital loss, as the case may be, from the disposition.
Marginal note:Amount credited to a deposit
(7) An amount that is credited or added to a deposit that is a TFSA as interest or other income in respect of the TFSA is deemed not to be received by the holder of the TFSA solely because of that crediting or adding.
Marginal note:Trust ceasing to be a TFSA
(8) If an arrangement that governs a trust ceases, at a particular time, to be a TFSA,
(a) the trust is deemed
(i) to have disposed, immediately before the particular time, of each property held by the trust for proceeds equal to the property’s fair market value immediately before the particular time, and
(ii) to have acquired, at the particular time, each such property at a cost equal to that fair market value;
(b) the trust’s last taxation year that began before the particular time is deemed to have ended immediately before the particular time; and
(c) a taxation year of the trust is deemed to begin at the particular time.
Marginal note:Trust ceasing to be a TFSA on death of holder
(9) If an arrangement that governs a trust ceases to be a TFSA because of the death of the holder of the TFSA,
(a) the arrangement is deemed, for the purposes of subsections (6) and (8), any regulations made under subsection (13), the definition “trust” in subsection 108(1), paragraph 149(1)(u.2) and the definitions “qualified investment” and “non-qualified investment” in subsection 207.01(1), to continue to be a TFSA until, and to cease to be a TFSA immediately after, the exemption-end time, being in this subsection the earlier of
(i) the time at which the trust ceases to exist, and
(ii) the end of the first calendar year that begins after the holder dies;
(b) there shall be included in computing a taxpayer’s income for a taxation year the total of all amounts each of which is an amount determined by the formula
A – B
where
- A
- is the amount of a payment made out of or under the trust, in satisfaction of all or part of the taxpayer’s beneficial interest in the trust, in the taxation year, after the holder’s death and at or before the exemption-end time, and
- B
- is an amount designated by the trust not exceeding the lesser of
(i) the amount of the payment, and
(ii) the amount by which the fair market value of all of the property held by the trust immediately before the holder’s death exceeds the total of all amounts each of which is the value of B in respect of any other payment made out of or under the trust; and
(c) there shall be included in computing the trust’s income for its first taxation year, if any, that begins after the exemption-end time the amount determined by the formula
A – B
where
- A
- is the fair market value of all of the property held by the trust at the exemption-end time, and
- B
- is the amount by which the fair market value of all of the property held by the trust immediately before the holder’s death exceeds the total of all amounts each of which is the value of B in paragraph (b) in respect of a payment made out of or under the trust.
Marginal note:Annuity contract ceasing to be a TFSA
(10) If an annuity contract ceases, at a particular time, to be a TFSA,
(a) the holder of the TFSA is deemed to have disposed of the contract immediately before the particular time for proceeds equal to its fair market value immediately before the particular time;
(b) the contract is deemed to be a separate annuity contract issued and effected at the particular time otherwise than pursuant to or as a TFSA; and
(c) each person who has an interest or, for civil law, a right in the separate annuity contract at the particular time is deemed to acquire the interest at the particular time at a cost equal to its fair market value at the particular time.
Marginal note:Deposit ceasing to be a TFSA
(11) If a deposit ceases, at a particular time, to be a TFSA,
(a) the holder of the TFSA is deemed to have disposed of the deposit immediately before the particular time for proceeds equal to its fair market value immediately before the particular time; and
(b) each person who has an interest or, for civil law, a right in the deposit at the particular time is deemed to acquire the interest at the particular time at a cost equal to its fair market value at the particular time.
Marginal note:Arrangement is TFSA only
(12) An arrangement that is a qualifying arrangement at the time it is entered into is deemed not to be a retirement savings plan, an education savings plan, a retirement income fund or a disability savings plan.
Marginal note:Regulations
(13) The Governor in Council may make regulations requiring issuers of TFSAs to file information returns in respect of TFSAs.
(3) Subsections (1) and (2) apply to the 2009 and subsequent taxation years.
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