Sustaining Canada’s Economic Recovery Act (S.C. 2010, c. 25)

Assented to 2010-12-15

Sustaining Canada’s Economic Recovery Act

S.C. 2010, c. 25

Assented to 2010-12-15

A second Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures

SUMMARY

Part 1 of this enactment implements a number of income tax measures proposed in the March 4, 2010 Budget. In particular it

  • (a) allows for the sharing of the Canada Child Tax Benefit, the Universal Child Care Benefit and the Goods and Services Tax/Harmonized Sales Tax credit for eligible shared custody parents;

  • (b) allows Registered Retirement Savings Plan proceeds to be transferred to a Registered Disability Savings Plan on a tax-deferred basis;

  • (c) implements disbursement quota reform for registered charities;

  • (d) better targets the tax incentives in place for employee stock options;

  • (e) expands the availability of accelerated capital cost allowance for clean energy generation;

  • (f) adjusts the capital cost allowance rate for television set-top boxes to better reflect the useful life of these assets;

  • (g) clarifies the definition of a principal-business corporation for the purposes of the rules relating to Canadian Renewable and Conservation Expenses;

  • (h) introduces amendments that are consequential to the introduction in 2011 of new International Financial Reporting Standards by the Accounting Standards Board; and

  • (i) amends the Canada Pension Plan, the Employment Insurance Act and the Income Tax Act to provide legislative authority for the Canada Revenue Agency to issue online notices if the taxpayer so requests.

Part 1 also implements income tax measures that were previously announced regarding:

  • (a) rules to facilitate the implementation of Employee Life and Health Trusts, released in draft form on February 26, 2010;

  • (b) indexing of the working income tax benefit announced in the 2009 Budget;

  • (c) technical changes concerning TFSAs announced on October 16, 2009; and

  • (d) an amendment to the rules regarding labour sponsored venture capital corporations that are consequential to the introduction of TFSAs.

Part 2 amends the Air Travellers Security Charge Act, the Excise Act, 2001, the Excise Tax Act and the New Harmonized Value-added Tax System Regulations to provide legislative authority for the Canada Revenue Agency to issue online notices if the taxpayer so requests.

Part 2 also amends the Air Travellers Security Charge Act, the Excise Act, the Excise Act, 2001, the Excise Tax Act, the Brewery Departmental Regulations and the Brewery Regulations to allow certain small remitters to file and remit semi-annually rather than monthly.

Finally, Part 2 amends the Air Travellers Security Charge Act and the Excise Tax Act to extend the protection from civil liability claims that is already provided under the Income Tax Act and other federal statutes to agents of the Crown who collect the Goods and Services Tax/Harmonized Sales Tax and the air travellers security charge in intended compliance with their statutory obligations.

Part 3 amends the Federal-Provincial Fiscal Arrangements Act to facilitate the sharing of taxes under Part I.01 and Part X.5 of the Income Tax Act with provinces and territories.

Part 4 amends the Bank Act and the Financial Consumer Agency of Canada Act to require that banks belong to an approved external complaints body and to authorize the Governor in Council to prescribe the approval requirement for that body. The amendments also assign the responsibility for managing the approval process and supervising the approved external complaints bodies to the Financial Consumer Agency of Canada.

Part 5 amends the Canada Disability Savings Act to allow a 10-year carry forward of Canada Disability Savings Grant and Canada Disability Savings Bond entitlements.

Part 6 amends section 11.1 of the Customs Act to exempt from the User Fees Act fees that are charged for expedited border clearance programs and that are coordinated with international partners.

Part 7 amends the Federal-Provincial Fiscal Arrangements Act to implement the total transfer protection for 2010-11, to set out the treatment of the one-time transfer protection payment under the fiscal stabilization program, update legislative references made in the fiscal stabilization provisions and give greater clarity to the calculation of the fiscal stabilization payment.

Part 8 amends the Office of the Superintendent of Financial Institutions Act. In particular, the Act is amended to

  • (a) harmonize the assessment of costs associated with the administration of the Pension Benefits Standards Act, 1985 with the regime in place for the assessment of costs associated with the administration of laws governing financial institutions; and

  • (b) allow the Superintendent to remit assessments, interim assessments and penalties and to write off certain debts.

Part 9 amends the Pension Benefits Standards Act, 1985. In particular, the Act is amended to

  • (a) authorize the Minister of Finance to enter into an agreement with the provinces respecting pension plans that are subject to the pension legislation of more than one jurisdiction;

  • (b) authorize the Minister of Finance to designate an entity for the purposes of receiving, holding and disbursing the pension benefit credit of any person who cannot be located;

  • (c) permit information to be provided in electronic form, including information provided by the administrator of a pension plan to members or to the Superintendent;

  • (d) allow the administrator of a pension plan to offer investment options with respect to accounts maintained in respect of a defined contribution provision or accounts maintained for additional voluntary contributions;

  • (e) provide rules regarding negotiated contribution plans;

  • (f) require consent of a member’s spouse or common-law partner before the transfer of the member’s pension benefit credit to a retirement savings plan; and

  • (g) authorize the Superintendent to direct the administrator of a pension plan that is subject to the pension legislation of more than one jurisdiction to establish a separate pension plan for certain members, former members and survivors.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Marginal note:Short title

 This Act may be cited as the Sustaining Canada’s Economic Recovery Act.

PART 1AMENDMENTS TO THE INCOME TAX ACT AND RELATED ACTS AND REGULATIONS

R.S., c. 1 (5th Supp.)Income Tax Act

  •  (1) Subparagraph 6(1)(a)(i) of the Income Tax Act is replaced by the following:

    • (i) derived from the contributions of the taxpayer’s employer to or under a deferred profit sharing plan, an employee life and health trust, a group sickness or accident insurance plan, a group term life insurance policy, a private health services plan, a registered pension plan or a supplementary unemployment benefit plan,

  • (2) Paragraph 6(1)(f) of the Act is amended by striking out “or” at the end of subparagraph (ii), by adding “or” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

    • (iii.1) a plan described in any of subparagraphs (i) to (iii) that is administered or provided by an employee life and health trust,

  • (3) Paragraph 6(1)(g) of the Act is amended by striking out “or” at the end of subparagraph (ii), by adding “or” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

    • (iv) a designated employee benefit (as defined in subsection 144.1(1));

  • (4) Subsections (1) to (3) apply after 2009.

  •  (1) The portion of subsection 7(1) of the Act before paragraph (a) is replaced by the following:

    Marginal note:Agreement to issue securities to employees
    • 7. (1) Subject to subsection (1.1), where a particular qualifying person has agreed to sell or issue securities of the particular qualifying person (or of a qualifying person with which the particular qualifying person does not deal at arm’s length) to an employee of the particular qualifying person (or of a qualifying person with which the particular qualifying person does not deal at arm’s length),

  • (2) Subsection 7(1) of the Act is amended by adding the following after paragraph (b):

    • (b.1) if the employee has transferred or otherwise disposed of rights under the agreement in respect of some or all of the securities to the particular qualifying person (or a qualifying person with which the particular qualifying person does not deal at arm’s length) with whom the employee was not dealing at arm’s length, a benefit equal to the amount, if any, by which

      • (i) the value of the consideration for the disposition

      exceeds

      • (ii) the amount, if any, paid by the employee to acquire those rights

      is deemed to have been received, in the taxation year in which the employee made the disposition, by the employee because of the employee’s employment;

  • (3) Subsection 7(1) of the Act is amended by adding the following after paragraph (d):

    • (d.1) if rights of the employee under the agreement have, by one or more transactions between persons not dealing at arm’s length, become vested in a particular person who has transferred or otherwise disposed of rights under the agreement to a particular qualifying person (or a qualifying person with which the particular qualifying person does not deal at arm’s length) with whom the particular person was not dealing at arm’s length, a benefit equal to the amount, if any, by which

      • (i) the value of the consideration for the disposition

      exceeds

      • (ii) the amount, if any, paid by the employee to acquire those rights

      is deemed to have been received, in the taxation year in which the particular person made the disposition, by the employee because of the employee’s employment, unless at the time of the disposition the employee was deceased, in which case such a benefit is deemed to have been received by the particular person in that year as income from the duties of an employment performed by the particular person in that year in the country in which the employee primarily performed the duties of the employee’s employment; and

  • (4) Subsection 7(1.3) of the Act is replaced by the following:

    • Marginal note:Order of disposition of securities

      (1.3) For the purposes of this subsection, subsection (1.1), subdivision c, paragraph 110(1)(d.01), subparagraph 110(1)(d.1)(ii) and subsections 110(2.1) and 147(10.4), and subject to subsection (1.31), a taxpayer is deemed to dispose of securities that are identical properties in the order in which the taxpayer acquired them and, for this purpose,

      • (a) if a taxpayer acquires a particular security (other than under circumstances to which subsection (1.1) or 147(10.1) applies) at a time when the taxpayer also acquires or holds one or more other securities that are identical to the particular security and are, or were, acquired under circumstances to which subsection (1.1) or 147(10.1) applied, the taxpayer is deemed to have acquired the particular security at the time immediately preceding the earliest of the times at which the taxpayer acquired those other securities; and

      • (b) if a taxpayer acquires, at the same time, two or more identical securities under circumstances to which subsection (1.1) applied, the taxpayer is deemed to have acquired the securities in the order in which the agreements under which the taxpayer acquired the rights to acquire the securities were made.

  • (5) Paragraph 7(1.5)(a) of the Act is replaced by the following:

    • (a) a taxpayer disposes of or exchanges securities of a particular qualifying person that were acquired by the taxpayer under circumstances to which subsection (1.1) applied (in this subsection referred to as the “exchanged securities”),

  • (6) Subsection 7(1.7) of the Act is replaced by the following:

    • Marginal note:Rights ceasing to be exercisable

      (1.7) For the purposes of subsections (1) and 110(1), if a taxpayer receives at a particular time one or more particular amounts in respect of rights of the taxpayer to acquire securities under an agreement referred to in subsection (1) ceasing to be exercisable in accordance with the terms of the agreement, and the cessation would not, if this Act were read without reference to this subsection, constitute a transfer or disposition of those rights by the taxpayer,

      • (a) the taxpayer is deemed to have disposed of those rights at the particular time to a person with whom the taxpayer was dealing at arm’s length and to have received the particular amounts as consideration for the disposition; and

      • (b) for the purpose of determining the amount, if any, of the benefit that is deemed to have been received as a consequence of the disposition referred to in paragraph (a), the taxpayer is deemed to have paid an amount to acquire those rights equal to the amount, if any, by which

        • (i) the amount paid by the taxpayer to acquire those rights (determined without reference to this subsection)

        exceeds

        • (ii) the total of all amounts each of which is an amount received by the taxpayer before the particular time in respect of the cessation.

  • (7) The portion of subsection 7(7) of the Act before the definition “qualifying person” is replaced by the following:

    • Marginal note:Definitions

      (7) The following definitions apply in this section and in subsection 47(3), paragraphs 53(1)(j) and 110(1)(d) and (d.01) and subsections 110(1.1), (1.2), (1.5), (1.6) and (2.1).

  • (8) Subsections 7(8) and (9) of the Act are repealed.

  • (9) Section 7 of the Act is amended by adding the following after subsection (9):

    • Marginal note:Reorganization

      (9.1) If, in the course of a reorganization that gives rise to a dividend that would, in the absence of paragraph 55(3)(b), be subject to subsection 55(2), rights to acquire securities listed on a designated stock exchange (referred to in this subsection as “public options”) under an agreement to sell or issue securities referred to in subsection (1) are exchanged for rights to acquire securities that are not listed on a designated stock exchange (referred to in this subsection as “private options”), and the private options are subsequently exchanged for public options, the private options are deemed to be rights to acquire shares that are listed on a designated stock exchange for the purposes of subparagraph 7(9)(d)(ii).

  • (10) Subsection 7(9.1) of the Act, as enacted by subsection (9), and subsections (10) to (15) of the Act are repealed.

  • (11) Subsections (1), (4) to (8) and (10) apply in respect of rights exercised after 4:00 p.m. Eastern Standard Time, March 4, 2010.

  • (12) Subsections (2) and (3) apply to dispositions of rights occurring after 4:00 p.m. Eastern Standard Time, March 4, 2010.

  • (13) Subsection (9) applies after 1999 and before 4:00 p.m. Eastern Standard Time, March 4, 2010, except that, for the period before December 14, 2007, the reference in subsection 7(9.1) of the Act, as enacted by subsection (9), to “designated stock exchange” shall be read as a reference to “prescribed stock exchange”.

  •  (1) Paragraph 12(1)(z.5) of the Act is replaced by the following:

    • Marginal note:TFSA amounts

      (z.5) any amount required by subsection 146.2(9) or section 207.061 to be included in computing the taxpayer’s income for the year; and

  • (2) Subsection (1) applies after October 16, 2009.

  •  (1) Subsection 18(1) of the Act is amended by adding the following after paragraph (l):

    • Marginal note:Limitation re employee stock option expenses

      (m) an amount in respect of which an election was made by or on behalf of the taxpayer under subsection 110(1.1);

  • (2) Subsection 18(1) of the Act is amended by adding the following after paragraph (o.2):

    • Marginal note:Employee life and health trust

      (o.3) except as expressly permitted by paragraph 20(1)(s), contributions to an employee life and health trust;

  • (3) Paragraph 18(9)(a) of the Act is amended by striking out “or” at the end of subparagraph (ii), by adding “or” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

    • (iv) subject to clause (iii)(B) and subsections 144.1(4) to (7), as consideration for a “designated employee benefit” (as defined in subsection 144.1(1)) to be provided after the end of the year (other than consideration payable in the year, to a corporation that is licensed to provide insurance, for insurance coverage in respect of the year);

  • (4) Subsection (1) applies in respect of transfers or dispositions of rights occurring after 4:00 p.m. Eastern Standard Time, March 4, 2010.

  • (5) Subsections (2) and (3) apply after 2009.

 
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