Technical Tax Amendments Act, 2012 (S.C. 2013, c. 34)

Assented to 2013-06-26

  •  (1) Paragraph 5908(10)(a) of the Regulations, as enacted by Part 2, is amended by adding the following after subparagraph (iii):

    • (iii.1) any amount included in computing the hybrid surplus or hybrid deficit of the affiliate before that time that may reasonably be considered to relate to a capital gain of the partnership,

  • (2) Paragraph 5908(10)(b) of the Regulations, as enacted by Part 2, is amended by adding the following after subparagraph (iii):

    • (iii.1) any amount included in computing the hybrid surplus or hybrid deficit of the affiliate before that time that may reasonably be considered to relate to a capital loss of the partnership,

  • (3) Section 5908 of the Regulations, as enacted by Part 2, is amended by adding the following after subsection (12):

    • (13) For the purposes of clauses 5907(2.9)(a)(i)(B) and (ii)(B), the amount determined under this subsection is, subject to subsection (14), the amount determined by the formula

      A × B/C

      where

      A 
      is
      • (a) if clause 5907(2.9)(a)(i)(B) applies, the amount determined under clause 5907(2.9)(a)(i)(A), and

      • (b) if clause 5907(2.9)(a)(ii)(B) applies, the amount determined under clause 5907(2.9)(a)(ii)(A),

      B 
      is the affiliate’s direct or indirect share of the partnership’s income or loss for the preceding taxation year, and
      C 
      is the partnership’s income or loss for the preceding taxation year.
    • (14) For the purposes of subsection (13), if both the income and loss of the partnership for the preceding taxation year are nil, the descriptions of B and C in the formula in that subsection are to be applied as if the partnership had income for that year in the amount of $1,000,000.

  • (4) Subsections (1) and (2) are deemed to have come into force on August 20, 2011.

  • (5) Subsection (3) applies in respect of taxation years of a foreign affiliate of a taxpayer that begin after December 20, 2002. However, if the taxpayer has elected under paragraph 70(29)(b), the following rules apply in respect of taxation years of the foreign affiliate that begin after 1994 and before December 21, 2002:

    • (a) the reference to “5908(13)” in clauses 5907(2.9)(a)(i)(B) and (ii)(B) of the Regulations, as enacted by subsection 85(38), is to be read as a reference to “5907.1(1)”; and

    • (b) the Income Tax Regulations are to be read as if they contained a section that reads as follows

      • 5907.1 (1) For the purposes of clauses 5907(2.9)(a)(i)(B) and (ii)(B), the amount determined under this subsection is, subject to subsection (2), the amount determined by the formula

        A × B/C

        where

        A 
        is
        • (a) if clause 5907(2.9)(a)(i)(B) applies, the amount determined under clause 5907(2.9)(a)(i)(A), and

        • (b) if clause 5907(2.9)(a)(ii)(B) applies, the amount determined under clause 5907(2.9)(a)(ii)(A);

        B 
        is the affiliate’s direct or indirect share of the partnership’s income or loss for the preceding taxation year; and
        C 
        is the partnership’s income or loss for the preceding taxation year.
      • (2) For the purposes of subsection (1), if both the income and loss of the partnership for the preceding taxation year are nil, the descriptions of B and C in the formula in that subsection are to be applied as if the partnership had income for that year in the amount of $1,000,000.

  •  (1) The description of B in paragraph 5910(1)(a) of the Regulations, as enacted by Part 2, is replaced by the following:

    B 
    is the affiliate’s earnings from the business for the particular year, and
  • (2) Subsection 5910(3) of the Regulations, as enacted by Part 2, is repealed.

  • (3) Subsections (1) and (2) apply in respect of taxation years of a foreign affiliate of a taxpayer that end after August 19, 2011.

  •  (1) The Regulations are amended by adding the following after section 5910, as enacted by Part 2:

    • 5911. (1) A listed election is to be made by the taxpayer and, if applicable, the disposing affiliate by so notifying the Minister in writing on or before

      • (a) if the taxpayer is a partnership, the earliest of the filing-due dates of any member of the partnership for the member’s taxation year that includes the last day of the partnership’s fiscal period that includes the last day of the foreign affiliate’s taxation year that includes the time of distribution of a distributed property; and

      • (b) in any other case, the taxpayer’s filing-due date for its taxation year that includes the last day of the foreign affiliate’s taxation year that includes the time of distribution of a distributed property.

    • (2) For the purposes of subsection (1), a listed election is any of the following:

      • (a) an election by the taxpayer under subsection 88(3.1) of the Act in respect of a liquidation and dissolution of a disposing affiliate;

      • (b) an election by the taxpayer under subsection 88(3.3) of the Act in respect of a distribution of distributed property; and

      • (c) a joint election by the taxpayer and a disposing affiliate under subsection 88(3.5) of the Act in respect of a distribution of distributed property.

    • (3) Subsection (4) applies if

      • (a) a taxpayer has made an election (referred to in this subsection and subsection (4) as the “initial election”) under subsection 88(3.3) of the Act in respect of a distribution of distributed property on or before the filing-due date specified in subsection (1);

      • (b) the taxpayer made reasonable efforts to determine all amounts, in respect of the disposing affiliate, that may reasonably be considered to be relevant in making the claim under the initial election; and

      • (c) the taxpayer amends the initial election on or before the day that is 10 years after the filing-due date referred to in paragraph (a).

    • (4) If this subsection applies and, in the opinion of the Minister, the circumstances are such that it would be just and equitable to permit the initial election to be amended, the amended election under paragraph (3)(c) is deemed to have been made on the day on which the initial election was made and the initial election is deemed not to have been made.

    • (5) An election under the definition “relevant cost base” in subsection 95(4) of the Act in respect of a property of a foreign affiliate of a taxpayer, in respect of the taxpayer, is to be made by the taxpayer by so notifying the Minister in writing on or before

      • (a) if the taxpayer is a partnership, the earliest of the filing-due dates of any member of the partnership for the member’s taxation year that includes the last day of the partnership’s fiscal period that includes the last day of the foreign affiliate’s taxation year in which the determination of the relevant cost base of the property, in respect of the taxpayer, is relevant; and

      • (b) in any other case, the taxpayer’s filing-due date for its taxation year that includes the last day of the foreign affiliate’s taxation year in which the determination of the relevant cost base of the property, in respect of the taxpayer, is relevant.

    • (6) An election, or joint election, as the case may be, under subsection 90(3) of the Act in respect of a distribution made by a foreign affiliate of a taxpayer is to be made by the taxpayer, or by the taxpayer and each connected person or partnership referred to in that subsection, as the case may be, by so notifying the Minister in writing on or before

      • (a) in the case of an election by the taxpayer,

        • (i) if the taxpayer is a partnership, the earliest of the filing-due dates of any member of the partnership for the member’s taxation year that includes the last day of the partnership’s fiscal period in which the distribution was made, and

        • (ii) in any other case, the taxpayer’s filing-due date for its taxation year that includes the last day of the foreign affiliate’s taxation year in which the distribution was made; and

      • (b) in the case of a joint election, the earliest of the filing-due dates that would be determined under paragraph (a) for each taxpayer that is required to make the joint election if there were no connected persons or partnerships in respect of the taxpayer.

  • (2) Subsections 5911(1) to (4) of the Regulations, as enacted by subsection (1), apply in respect of liquidations and dissolutions of foreign affiliates of a taxpayer that begin after February 27, 2004. However, any listed election referred to in that subsection 5911(1) that would otherwise be required to be filed with the Minister of National Revenue before the day that is 120 days after the day on which this Act receives royal assent is deemed to have been filed with the Minister on a timely basis if it is filed with the Minister within 365 days after the day on which this Act receives royal assent.

  • (3) Subsection 5911(5) of the Regulations, as enacted by subsection (1), applies in respect of determinations in respect of which subsection 70(22) applies. However, any election referred to in that subsection 5911(5) that would otherwise be required to be filed with the Minister of National Revenue before the day that is 120 days after the day on which this Act receives royal assent is deemed to have been filed with the Minister on a timely basis if it is filed with the Minister within 365 days after the day on which this Act receives royal assent.

  • (4) Subsection 5911(6) of the Regulations, as enacted by subsection (1), applies in respect of distributions made after August 19, 2011. However, any election referred to in that subsection 5911(6) that would otherwise be required to be filed with the Minister of National Revenue before the day that is 120 days after the day on which this Act receives royal assent is deemed to have been filed with the Minister on a timely basis if it is filed with the Minister within 365 days after the day on which this Act receives royal assent.

Elections and Assessments

 If the taxpayer referred to in any election provided for under this Part is a partnership, any reference in those elections to “the taxpayer’s filing-due date” is to be read as a reference to “the earliest of the filing-due dates of any member of the taxpayer”.

 Any assessment of a taxpayer’s tax, interest and penalties payable under the Act for any taxation year that ends before the day on which this Act receives royal assent that would, in the absence of this section, be precluded because of subsections 152(4) to (5) of the Act shall be made to the extent necessary to take into account sections 54 to 89.

PART 4R.S., c. 1 (5th Supp.)AMENDMENTS TO THE INCOME TAX ACT RELATED TO BIJURALISM

  •  (1) Subparagraph 12(1)(x)(viii) of the Income Tax Act is replaced by the following:

    • (viii) may not reasonably be considered to be a payment made in respect of the acquisition by the payer or the public authority of an interest in the taxpayer, an interest in, or for civil law a right in, the taxpayer’s business or an interest in, or for civil law a real right in, the taxpayer’s property;

  • (2) Subsection 12(4) of the Act is replaced by the following:

    • Marginal note:Interest from investment contract

      (4) Subject to subsection (4.1), if in a taxation year a taxpayer (other than a taxpayer to whom subsection (3) applies) holds an interest in, or for civil law a right in, an investment contract on any anniversary day of the contract, there shall be included in computing the taxpayer’s income for the year the interest that accrued to the taxpayer to the end of that day with respect to the investment contract, to the extent that the interest was not otherwise included in computing the taxpayer’s income for the year or any preceding taxation year.

  • (3) Subsections 12(9) and (9.1) of the Act are replaced by the following:

    • Marginal note:Deemed accrual

      (9) For the purposes of subsections (3), (4) and (11) and 20(14) and (21), if a taxpayer acquires an interest in, or for civil law a right in, a prescribed debt obligation, an amount determined in prescribed manner is deemed to accrue to the taxpayer as interest on the obligation in each taxation year during which the taxpayer holds the interest or the right in the obligation.

    • Marginal note:Exclusion of proceeds of disposition

      (9.1) If a taxpayer disposes of an interest in, or for civil law a right in, a debt obligation that is a debt obligation in respect of which the proportion of the payments of principal to which the taxpayer is entitled is not equal to the proportion of the payments of interest to which the taxpayer is entitled, the portion of the proceeds of disposition received by the taxpayer that can reasonably be considered to represent a recovery of the cost to the taxpayer of the interest or the right in the debt obligation shall, notwithstanding any other provision of this Act, not be included in computing the taxpayer’s income, and for the purpose of this subsection, a debt obligation includes, for greater certainty, all of the issuer’s obligations to pay principal and interest under that obligation.

  • (4) Paragraph (i) of the definition “investment contract” in subsection 12(11) of the Act is replaced by the following:

    • (i) an obligation in respect of which the taxpayer has (otherwise than because of subsection (4)) at periodic intervals of not more than one year, included, in computing the taxpayer’s income throughout the period in which the taxpayer held an interest in, or for civil law a right in, the obligation, the income accrued on it for those intervals,

 
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