Technical Tax Amendments Act, 2012 (S.C. 2013, c. 34)
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Assented to 2013-06-26
PART 5OTHER AMENDMENTS TO THE INCOME TAX ACT AND RELATED LEGISLATION
R.S., c. 1 (5th Supp.)Income Tax Act
177. (1) Subsection 15(1) of the Act is replaced by the following:
Marginal note:Benefit conferred on shareholder
15. (1) If, at any time, a benefit is conferred by a corporation on a shareholder of the corporation, on a member of a partnership that is a shareholder of the corporation or on a contemplated shareholder of the corporation, then the amount or value of the benefit is to be included in computing the income of the shareholder, member or contemplated shareholder, as the case may be, for its taxation year that includes the time, except to the extent that the amount or value of the benefit is deemed by section 84 to be a dividend or that the benefit is conferred on the shareholder
(a) where the corporation is resident in Canada at the time,
(i) by the reduction of the paid-up capital of the corporation,
(ii) by the redemption, acquisition or cancellation by the corporation of shares of its capital stock,
(iii) on the winding-up, discontinuance or reorganization of the corporation’s business, or
(iv) by way of a transaction to which subsection 88(1) or (2) applies;
(a.1) where the corporation is not resident in Canada at the time,
(i) by way of a distribution to which subsection 86.1(1) applies,
(ii) by a reduction of the paid-up capital of the corporation to which subclause 53(2)(b)(i)(B)(II) or subparagraph 53(2)(b)(ii) applies,
(iii) by the redemption, acquisition or cancellation by the corporation of shares of its capital stock, or
(iv) on the winding-up, or liquidation and dissolution, of the corporation;
(b) by the payment of a dividend or a stock dividend;
(c) by conferring, on all owners of common shares of the capital stock of the corporation at that time, a right in respect of each common share, that is identical to every other right conferred at that time in respect of each other such share, to acquire additional shares of the capital stock of the corporation, and, for the purposes of this paragraph,
(i) the shares of a particular class of common shares of the capital stock of the corporation are deemed to be property that is identical to the shares of another class of common shares of the capital stock of the corporation if
(A) the voting rights attached to the particular class differ from the voting rights attached to the other class, and
(B) there are no other differences between the terms and conditions of the classes of shares that could cause the fair market value of a share of the particular class to differ materially from the fair market value of a share of the other class, and
(ii) rights are not considered identical if the cost of acquiring the rights differs; or
(d) by an action to which paragraph 84(1)(c.1), (c.2) or (c.3) applies.
(2) Subsection 15(1.21) of the French version of the Act is replaced by the following:
Marginal note:Montant remis
(1.21) Pour l’application du paragraphe (1.2), le montant remis à un moment donné sur une dette émise par un débiteur s’entend au sens qui serait donné à cette expression par le paragraphe 80(1) si, à la fois :
a) la dette était une dette commerciale, au sens du paragraphe 80(1), émise par le débiteur;
b) il n’était pas tenu compte d’un montant inclus dans le calcul du revenu (autrement que par l’effet de l’alinéa 6(1)a)) en raison du règlement ou de l’extinction de la dette;
c) il n’était pas tenu compte des alinéas f) et h) de l’élément B de la formule figurant à la définition de montant remis au paragraphe 80(1);
d) il n’était pas tenu compte des alinéas 80(2)b) et q).
(3) Section 15 of the Act is amended by adding the following after subsection (1.3):
Marginal note:Interpretation — subsection (1)
(1.4) For the purposes of this subsection and subsection (1),
(a) a contemplated shareholder of a corporation is
(i) a person or partnership on whom a benefit is conferred by the corporation in contemplation of the person or partnership becoming a shareholder of the corporation, or
(ii) a member of a partnership on whom a benefit is conferred by the corporation in contemplation of the partnership becoming a shareholder of the corporation;
(b) a person or partnership that is (or is deemed by this paragraph to be) a member of a particular partnership that is a member of another partnership is deemed to be a member of the other partnership;
(c) a benefit conferred by a corporation on an individual is a benefit conferred on a shareholder of the corporation, a member of a partnership that is a shareholder of the corporation or a contemplated shareholder of the corporation — except to the extent that the amount or value of the benefit is included in computing the income of the individual or any other person — if the individual is an individual, other than an excluded trust in respect of the corporation, who does not deal at arm’s length with, or is affiliated with, the shareholder, member of the partnership or contemplated shareholder, as the case may be; and
(d) for the purposes of paragraph (c), an excluded trust in respect of a corporation is a trust in which no individual (other than an excluded trust in respect of the corporation) who does not deal at arm’s length with, or is affiliated with, a shareholder of the corporation, a member of a partnership that is a shareholder of the corporation or a contemplated shareholder of the corporation, is beneficially interested.
(4) Subsection 15(1.4) of the Act, as enacted by subsection (3), is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):
(e) if a non-resident corporation (in this paragraph referred to as the “original corporation”) governed by the laws of a foreign jurisdiction is divided under those laws into two or more non-resident corporations and, as a consequence of the division, a shareholder of the original corporation acquires at any time one or more shares of another corporation (in this paragraph referred to as the “new corporation”), the original corporation is deemed at that time to have conferred a benefit on the shareholder equal to the value at that time of the shares of the new corporation acquired by the shareholder except to the extent that any of subparagraphs (1)(a.1)(i) to (iii) and paragraph (1)(b) applies to the acquisition of the shares.
(5) The portion of subsection 15(2.1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Meaning of connected
(2.1) For the purposes of subsection (2), a person or partnership is connected with a shareholder of a particular corporation if that person or partnership does not deal at arm’s length with, or is affiliated with, the shareholder, unless, in the case of a person, that person is
(6) Subsections (1) and (3) apply in respect of benefits conferred on or after October 31, 2011.
(7) Subsection (2) applies to taxation years that end after February 21, 1994.
(8) Subsection (4) applies in respect of divisions of non-resident corporations that occur on or after October 24, 2012.
(9) Subsection (5) applies in respect of loans made and indebtedness arising after October 31, 2011.
178. (1) Subsection 18(1) of the Act is amended by striking out “and” at the end of paragraph (u), by adding “and” at the end of paragraph (v) and by adding the following after paragraph (v):
Marginal note:Underlying payments on qualified securities
(w) except as expressly permitted, an amount that is deemed by subsection 260(5.1) to have been received by another person as an amount described in any of paragraphs 260(5.1)(a) to (c).
(2) Paragraph 18(14)(c) of the Act is replaced by the following:
(c) the disposition is not a disposition that is deemed to have occurred by section 70, subsection 104(4), section 128.1, paragraph 132.2(3)(a) or (c) or subsection 138(11.3) or 149(10);
(3) Subsection (1) is deemed to have come into force on January 1, 2002.
(4) Subsection (2) applies to dispositions that occur after 1998.
179. (1) Subsection 18.1(15) of the Act is replaced by the following:
Marginal note:Non-application — risks ceded between insurers
(15) Subsections (2) to (13) do not apply to a taxpayer’s matchable expenditure in respect of a right to receive production if
(a) the expenditure is in respect of commissions, or other expenses, related to the issuance of an insurance policy for which all or a portion of a risk has been ceded to the taxpayer; and
(b) the taxpayer and the person to whom the expenditure is made, or is to be made, are both insurers who are subject to the supervision of
(i) the Superintendent of Financial Institutions, if the taxpayer or that person, as the case may be, is an insurer who is required by law to report to the Superintendent of Financial Institutions, or
(ii) the Superintendent of Insurance, or other similar officer or authority, of the province under whose laws the insurer is incorporated, in any other case.
Marginal note:Non-application — no rights, tax benefits or shelters
(16) Subsections (2) to (13) do not apply to a taxpayer’s matchable expenditure in respect of a right to receive production if
(a) no portion of the matchable expenditure can reasonably be considered to have been paid to another taxpayer, or to a person or partnership with whom the other taxpayer does not deal at arm’s length, to acquire the right from the other taxpayer;
(b) no portion of the matchable expenditure can reasonably be considered to relate to a tax shelter or a tax shelter investment (within the meaning assigned by subsection 143.2(1)); and
(c) none of the main purposes for making the matchable expenditure can reasonably be considered to have been to obtain a tax benefit for the taxpayer, a person or partnership with whom the taxpayer does not deal at arm’s length, or a person or partnership that holds, directly or indirectly, an interest in the taxpayer.
Marginal note:Revenue exception
(17) Paragraph (4)(a) does not apply in determining the amount for a taxation year that may be deducted in respect of a taxpayer’s matchable expenditure in respect of a right to receive production if
(a) before the end of the taxation year in which the matchable expenditure is made, the total of all amounts each of which is included in computing the taxpayer’s income for the year (other than any portion of any of those amounts that is the subject of a reserve claimed by the taxpayer for the year under this Act) in respect of the right to receive production that relates to the matchable expenditure exceeds 80% of the matchable expenditure; and
(b) no portion of the matchable expenditure can reasonably be considered to have been paid to another taxpayer, or to a person or partnership with whom the other taxpayer does not deal at arm’s length, to acquire the right from the other taxpayer.
(2) Subject to subsection (3), subsection (1) applies in respect of expenditures made by a taxpayer on or after September 18, 2001 in respect of a right to receive production, except if
(a) the expenditure was
(i) required to be made under a written agreement made by the taxpayer before September 18, 2001,
(ii) made under, or described in, the terms of a prospectus, preliminary prospectus or registration statement that was, before September 18, 2001, filed with a public authority in Canada in accordance with the securities legislation of Canada or of a province and, if required by law, accepted for filing by the public authority before September 18, 2001, or
(iii) made under, or described in, the terms of an offering memorandum distributed as part of an offering of securities if
(A) the memorandum contains a complete, or substantially complete, description of the securities contemplated in the offering as well as the terms and conditions of the offering,
(B) the memorandum was distributed before September 18, 2001,
(C) solicitations in respect of a sale of the securities contemplated in the offering were made before September 18, 2001, and
(D) the sale of the securities contemplated in the offering was substantially in accordance with the memorandum;
(b) the expenditure was made before 2002;
(c) the expenditure was made in consideration for services that were rendered in Canada before 2002 in respect of an activity, or a business, all or substantially all of which was carried on in Canada;
(d) there is no agreement or other arrangement under which the obligation of any taxpayer in respect of the expenditure can, on or after September 18, 2001, be changed, reduced or waived if there is a change to, or an adverse assessment under, the Act;
(e) if the right to receive production is, or is related to, a tax shelter investment, a tax shelter identification number in respect of the tax shelter was obtained before September 18, 2001; and
(f) if the expenditure was made under, or described in, the terms of a document that is a prospectus, a preliminary prospectus, a registration statement or an offering memorandum (and regardless of whether the expenditure was also made under a written agreement)
(i) all of the funds raised pursuant to the document that may reasonably be used to make a matchable expenditure were received by the taxpayer before 2002,
(ii) all or substantially all of the securities distributed pursuant to the document for the purpose of raising the funds described in subparagraph (i) were acquired before 2002 by a person who is not
(A) a promoter, or an agent of a promoter, of the securities, other than an agent of the promoter who acquired the security as principal and not for resale,
(B) a vendor of the right to receive production,
(C) a broker or dealer in securities, other than a person who acquired the security as principal and not for resale, or
(D) a person who does not deal at arm’s length with a person to whom clause (A) or (B) applies, and
(iii) all or substantially all of the funds raised pursuant to the document before 2002 were used to make expenditures that were required to be made pursuant to agreements in writing made before September 18, 2001.
(3) Subsection (1) does not apply to an expenditure made by a taxpayer in respect of a right to receive production in respect of a particular film or video production if
(a) expenditures in respect of the particular film or video production
(i) were made before September 18, 2001 (as determined, for the purpose of this paragraph, without reference to subsection 143.2(10) of the Act, except if a repaid amount for the purposes of that subsection is paid after 2002), or
(ii) were required to be made by the taxpayer under a written agreement made before September 18, 2001 by the taxpayer;
(b) principal photography of the particular film or video production
(i) began before 2002,
(ii) was primarily completed before April 2002, and
(iii) was conducted primarily in Canada;
(c) the expenditure
(i) was made before April 2002 in the course of the taxpayer’s business of providing film production services in respect of the particular film or video production (as determined for the purpose of this subparagraph without reference to subsection 143.2(10) of the Act, except to the extent that a repaid amount for the purposes of that subsection is paid after 2002),
(ii) was made under, or described in, the terms of
(A) a prospectus, preliminary prospectus or registration statement that was, before September 18, 2001, filed with a public authority in Canada in accordance with the securities legislation of Canada or of a province and, if required by law, accepted for filing by the public authority before September 18, 2001, or
(B) an offering memorandum distributed as part of an offering of securities if
(I) the memorandum contains a complete, or substantially complete, description of the securities contemplated in the offering as well as the terms and conditions of the offering,
(II) the memorandum was distributed before September 18, 2001,
(III) solicitations in respect of a sale of the securities contemplated in the offering have been made before September 18, 2001, and
(IV) the sale of the securities contemplated in the offering was substantially in accordance with the memorandum, and
(iii) was not an amount in respect of advertising, marketing, promotion or market research;
(d) except where the particular film or video production is a designated production of the taxpayer, at least 75% of the total of all expenditures, each of which is an expenditure made by the taxpayer in the course of the business referred to in subparagraph (c)(i), is an expenditure described for the purpose of that subparagraph made in consideration for the supply of goods or services that are supplied or rendered in Canada before April 2002 by persons that are subject to tax on the expenditure under Part I or XIII of the Act;
(e) there is no agreement or other arrangement under which the obligation of any taxpayer to acquire a security distributed pursuant to the prospectus, preliminary prospectus, registration statement or offering memorandum can, after September 18, 2001, be changed, reduced or waived if there is a change to, or an adverse assessment under, the Act;
(f) if the right to receive production is, or is related to, a tax shelter investment, a tax shelter identification number in respect of the tax shelter was obtained before September 18, 2001;
(g) all of the funds raised pursuant to the prospectus, preliminary prospectus, registration statement or offering memorandum that may reasonably be used to make a matchable expenditure before April 2002 in respect of the particular film or video production are received by the taxpayer before 2003;
(h) all of the securities distributed pursuant to the prospectus, preliminary prospectus, registration statement or offering memorandum for the purpose of raising the funds described in paragraph (g) were acquired before 2002;
(i) all or substantially all of the securities distributed pursuant to the prospectus, preliminary prospectus, registration statement or offering memorandum for the purpose of raising the funds described in paragraph (g) were acquired by a person who is not
(i) a promoter, or an agent of a promoter, of the securities, other than an agent of the promoter who acquired the security as principal and not for resale,
(ii) a vendor of the right to receive production,
(iii) a broker or dealer in securities, other than a person who acquired the security as principal and not for resale, or
(iv) a person who does not deal at arm’s length with a person referred to in subparagraph (i) or (ii); and
(j) except where the particular film or video production is a designated production of the taxpayer, all or substantially all of the matchable expenditures made by the taxpayer that are wholly attributable to the principal photography of the particular film or video production are wholly attributable to principal photography conducted in Canada.
(4) For the purpose of paragraphs (3)(d) and (j), a designated production of a taxpayer is
(a) a film or video production in respect of which
(i) all of the expenditures made by the taxpayer in respect of the particular film or video production were required to be made under a written agreement made by the taxpayer before September 18, 2001,
(ii) if the taxpayer is a partnership,
(A) the taxpayer’s expenditures in respect of the particular film or video production were funded, in whole or in part, with funds raised from the initial contribution of capital of members of the taxpayer, pursuant to subscriptions in writing for the issue of units in the taxpayer,
(B) all or substantially all of those written subscriptions were received by the taxpayer on or before September 18, 2001,
(C) at least one member of the taxpayer referred to in subparagraph (i) is a partnership (in this subsection referred to as a “master partnership”),
(D) the subscriptions in writing of all master partnerships for units in the taxpayer were funded, in whole or in part, with funds raised from the initial contribution of capital of members of the master partnerships, pursuant to subscriptions in writing for the issue of units in the master partnerships, and
(E) all or substantially all of the subscriptions in writing referred to in clause (D) were received by the master partnership on or before September 18, 2001,
(iii) if a member of a particular master partnership is a partnership (in this subsection referred to as an “original master partnership”),
(A) the subscriptions in writing of all original master partnerships for units in the particular master partnership were funded, in whole or in part, with funds raised from the initial contribution of capital of members of the original master partnerships, pursuant to subscriptions in writing for the issue of units in the original master partnerships, and
(B) all or substantially all of those written subscriptions were received by the original master partnership on or before September 18, 2001, and
(iv) no member of an original master partnership is a partnership, an interest in which is a tax shelter; or
(b) a film or video production in respect of which
(i) principal photography was all or substantially all complete before September 18, 2001, and
(ii) all or substantially all of the taxpayer’s expenditures were made on or before September 18, 2001 (as determined, for the purpose of this paragraph, without reference to subsection 143.2(10) of the Act, except if a repaid amount for the purposes of that subsection is paid after 2002).
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