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
C.R.C., c. 945Income Tax Regulations
379. (1) Subparagraph 309(1)(e)(i) of the Regulations is replaced by the following:
(i) policy dividends or other distributions of the life insurer’s income from its participating life insurance business, or
(2) Subsection (1) applies to taxation years that begin after October 31, 2011.
380. (1) The Regulations are amended by adding the following after section 309:
Income from participating life insurance businesses
309.1 For the purpose of subparagraph 309(1)(e)(i), in computing a life insurer’s income for a taxation year from its participating life insurance business carried on in Canada,
(a) there shall be included the amount determined by the formula
A × B/C
where
- A
- is the insurer’s gross Canadian life investment income (in this section as defined in subsection 2400(1)) for the year,
- B
- is the total of
(i) the insurer’s mean maximum tax actuarial reserve (in this section as defined in subsection 2400(1)) for the year in respect of participating life insurance policies in Canada, and
(ii) 1/2 of the total of
(A) all amounts on deposit with the insurer as at the end of the year in respect of policies described in subparagraph (i), and
(B) all amounts on deposit with the insurer as at the end of the immediately preceding taxation year in respect of policies described in subparagraph (i), and
- C
- the total of all amounts, each of which is
(i) the insurer’s mean maximum tax actuarial reserve for the year in respect of a class of life insurance policies in Canada, or
(ii) 1/2 of the total of
(A) all amounts on deposit with the insurer as at the end of the year in respect of a class of policies described in subparagraph (i), and
(B) all amounts on deposit with the insurer as at the end of the immediately preceding taxation year in respect of a class of policies described in subparagraph (i);
(b) there shall be included
(i) the insurer’s maximum tax actuarial reserve for the immediately preceding taxation year in respect of participating life insurance policies in Canada, and
(ii) the maximum amount deductible by the insurer under subparagraph 138(3)(a)(ii) of the Act in computing its income for the immediately preceding taxation year in respect of participating life insurance policies in Canada;
(c) there shall not be included any amount in respect of the insurer’s participating life insurance policies in Canada that was deducted under subparagraph 138(3)(a)(i) or (ii) of the Act in computing its income for the immediately preceding taxation year;
(d) subject to paragraph (a),
(i) there shall not be included any amount
(A) as a reserve that was deducted under paragraph 20(1)(l) of the Act in computing the insurer’s income for the immediately preceding taxation year, or
(B) that was included in determining the insurer’s gross Canadian life investment income for the year, and
(ii) no deduction shall be made in respect of any amount
(A) taken into account in determining the insurer’s gross Canadian life investment income for the year, or
(B) deductible under paragraph 20(1)(l) of the Act in computing the insurer’s income for the year;
(e) there shall be deducted
(i) the insurer’s maximum tax actuarial reserve for the year in respect of participating life insurance policies in Canada, and
(ii) the maximum amount deductible by the insurer under subparagraph 138(3)(a)(ii) of the Act in computing its income for the year in respect of participating life insurance policies in Canada;
(f) no deduction shall be made in respect of any amount deductible under subparagraph 138(3)(a)(iii) of the Act in computing the insurer’s income for the year;
(g) except as otherwise provided in paragraph (e), no deduction shall be made in respect of a reserve deductible under subparagraph 138(3)(a)(i) or (ii) of the Act in computing the insurer’s income for the year; and
(h) except as otherwise provided in this section, the provisions of the Act relating to the computation of income from a source shall apply.
(2) Subsection (1) applies to taxation years that begin after October 31, 2011, except that if a taxpayer has deducted an amount under subparagraph 138(3)(a)(iv) of the Act, as it read in its application to the taxpayer’s last taxation year that began before November 1, 2011, in computing the taxpayer’s income for that taxation year, then for the taxpayer’s first taxation year that begins after October 31, 2011 paragraph 309.1(b) of the Regulations, as enacted by subsection (1), is to be read as follows:
(b) there shall be included
(i) the amount deducted by the insurer under subparagraph 138(3)(a)(iv) of the Act, as it read in its application to the insurer’s last taxation year that began on or before October 31, 2011, in computing its income for the immediately preceding taxation year,
(ii) the insurer’s maximum tax actuarial reserve for the immediately preceding taxation year in respect of participating life insurance policies in Canada, and
(iii) the maximum amount deductible by the insurer under subparagraph 138(3)(a)(ii) of the Act in computing its income for the immediately preceding taxation year in respect of participating life insurance policies in Canada;
381. (1) Paragraph 407(1)(b) of the Regulations is replaced by the following:
(b) that proportion of its taxable income for the year that three times the number of revenue plane miles flown by its aircraft during the year in the province is of the total of all amounts, each of which is the total number of revenue plane miles flown by its aircraft during the year in a province in which the corporation had a permanent establishment.
(2) Subsection (1) applies to taxation years that end after October 24, 2012.
382. (1) Paragraph 600(b) of the Regulations is replaced by the following :
(b) subsections 7(10), 13(4), (7.4) and (29), 14(6), 20(24), 44(1) and (6), 45(2) and (3), 50(1), 53(2.1), 56.4(13), 70(6.2), (9.01), (9.11), (9.21) and (9.31), 72(2), 73(1), 80.1(1), 82(3), 83(2), 104(5.3) and (14), 107(2.001), 143(2), 146.01(7), 146.02(7), 164(6) and (6.1), 184(3) and 256(9) of the Act;
(2) Paragraph 600(b) of the Regulations, as enacted by subsection (1), is replaced by the following:
(b) subsections 13(4), (7.4) and (29), 14(6), 20(24), 44(1) and (6), 45(2) and (3), 50(1), 53(2.1), 56.4(13), 70(6.2), (9.01), (9.11), (9.21) and (9.31), 72(2), 73(1), 80.1(1), 82(3), 83(2), 104(14), 107(2.001), 143(2), 146.01(7), 146.02(7), 164(6) and (6.1), 184(3) and 256(9) of the Act;
(3) Subsection (1) is deemed to have come into force on May 13, 2010.
(4) Subsection (2) is deemed to have come into force on November 1, 2011.
383. (1) Subsection 1100(1.13) of the Regulations is amended by adding the following after paragraph (a):
(a.1) notwithstanding paragraph (a), “exempt property” does not include property that is the subject of a lease if that property had, at the time the lease was entered into, an aggregate fair market value in excess of $1,000,000 and the lessee of the property is
(i) a person who is exempt from tax by reason of section 149 of the Act,
(ii) a person who uses the property in the course of carrying on a business, the income from which is exempt from tax under Part I of the Act by reason of any provision of the Act,
(iii) a Canadian government, or
(iv) a person not resident in Canada, except if the person uses the property primarily in the course of carrying on a business in Canada that is not a treaty-protected business;
(a.2) for the purposes of paragraph (a.1), if it is reasonable, having regard to all the circumstances, to conclude that one of the main reasons for the existence of two or more leases was to avoid the application of paragraph (a.1) by reason of each such lease being a lease of property where the property that was the subject of the lease had an aggregate fair market value, at the time the lease was entered into, not in excess of $1,000,000, each such lease shall be deemed to be a lease of property that had, at the time the lease was entered into, an aggregate fair market value in excess of $1,000,000;
(2) Subsection (1) applies to property that is the subject of a lease entered into after 4:00 p.m. Eastern Standard Time, March 4, 2010.
384. (1) Section 1101 of the Regulations is amended by adding the following after subsection (1af):
(1ag) If more than one property of a taxpayer is described in the same class in Schedule II, and one or more of the properties is a property in respect of which the taxpayer is a transferee that has elected under subsection 13(4.2) of the Act (each of which is referred to in this subsection as an “elected property”), a separate class is prescribed for each elected property of the taxpayer that would otherwise be included in the same class.
(2) Subsection (1) is deemed to have come into force on December 21, 2002.
385. (1) Subsection 1106(11) of the Regulations is replaced by the following:
(11) For the purpose of the definition “assistance” in subsection 125.4(1) of the Act, “prescribed amount” means an amount paid or payable to a taxpayer under the License Fee Program of the Canada Media Fund.
(2) Subsection (1) is deemed to have come into force on April 1, 2010.
386. (1) Subsection 1403(8) of the Regulations is replaced by the following:
(8) Subsections (9) and (10) apply to an insurer if
(a) in a taxation year of the insurer, there has been a disposition to the insurer by another person with whom the insurer was dealing at arm’s length in respect of which subsection 138(11.92) of the Act applied;
(b) as a result of the disposition, the insurer assumed obligations under life insurance policies (in this subsection and subsections (9) and (10) referred to as the “transferred policies”) in respect of which an amount may be claimed by the insurer as a reserve under paragraph 1401(1)(c) for the taxation year;
(c) the amount (referred to in this subsection and subsections (9) and (10) as the “reserve deficiency”) determined by the following formula is a positive amount:
(A – B) – C
where
- A
- is the total of all amounts received or receivable by the insurer from the other person in respect of the transferred policies,
- B
- is the total of all amounts paid or payable by the insurer to the other person in respect of commissions in respect of the amounts referred to in the description of A, and
- C
- is the total of the maximum amounts that may be claimed by the insurer as a reserve under 1401(1)(c) (determined without reference to this subsection) in respect of the transferred policies for the taxation year; and
(d) the reserve deficiency can reasonably be attributed to the fact that the rates of interest, mortality or policy lapse used by the issuer of the transferred policies in determining the cash surrender values or premiums under the transferred policies are no longer reasonable in the circumstances.
(9) If this subsection applies to an insurer in respect of transferred policies for which there was a reserve deficiency, then, for the purposes of subsection (1) and subject to subsection (10),
(a) the insurer may make such revisions to the rates of interest, mortality or policy lapse used by the issuer of the transferred policies to eliminate all or any part of the reserve deficiency; and
(b) the revised rates are deemed to have been used by the issuer of the transferred policies in determining the cash surrender value or premiums under the policies.
(10) If, under subsection (9), an insurer has revised the rates of interest, mortality or policy lapse used by the issuer of transferred policies, the Minister may, for the purposes of subsection (1) and paragraph (9)(b), make further revisions to the revised rates to the extent that the insurer’s revisions to those rates are not reasonable in the circumstances.
(2) Subsection (1) applies to dispositions that occur after November 1999.
- Date modified: