Economic Action Plan 2014 Act, No. 2 (S.C. 2014, c. 39)
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Assented to 2014-12-16
PART 1AMENDMENTS TO THE INCOME TAX ACT AND A RELATED TEXT
R.S., c. 1 (5th Supp.)Income Tax Act
72. (1) Paragraphs 249(1)(b) and (c) of the Act are replaced by the following:
(b) in the case of a graduated rate estate, the period for which the accounts of the estate are made up for purposes of assessment under this Act; and
(c) in any other case, a calendar year.
(2) Section 249 of the Act is amended by adding the following after subsection (4):
Marginal note:Trust transition from graduated rate estate
(4.1) For a particular trust that is a testamentary trust,
(a) its taxation year that otherwise includes a particular time is deemed to end immediately before the particular time if
(i) the particular trust is an estate and the particular time is the first time after 2015 at which the estate is not a graduated rate estate, or
(ii) the particular trust is not an estate and the particular time is immediately after 2015; and
(b) if the particular trust exists at the particular time,
(i) a new taxation year of the particular trust is deemed to begin at the particular time, and
(ii) for the purpose of determining the particular trust’s fiscal period after the particular time, the particular trust is deemed not to have established a fiscal period before that time.
(3) Subsection 249(5) of the Act is replaced by the following:
Marginal note:Graduated rate estate
(5) The period for which the accounts of a graduated rate estate are made up for the purposes of an assessment under this Act may not exceed 12 months, and no change in the time when that period ends may be made for the purposes of this Act without the concurrence of the Minister.
(4) Subsection 249(6) of the Act is repealed.
(5) Subsections (1) and (3) apply to the 2016 and subsequent taxation years.
(6) Subsection (2) comes into force or is deemed to have come into force on December 31, 2015.
(7) Subsection (4) applies to transactions and events that occur after 2015.
73. (1) The portion of paragraph 249.1(1)(b) of the Act before clause (ii)(B) is replaced by the following:
(b) in the case of
(i) an individual (other than an individual to whom section 149 or 149.1 applies or a trust),
(i.1) a trust (other than a mutual fund trust if the fiscal period is one to which paragraph 132.11(1)(c) applies or a graduated rate estate),
(ii) a partnership of which
(A) an individual (other than an individual to whom section 149 or 149.1 applies or a graduated rate estate),
(2) Subparagraph 249.1(4)(c)(ii) of the Act is replaced by the following:
(ii) who is a member of a partnership no member of which is a graduated rate estate,
(3) Paragraph 249.1(4)(d) of the Act is replaced by the following:
(d) in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, an election in prescribed form to have paragraph (1)(b) not apply is filed with the Minister by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after 1994.
(4) Clause 249.1(6)(b)(i)(B) of the Act is replaced by the following:
(B) who is a member of a partnership no member of which is a graduated rate estate,
(5) Subparagraph 249.1(6)(b)(ii) of the Act is replaced by the following:
(ii) in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after the beginning of the particular year.
(6) Subsections (1) to (5) apply to the 2016 and subsequent taxation years.
74. (1) The portion of subsection 250(6) of the Act before paragraph (c) is replaced by the following:
Marginal note:Residence of international shipping corporation
(6) For the purposes of this Act, a corporation that was incorporated or otherwise formed under the laws of a country other than Canada or of a state, province or other political subdivision of such a country is deemed to be resident in that country throughout a taxation year and not to be resident in Canada at any time in the year, if
(a) the corporation
(i) has international shipping as its principal business in the year, or
(ii) holds eligible interests in one or more eligible entities throughout the year and at no time in the year is the total of the cost amounts to it of all those eligible interests and of all debts owing to it by an eligible entity in which an eligible interest is held by it, by a person related to it or by a partnership affiliated with it less than 50% of the total of the cost amounts to it of all its property;
(b) all or substantially all the corporation’s gross revenue for the year consists of any one or more of
(i) gross revenue from international shipping,
(ii) gross revenue from an eligible interest held by it in an eligible entity, and
(iii) interest on a debt owing by an eligible entity in which an eligible interest is held by it, by a person related to it or by a partnership affiliated with it; and
(2) Section 250 of the Act is amended by adding the following after subsection (6):
Marginal note:Partner’s gross revenue
(6.01) For the purposes of paragraph (6)(b), an amount of profit allocated from a partnership to a member of the partnership for a taxation year is deemed to be gross revenue of the member from member’s interest in the partnership for the year.
Marginal note:Service providers
(6.02) Subsection (6.03) applies to a corporation, trust or partnership (in this subsection and subsection (6.03) referred to as the “relevant entity”) for a taxation year if
(a) the relevant entity does not satisfy the condition in subparagraph (6)(a)(i), determined without reference to subsection (6.03);
(b) all or substantially all the gross revenue of the relevant entity for the year consists of any one or more of;
(i) gross revenue from the provision of services to one or more eligible entities, other than services described in any of paragraphs (a) to (h) of the definition “international shipping” in subsection 248(1),
(ii) gross revenue from international shipping,
(iii) gross revenue from an eligible interest held by it in an eligible entity, and
(iv) interest on a debt owing by an eligible entity in which an eligible interest is held by it or a person related to it;
(c) either the relevant entity is a subsidiary wholly-owned corporation (as defined in subsection 87(1.4)) of the eligible entity referred to in paragraph (b) or an eligible interest in each eligible entity referred to in paragraph (b) is held throughout the year by
(i) the relevant entity,
(ii) one or more persons related to the relevant entity (if the relevant entity and each such person is a corporation), or persons or partnerships affiliated with the relevant entity (in any other case), or
(iii) any combination of the relevant entity and persons or partnerships described in subparagraph (ii); and
(d) all or substantially all the shares of the capital stock of, or interests in, the relevant entity are held, directly or indirectly through one or more subsidiary wholly-owned corporations (as defined in subsection 87(1.4)), throughout the year by one or more corporations, trusts or partnerships that would be eligible entities if they did not own shares of, or interests in, the relevant entity.
Marginal note:Service providers
(6.03) If this subsection applies for a taxation year, then for the purposes of subsection (6) and paragraph 81(1)(c),
(a) the relevant entity is deemed to have international shipping as its principal business in the year; and
(b) the gross revenue described in subparagraph (6.02)(b)(i) is deemed to be gross revenue from international shipping.
Marginal note:Definitions
(6.04) The following definitions apply in this subsection and subsections (6) to (6.03).
“eligible entity”
« entité admissible »
“eligible entity”, for a taxation year, means
(a) a corporation that is deemed by subsection (6) to be resident in a country other than Canada for the year; or
(b) a partnership or trust, if
(i) it satisfies the conditions in subparagraph (6)(a)(i) or (ii), and
(ii) all or substantially all its gross revenue for the year consists of any combination of amounts described in any of subparagraphs (6)(b)(i) to (iii).
“eligible interest”
« participation admissible »
“eligible interest” means
(a) in respect of a corporation, shares of the capital stock of the corporation that
(i) give the holders of those shares not less than 25% of the votes that could be cast at an annual meeting of the shareholders of the corporation, and
(ii) have a fair market value that is not less than 25% of the fair market value of all the issued and outstanding shares of the capital stock of the corporation;
(b) in respect of a trust, an interest as a beneficiary (as defined in subsection 108(1)) under the trust with a fair market value that is not less than 25% of the fair market value of all the interests of all beneficiaries under the trust; and
(c) in respect of a partnership, an interest as a member of the partnership with a fair market value that is not less than 25% of the fair market value of all the membership interests in the partnership.
Marginal note:Holdings in eligible entities
(6.05) For the purpose of determining whether a person or partnership (in this subsection referred to as the “holder”) holds an eligible interest in an eligible entity in subsections (6) to (6.04), the holder is deemed to hold all of the shares or interests, as the case may be, in the eligible entity held by
(a) the holder;
(b) if the holder is a corporation,
(i) each corporation related to the holder, and
(ii) each person, other than a corporation, or partnership that is affiliated with the holder; and
(c) if the holder is not a corporation, each person or partnership affiliated with the holder.
(3) Subsections (1) and (2) apply to taxation years that begin after July 12, 2013.
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