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
75. (1) Subsection 251.2(1) of the Act is amended by adding the following in alphabetical order:
“fixed interest”
« participation fixe »
“fixed interest”, at any time of a person in a trust, means an interest of the person as a beneficiary (in this definition, determined without reference to subsection 248(25)) under the trust provided that no amount of the income or capital of the trust to be distributed at any time in respect of any interest in the trust depends on the exercise by any person of, or the failure by any person to exercise, any discretionary power, other than a power in respect of which it is reasonable to conclude that
(a) the power is consistent with normal commercial practice;
(b) the power is consistent with terms that would be acceptable to the beneficiaries under the trust if the beneficiaries were dealing with each other at arm’s length; and
(c) the exercise of, or failure to exercise, the power will not materially affect the value of an interest as a beneficiary under the trust relative to the value of other such interests under the trust.
“investment fund”
« fiducie de placement déterminée »
“investment fund”, at any time, means a trust that
(a) is at that time a portfolio investment fund; and
(b) is, at all times throughout the period that begins at the later of March 21, 2013 and the time of its creation and that ends at that time,
(i) a mutual fund trust, or
(ii) a trust
(A) that would be a mutual fund trust if section 4801 of the Income Tax Regulations were read without reference to its paragraph (b), and
(B) if the only beneficiaries who may for any reason receive directly from the trust any of the income or capital of the trust are beneficiaries whose interests as beneficiaries under the trust are fixed interests.
“portfolio investment fund”
« fonds de placement de portefeuille »
“portfolio investment fund”, at any time, means an entity that at that time would be a portfolio investment entity as defined in subsection 122.1(1) if
(a) the references to “subject entity” in paragraph (a) of the definition “non-portfolio property” in subsection 122.1(1) were read as references to “entity”;
(b) the definition “Canadian real, immovable or resource property” in subsection 248(1) were read as though
(i) its paragraph (a) were read without reference to “situated in Canada”,
(ii) its paragraph (b) were read as “a Canadian resource property or a foreign resource property”, and
(iii) “timber resource property” in paragraph (c) were defined as extending to rights in respect of property outside Canada; and
(c) paragraph (c) of the definition “non-portfolio property” in subsection 122.1(1) were read without reference to “in Canada”.
(2) Subsection 251.2(3) of the Act is amended by striking out “or” at the end of paragraph (d), by adding “or” at the end of paragraph (e) and by adding the following after paragraph (e):
(f) the acquisition of equity of the particular trust by a person or group of persons if
(i) immediately before the acquisition, the particular trust is an investment fund, and
(ii) the acquisition is not part of a series of transactions or events that includes the particular trust becoming a portfolio investment fund, or ceasing to be an investment fund.
(3) Section 251.2 of the Act is amended by adding the following after subsection (6):
Marginal note:Timing of filing
(7) If a trust is subject to a loss restriction event in a taxation year, subsection 249(4) does not apply to end the year for the purpose of this subsection or to determine the end of that year in applying subsection 132(6.1), paragraph 150(1)(c), paragraph (a) of the definition “balance-due day” in subsection 248(1) and subsection 204(2) of the Income Tax Regulations to the trust in respect of the year.
(4) Subsections (1) to (3) are deemed to have come into force on March 21, 2013, except that if a trust elects in writing and files the election with the Minister of National Revenue on or before the trust’s filing-due date for its last taxation year that ends before January 1, 2015, then those subsections are deemed to have come into force in respect of that trust on January 1, 2014.
76. (1) Subparagraphs 256(1.2)(f)(i) to (iii) of the Act are replaced by the following:
(ii) where a beneficiary’s share of the accumulating income or capital therefrom depends on the exercise by any person of, or the failure by any person to exercise, any discretionary power, those shares are deemed to be owned at that time by the beneficiary,
(iii) in any case where subparagraph (ii) does not apply, a beneficiary is deemed at that time to own the proportion of those shares that the fair market value of the beneficial interest in the trust of the beneficiary is of the fair market value of all beneficial interests in the trust, and
(2) Subsection (1) applies to the 2016 and subsequent taxation years.
77. (1) Paragraph 261(3)(b) of the Act is replaced by the following:
(b) the taxpayer has elected that subsection (5) apply to the taxpayer and has filed that election with the Minister in prescribed form and manner on or before the day that is 60 days after the first day of the particular taxation year;
(2) Subparagraph 261(6)(a)(iii) of the Act is replaced by the following:
(iii) begins on or after the first day of the particular taxpayer’s first functional currency year;
(3) Clause 261(6.1)(a)(i)(C) of the Act is replaced by the following:
(C) begins on or after the first day of the particular taxpayer’s first functional currency year,
(4) Clause 261(11)(b)(i)(A) of the Act is replaced by the following:
(A) the total of the taxes payable by the taxpayer under Parts I, VI, VI.1 and XIII.1 for the particular taxation year, as determined in the taxpayer’s elected functional currency
(5) The portion of paragraph 261(11)(c) of the Act before subparagraph (i) is replaced by the following:
(c) for the purposes of determining any amount (other than tax) that is payable by the taxpayer under Part I, VI, VI.1 or XIII.1 for the particular taxation year, the taxpayer’s tax payable under the Part for the particular taxation year is deemed to be equal to the total of
(6) Paragraph 261(11)(d) of the Act is replaced by the following:
(d) amounts of tax that are payable under this Act (except under Parts I, VI, VI.1 and XIII.1) by the taxpayer for the particular taxation year are to be determined by converting those amounts, as determined in the taxpayer’s elected functional currency, to Canadian currency using the relevant spot rate for the day on which those amounts are due;
(7) Section 261 of the Act is amended by adding the following after subsection (17):
Marginal note:Amalgamation — deemed application of subsection (5)
(17.1) Notwithstanding subsection (3), if each predecessor corporation in respect of an amalgamation (within the meaning assigned by subsection 87(1)) has the same elected functional currency for its last taxation year, then, unless a predecessor corporation has filed a notice of revocation under subsection (4) on or before the day that is six months before the end of its last taxation year,
(a) the new corporation formed as a result of the amalgamation is deemed to have made an election under paragraph (3)(b) and to have filed that election on the first day of its first taxation year; and
(b) that elected functional currency is deemed to be the new corporation’s functional currency for its first taxation year.
(8) Subsections (1) to (3) apply to taxation years that begin after July 12, 2013.
(9) Subsections (4) to (6) apply to taxation years that begin after December 13, 2007.
(10) Subsection (7) applies in respect of amalgamations that occur after July 12, 2013.
C.R.C., c. 945Income Tax Regulations
78. (1) Subsection 102(6) of the Income Tax Regulations and the heading before it are replaced by the following:
(6) Despite subsection (1), no amount shall be deducted or withheld in the year by an employer from an amount determined in accordance with subparagraph 110(1)(f)(iii), (iv) or (v) of the Act.
(2) Subsection (1) applies to amounts paid on or after July 12, 2013.
79. Subsection 300(2) of the Regulations is replaced by the following:
(2) For the purposes of this section, if the continuance of the annuity payments under a contract depends in whole or in part on the survival of an individual,
(a) the total of the payments expected to be made under the contract is
(i) in the case of a contract that provides for equal payments and does not provide for a guaranteed period of payment, to be equal to the product obtained by multiplying the total of the annuity payments expected to be received throughout a year under the contract by the complete expectations of life determined
(A) using the table of mortality known as the 1971 Individual Annuity Mortality Table as published in Volume XXIII of the Transactions of the Society of Actuaries, if the annuity rates in respect of the contract were fixed and determined before 2017, and
(I) annuity payments under the contract commenced before 2017, or
(II) on December 31, 2016, the contract would be a prescribed annuity contract if paragraph 304(1)(c) were read without reference to its subparagraph (i) and the contract cannot be terminated other than on the death of an individual on whose life payments under the contract are contingent, and
(B) in any other case, using the table of mortality known as the Annuity 2000 Basic Table as published in the Transactions of Society of Actuaries, 1995–96 Reports, and
(ii) in any other case, to be calculated in accordance with subparagraph (i) with such modifications as the circumstances may require;
(b) the age of the individual on any particular date as of which a calculation is being made is
(i) if the life insured was determined by the insurer that issued the contract to be a substandard life at the time the contract was issued and the Annuity 2000 Basic Table as published in the Transactions of Society of Actuaries, 1995–96 Reports applies to determine the total of the payments expected to be made under the contract, the age that is equal to the total of the age used for the purpose of determining the annuity rate under the policy at the date of issue of the contract and the number determined by subtracting the calendar year in which the contract was issued from the calendar year in which the particular date occurs, and
(ii) in any other case, determined by subtracting the calendar year of the individual’s birth from the calendar year in which the particular date occurs; and
(c) if, in the event of the death of the individual before the annual payments total a stated sum, the contract provides that the unpaid balance of the stated sum is to be paid in a lump sum or instalments, then for the purpose of determining the expected term of the contract, the contract is deemed to provide for the continuance of the payments under the contract for a minimum term certain equal to the nearest whole number of years required to complete the payment of the stated sum.
- Date modified: