Fall Economic Statement Implementation Act, 2022 (S.C. 2022, c. 19)
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Assented to 2022-12-15
PART 1Amendments to the Income Tax Act and Other Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
40 (1) Section 160.2 of the Act is amended by adding the following after subsection (2.2):
Marginal note:Joint and several liability — FHSA
(2.3) If an amount required to be included in the income of a holder of a FHSA because of section 146.6 is received by a taxpayer other than the holder, that taxpayer is jointly and severally, or solidarily, liable with the holder to pay a part of the holder’s tax under this Part for the taxation year in which the amount is received equal to the amount by which the holder’s tax for the year exceeds the amount that would be the holder’s tax for the year if the amount had not been received, but nothing in this subsection limits the liability of the holder under any other provision of this Act or of the taxpayer for the interest that the taxpayer is liable to pay under this Act on an assessment in respect of the amount that the taxpayer is liable to pay because of this subsection.
(2) Subsection 160.2(4) of the Act is replaced by the following:
Marginal note:Rules applicable
(4) If a taxpayer and an annuitant or holder have, by virtue of subsection (1), (2) or (2.3), become jointly and severally, or solidarily, liable in respect of part or all of a liability of the annuitant or holder under this Act, the following rules apply:
(a) a payment by the taxpayer on account of the taxpayer’s liability shall to the extent thereof discharge their liability; but
(b) a payment by the annuitant or holder on account of the liability of the annuitant or holder discharges the taxpayer’s liability only to the extent that the payment operates to reduce the liability of the annuitant or holder to an amount less than the amount in respect of which the taxpayer was, by subsection (1), (2) or (2.3), as the case may be, made jointly and severally, or solidarily, liable.
(3) Subsections (1) and (2) come into force on April 1, 2023.
41 (1) Paragraphs 161(1)(a) to (b) of the Act are replaced by the following:
(a) the total of the taxpayer’s taxes payable under this Part and Parts I.3, VI, VI.1 and VI.2 (determined in accordance with subsection 191.5(9)) for the year
exceeds
(b) the total of all amounts each of which is an amount paid at or before that time on account of the taxpayer’s tax payable and applied as at that time by the Minister against the taxpayer’s liability for an amount payable under this Part or Part I.3, VI, VI.1 or VI.2 for the year,
(2) Subsection (1) applies to the 2022 and subsequent taxation years.
Marginal note:False statement or omission — trust return
42 (1) Section 163 of the Act is amended by adding the following after subsection (4):
Marginal note:False statement or omission
(5) A person or partnership is liable to a penalty if the person or partnership
(a) knowingly or under circumstances amounting to gross negligence
(i) makes — or participates in, assents to or acquiesces in, the making of — a false statement or omission in a return of income of a trust that is not subject to one of the exceptions listed in paragraphs 150(1.2)(a) to (o) for a taxation year, or
(ii) fails to file a return described in subparagraph (i); or
(b) fails to comply with a demand under subsection 150(2) or 231.2(1) to file a return described in subparagraph (a)(i).
Marginal note:False statement or omission — trust return
(6) The amount of the penalty to which the person or partnership is liable under subsection (5) is equal to the greater of
(a) $2,500, and
(b) 5% of the highest amount at any time in the year that is equal to the total fair market value of all the property held by the trust referred to in subsection (5) at that time.
(2) Subsection (1) applies to taxation years that end after December 30, 2023.
43 (1) Subsection 181(2) of the Act is replaced by the following:
Marginal note:Prescribed expressions
(2) For the purposes of this Part, the expressions attributed surplus, Canadian assets, Canadian premiums, Canadian reserve liabilities, contractual service margin, group of insurance contracts, group of reinsurance contracts, permanent establishment, policyholders’ liabilities, reinsurance contract held amount, total assets, total premiums and total reserve liabilities have such meanings as may be prescribed.
(2) Subsection (1) applies to taxation years that begin after 2022.
44 (1) Paragraphs 181.3(3)(b) and (c) of the Act are replaced by the following:
(b) in the case of an insurance corporation that was resident in Canada at any time in the year and carried on a life insurance business at any time in the year, the amount determined by the formula
A + B + (0.9 × C) − (0.9 × D) − E
where
- A
- is the amount of the corporation’s long-term debt at the end of the year,
- B
- is the total amount, at the end of the year, of the corporation’s
(i) capital stock (or, in the case of an insurance corporation incorporated without share capital, the amount of its members’ contributions),
(ii) retained earnings,
(iii) accumulated other comprehensive income,
(iv) policyholders’ liabilities,
(v) contributed surplus, and
(vi) any other surpluses,
- C
- is the total of all amounts each of which is the contractual service margin for a group of insurance contracts of the corporation at the end of the year other than a group of segregated fund policies,
- D
- is the total of all amounts each of which is the amount, in respect of a group of reinsurance contracts held by the corporation at the end of the year, that is
(i) if no portion of the contractual service margin for the group is in respect of a risk under a segregated fund policy, the contractual service margin for the group, and
(ii) in any other case, the amount that would be the contractual service margin for the group if the contractual service margin were determined excluding any portion of the contractual service margin that is in respect of the reinsurance of risks under segregated fund policies, and
- E
- is the amount of any deficit deducted in computing the shareholders’ equity (including, for this purpose, the amount of any provision for the redemption of preferred shares) at the end of the year;
(c) in the case of an insurance corporation that was resident in Canada at any time in the year and throughout the year did not carry on a life insurance business, the amount determined by the formula
A + B + (0.9 × C) − (0.9 × D) + E − F − G
where
- A
- is the amount of the corporation’s long-term debt at the end of the year,
- B
- is the total amount, at the end of the year, of the corporation’s
(i) capital stock (or, in the case of an insurance corporation incorporated without share capital, the amount of its members’ contributions),
(ii) retained earnings,
(iii) accumulated other comprehensive income,
(iv) policyholders’ liabilities,
(v) contributed surplus, and
(vi) any other surpluses,
- C
- is total of all amounts each of which is the contractual service margin for a group of insurance contracts of the corporation at the end of the year that is in respect of
(i) non-cancellable or guaranteed renewable accident and sickness policies in respect of accident and sickness insurance (as defined in subsection 1408(1) of the Income Tax Regulations),
(ii) mortgage insurance (as defined in subsection 1408(1) of the Income Tax Regulations), or
(iii) title insurance (as defined in subsection 1408(1) of the Income Tax Regulations),
- D
- is the total of all amounts each of which is the amount, in respect of a group of reinsurance contracts held by the corporation at the end of the year, that is
(i) the contractual service margin for the group, if no portion of the contractual service margin is in respect of a risk under an insurance policy other than an insurance policy that is in respect of
(A) non-cancellable or guaranteed renewable accident and sickness policies in respect of accident and sickness insurance (as defined in subsection 1408(1) of the Income Tax Regulations),
(B) mortgage insurance (as defined in subsection 1408(1) of the Income Tax Regulations), or
(C) title insurance (as defined in subsection 1408(1) of the Income Tax Regulations), and
(ii) in any other case, the amount that would be the contractual service margin for the group if the contractual service margin were determined excluding any portion that is in respect of the reinsurance of risks under policies other than those described in any of clauses (i)(A) to (C),
- E
- is the amount of the corporation’s reserves for the year, except to the extent that they
(i) were deducted in computing its income under Part I for the year, or
(ii) are reserves in respect of the contractual service margin for a group of insurance contracts of the corporation at the end of the year,
- F
- is the total of all amounts each of which is the reinsurance contract held amount for a group of reinsurance contracts held by the corporation at the end of the year, to the extent the amount can be reasonably regarded as being included in the amount determined under the description of E, and
- G
- is the amount of any deficit deducted in computing the shareholders’ equity (including, for this purpose, the amount of any provision for the redemption of preferred shares) at the end of the year;
(2) Subparagraph 181.3(3)(d)(iv) of the Act is amended by adding “and” at the end of clause (C) and by replacing clauses (D) to (F) with the following:
(F) the total of all amounts each of which is the reinsurance contract held amount for a group of reinsurance contracts held by the corporation at the end of the year, to the extent the amount can be reasonably regarded as being included in the amount determined under clause (A); and
(3) Subsections (1) and (2) apply to taxation years that begin after 2022.
45 (1) Subsection 190(1) of the Act is amended by adding the following in alphabetical order:
- contractual service margin
contractual service margin for a group of insurance contracts of an insurer, or a group of reinsurance contracts held by the insurer, at the end of a taxation year, has the same meaning as in subsection 138(12); (marge sur services contractuels)
- group of insurance contracts
group of insurance contracts of an insurer has the same meaning as in subsection 138(12); (groupe de contrats d’assurance)
- group of reinsurance contracts
group of reinsurance contracts held by an insurer has the same meaning as in subsection 138(12); (groupe de contrats de réassurance)
- group of segregated fund policies
group of segregated fund policies of an insurer has the same meaning as in subsection 138(12); (groupe de polices à fonds réservé)
- policyholders’ liabilities
policyholders’ liabilities of an insurer at the end of a taxation year has the same meaning as in subsection 138(12); (obligation envers les titulaires de polices)
(2) Subsection (1) applies to taxation years that begin after 2022.
46 (1) Paragraph 190.1(3)(a) of the Act is replaced by the following:
(a) the corporation’s tax payable under Parts I and VI.2 (determined in accordance with subsection 191.5(9)) for the year; and
(2) Subsection (1) applies to the 2022 and subsequent taxation years.
47 (1) Paragraph 190.13(b) of the Act is replaced by the following:
(b) in the case of a life insurance corporation that was resident in Canada at any time in the year, the amount determined by the formula
A + B + (0.9 × C) − (0.9 × D) − E
where
- A
- is the amount of the corporation’s long-term debt at the end of the year,
- B
- is the total amount, at the end of the year, of the corporation’s
(i) capital stock (or, in the case of an insurance corporation incorporated without share capital, the amount of its members’ contributions),
(ii) retained earnings,
(iii) accumulated other comprehensive income,
(iv) policyholders’ liabilities,
(v) contributed surplus, and
(vi) any other surpluses,
- C
- is the total of all amounts each of which is the contractual service margin for a group of insurance contracts of the corporation at the end of the year other than a group of segregated fund policies,
- D
- is the total of all amounts each of which is the amount, in respect of a group of reinsurance contracts held by the corporation at the end of the year, that is
(i) if no portion of the contractual service margin for the group is in respect of a risk under a segregated fund policy, the contractual service margin for the group, and
(ii) in any other case, the amount that would be the contractual service margin for the group if the contractual service margin were determined excluding any portion that is in respect of the reinsurance of risk under a segregated fund policy, and
- E
- is the amount of any deficit deducted in computing the shareholders’ equity (including, for this purpose, the amount of any provision for the redemption of preferred shares) at the end of the year;
(2) Subsection (1) applies to taxation years that begin after 2022.
48 (1) The Act is amended by adding the following after Part VI.1:
PART VI.2Canada Recovery Dividend
Marginal note:Definition
191.5 (1) The following definition applies in this Part.
- bank or life insurer group member
bank or life insurer group member means a corporation that is
(a) a bank;
(b) a life insurance corporation that carries on business in Canada; or
(c) a financial institution (as defined in subsection 190(1)) that is related to any corporation described in paragraph (a) or (b). (membre d’un groupe de banques ou d’assureurs-vie)
Marginal note:Tax payable
(2) Every corporation that is a bank or life insurer group member at any time during a 2021 taxation year shall pay a tax under this Part for its 2022 taxation year equal to the amount determined by the formula
0.15 [(A ÷ 2) − B]
where
- A
- is the corporation’s total taxable income (or taxable income earned in Canada if the corporation is non-resident) for
(a) 2020 taxation years of the corporation, determined under Part I, without regard to paragraphs 111(1)(a) and (b), and
(b) 2021 taxation years of the corporation, determined under Part I, without regard to paragraphs 111(1)(a) and (b); and
- B
- is
(a) if the corporation is not related to another bank or life insurer group member at the end of each 2021 taxation year of the corporation, $1 billion, and
(b) in any other case, the amount determined under subsection (7).
Marginal note:Multiple 2022 taxation years
(3) If a corporation has more than one 2022 taxation year, the latest 2022 taxation year is the 2022 taxation year for the purposes of subsection (2).
Marginal note:Multiple 2020 and 2021 taxation years
(4) For the purposes of subsection (2),
(a) if a corporation has more than one 2020 taxation year and the aggregate number of days in all its 2020 taxation years is greater than 365 days, the amount determined for the corporation under paragraph (a) of the description of A in subsection (2) shall be reduced to that proportion of that amount that 365 is of the aggregate number of days in all 2020 taxation years; and
(b) if a corporation has more than one 2021 taxation year and the aggregate number of days in all its 2021 taxation years is greater than 365 days, the amount determined for the corporation under paragraph (b) of the description of A in subsection (2) shall be reduced to that proportion of that amount that 365 is of the aggregate number of days in all 2021 taxation years.
Marginal note:Related group
(5) A corporation that is described in paragraph (a) or (b) of the definition bank or life insurer group member in subsection (1) at any time during a 2021 taxation year and that was related to any other bank or life insurer group member at the end of the year (in this section, the corporation and each such bank or life insurer group member are referred to together as a “related group”) may file with the Minister an agreement in prescribed form, with the prescribed form referred to in subsection (8), on behalf of the related group under which an amount that does not exceed $1 billion is allocated among the members of the related group for the taxation year.
Marginal note:Allocation by Minister
(6) The Minister may request a corporation that is member of a related group at any time during the 2021 taxation year to file with the Minister an agreement referred to in subsection (5) and, if the corporation does not file the agreement within 30 days after receiving the request, the Minister may allocate the amount referred to in subsection (5) among the members of the related group for the taxation year.
Marginal note:Allocation
(7) For the purposes of this Part, the least amount allocated for the taxation year to each bank or life insurer group member under an agreement described in subsection (5) or by the Minister under subsection (6) is the amount determined for B in subsection (2) for the taxation year of that member, but, if no such allocation is made, the amount determined for B in subsection (2) of each bank and life insurer group member for the year is nil.
Marginal note:Return
(8) A corporation that is a bank or life insurer group member shall file with the Minister, no later than the day on or before which the corporation is required by section 150 to file its return of income for the 2022 taxation year under Part I, a prescribed form containing prescribed information.
Marginal note:Instalments
(9) A corporation liable to pay tax for the 2022 taxation year under this Part shall pay 1/5 of the tax to the Receiver General on or before its balance-due day for the 2022 and each of the four subsequent taxation years.
Marginal note:Administrative provisions — Part VI.2
191.6 Sections 152, 158 and 159, subsection 161(11), sections 162 to 167 and Division J of Part I apply to this Part with such modifications as the circumstances require.
(2) Subsection (1) applies to the 2022 and subsequent taxation years.
- Date modified: