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Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Full Document:  

Act current to 2020-06-17 and last amended on 2020-06-01. Previous Versions

PART IIncome Tax (continued)

DIVISION EComputation of Tax (continued)

SUBDIVISION BRules Applicable to Corporations (continued)

Marginal note:Definitions

  •  (1) The following definitions apply in this section.

    assistance

    assistance means an amount, other than an amount deemed under subsection (2) to have been paid, that would be included under paragraph 12(1)(x) in computing the income of a taxpayer for any taxation year if that paragraph were read without reference to

    • (a) subparagraphs 12(1)(x)(v) to (viii), if the amount were received

      • (i) from a person or partnership described in subparagraph 12(1)(x)(ii), or

      • (ii) in circumstances where clause 12(1)(x)(i)(C) applies; and

    • (b) subparagraphs 12(1)(x)(v) to (vii), in any other case. (montant d’aide)

    eligible newsroom employee

    eligible newsroom employee, in respect of a qualifying journalism organization in a taxation year, means an individual who

    • (a) is employed by the organization in the taxation year;

    • (b) works, on average, a minimum of 26 hours per week throughout the portion of the taxation year in which the individual is employed by the organization;

    • (c) at any time in the taxation year, has been, or is reasonably expected to be, employed by the organization for a minimum period of 40 consecutive weeks that includes that time;

    • (d) spends at least 75% of their time engaged in the production of news content, including by researching, collecting information, verifying facts, photographing, writing, editing, designing and otherwise preparing content; and

    • (e) meets any prescribed conditions. (employé de salle de presse admissible)

    qualifying journalism organization

    qualifying journalism organization, at any time, means a qualified Canadian journalism organization that meets the following conditions:

    • (a) it is primarily engaged in the production of original written news content;

    • (b) it does not carry on a broadcasting undertaking as defined in subsection 2(1) of the Broadcasting Act;

    • (c) it does not, in the taxation year in which the time occurs, receive an amount from the Aid to Publishers component of the Canada Periodical Fund; and

    • (d) if it is a corporation having share capital, it meets the conditions in subparagraph (e)(iii) of the definition Canadian newspaper in subsection 19(5). (organisation journalistique admissible)

    qualifying labour expenditure

    qualifying labour expenditure, of a taxpayer for a taxation year in respect of an eligible newsroom employee, means the lesser of

    • (a) the amount determined by the formula

      $55,000 × A/365

      where

      A
      is the lesser of 365 and the number of days in the taxation year, and
    • (b) the amount determined by the formula

      A − B

      where

      A
      is the salary or wages payable by the taxpayer to the eligible newsroom employee in respect of the portion of the taxation year throughout which the taxpayer is a qualifying journalism organization, and
      B
      is the total of all amounts each of which is an amount of assistance that
      • (i) the taxpayer has received, is entitled to receive or can reasonably be expected to receive, in respect of amounts described in A, and

      • (ii) has not been repaid before the end of the year pursuant to a legal obligation to do so. (dépense de main-d’oeuvre admissible)

  • Marginal note:Tax credit

    (2) A taxpayer that is a qualifying journalism organization at any time in a taxation year and that files a prescribed form containing prescribed information with its return of income for the year is deemed to have, on its balance-due day for the year, paid on account of its tax payable under this Part for the year an amount determined by the formula

    0.25(A)

    where

    A
    is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the year in respect of an eligible newsroom employee.
  • Marginal note:When assistance received

    (3) For the purposes of this Act other than this section, and for greater certainty, the amount that a qualifying journalism organization is deemed under subsection (2) to have paid for a taxation year is assistance received by it from a government immediately before the end of the year.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2019, c. 29, s. 23

Marginal note:Definitions

  •  (1) The following definitions apply in this section and in subsection 163(2.901).

    baseline remuneration

    baseline remuneration, in respect of an eligible employee of an eligible entity, means the average weekly eligible remuneration paid to the eligible employee by the eligible entity during the period that begins on January 1, 2020 and ends on March 15, 2020, excluding any period of seven or more consecutive days for which the employee was not remunerated. (rémunération de base)

    current reference period

    current reference period, for a qualifying period, means

    • (a) for the qualifying period referred to in paragraph (a) of the definition qualifying period, March 2020;

    • (b) for the qualifying period referred to in paragraph (b) of the definition qualifying period, April 2020;

    • (c) for the qualifying period referred to in paragraph (c) of the definition qualifying period, May 2020; and

    • (d) for the qualifying period referred to in paragraph (d) of the definition qualifying period, a prescribed period. (période de référence actuelle)

    eligible employee

    eligible employee, of an eligible entity in respect of a week in a qualifying period, means an individual employed in Canada by the eligible entity in the qualifying period, other than an individual who is without remuneration by the eligible entity in respect of 14 or more consecutive days in the qualifying period. (employé admissible)

    eligible entity

    eligible entity means

    • (a) a corporation, other than a corporation that is exempt from tax under this Part or is a public institution;

    • (b) an individual;

    • (c) a registered charity, other than a public institution;

    • (d) a person that is exempt from tax under this Part because of paragraph 149(1)(e), (j), (k) or (l), other than a public institution;

    • (e) a partnership, all of the members of which are described in this paragraph or any of paragraphs (a) to (d); or

    • (f) a prescribed organization. (entité déterminée)

    eligible remuneration

    eligible remuneration, of an eligible employee of an eligible entity, means amounts described in paragraph 153(1)(a) or (g), other than

    • (a) for greater certainty, a retiring allowance;

    • (b) amounts deemed to have been received by the eligible employee as a benefit under or because of any of paragraphs 7(1)(a) to (d.1);

    • (c) any amount received that can reasonably be expected to be paid or returned, directly or indirectly, in any manner whatever, to

      • (i) the eligible entity,

      • (ii) a person or partnership not dealing at arm’s length with the eligible entity, or

      • (iii) another person or partnership at the direction of the eligible entity; and

    • (d) any amount that is paid in respect of a week in the qualifying period, if, as part of an arrangement involving the eligible employee and the eligible entity,

      • (i) the amount is in excess of the eligible employee’s baseline remuneration,

      • (ii) after the qualifying period, the eligible employee is reasonably expected to be paid a lower weekly amount than their baseline remuneration, and

      • (iii) one of the main purposes for the arrangement is to increase the amount of the deemed overpayment under subsection (2). (rémunération admissible)

    prior reference period

    prior reference period, for a qualifying period of an eligible entity, means

    • (a) subject to paragraph (b),

      • (i) for the qualifying period referred to in paragraph (a) of the definition qualifying period, March 2019,

      • (ii) for the qualifying period referred to in paragraph (b) of the definition qualifying period, April 2019, and

      • (iii) for the qualifying period referred to in paragraph (c) of the definition qualifying period, May 2019;

    • (b) January and February 2020, if

      • (i) on March 1, 2019, the eligible entity was not carrying on business or otherwise carrying on its ordinary activities, or

      • (ii) the qualifying period is referred to in any of paragraphs (a) to (c) of the definition qualifying period and the eligible entity elects for all of those paragraphs; and

    • (c) for the qualifying period referred to in paragraph (d) of the definition qualifying period, a prescribed period. (période de référence antérieure)

    public institution

    public institution means

    • (a) an organization described in any of paragraphs 149(1)(a) to (d.6); or

    • (b) a school, school board, hospital, health authority, public university or college. (institution publique)

    qualifying entity

    qualifying entity, for a qualifying period, means an eligible entity that meets the following conditions:

    • (a) it files an application with the Minister in respect of the qualifying period in prescribed form and manner, before October 2020;

    • (b) the individual who has principal responsibility for the financial activities of the eligible entity attests that the application is complete and accurate in all material respects;

    • (c) its qualifying revenues for the current reference period are equal to or less than the specified percentage, for the qualifying period, of

      • (i) if paragraph (a) or (c) of the definition prior reference period applies, its qualifying revenues for the prior reference period, and

      • (ii) if paragraph (b) of the definition prior reference period applies, the amount determined by the formula

        0.5A(B/C)

        where

        A
        is its qualifying revenues for the prior reference period,
        B
        is the number of days in the prior reference period, and
        C
        is the number of days in the prior reference period during which the eligible entity was carrying on business; and
    • (d) it had, on March 15, 2020, a business number in respect of which it is registered with the Minister to make remittances required under section 153. (entité admissible)

    qualifying period

    qualifying period means

    • (a) the period that begins on March 15, 2020 and ends on April 11, 2020;

    • (b) the period that begins on April 12, 2020 and ends on May 9, 2020;

    • (c) the period that begins on May 10, 2020 and ends on June 6, 2020; or

    • (d) a prescribed period that ends no later than September 30, 2020. (période d’admissibilité)

    qualifying revenue

    qualifying revenue, of an eligible entity for a prior reference period or a current reference period, means the inflow of cash, receivables or other consideration arising in the course of the ordinary activities of the eligible entity — generally from the sale of goods, the rendering of services and the use by others of resources of the eligible entity — in Canada in the particular period, subject to the following:

    • (a) in the case of an eligible entity described in paragraph (c) of the definition eligible entity,

      • (i) it includes revenue from a related business (as defined in subsection 149.1(1)), gifts and other amounts received in the course of its ordinary activities, and

      • (ii) notwithstanding subparagraph (i), the eligible entity may elect to exclude funding received from government sources in the determination of its qualifying revenue for all of its prior reference periods and current reference periods;

    • (b) in the case of an eligible entity described in paragraph (d) of the definition eligible entity,

      • (i) it includes membership fees and other amounts received in the course of its ordinary activities, and

      • (ii) notwithstanding subparagraph (i), the eligible entity may elect to exclude funding received from government sources in the determination of its qualifying revenue for all of its prior reference periods and current reference periods;

    • (c) it excludes, for greater certainty, extraordinary items;

    • (d) it excludes amounts derived from persons or partnerships not dealing at arm’s length with the eligible entity; and

    • (e) it excludes, for greater certainty, deemed overpayments under subsection (2) and deemed remittances under subsection 153(1.02). (revenu admissible)

    specified percentage

    specified percentage, for a qualifying period, means

    • (a) for the qualifying period referred to in paragraph (a) of the definition qualifying period, 85%;

    • (b) for the qualifying period referred to in paragraph (b) or (c) of the definition qualifying period, 70%; and

    • (c) for the qualifying period referred to in paragraph (d) of the definition qualifying period, the prescribed percentage. (pourcentage déterminé)

  • Marginal note:COVID-19 — wage subsidy

    (2) For a qualifying entity for a qualifying period, an overpayment on account of the qualifying entity’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen during the qualifying period in an amount determined by the formula

    A − B − C + D

    where

    A
    is the total of all amounts, each of which is for an eligible employee in respect of a week in the qualifying period, equal to the greater of
    • (a) the least of

      • (i) 75% of eligible remuneration paid to the eligible employee in respect of that week,

      • (ii) $847, and

      • (iii) if the eligible employee does not deal at arm’s length with the qualifying entity in the qualifying period, nil, and

    • (b) the least of

      • (i) the amount of eligible remuneration paid to the eligible employee in respect of that week,

      • (ii) 75% of baseline remuneration in respect of the eligible employee determined for that week, and

      • (iii) $847;

    B
    is the total of all amounts each of which is an amount deemed to have been remitted under subsection 153(1.02) by the qualifying entity in the qualifying period;
    C
    is the total of all amounts received by the eligible employee for each week in the qualifying period as a work-sharing benefit under the Employment Insurance Act; and
    D
    is the total of all amounts, each of which is for an eligible employee in respect of a week in the qualifying period, if the eligible employee is on leave with pay for that week and the amount is
    • (a) an amount payable by the qualifying entity

    • (b) an amount payable by the qualifying entity as an employer’s premium under the Act respecting parental insurance, CQLR, c. A-29.011.

  • Marginal note:When assistance received

    (3) For the purposes of this Act other than this section, and for greater certainty, the amount that a qualifying entity is deemed under subsection (2) to have overpaid is assistance received by it from a government immediately before the end of the qualifying period to which it relates.

  • Marginal note:Computation of revenue

    (4) For the purposes of the definition qualifying revenue in subsection (1), the qualifying revenue of an eligible entity is to be determined in accordance with its normal accounting practices, except that

    • (a) if a group of eligible entities normally prepares consolidated financial statements, each member of the group may determine its qualifying revenue separately, provided every member of the group determines its qualifying revenue on that basis;

    • (b) if an eligible entity and each member of an affiliated group of eligible entities of which the eligible entity is a member jointly elect, the qualifying revenue of the group determined on a consolidated basis in accordance with relevant accounting principles is to be used for each member of the group;

    • (c) if all of the interests in an eligible entity are owned by participants in a joint venture and all or substantially all of the qualifying revenue of the eligible entity for a qualifying period is in respect of the joint venture, then the eligible entity may use the qualifying revenues of the joint venture (determined as if the joint venture were an eligible entity) instead of its qualifying revenues for the purposes of paragraph (c) of the definition qualifying entity in subsection (1);

    • (d) if all or substantially all of an eligible entity’s qualifying revenue — determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1) — for a qualifying period is from one or more particular persons or partnerships with which it does not deal at arm’s length and each particular person or partnership jointly elects with the eligible entity, for the purposes of paragraph (c) of the definition qualifying entity in subsection (1)

      • (i) the eligible entity’s qualifying revenue for the prior reference period is deemed to be $100, and

      • (ii) the eligible entity’s qualifying revenue for the current reference period is deemed to be the total of all amounts, each of which is determined by the formula

        $100(A/B)(C/D)

        where

        A
        is the eligible entity’s qualifying revenue (determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1)) for the current reference period attributable to a particular person or partnership,
        B
        is the total of all amounts, each of which is the eligible entity’s qualifying revenue (determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1)) for the current reference period attributable to a particular person or partnership,
        C
        is the particular person or partnership’s qualifying revenue (determined as if the definition qualifying revenue in subsection (1) were read without reference to “in Canada”) for the current reference period, and
        D
        is the particular person or partnership’s qualifying revenue (determined as if the definition qualifying revenue in subsection (1) were read without reference to “in Canada”) for the prior reference period; and
    • (e) an eligible entity may make an election, which must apply for all qualifying periods, to determine its revenues based on the cash method, within the meaning assigned by subsection 28(1) with any modifications that the circumstances require.

  • Marginal note:Deemed overpayment

    (5) For the purposes of this section,

    • (a) the amount of any deemed overpayment by an eligible entity under subsection (2) in respect of a qualifying period cannot exceed the amount claimed by the qualifying entity — in the application referred to in paragraph (a) of the definition qualifying entity in subsection (1) — in respect of that qualifying period; and

    • (b) if an eligible employee is employed in a week by two or more qualifying entities that do not deal with each other at arm’s length, the total amount of the deemed overpayment under subsection (2) in respect of the eligible employee for that week shall not exceed the amount that would arise if the eligible employee’s eligible remuneration for that week were paid by one qualifying entity.

  • Marginal note:Anti-avoidance — qualifying revenues

    (6) The qualifying revenue of an eligible entity for a current reference period for a qualifying period is deemed to be equal to the qualifying revenue of the eligible entity for the relevant prior reference period, if

    • (a) the eligible entity, or a person or partnership not dealing at arm’s length with the eligible entity, enters into a transaction or participates in an event (or a series of transactions or events) or takes an action (or fails to take an action) — other than, for greater certainty, a decision under subparagraph (a)(ii) or (b)(ii) of the definition qualifying revenue in subsection (1) or the decision to use one of the methods of computing qualifying revenues under subsection (4) — that has the effect of reducing the qualifying revenues (determined without reference to this subsection) of the eligible entity for the current reference period; and

    • (b) it is reasonable to conclude that one of the main purposes of the transaction, event, series or action in paragraph (a) is to cause an eligible entity to qualify for the deemed overpayment under subsection (2) in respect of that qualifying period.

  • Marginal note:Partnerships

    (7) A partnership is deemed

    • (a) for the purposes of subsection (2) and subsection 160.1(1), to be a taxpayer; and

    • (b) for the purposes of subsection (2), to have a liability under this Part for a taxation year in which a qualifying period ends.

  • Marginal note:Prescribed amounts

    (8) For any period referred to in paragraph (d) of the definition qualifying period in subsection (1), the following may be prescribed:

    • (a) the percentages in subparagraphs (a)(i) and (b)(ii) of the description of A in subsection (2); and

    • (b) the amounts in subparagraphs (a)(ii) and (b)(iii) of the description of A in subsection (2).

  • Marginal note:Deeming rule — current reference period

    (9) If, absent the application of this subsection, an eligible entity meets the conditions in paragraph (c) of the definition qualifying entity in subsection (1) in respect of a particular qualifying period, then the eligible entity is deemed to meet the conditions of that paragraph in respect of the immediately following qualifying period.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2020, c. 6, s. 2
 
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