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

Full Document:  

Act current to 2022-11-16 and last amended on 2022-10-18. Previous Versions

PART XVAdministration and Enforcement (continued)

General (continued)

Marginal note:Definitions

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

    exempt trust

    exempt trust means

    • (a) a trust that is governed by a foreign retirement arrangement;

    • (b) a trust that

      • (i) is resident in a country under the laws of which an income tax is imposed,

      • (ii) is exempt under the laws referred to in subparagraph (i) from the payment of income tax to the government of that country,

      • (iii) is established principally in connection with, or the principal purpose of which is to administer or provide benefits under, one or more superannuation, pension or retirement funds or plans or any funds or plans established to provide employee benefits, and

      • (iv) is either

        • (A) maintained primarily for the benefit of non-resident individuals, or

        • (B) governed by an employees profit sharing plan; or

    • (c) a trust

      • (i) where the interest of each beneficiary under the trust is described by reference to units, and

      • (ii) that complies with prescribed conditions. (fiducie exonérée)

    specified beneficiary

    specified beneficiary[Repealed, 2013, c. 34, s. 21]

    specified foreign trust

    specified foreign trust[Repealed, 2013, c. 34, s. 21]

  • Marginal note:Rule of application

    (2) In this section and paragraph 233.5(c.1), subsections 94(1), (2) and (10) to (13) apply, except that the reference to the expression “(other than restricted property)” in the definition arm’s length transfer in subsection 94(1) is to be read as a reference to the expression “(other than property to which paragraph 94(2)(g) applies but not including a unit of a mutual fund trust or of a trust that would be a mutual fund trust if section 4801 of the Income Tax Regulations were read without reference to paragraph 4801(b), a share of the capital stock of a mutual fund corporation, or a particular share of the capital stock of a corporation (other than a closely held corporation) which particular share is identical to a share that is, at the transfer time, of a class that is listed on a designated stock exchange)”.

  • (3) [Repealed, 2013, c. 34, s. 21]

  • Marginal note:Filing information on foreign trusts

    (4) A person shall file an information return in prescribed form, in respect of a taxation year of a particular trust (other than an exempt trust or a trust described in any of paragraphs (c) to (h) of the definition exempt foreign trust in subsection 94(1)) with the Minister on or before the person’s filing-due date for the person’s taxation year in which the particular trust’s taxation year ends if

    • (a) the particular trust is non-resident at a specified time in that taxation year of the particular trust;

    • (b) the person is a contributor, a connected contributor or a resident contributor to the particular trust; and

    • (c) the person

      • (i) is resident in Canada at that specified time, and

      • (ii) is not, at that specified time,

        • (A) a mutual fund corporation,

        • (B) an exempt person,

        • (C) a mutual fund trust,

        • (D) a trust described in any of paragraphs (a) to (e.1) of the definition trust in subsection 108(1),

        • (E) a registered investment,

        • (F) a trust in which all persons beneficially interested are persons described in clauses (A) to (E), or

        • (G) a contributor to the particular trust by reason only of being a contributor to another trust that is resident in Canada and is described in any of clauses (B) to (F).

  • Marginal note:Similar arrangements

    (4.1) In this section and sections 162, 163 and 233.5, a person’s obligations under subsection (4) (except to the extent that they are waived in writing by the Minister) are to be determined as if a contributor described in paragraph (4)(b) were any person who had transferred or loaned property, an arrangement or entity were a non-resident trust throughout the calendar year that includes the time referred to in paragraph (a) and that calendar year were a taxation year of the arrangement or entity, if

    • (a) the person at any time, directly or indirectly, transferred or loaned the property to be held

      • (i) under the arrangement and the arrangement is governed by the laws of a country or a political subdivision of a country other than Canada or exists, was formed or organized, or was last continued under the laws of a country or a political subdivision of a country other than Canada, or

      • (ii) by the entity and the entity is a non-resident entity (as defined by subsection 94.1(2));

    • (b) the transfer or loan is not an arm’s length transfer;

    • (c) the transfer or loan is not solely in exchange for property that would be described in paragraphs (a) to (i) of the definition specified foreign property in subsection 233.3(1) if that definition were read without reference to paragraphs (j) to (q);

    • (d) the arrangement or entity is not a trust in respect of which the person would, if this Act were read without reference to this subsection, be required to file an information return for a taxation year that includes that time; and

    • (e) the arrangement or entity is, for a taxation year or fiscal period of the arrangement or entity that includes that time, not

      • (i) an exempt foreign trust (as defined in subsection 94(1)),

      • (ii) a foreign affiliate in respect of which the person is a reporting entity (within the meaning assigned by subsection 233.4(1)), or

      • (iii) an exempt trust.

  • Marginal note:Joint filing

    (5) Where information returns in respect of a trust’s taxation year would, but for this subsection, be required to be filed under subsection 4 by a particular person and another person, and the particular person identifies the other person in an election filed in writing with the Minister, for the purposes of applying this Act to the particular person

    • (a) the information return filed by the other person shall be treated as if it had been filed by the particular person;

    • (b) the information required to be provided with the return by the particular person shall be deemed to be the information required to be provided by the other person with the return;

    • (c) the day on or before which the return is required to be filed by the particular person is deemed to be the later of the day on or before which

      • (i) the return would, but for this subsection, have been required to have been filed by the particular person, and

      • (ii) the return is required to have been filed by the other person; and

    • (d) each act and omission of the other person in respect of the return is deemed to be an act or omission of the particular person.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1997, c. 25, s. 69
  • 1998, c. 19, s. 232
  • 2013, c. 34, s. 21

Marginal note:Definitions

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

    reporting entity

    reporting entity for a taxation year or fiscal period means a specified Canadian entity for the year or period where, at any time (other than a time when the entity is non-resident) in the year or period, the total of all amounts each of which is the cost amount to the entity of a specified foreign property of the entity exceeds $100,000. (déclarant)

    specified Canadian entity

    specified Canadian entity for a taxation year or fiscal period means

    • (a) a taxpayer resident in Canada in the year that is not

      • (i) a mutual fund corporation,

      • (ii) a non-resident-owned investment corporation,

      • (iii) a person (other than a trust) all of whose taxable income for the year is exempt from tax under Part I,

      • (iv) a trust all of the taxable income of which for the year is exempt from tax under Part I,

      • (v) a mutual fund trust,

      • (vi) a trust described in any of paragraphs (a) to (e.1) of the definition trust in subsection 108(1),

      • (vii) a registered investment, nor

      • (viii) a trust in which all persons beneficially interested are persons described in subparagraphs (i) to (vii); and

    • (b) a partnership (other than a partnership all the members of which are taxpayers referred to in any of subparagraphs i) to (viii)) where the total of all amounts, each of which is a share of the partnership’s income or loss for the period of a non-resident member, is less than 90% of the income or loss of the partnership for the period, and, where the income and loss of the partnership are nil for the period, the income of the partnership for the period is deemed to be $1,000,000 for the purpose of determining a member’s share of the partnership’s income for the purpose of this paragraph. (entité canadienne déterminée)

    specified foreign property

    specified foreign property of a person or partnership means any property of the person or the partnership that is

    • (a) funds or intangible property, or for civil law incorporeal property, situated, deposited or held outside Canada,

    • (b) tangible property, or for civil law corporeal property, situated outside Canada,

    • (c) a share of the capital stock of a non-resident corporation,

    • (d) an interest in a non-resident trust,

    • (e) an interest in a partnership that owns or holds specified foreign property,

    • (f) an interest in, or right with respect to, an entity that is non-resident,

    • (g) indebtedness owed by a non-resident person,

    • (h) an interest in, or for civil law a right in, or a right — under a contract in equity or otherwise either immediately or in the future and either absolutely or contingently — to, any property (other than any property owned by a corporation or trust that is not the person) that is specified foreign property, and

    • (i) property that, under the terms or conditions thereof or any agreement relating thereto, is convertible into, is exchangeable for or confers a right to acquire, property that is specified foreign property,

    but does not include

    • (j) property that is used or held exclusively in the course of carrying on an active business of the person or partnership (determined as if the person or partnership were a corporation resident in Canada),

    • (k) a share of the capital stock or indebtedness of a non-resident corporation that is a foreign affiliate of the person or partnership for the purpose of section 233.4,

    • (l) an interest in, or indebtedness of, a non-resident trust that is a foreign affiliate of the person or partnership for the purpose of section 233.4,

    • (m) an interest in a non-resident trust that was not acquired for consideration by either the person or partnership or a person related to the person or partnership,

    • (n) an interest in a trust described in paragraph (a) or (b) of the definition exempt trust in subsection 233.2(1),

    • (o) an interest in a partnership that is a specified Canadian entity,

    • (o.1) a right with respect to, or indebtedness of, an authorized foreign bank that is issued by, and payable or otherwise enforceable at, a branch in Canada of the bank,

    • (p) personal-use property of the person or partnership, and

    • (q) an interest in, or for civil law a right in, or a right to acquire, a property that is described in any of paragraphs (j) to (p). (bien étranger déterminé)

  • Marginal note:Application to members of partnerships

    (2) For the purpose of this section, a person who is a member of a partnership that is a member of another partnership

    • (a) is deemed to be a member of the other partnership; and

    • (b) the person’s share of the income or loss of the other partnership is deemed to be equal to the amount of that income or loss to which the person is directly or indirectly entitled.

  • Marginal note:Returns respecting foreign property

    (3) A reporting entity for a taxation year or fiscal period shall file with the Minister for the year or period a return in prescribed form on or before the day that is

    • (a) where the entity is a partnership, the day on or before which a return is required by section 229 of the Income Tax Regulations to be filed in respect of the fiscal period of the partnership or would be required to be so filed if that section applied to the partnership; and

    • (b) where the entity is not a partnership, the entity’s filing-due date for the year.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1997, c. 25, s. 69
  • 2001, c. 17, s. 184
  • 2013, c. 34, ss. 22, 166

Marginal note:Reporting entity

  •  (1) For the purpose of this section, reporting entity for a taxation year or fiscal period means

    • (a) a taxpayer resident in Canada (other than a taxpayer all of whose taxable income for the year is exempt from tax under Part I) of which a non-resident corporation is a foreign affiliate at any time in the year;

    • (b) a taxpayer resident in Canada (other than a taxpayer all of whose taxable income for the year is exempt from tax under Part I) of which a non-resident trust is a foreign affiliate at any time in the year; and

    • (c) a partnership

      • (i) where the total of all amounts, each of which is a share of the partnership’s income or loss for the period of a member that is not resident in Canada or that is a taxpayer all of whose taxable income for the year in which the period ends is exempt from tax under Part I, is less than 90% of the income or loss of the partnership for the period, and, where the income and loss of the partnership are nil for the period, the income of the partnership for the period is deemed to be $1,000,000 for the purpose of determining a member’s share of the partnership’s income for the purpose of this subparagraph, and

      • (ii) of which a non-resident corporation or trust is a foreign affiliate at any time in the fiscal period.

  • Marginal note:Rules of application

    (2) For the purpose of this section, in determining whether a non-resident corporation or trust is a foreign affiliate or a controlled foreign affiliate of a taxpayer resident in Canada or of a partnership

    • (a) paragraph (b) of the definition equity percentage in subsection 95(4) shall be read as if the reference to “any corporation” were a reference to “any corporation other than a corporation resident in Canada”;

    • (b) the definitions direct equity percentage and equity percentage in subsection 95(4) shall be read as if a partnership were a person;

    • (c) the definitions controlled foreign affiliate and foreign affiliate in subsection 95(1) shall be read as if a partnership were a taxpayer resident in Canada; and

    • (d) if the taxpayer is a member of one or more partnerships described in subparagraph (1)(c)(i) of which a non-resident corporation or trust is a foreign affiliate, and the taxpayer does not have any direct or indirect interest (determined without reference to subsection 93.1(1)) in the non-resident corporation or trust other than through its interest in the partnerships, then the non-resident corporation or trust is deemed not to be a foreign affiliate of the taxpayer.

  • Marginal note:Application to members of partnerships

    (3) For the purpose of this section, a person who is a member of a partnership that is a member of another partnership

    • (a) is deemed to be a member of the other partnership; and

    • (b) the person’s share of the income or loss of the other partnership is deemed to be equal to the amount of that income or loss to which the person is directly or indirectly entitled.

  • Marginal note:Returns respecting foreign affiliates

    (4) A reporting entity for a taxation year or fiscal period shall file with the Minister for the year or period a return in prescribed form in respect of each foreign affiliate of the entity in the year or period within 10 months after the end of the year or period.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1997, c. 25, s. 69
  • 2013, c. 34, s. 354
  • 2014, c. 39, s. 69
  • 2018, c. 27, s. 25
 
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