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

Full Document:  

Act current to 2021-04-05 and last amended on 2021-01-01. Previous Versions

PART IIncome Tax (continued)

DIVISION BComputation of Income (continued)

SUBDIVISION FRules Relating to Computation of Income (continued)

Marginal note:Trusts

  •  (2) If a trust, that is resident in Canada and that was created in any manner whatever since 1934, holds property on condition

    • (a) that it or property substituted therefor may

      • (i) revert to the person from whom the property or property for which it was substituted was directly or indirectly received (in this subsection referred to as “the person”), or

      • (ii) pass to persons to be determined by the person at a time subsequent to the creation of the trust, or

    • (b) that, during the existence of the person, the property shall not be disposed of except with the person’s consent or in accordance with the person’s direction,

    any income or loss from the property or from property substituted for the property, and any taxable capital gain or allowable capital loss from the disposition of the property or of property substituted for the property, shall, during the existence of the person while the person is resident in Canada, be deemed to be income or a loss, as the case may be, or a taxable capital gain or allowable capital loss, as the case may be, of the person.

  • Marginal note:Exceptions

    (3) Subsection 75(2) does not apply to property held in a taxation year

    • (a) by a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a pooled registered pension plan, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan, a registered supplementary unemployment benefit plan, a retirement compensation arrangement or a TFSA;

    • (b) by an employee life and health trust, an employee trust, a private foundation that is a registered charity, a related segregated fund trust (within the meaning assigned by paragraph 138.1(1)(a)), a trust described by paragraph (a.1) of the definition trust in subsection 108(1), or a trust described by paragraph 149(1)(y);

    • (c) by a qualifying environmental trust; or

    • (c.1) to (c.3) [Repealed, 2013, c. 40, s. 35]

    • (d) by a trust if

      • (i) the trust acquired the property, or other property for which the property is a substitute, from a particular individual,

      • (ii) the particular individual acquired the property or the other property, as the case may be, in respect of another individual as a consequence of the operation of subsection 122.61(1) or under section 4 of the Universal Child Care Benefit Act, and

      • (iii) the trust has no beneficiaries (as defined in subsection 108(1)) who may for any reason receive directly from the trust any of the income or capital of the trust other than individuals in respect of whom the particular individual acquired property as a consequence of the operation of a provision described in subparagraph (ii).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 75
  • 1995, c. 3, s. 21
  • 1998, c. 19, s. 13
  • 2001, c. 17, s. 55
  • 2007, c. 35, s. 107
  • 2008, c. 28, s. 7
  • 2010, c. 25, s. 14
  • 2012, c. 31, s. 15
  • 2013, c. 34, ss. 5, 212, c. 40, s. 35
  • 2017, c. 33, s. 21

Marginal note:Gain or loss deemed that of transferor

  •  (1) Where

    • (a) subsection 73(3) or (4) applied to the transfer of property (in this subsection referred to as “transferred property”) by a taxpayer to a child of the taxpayer,

    • (b) the transfer was made at less than the fair market value of the transferred property immediately before the time of the transfer, and

    • (c) in a taxation year, the transferee disposed of the transferred property and did not, before the end of that year, attain the age of 18 years,

    the following rules apply:

    • (d) the amount, if any, by which

      • (i) the total of the transferee’s taxable capital gains for the year from dispositions of transferred property

      exceeds

      • (ii) the total of the transferee’s allowable capital losses for the year from dispositions of transferred property,

      shall during the lifetime of the transferor while the transferor is resident in Canada, be deemed to be a taxable capital gain of the transferor for the year from the disposition of property,

    • (e) the amount, if any, by which the total determined under subparagraph 75.1(1)(d)(ii) exceeds the total determined under subparagraph 75.1(1)(d)(i) shall, during the lifetime of the transferor while the transferor is resident in Canada, be deemed to be an allowable capital loss of the transferor for the year from the disposition of property, and

    • (f) any taxable capital gain or allowable capital loss taken into account in computing an amount described in paragraph 75.1(1)(d) or the amount described in paragraph 75.1(1)(e) shall, except for the purposes of those paragraphs, to the extent that the amount so described is deemed by virtue of this subsection to be a taxable capital gain or an allowable capital loss of the transferor, be deemed not to be a taxable capital gain or an allowable capital loss, as the case may be, of the transferee.

  • Definition of child

    (2) For the purposes of this section, child of a taxpayer includes a child of the taxpayer’s child and a child of the taxpayer’s child’s child.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 75.1
  • 1994, c. 7, Sch. II, s. 54

Marginal note:Rules applicable with respect to “qualifying trust annuity”

 If an amount paid to acquire a qualifying trust annuity with respect to a taxpayer was deductible under paragraph 60(l) in computing the taxpayer’s income,

  • (a) any amount that is paid out of or under the annuity at any particular time after 2005 and before the death of the taxpayer is deemed to have been received out of or under the annuity at the particular time by the taxpayer, and not to have been received by any other taxpayer; and

  • (b) if the taxpayer dies after 2005

    • (i) an amount equal to the fair market value of the annuity at the time of the taxpayer’s death is deemed to have been received, immediately before the taxpayer’s death, by the taxpayer out of or under the annuity, and

    • (ii) for the purpose of subsection 70(5), the annuity is to be disregarded in determining the fair market value (immediately before the taxpayer’s death) of the taxpayer’s interest in the trust that is the annuitant under the annuity.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2013, c. 34, s. 213

Marginal note:Security in satisfaction of income debt

  •  (1) Where a person receives a security or other right or a certificate of indebtedness or other evidence of indebtedness wholly or partially as payment of, in lieu of payment of or in satisfaction of, a debt that is then payable, the amount of which debt would be included in computing the person’s income if it were paid, the value of the security, right or indebtedness or the applicable portion thereof shall, notwithstanding the form or legal effect of the transaction, be included in computing the person’s income for the taxation year in which it is received.

  • Marginal note:Idem

    (2) Where a security or other right or a certificate of indebtedness or other evidence of indebtedness is received by a person wholly or partially as payment of, in lieu of payment of or in satisfaction of, a debt before the debt is payable, but is not itself payable or redeemable before the day on which the debt is payable, it shall, for the purpose of subsection 76(1), be deemed to be received by the person holding it at that time when the debt becomes payable.

  • Marginal note:Section enacted for greater certainty

    (3) This section is enacted for greater certainty and shall not be construed as limiting the generality of the other provisions of this Part by which amounts are required to be included in computing income.

  • Marginal note:Debt deemed not to be income debt

    (4) Where a cash purchase ticket or other form of settlement prescribed pursuant to the Canada Grain Act or by the Minister is issued to a taxpayer in respect of grain delivered in a taxation year of a taxpayer to a primary elevator or process elevator and the ticket or other form of settlement entitles the holder thereof to payment by the operator of the elevator of the purchase price, without interest, stated in the ticket for the grain at a date that is after the end of that taxation year, the amount of the purchase price stated in the ticket or other form of settlement shall, notwithstanding any other provision of this section, be included in computing the income of the taxpayer to whom the ticket or other form of settlement was issued for the taxpayer’s taxation year immediately following the taxation year in which the grain was delivered and not for the taxation year in which the grain was delivered.

  • Marginal note:Definitions of certain expressions

    (5) In subsection (4), the expressions cash purchase ticket, operator, primary elevator and process elevator have the meanings assigned by the Canada Grain Act, and grain means wheat, oats, barley, rye, flaxseed, rapeseed and canola produced in Canada.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 76
  • 1994, c. 7, Sch. II, s. 55
  • 2012, c. 19, s. 2
 
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