Income Tax Act

Marginal note:Definitions

• 197 (1) The following definitions apply in this Part and in section 96.

  non-portfolio earnings

  gains hors portefeuille

  non-portfolio earnings, of a SIFT partnership for a taxation year, means the total of

  • (a) the amount, if any, by which

    • (i) the total of all amounts each of which is the SIFT partnership’s income for the taxation year from a business carried on by it in Canada or from a non-portfolio property, other than income that is a taxable dividend received by the SIFT partnership,

    exceeds

    • (ii) the total of all amounts each of which is the SIFT partnership’s loss for the taxation year from a business carried on by it in Canada or from a non-portfolio property, and

  • (b) the amount, if any, by which all taxable capital gains of the SIFT partnership from dispositions of non-portfolio properties during the taxation year exceeds the total of the allowable capital losses of the SIFT partnership for the taxation year from dispositions of non-portfolio properties during the taxation year. (gains hors portefeuille)

  SIFT partnership

  société de personnes intermédiaire de placement déterminée

  SIFT partnership, being a specified investment flow-through partnership, for any taxation year, means a partnership other than an excluded subsidiary entity (as defined in subsection 122.1(1)) for the taxation year that meets the following conditions at any time during the taxation year:

  • (a) the partnership is a Canadian resident partnership;

  • (b) investments (as defined in subsection 122.1(1)) in the partnership are listed or traded on a stock exchange or other public market; and

  • (c) the partnership holds one or more non-portfolio properties. (société de personnes intermédiaire de placement déterminée)

  taxable non-portfolio earnings

  gains hors portefeuille imposables

  taxable non-portfolio earnings of a SIFT partnership, for a taxation year, means the lesser of

  • (a) the amount that would, if the SIFT partnership were a taxpayer for the purposes of Part I and if subsection 96(1) were read without reference to its paragraph (d), be its income for the taxation year as determined under section 3; and

  • (b) its non-portfolio earnings for the taxation year. (gains hors portefeuille imposables)

• Marginal note:Tax on partnership income

  (2) Every partnership that is a SIFT partnership for a taxation year is liable to a tax under this Part equal to the amount determined by the formula

  A × (B + C)

  where

  A

  is the taxable non-portfolio earnings of the SIFT partnership for the taxation year;

  B

  is the net corporate income tax rate in respect of the SIFT partnership for the taxation year; and

  C

  is the provincial SIFT tax rate of the SIFT partnership for the taxation year.

• Marginal note:Ordering

  (3) This Part and section 122.1 are to be applied as if this Act were read without reference to subsection 96(1.11).

• Marginal note:Partnership to file return

  (4) Every member of a partnership that is liable to pay tax under this Part for a taxation year shall — on or before the day on or before which the partnership return is required to be filed for the year under section 229 of the Income Tax Regulations — file with the Minister a return for the taxation year under this Part in prescribed form containing an estimate of the tax payable by the partnership under this Part for the taxation year.

• Marginal note:Authority to file return

  (5) For the purposes of subsection (4), if, in respect of a taxation year of a partnership, a particular member of the partnership has authority to act for the partnership,

  • (a) if the particular member has filed a return as required by this Part for a taxation year, each other person who was a member of the partnership during the taxation year is deemed to have filed the return; and

  • (b) a return that has been filed by any other member of the partnership for the taxation year is not valid and is deemed not to have been filed by any member of the partnership.

• Marginal note:Provisions applicable to Part

  (6) Subsection 150(2), sections 152, 156, 156.1, 158, 159 and 161 to 167 and Division J of Part I apply to this Part, with any modifications that the circumstances require, and for greater certainty,

  • (a) a notice of assessment referred to in subsection 152(2) in respect of tax payable under this Part is valid notwithstanding that a partnership is not a person; and

  • (b) notwithstanding subsection 152(4), the Minister may at any time make an assessment or reassessment of tax payable under this Part or Part I to give effect to a determination made by the Minister under subsection 152(1.4), including the assessment or reassessment of Part I tax payable in respect of the disposition of an interest in a SIFT partnership by a member of the partnership.

• Marginal note:Payment

  (7) Every SIFT partnership shall pay to the Receiver General, on or before its SIFT partnership balance-due day for each taxation year, its tax payable under this Part for the taxation year.

• Application of definition SIFT partnership

  (8) The definition SIFT partnership applies to a partnership for a taxation year of the partnership that ends after 2006, except that if the partnership would have been a SIFT partnership on October 31, 2006 had that definition been in force and applied to the partnership as of that date, that definition does not apply to the partnership for a taxation year of the partnership that ends before the earlier of

  • (a) 2011, and

  • (b) the first day after December 15, 2006 on which the partnership exceeds normal growth as determined by reference to the normal growth guidelines issued by the Department of Finance on December 15, 2006, as amended from time to time, unless that excess arose as a result of a prescribed transaction.