Income Tax Application Rules

Marginal note:Part XI of amended Act

• 65 (1) Where, at any particular time after June 18, 1971 and before July 1, 1972, a taxpayer described in section 205 of the amended Act has acquired a foreign property that was

  • (a) a share of the capital stock of a corporation that would be a mutual fund corporation if paragraph 131(8)(a) of the amended Act were read without reference to the words “that was a public corporation”,

  • (b) a unit of a trust that would be a mutual fund trust if subsection 132(6) of the amended Act were read without reference to paragraph 132(6)(c), or

  • (c) an interest, as a beneficiary under a trust, in property held subject to the trust by a trust company incorporated under the laws of Canada or a province, if

    • (i) throughout the 1971 taxation year of the trust,

      • (A) all the property of the trust was held in trust for the benefit of not less than 20 beneficiaries, and

        • (I) not less than 20 of the beneficiaries were taxpayers described in paragraph 205(a) or (c) of the amended Act, or

        • (II) not less than 100 of the beneficiaries were taxpayers described in paragraph 205(b) of the amended Act,

      • (B) not less than 80% of all the property of the trust consisted of shares, bonds, mortgages, marketable securities or cash, and

      • (C) not more than 10% of all the property of the trust consisted of shares, bonds, mortgages or other securities of any one corporation or debtor other than Her Majesty in right of Canada or of a province or a Canadian municipality,

    • (ii) not less than 95% of the income of the trust for its 1971 taxation year was derived from investments described in clause (i)(B),

    • (iii) the total value of all such interests owned by all beneficiaries mentioned in clause (i)(A) to which any one employer has made or may make contributions did not exceed, at any time in the 1971 taxation year of the trust, 25% of the value of all the property of the trust at that time, and

    • (iv) the total value of all such interests owned by all beneficiaries mentioned in subclause (i)(A)(II) to which any one taxpayer has paid or may pay premiums did not exceed, at any time in the 1971 taxation year of the trust, 25% of the value of all the property of the trust at that time,

  the property shall, to the extent that the cost to the taxpayer thereof did not exceed the amount, if any, by which the taxpayer’s foreign investment limit exceeded the total of the costs to it of all foreign properties described in paragraphs (a) to (c) acquired by the taxpayer after June 18, 1971 and before the particular time, be deemed

  • (d) for the purposes of Part XI of the amended Act, to have been acquired before June 19, 1971 and not to have been acquired after June 18, 1971, and

  • (e) where the taxpayer was a trust governed by a registered retirement savings plan, notwithstanding the definition qualified investment in subsection 146(1) of the amended Act, to have been a qualified investment for the purposes of section 146 of that Act.

• Marginal note:Idem

  (1.1) Where, at any particular time after October 13, 1971 and before July 1, 1972, a taxpayer to whom Part XI of the amended Act applies has acquired a foreign property that was a share of the capital stock of a corporation that would be an investment corporation if subparagraph 130(3)(a)(i) of the amended Act were read without reference to the words “that was a public corporation”, for the purposes of subsection (1) the share so acquired shall be deemed to be a share described in paragraph (1)(a).

• Definition of foreign investment limit

  (2) In subsection (1), foreign investment limit of a taxpayer means the total of

  • (a) the taxpayer’s income from property for its 1971 taxation year,

  • (b) where the taxpayer was, throughout its 1971 taxation year, a taxpayer described in paragraph 205(a) of the amended Act, all amounts each of which is such portion of any amount paid or contributed by any person to or under the plan in 1971 as was deductible in computing that person’s income for the 1971 taxation year under paragraph 11(1)(g) or (h) of the former Act, or as would have been deductible in computing that income under paragraph 11(1)(i) of the former Act if that paragraph were read (except for the purposes of subparagraph 11(1)(i)(iii) of that Act) without reference to subparagraph 11(1)(i)(ii) of that Act,

  • (c) where the taxpayer was, throughout its 1971 taxation year, a trust governed by a registered retirement savings plan, all amounts each of which is such portion of any premium paid in 1971 by the annuitant under the plan as was deductible under subsection 79b(5) of the former Act in computing the annuitant’s income for the 1971 taxation year, and

  • (d) where the taxpayer was, throughout its 1971 taxation year, a trust governed by a deferred profit sharing plan, all amounts each of which is such portion of any amount paid by an employer to a trustee under the plan as was deductible under subsection 79c(7) of the former Act in computing the employer’s income for the 1971 taxation year.

• Marginal note:Foreign property acquired by registered retirement savings plan

  (3) Where, at any particular time after 1971 and before July 1, 1974, a trust governed by a registered retirement savings plan acquired a foreign property described in paragraph (1)(a) or (b) or a foreign property that would be described in paragraph (1)(c) if the references in that paragraph to the “1971 taxation year” of the trust were read as references to the “1972 and 1973 taxation years” of the trust, the property shall, to the extent that the cost to the trust thereof did not exceed the amount, if any, by which the trust’s foreign reinvestment limit exceeded the total of the cost to it of all such foreign properties so acquired by it after 1971 and before the particular time, be deemed

  • (a) for the purposes of Part XI of the amended Act, to have been acquired before June 19, 1971 and not to have been acquired after June 18, 1971; and

  • (b) notwithstanding the definition qualified investment in subsection 146(1) of the amended Act, to have been a qualified investment for the purposes of section 146 of that Act.

• Definition of foreign reinvestment limit

  (4) In subsection (3), foreign reinvestment limit of a trust governed by a registered retirement savings plan means such portion of the total of

  • (a) the trust’s income from the property for its 1972 and 1973 taxation years,

  • (b) all amounts each of which is such portion of any premium paid by the annuitant under the plan as was deductible under subsection 146(5) of the amended Act in computing the annuitant’s income for the 1972 or 1973 taxation year,

  • (c) all amounts each of which is a capital gains dividend (within the meaning assigned by subsection 131(1) of the amended Act) received by the trust in its 1972 or 1973 taxation year, and

  • (d) 2 times the total of all amounts each of which is, because of subsection 104(21) of the amended Act, deemed to be a taxable capital gain of the trust for its 1972 or 1973 taxation year,

  as was, under the terms and conditions of the plan as fixed on or before June 18, 1971, required to be invested by the trust in foreign property described in paragraph (1)(a) or (b) or foreign property that would be described in paragraph (1)(c) if the references in that paragraph to the “1971 taxation year” of the trust were read as references to the “1971 and 1972 taxation years” of the trust.

• Marginal note:Shares of a mutual fund corporation received on amalgamation

  (5) Where, after May 25, 1976, there has been an amalgamation (within the meaning assigned by section 87 of the amended Act) of two or more mutual fund corporations (each of which corporations is in this subsection referred to as a “predecessor corporation”) to form one corporate entity (in this subsection referred to as the “new corporation”), and

  • (a) any shareholder that is a taxpayer described in any of paragraphs 205(a), (b) and (c) of the amended Act owned shares of the capital stock of a predecessor corporation (in this subsection referred to as the “old shares”) on June 18, 1971 and thereafter without interruption until immediately before the amalgamation,

  • (b) any shares referred to in paragraph (a) were foreign property (within the meaning assigned by subsection 206(1) of the amended Act) immediately before the amalgamation, and

  • (c) no consideration was received by the shareholder for the disposition of the old shares on the amalgamation, other than shares of the capital stock of the new corporation (in this subsection referred to as the “new shares”),

  notwithstanding any other provision of this Act or of the amended Act, for the purpose of subsection 206(2) of the amended Act, the taxpayer shall be deemed not to have acquired the new shares after June 18, 1971.