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

Marginal note:Part XII.4 tax credit

• 127.41 (1) In this section, the Part XII.4 tax credit of a taxpayer for a particular taxation year means the total of

  • (a) all amounts each of which is an amount determined by the formula

    A × B/C

    where

    A

    is the tax payable under Part XII.4 by a qualifying environmental trust for a taxation year (in this paragraph referred to as the “trust’s year”) that ends in the particular year,

    B

    is the amount, if any, by which the total of all amounts in respect of the trust that were included (otherwise than because of being a member of a partnership) because of the application of subsection 107.3(1) in computing the taxpayer’s income for the particular year exceeds the total of all amounts in respect of the trust that were deducted (otherwise than because of being a member of a partnership) because of the application of subsection 107.3(1) in computing that income, and

    C

    is the trust’s income for the trust’s year, computed without reference to subsections 104(4) to 104(31) and sections 105 to 107, and

  • (b) in respect of each partnership of which the taxpayer was a member, the total of all amounts each of which is the amount that can reasonably be considered to be the taxpayer’s share of the relevant credit in respect of the partnership and, for this purpose, the relevant credit in respect of a partnership is the amount that would, if a partnership were a person and its fiscal period were its taxation year, be the Part XII.4 tax credit of the partnership for its taxation year that ends in the particular year.

• Marginal note:Reduction of Part I tax

  (2) There may be deducted from a taxpayer’s tax otherwise payable under this Part for a taxation year such amount as the taxpayer claims not exceeding the taxpayer’s Part XII.4 tax credit for the year.

• Marginal note:Deemed payment of Part I tax

  (3) There is deemed to have been paid on account of the tax payable under this Part by a taxpayer (other than a taxpayer exempt from such tax) for a taxation year on the taxpayer’s balance-due day for the year, such amount as the taxpayer claims not exceeding the amount, if any, by which

  • (a) the taxpayer’s Part XII.4 tax credit for the year

  exceeds

  • (b) the amount deducted under subsection 127.41(2) in computing the taxpayer’s tax payable under this Part for the year.

Marginal note:Definitions

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

  designated province

  designated province means a province specified by the Minister of Finance for a calendar year. (province déterminée)

  eligible farming expenses

  eligible farming expenses, of a taxpayer for a designated province for a taxation year, means the amount determined by the formula

  A × B

  where

  A

  is

  • (a) nil, if the total of all amounts deducted in the year by the taxpayer in computing income under this Part from farming activities, excluding any deductions arising from inventory adjustments under section 28 and from transactions with persons that do not deal at arm’s length with the taxpayer, is less than $25,000, and

  • (b) in any other case, the total of all amounts deducted in the year by the taxpayer in computing income under this Part from farming activities, excluding any deductions arising from inventory adjustments under section 28 and from transactions with persons that do not deal at arm’s length with the taxpayer; and

  B

  is the taxpayer’s relevant proportion for the designated province for the taxation year. (dépenses agricoles admissibles)

  farming activities

  farming activities means a farming business, including or excluding activities prescribed by regulation. (activités agricoles)

  payment rate

  payment rate, for a calendar year for a designated province, means the rate specified by the Minister of Finance for the calendar year for the designated province. (taux de paiement)

  relevant proportion

  relevant proportion, of eligible farming expenses of a taxpayer for a designated province for a taxation year, means

  • (a) if the taxpayer is an individual, the proportion determined by the formula

    A ÷ B

    where

    A

    is the individual’s income for the year from farming activities that is deemed to have been earned in the year in the designated province in accordance with Part XXVI of the Income Tax Regulations, and

    B

    is the whole of the individual’s income from farming activities for the year;

  • (b) if the taxpayer is a corporation, the proportion determined by the formula

    C ÷ D

    where

    C

    is the corporation’s taxable income that is deemed to have been earned in the year in the designated province in accordance with Part IV of the Income Tax Regulations, and

    D

    is the whole of the corporation’s taxable income for the year; and

  • (c) if the taxpayer is a partnership, the proportion determined by the formula

    E ÷ F

    where

    E

    is the partnership’s income for the fiscal period of the partnership from farming activities that would be deemed to have been earned in the year in the designated province, computed in accordance with Part XXVI of the Income Tax Regulations as if the partnership were an individual, and

    F

    is the whole of the partnership’s income from farming activities for the fiscal period of the partnership. (proportion pertinente)

• Marginal note:Deemed payment on account of tax

  (2) A taxpayer (other than a partnership) that files a prescribed form containing prescribed information with their return of income for a taxation year is deemed, on their balance-due day for the year, to have paid on account of their tax payable under this Part for the year, the total of all amounts each of which is an amount, for each designated province and for each calendar year a portion of which falls within the taxation year, determined by the formula

  (A × B) × (C ÷ D)

  where

  A

  is the payment rate for the calendar year for the designated province;

  B

  is the taxpayer’s eligible farming expenses for the designated province for the taxation year;

  C

  is the number of days within the taxation year that fall within the calendar year; and

  D

  is the number of days in the taxation year.

• Marginal note:Deemed payment on account of tax — partnership

  (3) If a taxpayer (other than a partnership) is a member of a partnership at the end of a fiscal period of the partnership that ends in a taxation year of the taxpayer — and the partnership files a prescribed form containing prescribed information for that fiscal period and the taxpayer files a prescribed form containing prescribed information with its return of income for the taxation year — the taxpayer is deemed, on the taxpayer’s balance-due day for the taxation year, to have paid on account of their tax payable under this Part for the year, the total of all amounts each of which is an amount, for each designated province and for each calendar year a portion of which falls within the partnership’s fiscal period, determined by the formula

  (A × B) × (C ÷ D) × E

  where

  A

  is the payment rate for the calendar year for the designated province;

  B

  is the partnership’s eligible farming expenses for the designated province for the fiscal period;

  C

  is the number of days within the fiscal period that fall within the calendar year;

  D

  is the number of days in the fiscal period; and

  E

  is the specified proportion of the taxpayer for the fiscal period.

• Marginal note:Partnerships

  (4) For the purposes of this section,

  • (a) a taxpayer includes a partnership;

  • (b) the fiscal period of a partnership is deemed to be its taxation year; and

  • (c) if a taxpayer is a member of a particular partnership that is a member of another partnership, the taxpayer is deemed

    • (i) to be a member of the other partnership, and

    • (ii) to have a specified proportion in the other partnership for a fiscal period of the other partnership equal to its specified proportion of the particular partnership — for the last fiscal period of the particular partnership that ends in the fiscal period of the other partnership — multiplied by the particular partnership’s specified proportion of the other partnership for the fiscal period of the other partnership.

• Marginal note:Authority to specify

  (5) For the purposes of this section, the Minister of Finance may specify for a calendar year

  • (a) the designated provinces; and

  • (b) the payment rate for a designated province.

• Marginal note:Payment rate not specified

  (6) For the purposes of this section, if the Minister of Finance does not specify the payment rate for a designated province under paragraph (5)(b), the payment rate is deemed to be nil.

• Marginal note:When assistance received

  (7) For the purposes of this Act, and for greater certainty, an amount that a taxpayer is deemed under subsection (2) or (3) to have paid for a taxation year is assistance received by the taxpayer from a government immediately before the end of the year.

• Marginal note:Relevant proportion — special rule

  (8) For purposes of determining the relevant proportion of eligible farming expenses of a taxpayer for a designated province in a taxation year,

  • (a) if the income of an individual or partnership from farming activities for the year is nil, the income for the year from farming activities that is deemed to have been earned in the year in the designated province shall be computed in accordance with Part XXVI of the Income Tax Regulations as if the individual or partnership earned $1,000,000 of income from farming activities; and

  • (b) if the taxable income of a corporation is nil, the corporation’s taxable income that is deemed to have been earned in the year in the designated province shall be computed in accordance with Part IV of the Income Tax Regulations as if the corporation had taxable income for the year in the amount of $1,000,000.

Marginal note:Definitions

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

  designated province

  designated province means a province specified by the Minister of Finance for a calendar year. (province déterminée)

  fuel return specified

  fuel return specified, for a designated province for a calendar year, means the amount specified by the Minister of Finance for a person employed by a corporation for the designated province for the calendar year. (montant lié aux carburants spécifié)

  person employed

  person employed, by a corporation for a calendar year, means a person who was at any time in the calendar year employed by the corporation and in respect of whom the corporation issued (or a payroll service provider issued on behalf of the corporation) a statement of remuneration paid. (personne employée)

  2023 business number

  2023 business number means the business number of a corporation which the corporation used to make remittances for employees for the corporation’s last taxation year ending in 2023. (numéro d’entreprise 2023)

• Marginal note:Deemed amount 2019-2023

  (2) A corporation that files, on or before July 15, 2024, a return of income for a taxation year ending in 2023 (other than a final return on dissolution) is deemed to have paid on a date specified by the Minister of Finance, on account of tax payable under this Part for that taxation year, the total of all amounts, each of which is an amount, for each designated province, for each calendar year that is 2019, 2020, 2021, 2022 and 2023, determined by the formula

  A × B × C

  where

  A

  is the fuel return specified for the designated province, for the calendar year;

  B

  is

  • (a) if the total number of persons each of whom was a person employed by the corporation in a province at any time in the calendar year exceeds 499, nil, and

  • (b) in any other case, the total number of persons, each of whom was a person employed by the corporation in the designated province in the calendar year; and

  C

  is

  • (a) if the corporation was a Canadian-controlled private corporation at all times in the taxation year ending in 2023, 1, and

  • (b) in any other case, nil.

• Marginal note:Deemed amount after 2023

  (3) A corporation that files a return of income for a particular taxation year ending in a calendar year after 2023 (other than a final return on dissolution) is, if the return is filed on or before July 15 of the following calendar year, deemed to have paid on its balance-due day for the year, on account of tax payable under this Part for the particular taxation year, the total of all amounts, each of which is an amount, for each designated province for the calendar year, determined by the formula

  A × B × C

  where

  A

  is the fuel return specified for the designated province, for the calendar year;

  B

  is

  • (a) if the total number of persons each of whom was a person employed by the corporation in a province at any time in the calendar year exceeds 499, nil, and

  • (b) in any other case, the total number of persons, each of whom was a person employed by the corporation in the designated province in the calendar year; and

  C

  is

  • (a) if the corporation was a Canadian-controlled private corporation at all times in the particular taxation year, 1, and

  • (b) in any other case, nil.

• Marginal note:Authority to specify

  (4) For the purposes of this section, the Minister of Finance may specify for a calendar year

  • (a) the designated provinces; and

  • (b) the fuel return specified for a designated province.

• Marginal note:Amount not specified

  (5) For the purposes of this section, if the Minister of Finance does not specify a fuel return specified for a designated province for a calendar year under paragraph (4)(b), the fuel return specified for the designated province for the calendar year is deemed to be nil.

• Marginal note:Assistance received

  (6) For the purposes of this Act, an amount deemed by this section to have been paid on account of tax payable for a taxation year is assistance received by the taxpayer from a government in the taxation year in which the assistance is received.

• Marginal note:Deemed rebate in respect of fuel charges

  (7) An amount for a designated province included in the total of all amounts deemed by this section to have been paid on account of tax payable for a taxation year is deemed to have been paid during the taxation year as a rebate in respect of charges levied under Part 1 of the Greenhouse Gas Pollution Pricing Act in respect of the designated province.

• Marginal note:Predecessor corporation

  (8) For the purposes of subsection (2), where there has been an amalgamation or merger of two or more corporations before 2023, the corporation filing a return of income in 2023 is deemed to be the same corporation as and a continuation of each predecessor corporation that was registered with the Minister to make remittances required under section 153 under the corporation’s 2023 business number.

• Marginal note:Predecessor corporation

  (9) For the purposes of subsections (2) and (3), the number of persons employed by a corporation in a calendar year after 2022 is deemed to be nil in that year if the corporation is formed by an amalgamation or merger in that calendar year.

• Marginal note:Province of employment

  (10) For the purposes of this section, if a person is employed by the same corporation in more than one province in a calendar year, the person is deemed to be employed throughout the calendar year by that corporation in the province in respect of which the person has received the highest amount of remuneration paid by the corporation and is deemed not to be employed in any other province in the calendar year.

• Marginal note:Deemed taxation year

  (11) For the purposes of subsection (3), if a corporation has more than one taxation year ending in the same calendar year, the particular taxation year is the first taxation year that ends in that calendar year.