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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 IIncome Tax (continued)

DIVISION EComputation of Tax (continued)

SUBDIVISION ARules Applicable to Individuals (continued)

Marginal note:Definitions

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

    adjusted income

    adjusted income of an individual for a taxation year has the meaning assigned by section 122.6. (revenu modifié)

    eligible individual

    eligible individual for a taxation year means an individual (other than a trust)

    • (a) who is resident in Canada throughout the year (or, if the individual dies in the year, throughout the portion of the year before the individual’s death);

    • (b) who, before the end of the year, has attained the age of 18 years; and

    • (c) the total of whose incomes for the year from the following sources is at least $2,500:

      • (i) offices and employments (computed without reference to paragraph 6(1)(f)),

      • (ii) businesses each of which is a business carried on by the individual either alone or as a partner actively engaged in the business, and

      • (iii) the program established under the Wage Earner Protection Program Act. (particulier admissible)

  • Marginal note:Deemed payment on account of tax

    (2) Where a return of income (other than a return of income filed under subsection 70(2), paragraph 104(23)(d) or 128(2)(e) or subsection 150(4)) is filed in respect of an eligible individual for a particular taxation year that ends at the end of a calendar year, there is deemed to be paid at the end of the particular year on account of the individual’s tax payable under this Part for the particular year the amount determined by the formula

    A - B

    where

    A
    is the lesser of
    • (a) $1000, and

    • (b) the total of

      • (i) the amount determined by the formula

        (0.25/C) × D

        where

        C
        is the appropriate percentage for the particular taxation year, and
        D
        is the total of all amounts each of which is the amount determined by the formula in subsection 118.2(1) for the purpose of computing the individual’s tax payable under this Part for a taxation year that ends in the calendar year, and
      • (ii) 25% of the total of all amounts each of which is the amount deductible under section 64 in computing the individual’s income for a taxation year that ends in the calendar year; and

    B
    is 5% of the amount, if any, by which
    • (a) the total of all amounts each of which is the individual’s adjusted income for a taxation year that ends in the calendar year

    exceeds

    • (b) $21,663.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1998, c. 19, s. 32
  • 2000, c. 14, s. 39, c. 19, s. 32
  • 2001, c. 17, s. 108
  • 2005, c. 19, s. 26, c. 30, s. 7
  • 2006, c. 4, s. 70
  • 2007, c. 2, s. 31
  • 2009, c. 2, s. 37
  • 2017, c. 33, s. 47

SUBDIVISION A.1Canada Child Benefit

Marginal note:Definitions

 In this Subdivision,

adjusted earned income

adjusted earned income[Repealed, 1998, c. 21, s. 92]

adjusted income

adjusted income, of an individual for a taxation year, means the total of all amounts each of which would be the income for the year of the individual or of the person who was the individual’s cohabiting spouse or common-law partner at the end of the year if in computing that income no amount were

  • (a) included

    • (i) under paragraph 56(1)(q.1) or subsection 56(6),

    • (ii) in respect of any gain from a disposition of property to which section 79 applies, or

    • (iii) in respect of a gain described in subsection 40(3.21), or

  • (b) deductible under paragraph 20(1)(ww) or 60(y) or (z); (revenu modifié)

base taxation year

base taxation year in relation to a month means

  • (a) where the month is any of the first 6 months of a calendar year, the taxation year that ended on December 31 of the second preceding calendar year, and

  • (b) where the month is any of the last 6 months of a calendar year, the taxation year that ended on December 31 of the preceding calendar year; (année de base)

cohabiting spouse or common-law partner

cohabiting spouse or common-law partner of an individual at any time means the person who at that time is the individual’s spouse or common-law partner and who is not at that time living separate and apart from the individual and, for the purpose of this definition, a person shall not be considered to be living separate and apart from an individual at any time unless they were living separate and apart at that time, because of a breakdown of their marriage or common-law partnership, for a period of at least 90 days that includes that time; (époux ou conjoint de fait visé)

earned income

earned income[Repealed, 1998, c. 21, s. 92]

eligible individual

eligible individual in respect of a qualified dependant at any time means a person who at that time

  • (a) resides with the qualified dependant,

  • (b) is a parent of the qualified dependant who

    • (i) is the parent who primarily fulfils the responsibility for the care and upbringing of the qualified dependant and who is not a shared-custody parent in respect of the qualified dependant, or

    • (ii) is a shared-custody parent in respect of the qualified dependant,

  • (c) is resident in Canada or, where the person is the cohabiting spouse or common-law partner of a person who is deemed under subsection 250(1) to be resident in Canada throughout the taxation year that includes that time, was resident in Canada in any preceding taxation year,

  • (d) is not described in paragraph 149(1)(a) or 149(1)(b), and

  • (e) is, or whose cohabiting spouse or common-law partner is, a Canadian citizen or a person who

and for the purposes of this definition,

  • (f) where the qualified dependant resides with the dependant’s female parent, the parent who primarily fulfils the responsibility for the care and upbringing of the qualified dependant is presumed to be the female parent,

  • (g) the presumption referred to in paragraph 122.6 eligible individual (f) does not apply in prescribed circumstances,

  • (h) prescribed factors shall be considered in determining what constitutes care and upbringing, and

  • (i) an individual shall not fail to qualify as a parent (within the meaning assigned by section 252) of another individual solely because of the receipt of a social assistance amount that is payable under a program of the Government of Canada, the government of a province or an Indigenous governing body (as defined in section 2 of the Children’s Special Allowances Act) for the benefit of the other individual; (particulier admissible)

qualified dependant

qualified dependant at any time means a person who at that time

  • (a) has not attained the age of 18 years,

  • (b) is not a person in respect of whom an amount was deducted under paragraph (a) of the description of B in subsection 118(1) in computing the tax payable under this Part by the person’s spouse or common-law partner for the base taxation year in relation to the month that includes that time, and

  • (c) is not a person in respect of whom a special allowance under the Children’s Special Allowances Act is payable for the month that includes that time; (personne à charge admissible)

return of income

return of income filed by an individual for a taxation year means

  • (a) where the individual was resident in Canada throughout the year, the individual’s return of income (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) that is filed or required to be filed under this Part for the year, and

  • (b) in any other case, a prescribed form containing prescribed information, that is filed with the Minister; (déclaration de revenu)

shared-custody parent

shared-custody parent in respect of a qualified dependant at a particular time means, where the presumption referred to in paragraph (f) of the definition eligible individual does not apply in respect of the qualified dependant, an individual who is one of the two parents of the qualified dependant who

  • (a) are not at that time cohabitating spouses or common-law partners of each other,

  • (b) reside with the qualified dependant either

    • (i) at least 40% of the time in the month in which the particular time occurs, or

    • (ii) on an approximately equal basis, and

  • (c) primarily fulfil the responsibility for the care and upbringing of the qualified dependant when residing with the qualified dependant, as determined in consideration of prescribed factors. (parent ayant la garde partagée)

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1994, c. 7, Sch. VII, s. 12
  • 1996, c. 11, s. 95
  • 1998, c. 19, s. 140, c. 21, s. 92
  • 1999, c. 22, s. 44
  • 2000, c. 12, s. 142
  • 2001, c. 17, s. 109, c. 27, s. 254
  • 2006, c. 4, s. 176
  • 2007, c. 35, s. 112
  • 2010, c. 25, s. 24
  • 2016, c. 7, s. 28
  • 2018, c. 12, s. 16, c. 27, s. 11
  • 2021, c. 23, s. 21
  • 2022, c. 10, s. 9

Marginal note:Deemed overpayment

  •  (1) If a person and, if the Minister so demands, the person’s cohabiting spouse or common-law partner at the end of a taxation year have filed a return of income for the year, an overpayment on account of the person’s liability under this Part for the year is deemed to have arisen during a month in relation to which the year is the base taxation year, equal to the amount determined by the formula

    (A + M)/12

    where

    A
    is the amount determined by the formula

    E − Q

    where

    E
    is the total of
    • (a) the product obtained by multiplying $6,400 by the number of qualified dependants in respect of whom the person was an eligible individual at the beginning of the month who have not reached the age of six years at the beginning of the month, and

    • (b) the product obtained by multiplying $5,400 by the number of qualified dependants, other than those qualified dependants referred to in paragraph (a), in respect of whom the person was an eligible individual at the beginning of the month, and

    Q
    is
    • (a) if the person’s adjusted income for the year is less than or equal to $30,000, nil,

    • (b) if the person’s adjusted income for the year is greater than $30,000 but less than or equal to $65,000, and if the person is, at the beginning of the month, an eligible individual in respect of

      • (i) only one qualified dependant, 7% of the person’s adjusted income for the year in excess of $30,000,

      • (ii) only two qualified dependants, 13.5% of the person’s adjusted income for the year in excess of $30,000,

      • (iii) only three qualified dependants, 19% of the person’s adjusted income for the year in excess of $30,000, or

      • (iv) more than three qualified dependants, 23% of the person’s adjusted income for the year in excess of $30,000, and

    • (c) if the person’s adjusted income for the year is greater than $65,000, and if the person is, at the beginning of the month, an eligible individual in respect of

      • (i) only one qualified dependant, the total of $2,450 and 3.2% of the person’s adjusted income for the year in excess of $65,000,

      • (ii) only two qualified dependants, the total of $4,725 and 5.7% of the person’s adjusted income for the year in excess of $65,000,

      • (iii) only three qualified dependants, the total of $6,650 and 8% of the person’s adjusted income for the year in excess of $65,000, or

      • (iv) more than three qualified dependants, the total of $8,050 and 9.5% of the person’s adjusted income for the year in excess of $65,000,

    M
    is the amount determined by the formula

    N – O

    where

    N
    is the product obtained by multiplying $2,730 by the number of qualified dependants in respect of whom both
    • (a) an amount may be deducted under section 118.3 for the taxation year that includes the month, and

    • (b) the person is an eligible individual at the beginning of the month, and

    O
    is
    • (a) if the person’s adjusted income for the year is less than or equal to $65,000, nil, and

    • (b) if the person’s adjusted income for the year is greater than $65,000,

      • (i) where the person is an eligible individual in respect of only one qualified dependant described in N, 3.2% of the person’s adjusted income for the year in excess of $65,000, and

      • (ii) where the person is an eligible individual in respect of two or more qualified dependants described in N, 5.7% of the person’s adjusted income for the year in excess of $65,000.

  • Marginal note:COVID-19 — additional amount

    (1.01) If the month referred to in subsection (1) is May 2020, each amount expressed in dollars referred to in paragraphs (a) and (b) of the description of E in subsection (1) is deemed, for that month, to be equal to that amount (as adjusted under subsection (5)) plus an additional amount of $3,600. For greater certainty, the adjustment in subsection (5) shall not take into account this additional amount.

  • Marginal note:Shared-custody parent

    (1.1) Notwithstanding subsection (1), if an eligible individual is a shared-custody parent in respect of one or more qualified dependants at the beginning of a month, the overpayment deemed by subsection (1) to have arisen during the month is equal to the amount determined by the formula

    1/2 × (A + B)

    where

    A
    is the amount determined by the formula in subsection (1), calculated without reference to this subsection, and
    B
    is the amount determined by the formula in subsection (1), calculated without reference to this subsection and subparagraph (b)(ii) of the definition eligible individual in section 122.6.
  • Marginal note:Deemed overpayment — COVID-19

    (1.2) If the Minister determines before 2024 that an overpayment (for greater certainty, in an amount greater than nil) on account of a person’s liability under this Part for a taxation year is deemed to have arisen during a month under subsection (1), or would be so deemed if this section were read without reference to subsection (2), then an overpayment on account of the person’s liability under this Part for the year is deemed to have arisen during the month, equal to the total of all amounts each of which is an amount in respect of a qualified dependant — in respect of whom the person was an eligible individual at the beginning of the month who has not reached the age of six years at the beginning of the month — determined by the formula

    A × B

    where

    A
    is
    • (a) 0.5, if the person is a shared-custody parent in respect of the qualified dependant, and

    • (b) 1, in any other case; and

    B
    is
    • (a) if the month is January 2021 or April 2021,

      • (i) $300, if the person’s adjusted income for 2019 is less than or equal to $120,000, and

      • (ii) $150 in any other case,

    • (b) if the month is July 2021 or October 2021,

      • (i) $300, if the person’s adjusted income for 2020 is less than or equal to $120,000, and

      • (ii) $150 in any other case, and

    • (c) in any other case, nil.

  • Marginal note:Exceptions

    (2) Notwithstanding subsection (1), if a particular month is the first month during which an overpayment that is less than $20 (or such other amount as is prescribed) is deemed under that subsection to have arisen on account of a person’s liability under this Part for the base taxation year in relation to the particular month, any such overpayment that would, but for this subsection, reasonably be expected at the end of the particular month to arise during another month in relation to which the year is the base taxation year is deemed to arise under that subsection during the particular month and not during the other month.

  • Marginal note:Non-residents and part-year residents

    (3) For the purposes of this section, if a person was non-resident at any time in a taxation year, the person’s income for the year is, for greater certainty, deemed to be the amount that would have been the person’s income for the year had the person been resident in Canada throughout the year.

  • Marginal note:Effect of bankruptcy

    (3.1) For the purposes of this Subdivision, where in a taxation year an individual becomes bankrupt,

    • (a) the individual’s income for the year shall include the individual’s income for the taxation year that begins on January 1 of the calendar year that includes the date of bankruptcy; and

    • (b) the total of all amounts deducted under section 63 in computing the individual’s income for the year shall include the amount deducted under that section for the individual’s taxation year that begins on January 1 of the calendar year that includes the date of bankruptcy.

    • (c) [Repealed, 1998, c. 21, s. 94]

  • Marginal note:Amount not to be charged, etc.

    (4) A refund of an amount deemed by this section to be an overpayment on account of a person’s liability under this Part for a taxation year

  • Marginal note:Annual adjustment

    (5) Each amount expressed in dollars in subsection (1) shall be adjusted so that, where the base taxation year in relation to a particular month is after 2016, the amount to be used under that subsection for the month is the total of

    • (a) the amount that would, but for subsection (7), be the relevant amount used under subsection (1) for the month that is one year before the particular month, and

    • (b) the product obtained by multiplying

      • (i) the amount referred to in paragraph (a)

      by

      • (ii) the amount, adjusted in such manner as is prescribed and rounded to the nearest one-thousandth or, where the result obtained is equidistant from 2 such consecutive one-thousandths, to the higher thereof, that is determined by the formula

        (A/B) − 1

        where

        A
        is the Consumer Price Index (within the meaning assigned by subsection 117.1(4)) for the 12-month period that ended on September 30 of the base taxation year, and
        B
        is the Consumer Price Index for the 12 month period preceding the period referred to in the description of A.
  • (5.1) [Repealed, 1998, c. 21, s. 93]

  • Marginal note:Additions to NCB supplement — July 2005 and 2006

    (6) Each amount referred to in the description of F in subsection (1) that is to be used for the purpose of determining the amount deemed to be an overpayment arising during months that are

    • (a) after June 2005 and before July 2006, is to be replaced with the amount that is the total of $185 and the amount otherwise determined under subsection (5) for those months; and

    • (b) after June 2006 and before July 2007, is to be replaced with the amount that is the total of $185 and the amount otherwise determined, for those months, by applying subsection (5) to the amount determined under paragraph (a).

  • Marginal note:Agreement with a province

    (6.1) Notwithstanding subsection (5), for the purposes of any agreement referred to in section 122.63 with respect to overpayments deemed to arise during months that are after June 2001 and before July 2002, the amount determined under subparagraph (5)(b)(ii) for a month referred to in paragraph (6)(b) is deemed to be 0.012.

  • Marginal note:Rounding

    (7) If an amount referred to in subsection (1), when adjusted as provided in subsection (5), is not a multiple of one dollar, it shall be rounded to the nearest multiple of one dollar or, where it is equidistant from 2 such consecutive multiples, to the higher thereof.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1994, c. 7, Sch. VII, s. 12
  • 1997, c. 26, s. 80
  • 1998, c. 19, s. 141, c. 21, ss. 93, 94
  • 1999, c. 26, s. 36
  • 2000, c. 12, s. 142, c. 14, s. 40, c. 19, s. 33, 73
  • 2001, c. 17, s. 110
  • 2003, c. 15, s. 77
  • 2005, c. 30, s. 8
  • 2006, c. 4, ss. 71, 177
  • 2010, c. 25, s. 25
  • 2011, c. 24, s. 38
  • 2013, c. 40, s. 52
  • 2016, c. 7, s. 29, c. 12, s. 43
  • 2017, c. 20, s. 30
  • 2018, c. 12, s. 17
  • 2020, c. 5, s. 3
  • 2021, c. 7, s. 2
 
Date modified: