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

122.2 [Repealed, 1994, c. 7, Sch. VII, s. 10]

Marginal note:Overseas employment tax credit

• 122.3 (1) If an individual is resident in Canada in a taxation year and, throughout any period of more than six consecutive months that began before the end of the year and included any part of the year (in this section referred to as the “qualifying period”)

  • (a) was employed by a person who was a specified employer, other than for the performance of services under a prescribed international development assistance program of the Government of Canada, and

  • (b) performed all or substantially all the duties of the individual’s employment outside Canada

    • (i) in connection with a contract under which the specified employer carried on business outside Canada with respect to

      • (A) the exploration for or exploitation of petroleum, natural gas, minerals or other similar resources,

      • (B) any construction, installation, agricultural or engineering activity, or

      • (C) any prescribed activity, or

    • (ii) for the purpose of obtaining, on behalf of the specified employer, a contract to undertake any of the activities referred to in clause 122.3(1)(b)(i)(A), 122.3(1)(b)(i)(B) or 122.3(1)(b)(i)(C),

  there may be deducted, from the amount that would, but for this section, be the individual’s tax payable under this Part for the year, an amount equal to that proportion of the tax otherwise payable under this Part for the year by the individual that the lesser of

  • (c) an amount equal to that proportion of the specified amount for the year that the number of days

    • (i) in that portion of the qualifying period that is in the year, and

    • (ii) on which the individual was resident in Canada

    is of 365, and

  • (d) the specified percentage for the year of the individual’s income for the year from that employment that is reasonably attributable to duties performed on the days referred to in paragraph (c)

  is of

  • (e) the amount, if any, by which

    • (i) if the individual is resident in Canada throughout the year, the individual’s income for the year, and

    • (ii) if the individual is non-resident at any time in the year, the amount determined under paragraph 114(a) in respect of the taxpayer for the year

    exceeds

    • (iii) the total of all amounts each of which is an amount deducted under section 110.6 or paragraph 111(1)(b), or deductible under paragraph 110(1)(d.2), (d.3), (f) or (g), in computing the individual’s taxable income for the year.

• Marginal note:Specified amount

  (1.01) For the purposes of paragraph (1)(c), the specified amount for a taxation year of an individual is

  • (a) for the 2013 to 2015 taxation years, the amount determined by the formula

    [$80,000 × A/(A + B)] + [C × B/(A + B)]

    where

    A

    is the individual’s income described in paragraph (1)(d) for the taxation year that is earned in connection with a contract that was committed to in writing before March 29, 2012 by a specified employer of the individual,

    B

    is the individual’s income described in paragraph (1)(d) for the taxation year, other than income included in the description of A, and

    C

    is

    • (i) for the 2013 taxation year, $60,000,

    • (ii) for the 2014 taxation year, $40,000, and

    • (iii) for the 2015 taxation year, $20,000; and

  • (b) for the 2016 and subsequent taxation years, nil.

• Marginal note:Specified percentage

  (1.02) For the purposes of paragraph (1)(d), the specified percentage for a taxation year of an individual is

  • (a) for the 2013 to 2015 taxation years, the amount determined by the formula

    [80% × A/(A + B)] + [C × B/(A + B)]

    where

    A

    is the value of A in subsection (1.01),

    B

    is the value of B in subsection (1.01), and

    C

    is

    • (i) for the 2013 taxation year, 60%,

    • (ii) for the 2014 taxation year, 40%, and

    • (iii) for the 2015 taxation year, 20%; and

  • (b) for the 2016 and subsequent taxation years, 0%.

• Marginal note:Excluded income

  (1.1) No amount may be included under paragraph (1)(d) in respect of an individual’s income for a taxation year from the individual’s employment by an employer

  • (a) if

    • (i) the employer carries on a business of providing services and does not employ in the business throughout the year more than five full-time employees,

    • (ii) the individual

      • (A) does not deal at arm’s length with the employer, or is a specified shareholder of the employer, or

      • (B) where the employer is a partnership, does not deal at arm’s length with a member of the partnership, or is a specified shareholder of a member of the partnership, and

    • (iii) but for the existence of the employer, the individual would reasonably be regarded as being an employee of a person or partnership that is not a specified employer; or

  • (b) if at any time in that portion of the qualifying period that is in the taxation year

    • (i) the employer provides the services of the individual to a corporation, partnership or trust with which the employer does not deal at arm’s length, and

    • (ii) the fair market value of all the issued shares of the capital stock of the corporation or of all interests in the partnership or trust, as the case may be, that are held, directly or indirectly, by persons who are resident in Canada is less than 10% of the fair market value of all those shares or interests.

• Marginal note:Definitions

  (2) In subsection 122.3(1),

  specified employer

  specified employer means

  • (a) a person resident in Canada,

  • (b) a partnership in which interests that exceed in total value 10% of the fair market value of all interests in the partnership are owned by persons resident in Canada or corporations controlled by persons resident in Canada, or

  • (c) a corporation that is a foreign affiliate of a person resident in Canada; (employeur déterminé)

  tax otherwise payable under this Part for the year

  tax otherwise payable under this Part for the year means the amount that, but for this section, sections 120 and 120.2, subsection 120.4(2) and sections 121, 126, 127 and 127.4, would be the tax payable under this Part for the year. (impôt qu’il est par ailleurs tenu de payer pour l’année en vertu de la présente partie)

Marginal note:Definitions

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

  adjusted income

  adjusted income, of an individual for a taxation year in relation to a month specified for the taxation year, means the total of the individual’s income for the taxation year and the income for the taxation year of the individual’s qualified relation, if any, in relation to the specified month, both calculated as 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 rajusté)

  cohabiting spouse or common-law partner

  cohabiting spouse or common-law partner of an individual at any time has the meaning assigned by section 122.6. (époux ou conjoint de fait visé)

  eligible individual

  eligible individual, in relation to a month specified for a taxation year, means an individual (other than a trust) who

  • (a) has, before the specified month, attained the age of 19 years; or

  • (b) was, at any time before the specified month,

    • (i) a parent who resided with their child, or

    • (ii) married or in a common-law partnership. (particulier admissible)

  qualified dependant

  qualified dependant of an individual, in relation to a month specified for a taxation year, means a person who at the beginning of the specified month

  • (a) is the individual’s child or is dependent for support on the individual or on the individual’s cohabiting spouse or common-law partner;

  • (b) resides with the individual;

  • (c) is under the age of 19 years;

  • (d) is not an eligible individual in relation to the specified month; and

  • (e) is not a qualified relation of any individual in relation to the specified month. (personne à charge admissible)

  qualified relation

  qualified relation of an individual, in relation to a month specified for a taxation year, means the person, if any, who, at the beginning of the specified month, is the individual’s cohabiting spouse or common-law partner. (proche admissible)

  return of income

  return of income, in respect of a person for a taxation year, means

  • (a) for a person who is resident in Canada at the end of the taxation year, the person’s return of income (other than a return of income under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) that is required to be filed for the taxation year or that would be required to be filed if the person had tax payable under this Part for the taxation year; and

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

• Marginal note:Persons not eligible individuals, qualified relations or qualified dependants

  (2) Notwithstanding subsection (1), a person is not an eligible individual, is not a qualified relation and is not a qualified dependant, in relation to a month specified for a taxation year, if the person

  • (a) died before the specified month;

  • (b) is confined to a prison or similar institution for a period of at least 90 days that includes the first day of the specified month;

  • (c) is at the beginning of the specified month a non-resident person, other than a non-resident person who

    • (i) is at that time 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 the first day of the specified month, and

    • (ii) was resident in Canada at any time before the specified month;

  • (d) is at the beginning of the specified month a person described in paragraph 149(1)(a) or (b); or

  • (e) is a person in respect of whom a special allowance under the Children’s Special Allowances Act is payable for the specified month.

• Marginal note:Deemed payment on account of tax

  (3) An eligible individual in relation to a month specified for a taxation year who files a return of income for the taxation year is deemed to have paid during the specified month on account of their tax payable under this Part for the taxation year an amount equal to ¼ of the amount, if any, determined by the formula

  A - B

  where

  A

  is the total of

  • (a) $213,

  • (b) $213 for the qualified relation, if any, of the individual in relation to the specified month,

  • (c) if the individual has no qualified relation in relation to the specified month and is entitled to deduct an amount for the taxation year under subsection 118(1) because of paragraph (b) of the description of B in that subsection in respect of a qualified dependant of the individual in relation to the specified month, $213,

  • (d) $112 times the number of qualified dependants of the individual in relation to the specified month, other than a qualified dependant in respect of whom an amount is included under paragraph (c) in computing the total for the specified month,

  • (e) if the individual has no qualified relation and has one or more qualified dependants, in relation to the specified month, $112, and

  • (f) if the individual has no qualified relation and no qualified dependant, in relation to the specified month, the lesser of $112 and 2% of the amount, if any, by which the individual’s income for the taxation year exceeds $6,911; and

  B

  is 5% of the amount, if any, by which the individual’s adjusted income for the taxation year in relation to the specified month exceeds $27,749.

• Marginal note:COVID-19 — additional deemed payment

  (3.001) An eligible individual in relation to a month specified for a taxation year who files a return of income for the taxation year is deemed to have paid during the specified month on account of their tax payable under this Part for the taxation year an amount determined by the formula

  A − B − C

  where

  A

  is the total of

  • (a) $580,

  • (b) $580 for the qualified relation, if any, of the individual in relation to the specified month,

  • (c) if the individual has no qualified relation in relation to the specified month and is entitled to deduct an amount for the taxation year under subsection 118(1) because of paragraph (b) of the description of B in that subsection in respect of a qualified dependant of the individual in relation to the specified month, $580,

  • (d) $306 times the number of qualified dependants of the individual in relation to the specified month, other than a qualified dependant in respect of whom an amount is included under paragraph (c) in computing the total for the specified month,

  • (e) if the individual has no qualified relation and has one or more qualified dependants, in relation to the specified month, $306, and

  • (f) if the individual has no qualified relation and no qualified dependant, in relation to the specified month, the lesser of $306 and 2% of the amount, if any, by which the individual’s income for the taxation year exceeds $9,412;

  B

  is 5% of the amount, if any, by which the individual’s adjusted income for the taxation year in relation to the specified month exceeds $37,789; and

  C

  is the total amount that the eligible individual is deemed to have paid under subsection (3) on account of their tax payable for the specified months of July 2019, October 2019, January 2020 and April 2020.

• Marginal note:Additional deemed payment

  (3.002) An eligible individual in relation to a month specified for a taxation year who files a return of income for the taxation year is deemed to have paid during the specified month on account of their tax payable under this Part for the taxation year an amount determined by the formula

  0.25 × (A – B) – C

  where

  A

  is the total of

  • (a) $918,

  • (b) $918 for the qualified relation, if any, of the individual in relation to the specified month,

  • (c) if the individual has no qualified relation in relation to the specified month and is entitled to deduct an amount for the taxation year under subsection 118(1) because of paragraph (b) of the description of B in that subsection in respect of a qualified dependant of the individual in relation to the specified month, $918,

  • (d) $483 times the number of qualified dependants of the individual in relation to the specified month, other than a qualified dependant in respect of whom an amount is included under paragraph (c) in computing the total for the specified month,

  • (e) if the individual has no qualified relation and has one or more qualified dependants, in relation to the specified month, $483, and

  • (f) if the individual has no qualified relation and no qualified dependant, in relation to the specified month, the lesser of $483 and 6% of the amount, if any, by which the individual’s income for the taxation year exceeds $9,919;

  B

  is 15% of the amount, if any, by which the individual’s adjusted income for the taxation year exceeds $39,826; and

  C

  is the amount that the eligible individual is deemed to have paid under subsection (3) during the specified month on account of their tax payable for the taxation year.

• Marginal note:Additional deemed payment – January 2023

  (3.003) An eligible individual in relation to a month specified for a taxation year who files a return of income for the taxation year is deemed to have paid during the specified month on account of their tax payable under this Part for the taxation year an amount determined by the formula

  0.25 × (A − B) − C

  where

  A

  is the total of

  • (a) $918,

  • (b) $918 for the qualified relation, if any, of the individual in relation to the specified month,

  • (c) if the individual has no qualified relation in relation to the specified month and is entitled to deduct an amount for the taxation year under subsection 118(1) because of paragraph (b) of the description of B in that subsection in respect of a qualified dependant of the individual in relation to the specified month, $918,

  • (d) $483 times the number of qualified dependants of the individual in relation to the specified month, other than a qualified dependant in respect of whom an amount is included under paragraph (c) in computing the total for the specified month,

  • (e) if the individual has no qualified relation and has one or more qualified dependants, in relation to the specified month, $483, and

  • (f) if the individual has no qualified relation and no qualified dependant, in relation to the specified month, the lesser of $483 and 6% of the amount, if any, by which the individual’s income for the taxation year exceeds $9,919;

  B

  is 15% of the amount, if any, by which the individual’s adjusted income for the taxation year exceeds $39,826; and

  C

  is the amount that the eligible individual is deemed to have paid under subsection (3) during the specified month on account of their tax payable for the taxation year.

• Marginal note:Shared-custody parent

  (3.01) Notwithstanding subsection (3), if an eligible individual is a shared-custody parent (within the meaning assigned by section 122.6, but with the words qualified dependant in that section having the meaning assigned by subsection (1)) in respect of one or more qualified dependants at the beginning of a month, the amount deemed by subsection (3) to have been paid during a specified month is equal to the amount determined by the following formula:

  1/2 × (A + B)

  where

  A

  is the amount determined by the formula in subsection (3), calculated without reference to this subsection, and

  B

  is the amount determined by the formula in subsection (3), calculated without reference to this subsection and subparagraph (b)(ii) of the definition eligible individual in section 122.6.

• Marginal note:COVID-19 — shared-custody parent

  (3.02) Notwithstanding subsection (3.001), if an eligible individual is a shared-custody parent (within the meaning assigned by section 122.6, but with the words qualified dependant in that section having the meaning assigned by subsection (1)) in respect of one or more qualified dependants at the beginning of a month, the amount deemed by subsection (3.001) to have been paid during the specified month is equal to the amount determined by the following formula:

  0.5(A + B)

  where

  A

  is the amount determined by the formula in subsection (3.001), calculated without reference to this subsection; and

  B

  is the amount determined by the formula in subsection (3.001), calculated without reference to this subsection and subparagraph (b)(ii) of the definition eligible individual in section 122.6.

• Marginal note:Additional deemed payment — shared-custody parent

  (3.03) Notwithstanding subsection (3.002), if an eligible individual is a shared-custody parent (within the meaning assigned by section 122.6, but with the words qualified dependant in that section having the meaning assigned by subsection (1) in respect of one or more qualified dependants at the beginning of a month, the amount deemed by subsection (3.002) to have been paid during the specified month is equal to the amount determined by the following formula:

  0.5 × (A + B)

  where

  A

  is the amount determined by the formula in subsection (3.002), calculated without reference to this subsection; and

  B

  is the amount determined by the formula in subsection (3.002), calculated without reference to this subsection and subparagraph (b)(ii) of the definition eligible individual in section 122.6.

• Marginal note:January 2023 payment – shared-custody parent

  (3.04) Notwithstanding subsection (3.003), if an eligible individual is a shared-custody parent (as defined in section 122.6, but with the term “qualified dependant” in that section having the meaning assigned by subsection (1)) in respect of one or more qualified dependants at the beginning of a month, the amount deemed by subsection (3.003) to have been paid during the specified month is equal to the amount determined by the formula

  0.5 × (A + B)

  where

  A

  is the amount determined by the formula in subsection (3.003), calculated without reference to this subsection; and

  B

  is the amount determined by the formula in subsection (3.003), calculated without reference to this subsection and subparagraph (b)(ii) of the definition eligible individual in section 122.6.

• Marginal note:When advance payment applies

  (3.1) Subsection (3.2) applies in respect of an eligible individual in relation to a particular month specified for a taxation year, and each subsequent month specified for the taxation year, if

  • (a) the amount deemed by that subsection to have been paid by the eligible individual during the particular month specified for the taxation year is less than $50; and

  • (b) it is reasonable to conclude that the amount deemed by that subsection to have been paid by the eligible individual during each subsequent month specified for the taxation year will be less than $50.

• Marginal note:Advance payment

  (3.2) If this subsection applies, the total of the amounts that would otherwise be deemed by subsection (3) to have been paid on account of the eligible individual’s tax payable under this Part for the taxation year during the particular month specified for the taxation year, and during each subsequent month specified for the taxation year, is deemed to have been paid by the eligible individual on account of their tax payable under this Part for the taxation year during the particular specified month for the taxation year, and the amount deemed by subsection (3) to have been paid by the eligible individual during those subsequent months specified for the taxation year is deemed, except for the purpose of this subsection, not to have been paid to the extent that it is included in an amount deemed to have been paid by this subsection.

• Marginal note:Months specified

  (4) For the purposes of this section, the months specified for a taxation year are July and October of the immediately following taxation year and January and April of the second immediately following taxation year.

• Marginal note:COVID-19 — month specified

  (4.1) Notwithstanding subsection (4) and for the purposes of this section, the month specified in subsection (3.001) is May 2020 (or an earlier month designated by the Minister) and the taxation year is the 2018 taxation year.

• Marginal note:Month specified

  (4.2) Notwithstanding subsection (4) and for the purposes of this section, the month specified in subsection (3.002) is October 2022 and the taxation year is the 2021 taxation year.

• Marginal note:January 2023 – month specified

  (4.3) Notwithstanding subsection (4) and for the purposes of this section, the month specified in subsection (3.003) is January 2023 and the taxation year is the 2021 taxation year.

• Marginal note:Only one eligible individual

  (5) If an individual is a qualified relation of another individual in relation to a month specified for a taxation year and both those individuals would be, but for this subsection, eligible individuals in relation to the specified month, only the individual that the Minister designates is the eligible individual in relation to the specified month.

• (5.1) [Repealed, 2002, c. 9, s. 38(2)]

• Marginal note:Exception re qualified dependant

  (6) If a person would, if this Act were read without reference to this subsection, be the qualified dependant of two or more individuals, in relation to a month specified for a taxation year,

  • (a) the person is deemed to be a qualified dependant, in relation to that month, of the one of those individuals on whom those individuals agree;

  • (b) in the absence of an agreement referred to in paragraph (a), the person is deemed to be, in relation to that month, a qualified dependant of the individuals, if any, who are, at the beginning of that month, eligible individuals (within the meaning assigned by section 122.6, but with the words qualified dependant in that section having the meaning assigned by subsection (1)) in respect of that person; and

  • (c) in any other case, the person is deemed to be, in relation to that month, a qualified dependant only of the individual that the Minister designates.

• Marginal note:Notification to Minister

  (6.1) An individual shall notify the Minister of the occurrence of any of the following events before the end of the month following the month in which the event occurs:

  • (a) the individual ceases to be an eligible individual;

  • (b) a person becomes or ceases to be the individual’s qualified relation; and

  • (c) a person ceases to be a qualified dependant of the individual, otherwise than because of attaining the age of 19 years.

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

  (6.2) For the purpose of this section, the income of a person who is non-resident at any time in a taxation year is deemed to be equal to the amount that would, if the person were resident in Canada throughout the year, be the person’s income for the year.

• Marginal note:Effect of bankruptcy

  (7) For the purpose of this section, if in a taxation year an individual becomes bankrupt, the individual’s income for the taxation 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.