Income Tax Act

Marginal note:Definitions

• 148.1 (1) In this section,

  cemetery care trust

  cemetery care trust means a trust established pursuant to an Act of a province for the care and maintenance of a cemetery; (fiducie pour l’entretien d’un cimetière)

  cemetery services

  cemetery services with respect to an individual means property (including interment vaults, markers, flowers, liners, urns, shrubs and wreaths) and services that relate directly to cemetery arrangements in Canada in consequence of the death of the individual including, for greater certainty, property and services to be funded out of a cemetery care trust; (services de cimetière)

  custodian

  custodian of an arrangement means

  • (a) where a trust is governed by the arrangement, a trustee of the trust, and

  • (b) in any other case, a qualifying person who receives a contribution under the arrangement as a deposit for the provision by the person of funeral or cemetery services; (dépositaire)

  eligible funeral arrangement

  eligible funeral arrangement at a particular time means an arrangement established and maintained by a qualifying person solely for the purpose of funding funeral or cemetery services with respect to one or more individuals and of which there is one or more custodians each of whom was resident in Canada at the time the arrangement was established, where

  • (a) each contribution made before the particular time under the arrangement was made for the purpose of funding funeral or cemetery services to be provided by the qualifying person with respect to an individual, and

  • (b) for each such individual, the total of all relevant contributions made before the particular time in respect of the individual does not exceed

    • (i) $15,000, where the arrangement solely covers funeral services with respect to the individual,

    • (ii) $20,000, where the arrangement solely covers cemetery services with respect to the individual, and

    • (iii) $35,000, in any other case,

    and for the purpose of this definition, any payment (other than the portion of the payment to be applied as a contribution to a cemetery care trust) that is made in consideration for the immediate acquisition of a right to burial in or on property that is set apart or used as a place for the burial of human remains or of any interest in a building or structure for the permanent placement of human remains, shall be considered to have been made pursuant to a separate arrangement that is not an eligible funeral arrangement; (arrangement de services funéraires)

  funeral or cemetery services

  funeral or cemetery services with respect to an individual means funeral services with respect to the individual, cemetery services with respect to the individual or any combination of such services; (services de funérailles ou de cimetière)

  funeral services

  funeral services with respect to an individual means property and services (other than cemetery services with respect to the individual) that relate directly to funeral arrangements in Canada in consequence of the death of the individual; (services funéraires)

  qualifying person

  qualifying person means a person licensed or otherwise authorized under the laws of a province to provide funeral or cemetery services with respect to individuals; (personne admissible)

  relevant contribution

  relevant contribution in respect of an individual under a particular arrangement means

  • (a) a contribution under the particular arrangement (other than a contribution made by way of a transfer from an eligible funeral arrangement) for the purpose of funding funeral or cemetery services with respect to the individual, or

  • (b) such portion of a contribution to another arrangement that was an eligible funeral arrangement (other than any such contribution made by way of a transfer from any eligible funeral arrangement) as can reasonably be considered to have subsequently been used to make a contribution under the particular arrangement by way of a transfer from an eligible funeral arrangement for the purpose of funding funeral or cemetery services with respect to the individual. (versement admissible)

• Marginal note:Exemption for eligible funeral arrangements

  (2) Notwithstanding any other provision of this Act,

  • (a) no amount that has accrued, is credited or is added to an eligible funeral arrangement shall be included in computing the income of any person solely because of such accrual, crediting or adding;

  • (b) subject to paragraph 148.1(2)(c) and subsection 148.1(3), no amount shall be

    • (i) included in computing a person’s income solely because of the provision by another person of funeral or cemetery services under an eligible funeral arrangement, or

    • (ii) included in computing a person’s income because of the disposition of an interest under an eligible funeral arrangement or an interest in a trust governed by an eligible funeral arrangement; and

  • (c) subparagraph 148.1(2)(b)(ii) shall not affect the consequences under this Act of the disposition of any right under an eligible funeral arrangement to payment for the provision of funeral or cemetery services.

• Marginal note:Income inclusion on return of funds

  (3) Where at any particular time in a taxation year a particular amount is distributed (otherwise than as payment for the provision of funeral or cemetery services with respect to an individual) to a taxpayer from an arrangement that was, at the time it was established, an eligible funeral arrangement and the particular amount is paid from the balance in respect of the individual under the arrangement, there shall be added in computing the taxpayer’s income for the year from property the lesser of the particular amount and the amount determined by the formula

  A + B - C

  where

  A

  is the balance in respect of the individual under the arrangement immediately before the particular time (determined without regard to the value of property in a cemetery care trust);

  B

  is the total of all payments made from the arrangement before the particular time for the provision of funeral or cemetery services with respect to the individual (other than cemetery services funded by property in a cemetery care trust); and

  C

  is the amount determined by the formula

  D – E

  where

  D

  is the total of all relevant contributions made before the particular time in respect of the individual under the arrangement (other than contributions in respect of the individual that were in a cemetery care trust), and

  E

  is the total of all amounts each of which is the amount, if any, by which

  • (a) an amount relating to the balance in respect of the individual under the arrangement that is deemed by subsection (4) to have been distributed before the particular time from the arrangement

  exceeds

  • (b) the portion of the amount referred to in paragraph (a) that is added, because of this subsection, in computing a taxpayer’s income.

• Marginal note:Deemed distribution on transfer

  (4) If at a particular time an amount relating to the balance in respect of an individual (referred to in this subsection and in subsection (5) as the “transferor”) under an eligible funeral arrangement (referred to in this subsection and in subsection (5) as the “transferor arrangement”) is transferred, credited or added to the balance in respect of the same or another individual (referred to in this subsection and in subsection (5) as the “recipient”) under the same or another eligible funeral arrangement (referred to in this subsection and in subsection (5) as the “recipient arrangement”),

  • (a) the amount is deemed to be distributed to the transferor (or, if the transferor is deceased at the particular time, to the recipient) at the particular time from the transferor arrangement and to be paid from the balance in respect of the transferor under the transferor arrangement; and

  • (b) the amount is deemed to be a contribution made (other than by way of a transfer from an eligible funeral arrangement) at the particular time under the recipient arrangement for the purpose of funding funeral or cemetery services with respect to the recipient.

• Marginal note:Non-application of subsection (4)

  (5) Subsection (4) does not apply if

  • (a) the transferor and the recipient are the same individual;

  • (b) the amount that is transferred, credited or added to the balance in respect of the individual under the recipient arrangement is equal to the balance in respect of the individual under the transferor arrangement immediately before the particular time; and

  • (c) the transferor arrangement is terminated immediately after the transfer.