Income Tax Act

Marginal note:General

• 161 (1) Where at any time after a taxpayer’s balance-due day for a taxation year

  • (a) the total of the taxpayer’s taxes payable under this Part and Parts I.3, VI and VI.1 for the year

  exceeds

  • (b) the total of all amounts each of which is an amount paid at or before that time on account of the taxpayer’s tax payable and applied as at that time by the Minister against the taxpayer’s liability for an amount payable under this Part or Part I.3, VI or VI.1 for the year,

  the taxpayer shall pay to the Receiver General interest at the prescribed rate on the excess, computed for the period during which that excess is outstanding.

• Marginal note:Interest on instalments

  (2) In addition to the interest payable under subsection 161(1), where a taxpayer who is required by this Part to pay a part or instalment of tax has failed to pay all or any part thereof on or before the day on or before which the tax or instalment, as the case may be, was required to be paid, the taxpayer shall pay to the Receiver General interest at the prescribed rate on the amount that the taxpayer failed to pay computed from the day on or before which the amount was required to be paid to the day of payment, or to the beginning of the period in respect of which the taxpayer is required to pay interest thereon under subsection 161(1), whichever is earlier.

• (2.1) [Repealed, 2003, c. 15, s. 116(1)]

• Marginal note:Contra interest

  (2.2) Notwithstanding subsections 161(1) and 161(2), the total amount of interest payable by a taxpayer (other than a testamentary trust) under those subsections, for the period that begins on the first day of the taxation year for which a part or instalment of tax is payable and ends on the taxpayer’s balance-due day for the year, in respect of the taxpayer’s tax or instalments of tax payable for the year shall not exceed the amount, if any, by which

  • (a) the total amount of interest that would be payable for the period by the taxpayer under subsections 161(1) and 161(2) in respect of the taxpayer’s tax and instalments of tax payable for the year if no amount were paid on account of the tax or instalments

  exceeds

  • (b) the amount of interest that would be payable under subsection 164(3) to the taxpayer in respect of the period on the amount that would be refunded to the taxpayer in respect of the year or applied to another liability if

    • (i) no tax were payable by the taxpayer for the year,

    • (ii) no amount had been remitted under section 153 to the Receiver General on account of the taxpayer’s tax for the year,

    • (iii) the rate of interest prescribed for the purpose of subsection 161(1) were prescribed for the purpose of subsection 164(3), and

    • (iv) the latest of the days described in paragraphs 164(3)(a), 164(3)(b) and 164(3)(c) were the first day of the year.

• (3) [Repealed, 1994, c. 7, Sch. II, s. 133(3)]

• Marginal note:Limitation — farmers and fishermen

  (4) For the purposes of subsection 161(2) and section 163.1, where an individual is required to pay a part or instalment of tax for a taxation year computed by reference to a method described in subsection 155(1), the individual shall be deemed to have been liable to pay on or before the day referred to in subsection 155(1) a part or instalment computed by reference to

  • (a) the amount, if any, by which

    • (i) the tax payable under this Part by the individual for the year, determined before taking into consideration the specified future tax consequences for the year,

    exceeds

    • (ii) the amounts deemed by subsections 120(2) and (2.2) to have been paid on account of the individual’s tax under this Part for the year, determined before taking into consideration the specified future tax consequences for the year,

  • (b) the individual’s instalment base for the preceding taxation year, or

  • (c) the amount stated to be the amount of the instalment payable by the individual for the year in the notice, if any, sent to the individual by the Minister,

  whichever method gives rise to the least amount required to be paid by the individual on or before that day.

• Marginal note:Limitation — other individuals

  (4.01) For the purposes of subsection 161(2) and section 163.1, where an individual is required to pay a part or instalment of tax for a taxation year computed by reference to a method described in subsection 156(1), the individual shall be deemed to have been liable to pay on or before each day referred to in subsection 156(1) a part or instalment computed by reference to

  • (a) the amount, if any, by which

    • (i) the tax payable under this Part by the individual for the year, determined before taking into consideration the specified future tax consequences for the year,

    exceeds

    • (ii) the amounts deemed by subsections 120(2) and (2.2) to have been paid on account of the individual’s tax under this Part for the year, determined before taking into consideration the specified future tax consequences for the year,

  • (b) the individual’s instalment base for the preceding taxation year,

  • (c) the amounts determined under paragraph 156(1)(b) in respect of the individual for the year, or

  • (d) the amounts stated to be the amounts of instalments payable by the individual for the year in the notices, if any, sent to the individual by the Minister,

  reduced by the amount, if any, determined under paragraph 156(2)(b) in respect of the individual for the year, whichever method gives rise to the least total amount of such parts or instalments required to be paid by the individual by that day.

• Marginal note:Limitation — corporations

  (4.1) For the purposes of subsection (2) and section 163.1, where a corporation is required to pay a part or instalment of tax for a taxation year computed by reference to a method described in subsection 157(1), (1.1) or (1.5), as the case may be, the corporation is deemed to have been liable to pay on or before each day on or before which subparagraph 157(1)(a)(i), (ii) or (iii), subparagraph 157(1.1)(a)(i), (ii) or (iii), or subparagraph 157(1.5)(a)(i) or (ii), as the case may be, requires a part or instalment to be made equal to the amount, if any, by which

  • (a) the part or instalment due on that day computed in accordance with whichever allowable method in the circumstances gives rise to the least total amount of such parts or instalments of tax for the year, computed by reference to

    • (i) the total of the taxes payable under this Part and Parts VI, VI.1 and XIII.1 by the corporation for the year, determined before taking into consideration the specified future tax consequences for the year,

    • (ii) its first instalment base for the year, or

    • (iii) its second instalment base and its first instalment base for the year,

  exceeds

  • (b) the amount, if any, determined under any of paragraphs 157(3)(b) to (e) or under paragraph 157(3.1)(b) or (c), as the case may be, in respect of that instalment.

• (5) [Repealed, 2012, c. 19, s. 11]

• Marginal note:Income of resident from a foreign country in blocked currency

  (6) Where the income of a taxpayer for a taxation year, or part thereof, is from sources in another country and the taxpayer by reason of monetary or exchange restrictions imposed by the law of that country is unable to transfer it to Canada, the Minister may, if the Minister is satisfied that payment as required by this Part of the whole of the additional tax under this Part for the year reasonably attributable to income from sources in that country would impose extreme hardship on the taxpayer, postpone the time for payment of the whole or a part of that additional tax for a period to be determined by the Minister, but no such postponement may be granted if any of the income for the year from sources in that country has been

  • (a) transferred to Canada,

  • (b) used by the taxpayer for any purpose whatever, other than payment of income tax to the government of that other country on income from sources in that country, or

  • (c) disposed of by the taxpayer,

  and no interest is payable under this section in respect of that additional tax, or part thereof, during the period of postponement.

• Marginal note:Foreign tax credit adjustment

  (6.1) Notwithstanding any other provision in this section, where the tax payable under this Part by a taxpayer for a particular taxation year is increased because of

  • (a) an adjustment of an income or profits tax payable by the taxpayer to the government of a country other than Canada or to the government of a state, province or other political subdivision of such a country, or

  • (b) a reduction in the amount of foreign tax deductible under subsection 126(1) or (2) in computing the taxpayer’s tax otherwise payable under this Part for the particular year, as a result of the application of subsection 126(4.2) in respect of a share or debt obligation disposed of by the taxpayer in the taxation year following the particular year,

  no interest is payable, in respect of the increase in the taxpayer’s tax payable, for the period

  • (c) that ends 90 days after the day on which the taxpayer is first notified of the amount of the adjustment, if paragraph (a) applies, and

  • (d) before the date of the disposition, if paragraph (b) applies.

• Marginal note:Flow-through share renunciations

  (6.2) Where the tax payable under this Part by a taxpayer for a taxation year is more than it otherwise would be because of a consequence for the year described in paragraph (b) of the definition specified future tax consequence in subsection 248(1) in respect of an amount purported to be renounced in a calendar year, for the purposes of the provisions of this Act (other than this subsection) relating to interest payable under this Act, an amount equal to the additional tax payable is deemed

  • (a) to have been paid on the taxpayer’s balance-due day for the taxation year on account of the taxpayer’s tax payable under this Part for the year; and

  • (b) to have been refunded on April 30 of the following calendar year to the taxpayer on account of the taxpayer’s tax payable under this Part for the taxation year.

• Marginal note:Effect of carryback of loss, etc.

  (7) For the purpose of computing interest under subsection 161(1) or 161(2) on tax or a part of an instalment of tax for a taxation year, and for the purpose of section 163.1,

  • (a) the tax payable under this Part and Parts I.3, VI and VI.1 by the taxpayer for the year is deemed to be the amount that it would be if the consequences of the deduction, reduction or exclusion of the following amounts were not taken into consideration:

    • (i) any amount deducted under section 119 in respect of a disposition in a subsequent taxation year,

    • (ii) any amount deducted under section 41 in respect of the taxpayer’s listed-personal-property loss for a subsequent taxation year,

    • (iii) any amount excluded from the taxpayer’s income for the year by virtue of section 49 in respect of the exercise of an option in a subsequent taxation year,

    • (iv) any amount deducted under section 118.1 in respect of a gift made in a subsequent taxation year or under section 111 in respect of a loss for a subsequent taxation year,

    • (iv.1) any amount deducted under subsection 126(2) in respect of an unused foreign tax credit (within the meaning assigned by subsection 126(7)), or under subsection 126(2.21) or (2.22) in respect of foreign taxes paid, for a subsequent taxation year,

    • (iv.2) any amount deducted in computing the taxpayer’s income for the year by virtue of an election in a subsequent taxation year under paragraph 164(6)(c) or 164(6)(d) by the taxpayer’s legal representative,

    • (v) any amount deducted under subsection 127(5) in respect of property acquired or an expenditure made in a subsequent taxation year,

    • (vi) [Repealed, 2013, c. 34, s. 318]

    • (vii) any amount deducted under section 125.3 in respect of an unused Part I.3 tax credit (within the meaning assigned by subsection 125.3(3)) for a subsequent taxation year,

    • (viii) any amount deducted, in respect of a repayment under subsection 68.4(7) of the Excise Tax Act made in a subsequent taxation year, in computing the amount determined under subparagraph 12(1)(x.1)(ii),

    • (viii.1) any amount deducted under subsection 147.2(4) in computing the taxpayer’s income for the year because of the application of subsection 147.2(6) as a result of the taxpayer’s death in the subsequent taxation year,

    • (ix) any amount deducted under subsection 181.1(4) in respect of any unused surtax credit (within the meaning assigned by subsection 181.1(6)) of the taxpayer for a subsequent taxation year,

    • (x) any amount deducted under subsection 190.1(3) in respect of any unused Part I tax credit (within the meaning assigned by subsection 190.1(5)) of the taxpayer for a subsequent taxation year,

    • (xi) any amount deducted under any of subsections 128.1(6) to (8) from the taxpayer’s proceeds of disposition of a property because of an election made in a return of income for a subsequent taxation year, and

    • (xii) any amount by which the amount included under subsection 91(1) for the year is reduced because of a reduction referred to in paragraph 152(6.1)(b) in the foreign accrual property income of a foreign affiliate of the taxpayer for a taxation year of the affiliate that ends in the year; and

  • (b) the amount by which the tax payable under this Part and Parts I.3, VI and VI.1 by the taxpayer for the year is reduced as a consequence of the deduction or exclusion of amounts described in paragraph (a) is deemed to have been paid on account of the taxpayer’s tax payable under this Part for the year on the day that is 30 days after the latest of

    • (i) the first day immediately following that subsequent taxation year,

    • (ii) the day on which the taxpayer’s or the taxpayer’s legal representative’s return of income for that subsequent taxation year was filed,

    • (iii) if an amended return of the taxpayer’s income for the year or a prescribed form amending the taxpayer’s return of income for the year was filed under subsection 49(4) or 152(6) or (6.1) or paragraph 164(6)(e), the day on which the amended return or prescribed form was filed, and

    • (iv) where, as a consequence of a request in writing, the Minister reassessed the taxpayer’s tax for the year to take into account the deduction or exclusion, the day on which the request was made.

• Marginal note:Certain amounts deemed to be paid as instalments

  (8) For the purposes of subsection 161(2), where in a taxation year an amount has been paid by a non-resident person pursuant to subsection 116(2) or 116(4) or an amount has been paid on that person’s behalf by another person in accordance with subsection 116(5), the amount shall be deemed to have been paid by that non-resident person in the year as an instalment of tax on the first day on which the non-resident person was required under this Act to pay an instalment of tax for that year.

• Definitions of instalment base, etc.

  (9) In this section,

  • (a) instalment base of an individual for a taxation year means the amount determined in prescribed manner to be the individual’s instalment base for the year; and

  • (b) first instalment base and second instalment base of a corporation for a taxation year have the meanings prescribed by regulation.

• Marginal note:When amount deemed paid

  (10) For the purposes of subsection 161(2), where an amount has been deducted by virtue of paragraph 127.2(1)(a) or 127.3(1)(a) in computing the tax payable under this Part by a taxpayer for a taxation year, the amount so deducted shall be deemed to have been paid by the taxpayer

  • (a) in the case of a taxpayer who has filed a return of income under this Part for the year as required by section 150, on the last day of the year; and

  • (b) in any other case, on the day on which the taxpayer filed the taxpayer’s return of income under this Part for the year.

• Marginal note:Interest on penalties

  (11) Where a taxpayer is required to pay a penalty, the taxpayer shall pay the penalty to the Receiver General together with interest thereon at the prescribed rate computed,

  • (a) in the case of a penalty payable under section 162, 163 or 235, from the day on or before which

    • (i) the taxpayer’s return of income for a taxation year in respect of which the penalty is payable was required to be filed, or would have been required to be filed if tax under this Part were payable by the taxpayer for the year, or

    • (ii) the information return, return, ownership certificate or other document in respect of which the penalty is payable was required to be made,

    as the case may be, to the day of payment;

  • (b) in the case of a penalty payable for a taxation year because of section 163.1, from the taxpayer’s balance-due day for the year to the day of payment of the penalty;

  • (b.1) in the case of a penalty under subsection 237.1(7.4) or 237.3(8), from the day on which the taxpayer became liable to the penalty to the day of payment; and

  • (c) in the case of a penalty payable by reason of any other provision of this Act, from the day of sending of the notice of original assessment of the penalty to the day of payment.

• (12) [Repealed, 2000, c. 19, s. 47(3)]