Income Tax Act

Marginal note:Definitions

• 207.01 (1) The definitions in subsection 146.2(1) and the following definitions apply in this Part.

  advantage

  avantage

  advantage, in relation to a TFSA, means

  • (a) any benefit, loan or indebtedness that is conditional in any way on the existence of the TFSA, other than

    • (i) a benefit derived from the provision of administrative or investment services in respect of the TFSA,

    • (ii) a loan or an indebtedness (including the use of the TFSA as security for a loan or an indebtedness) the terms and conditions of which are terms and conditions that persons dealing at arm’s length with each other would have entered into,

    • (iii) a distribution under the TFSA, and

    • (iv) the payment or allocation of any amount to the TFSA by the issuer; and

  • (b) a benefit that is an increase in the total fair market value of the property held in connection with the TFSA if it is reasonable to consider, having regard to all the circumstances, that the increase is attributable, directly or indirectly, to

    • (i) a transaction or event or a series of transactions or events that

      • (A) would not have occurred in an open market in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly, and

      • (B) had as one of its main purposes to enable a person or a partnership to benefit from the exemption from tax under Part I of any amount in respect of the TFSA, or

    • (ii) a payment received as, on account or in lieu of, or in satisfaction of, a payment

      • (A) for services provided by a person who is, or who does not deal at arm’s length with, the holder of the TFSA, or

      • (B) of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition, in respect of property (other than property held in connection with the TFSA) held by a person who is, or who does not deal at arm’s length with, the holder of the TFSA; and

  • (c) a prescribed benefit. (avantage)

  allowable refund

  remboursement admissible

  allowable refund of a person for a calendar year means the total of all amounts each of which is a refund, for the year, to which the person is entitled under subsection 207.04(4). (remboursement admissible)

  excess TFSA amount

  excédent CÉLI

  excess TFSA amount of an individual at a particular time in a calendar year means the amount, if any, determined by the formula

  A - B - C - D - E

  where

  A

  is the total of all amounts each of which is a contribution made under a TFSA by the individual in the calendar year and at or before the particular time, other than a contribution that is

  • (a) a qualifying transfer, or

  • (b) an exempt contribution;

  B

  is the individual’s unused TFSA contribution room at the end of the preceding calendar year;

  C

  is the total of all amounts each of which was a distribution made in the preceding calendar year under a TFSA of which the individual was the holder at the time of the distribution, other than a distribution that is

  • (a) a qualifying transfer, or

  • (b) a prescribed distribution;

  D

  is

  • (a) the TFSA dollar limit for the calendar year if, at any time in the calendar year, the individual is resident in Canada, and

  • (b) nil, in any other case; and

  E

  is the total of all amounts each of which is the qualifying portion of a distribution made in the calendar year and at or before the particular time under a TFSA of which the individual was the holder at the time of the distribution and, for this purpose, the qualifying portion of a distribution is

  • (a) nil, if the distribution is a qualifying transfer or a prescribed distribution, and

  • (b) in any other case, the lesser of

    • (i) the amount of the distribution, and

    • (ii) the amount that would be the individual’s excess TFSA amount at the time of the distribution if the amount of the distribution were nil. (excédent CÉLI)

  exempt contribution

  cotisation exclue

  exempt contribution means a contribution made in a calendar year under a TFSA by the survivor of an individual if

  • (a) the contribution is made during the period (in this definition referred to as the “rollover period”) that begins when the individual dies and that ends at the end of the first calendar year that begins after the individual dies (or at any later time that is acceptable to the Minister);

  • (b) a payment (in this definition referred to as the “survivor payment”) was made to the survivor during the rollover period, as a consequence of the individual’s death, directly or indirectly out of or under an arrangement that ceased, because of the individual’s death, to be a TFSA;

  • (c) the survivor designates, in prescribed form filed in prescribed manner within 30 days after the day on which the contribution is made, the contribution in relation to the survivor payment; and

  • (d) the amount of the contribution does not exceed the least of

    • (i) the amount, if any, by which

      • (A) the amount of the survivor payment

      exceeds

      • (B) the total of all other contributions designated by the survivor in relation to the survivor payment,

    • (ii) the amount, if any, by which

      • (A) the total proceeds of disposition that would, if section 146.2 were read without reference to subsection 146.2(9), be determined in respect of the arrangement under paragraph 146.2(8)(a), (10)(a) or (11)(a), as the case may be,

      exceeds

      • (B) the total of all other exempt contributions in respect of the arrangement made by the survivor at or before the time of the contribution, and

    • (iii) if the individual had, immediately before the individual’s death, an excess TFSA amount or if payments described in paragraph (b) are made to more than one survivor of the individual, nil or the greater amount, if any, allowed by the Minister in respect of the contribution. (cotisation exclue)

  non-qualified investment

  placement non admissible

  non-qualified investment for a trust governed by a TFSA means property that is not a qualified investment for the trust. (placement non admissible)

  prohibited investment

  placement interdit

  prohibited investment, at any time, for a trust governed by a TFSA means property (other than prescribed property) that is at that time

  • (a) a debt of the holder of the TFSA;

  • (b) a share of the capital stock of, an interest in, or a debt of

    • (i) a corporation, partnership or trust in which the holder has a significant interest, or

    • (ii) a person or partnership that does not deal at arm’s length with the holder or with a person or partnership described in subparagraph (i);

  • (c) an interest (or, for civil law, a right) in, or a right to acquire, a share, interest or debt described in paragraph (a) or (b); or

  • (d) prescribed property. (placement interdit)

  qualified investment

  placement admissible

  qualified investment for a trust governed by a TFSA means

  • (a) an investment that would be described by any of paragraphs (a) to (d), (f) and (g) of the definition qualified investment in section 204 if the reference in that definition to “a trust governed by a deferred profit sharing plan or revoked plan” were read as a reference to “a trust governed by a TFSA” and if that definition were read without reference to the words “with the exception of excluded property in relation to the trust”;

  • (b) a contract for an annuity issued by a licensed annuities provider if

    • (i) the trust is the only person who, disregarding any subsequent transfer of the contract by the trust, is or may become entitled to any annuity payments under the contract, and

    • (ii) the holder of the contract has a right to surrender the contract at any time for an amount that would, if reasonable sales and administration charges were ignored, approximate the value of funds that could otherwise be applied to fund future periodic payments under the contract; and

  • (c) a prescribed investment. (placement admissible)

  qualifying transfer

  transfert admissible

  qualifying transfer means the transfer of an amount from a TFSA of which a particular individual is the holder if

  • (a) the amount is transferred directly to another TFSA, the holder of which is the particular individual; or

  • (b) the amount is transferred directly to another TFSA, the holder of which is a spouse or common-law partner or former spouse or common-law partner of the particular individual, and the following conditions are satisfied:

    • (i) the individuals are living separate and apart at the time of the transfer, and

    • (ii) the transfer is made under a decree, order or judgment of a competent tribunal, or under a written separation agreement, relating to a division of property between the individuals in settlement of rights arising out of, or on the breakdown of, their marriage or common-law partnership. (transfert admissible)

  restricted property

  restricted property[Repealed, 2009, c. 2, s. 68]

  TFSA dollar limit

  plafond CÉLI

  TFSA dollar limit for a calendar year means,

  • (a) for 2009, $5,000; and

  • (b) for each year after 2009, the amount (rounded to the nearest multiple of $500, or if that amount is equidistant from two such consecutive multiples, to the higher multiple) that is equal to $5,000 adjusted for each year after 2009 in the manner set out in section 117.1. (plafond CÉLI)

  unused TFSA contribution room

  droits inutilisés de cotisation à un CÉLI

  unused TFSA contribution room of an individual at the end of a calendar year means,

  • (a) if the year is before 2009, nil; and

  • (b) in any other case, the positive or negative amount determined by the formula

    A + B + C - D

    where

    A

    is the individual’s unused TFSA contribution room at the end of the preceding calendar year,

    B

    is the total of all amounts each of which was a distribution made in the preceding calendar year under a TFSA of which the individual was the holder at the time of the distribution, other than a distribution that is

    • (i) a qualifying transfer, or

    • (ii) a prescribed distribution,

    C

    is

    • (i) the TFSA dollar limit for the calendar year, if at any time in the calendar year the individual is 18 years of age or older and resident in Canada, and

    • (ii) nil, in any other case, and

    D

    is the total of all amounts each of which is a contribution made under a TFSA by the individual in the calendar year, other than a contribution that is

    • (i) a qualifying transfer, or

    • (ii) an exempt contribution. (droits inutilisés de cotisation à un CÉLI)

• (2) [Repealed, 2009, c. 2, s. 68]

• Marginal note:Survivor as successor holder

  (3) If an individual’s survivor becomes the holder of a TFSA as a consequence of the individual’s death and, immediately before the individual’s death, the individual had an excess TFSA amount, the survivor is deemed (other than for the purposes of the definition exempt contribution) to have made, at the beginning of the month following the individual’s death, a contribution under a TFSA equal to the amount, if any, by which

  • (a) that excess TFSA amount

  exceeds

  • (b) the total fair market value immediately before the individual’s death of all property held in connection with arrangements that ceased, because of the individual’s death, to be TFSAs.

• Marginal note:Significant interest

  (4) An individual has a significant interest in a corporation, partnership or trust at any time if

  • (a) in the case of a corporation, the individual is a specified shareholder of the corporation at that time;

  • (b) in the case of a partnership, the individual, or the individual together with persons and partnerships with which the individual does not deal at arm’s length, holds at that time interests as a member of the partnership that have a fair market value of 10% or more of the fair market value of the interests of all members in the partnership; and

  • (c) in the case of a trust, the individual, or the individual together with persons and partnerships with which the individual does not deal at arm’s length, holds at that time interests as a beneficiary (in this paragraph, as defined in subsection 108(1)) under the trust that have a fair market value of 10% or more of the fair market value of the interests of all beneficiaries under the trust.

• Marginal note:Obligation of issuer

  (5) The issuer of a TFSA shall exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a trust governed by the TFSA holds a non-qualified investment.