Income Tax Act

Marginal note:Definitions

• 207.01 (1) The following definitions and the definitions in subsections 146(1) (other than the definition benefit), 146.2(1) and 146.3(1) apply in this Part and in Parts XLIX and L of the Income Tax Regulations.

  advantage

  avantage

  advantage, in relation to a registered plan, means

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

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

    • (ii) a loan or an indebtedness (including, in the case of a TFSA, 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 payment out of or under the registered plan in satisfaction of all or part of the controlling individual’s interest in the registered plan, and

    • (iv) the payment or allocation of any amount to the registered plan by the issuer or carrier;

  • (b) a benefit that is an increase in the total fair market value of the property held in connection with the registered plan 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 registered plan,

    • (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 controlling individual of the registered plan, 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 registered plan) held by a person who is, or who does not deal at arm’s length with, the controlling individual of the registered plan,

    • (iii) a swap transaction, or

    • (iv) specified non-qualified investment income that has not been paid from the registered plan to its controlling individual within 90 days of receipt by the controlling individual of a notice issued by the Minister under subsection 207.06(4);

  • (c) a benefit that is income (including a capital gain) that is reasonably attributable, directly or indirectly, to

    • (i) a prohibited investment in respect of the registered plan or any other registered plan of the controlling individual,

    • (ii) in the case of a RRIF or RRSP, an amount received by the controlling individual of the registered plan, or by a person who does not deal at arm’s length with the controlling individual (if it is reasonable to consider, having regard to all the circumstances, that the amount was paid in relation to, or would not have been paid but for, property held in connection with the registered plan) and the amount was paid 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 controlling individual of the registered plan, or

      • (B) of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition, or

    • (iii) a deliberate over-contribution;

  • (d) an RRSP strip in respect of the registered plan; and

  • (e) 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)

  controlling individual

  particulier contrôlant

  controlling individual, of a registered plan, means the holder of a TFSA or the annuitant of a RRIF or RRSP, as the case may be. (particulier contrôlant)

  deliberate over-contribution

  cotisation excédentaire intentionnelle

  deliberate over-contribution of an individual means a contribution made under a TFSA by the individual that results in, or increases, an excess TFSA amount, unless it is reasonable to conclude that the individual neither knew nor ought to have known that the contribution could result in liability for a penalty, tax or similar consequence under this Act. (cotisation excédentaire intentionnelle)

  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 specified 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 specified 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 registered plan 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 registered plan, means property (other than prescribed excluded property) that is at that time

  • (a) a debt of the controlling individual of the registered plan;

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

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

    • (ii) a person or partnership that does not deal at arm’s length with the controlling individual 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)

  registered plan

  régime enregistré

  registered plan means a RRIF, RRSP or TFSA. (régime enregistré)

  restricted property

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

  RRSP strip

  somme découlant d’un dépouillement de REER

  RRSP strip, in respect of a RRIF or RRSP, means an amount used or obtained by the controlling individual of the RRIF or RRSP, or a person who does not deal at arm’s length with the controlling individual, as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable the controlling individual, or a person who does not deal at arm’s length with the controlling individual, to use or obtain the benefit of property held in connection with the RRIF or RRSP, but does not include an amount that is

  • (a) included in the income of the controlling individual or their spouse or common-law partner under section 146 or 146.3;

  • (b) an excluded withdrawal under section 146.01 or 146.02;

  • (c) described in subsection 146(16) or 146.3(14.2); or

  • (d) the principal amount of a debt obligation that is a prescribed excluded property. (somme découlant d’un dépouillement de REER)

  specified distribution

  distribution déterminée

  specified distribution means

  • (a) a distribution made under a TFSA to the extent that it is, or is reasonably attributable to, an amount that is

    • (i) an advantage in respect of the TFSA or any other TFSA of the holder,

    • (ii) specified non-qualified investment income,

    • (iii) an amount in respect of which tax was payable under Part I by a trust governed by the TFSA or any other TFSA of the holder, or

    • (iv) an amount described in subparagraph 207.06(1)(b)(ii); or

  • (b) a prescribed distribution. (distribution déterminée)

  specified non-qualified investment income

  revenu de placement non admissible déterminé

  specified non-qualified investment income, in respect of a registered plan and its controlling individual, means income (including a capital gain) that is reasonably attributable, directly or indirectly, to an amount in respect of which tax was payable under Part I by a trust governed by the registered plan or by any other registered plan of the controlling individual. (revenu de placement non admissible déterminé)

  swap transaction

  opération de swap

  swap transaction, in respect of a registered plan, means a transfer of property between the registered plan and its controlling individual or a person with whom the controlling individual does not deal at arm’s length, but does not include

  • (a) a payment out of or under the registered plan in satisfaction of all or part of the controlling individual’s interest in the registered plan;

  • (b) a payment into the registered plan that is a contribution, a premium, or an amount transferred in accordance with paragraph 146.3(2)(f);

  • (c) a transfer of a prohibited investment or a non-qualified investment from the registered plan, in circumstances where the controlling individual is entitled to a refund under subsection 207.04(4) on the transfer; or

  • (d) a transfer of property from one registered plan of a controlling individual to another registered plan of the controlling individual if

    • (i) both registered plans are RRIFs or RRSPs, or

    • (ii) both registered plans are TFSAs. (opération de swap)

  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)

  transitional prohibited investment benefit

  bénéfice transitoire provenant d’un placement interdit

  transitional prohibited investment benefit, of a controlling individual for a taxation year, means the amount determined by the formula

  A – B

  where

  A

  is the total of all amounts each of which is income earned, or a capital gain realized, in the taxation year by a trust governed by a RRIF or RRSP of the controlling individual that

  • (a) is attributable to a property that was, on March 23, 2011, a prohibited investment for a trust governed by a RRIF or RRSP of the controlling individual, and

  • (b) in the case of income, is earned after March 22, 2011 and before 2022 and, in the case of a capital gain, accrues after March 22, 2011 and is realized before 2022; and

  B

  is the total of all amounts each of which is a capital loss, determined without reference to subparagraph 40(2)(g)(i) and subsection 40(3.4), realized in the taxation year by a trust governed by a RRIF or RRSP of the controlling individual that

  • (a) is attributable to a property that was, on March 23, 2011, a prohibited investment for a trust governed by a RRIF or RRSP of the controlling individual, and

  • (b) accrues after March 22, 2011 and is realized before 2022. (bénéfice transitoire provenant d’un placement interdit)

  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;

  • (a.1) in circumstances where the Minister has, in accordance with section 207.06, waived or cancelled all or part of the liability imposed on the individual, the amount determined by the Minister; 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 specified 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 or carrier of a registered plan shall exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a trust governed by the registered plan holds a non-qualified investment.