Marginal note:Application
80.2 (1) Subsections (2) to (13) apply if
(a) in a taxation year, a taxpayer, under the terms of a contract, pays to a person (referred to in this section as the “recipient”) an amount (referred to in this section as the “specified amount”) that may reasonably be considered to be received by the recipient as a reimbursement of, or a contribution or an allowance in respect of, an amount (referred to in this section as the “original amount”)
(i) that was described by paragraph 18(1)(m) and was paid or payable by the recipient, or
(ii) that was, in respect of the recipient, an amount described by paragraph 12(1)(o);
(b) the original amount is paid or became payable or receivable in a taxation year or fiscal period of the recipient that begins before 2007; and
(c) the taxpayer is resident in Canada or carries on business in Canada when the specified amount is paid.
Marginal note:Rules relating to time of payment
(2) If the specified amount is paid in a taxation year of the taxpayer that begins before 2008, the eligible portion of the specified amount, referred to in subsection (11), is deemed to be a payment described by paragraph 18(1)(m). If, however, the specified amount is paid in a taxation year of the taxpayer that begins after 2007, the specified amount is deemed, for the purpose of applying this section to the taxpayer, to be nil.
Marginal note:Applying paragraph 18(1)(m)
(3) For the purpose of applying paragraph 18(1)(m) for the taxpayer’s taxation year in which the specified amount was paid, the amount to which that paragraph applies is to be determined for that taxation year
(a) if the taxpayer was in existence at the time the original amount became receivable by a person referred to in subparagraph 12(1)(o)(i) or became payable to a person referred to in subparagraph 18(1)(m)(i), as if the specified amount were paid by the taxpayer at that time; and
(b) in any other case, as if
(i) the taxpayer were in existence and had a calendar taxation year at the time the original amount became receivable by a person referred to in subparagraph 12(1)(o)(i) or became payable to a person referred to in subparagraph 18(1)(m)(i), and
(ii) the specified amount were paid by the taxpayer at that time.
Marginal note:Exception for certain partnership reimbursements
(4) Subsection (3) does not apply to a specified amount paid by a taxpayer if
(a) the recipient is a partnership;
(b) the original amount became receivable by a person referred to in subparagraph 12(1)(o)(i) or became payable to a person referred to in subparagraph 18(1)(m)(i), in a particular fiscal period of the partnership;
(c) the taxpayer is a member of the partnership at the end of the particular fiscal period; and
(d) the taxpayer paid the specified amount before the end of the taxation year of the taxpayer in which that particular fiscal period ends.
Marginal note:Specified amount deemed to be paid at end of taxation year
(5) A specified amount paid by the taxpayer to a partnership is deemed to have been paid on the last day of a particular taxation year of the taxpayer, and not at the time it was paid, if
(a) the taxpayer paid an amount to the partnership in the particular taxation year (referred to in this subsection as the “initial payment”);
(b) the initial payment was paid before September 17, 2004;
(c) the initial payment is an amount to which subsection (3) did not apply because of subsection (4);
(d) the taxpayer’s share of the original amount in respect of the initial payment is greater than the initial payment;
(e) the specified amount is equal to or less than the difference between the taxpayer’s share of the original amount in respect of the initial payment and the initial payment;
(f) the taxpayer elects in the taxpayer’s return of income for the taxpayer’s taxation year that includes the time at which the specified amount would, if this Act were read without reference to this subsection, have been paid, to have this subsection apply to the specified amount; and
(g) the specified amount is paid before 2006.
Marginal note:Inclusion in recipient’s income
(6) The recipient shall include in computing the recipient’s income for the taxation year or fiscal period in which the original amount was paid or became payable or receivable, the amount, if any, by which the eligible portion of the specified amount exceeds the portion of the original amount that was included in computing the income of the recipient for the taxation year or fiscal period because of paragraph 12(1)(o) or that was not deductible in computing the income of the recipient for the taxation year or fiscal period because of paragraph 18(1)(m).
Marginal note:Interpretation — portion of the original amount
(7) For the purpose of subsection (6), the portion of the original amount that was included in computing the income of the recipient or that was not deductible in computing the income of the recipient is the amount that would be included in computing the income of the recipient under paragraph 12(1)(o) or that would not be deductible in computing the income of the recipient under paragraph 18(1)(m), if the original amount were equal to the eligible portion of the specified amount.
Marginal note:Inclusion in recipient’s income
(8) The recipient shall include, in computing the recipient’s income for its taxation year or fiscal period in which the original amount was paid or became payable or receivable, the amount, if any, by which the specified amount exceeds the eligible portion of the specified amount.
Marginal note:Deduction by taxpayer
(9) Subject to paragraphs 18(1)(a) and (b), the taxpayer may deduct in computing the taxpayer’s income for the taxpayer’s taxation year in which the specified amount was paid, the amount, if any, by which the specified amount exceeds the eligible portion of the specified amount.
Marginal note:Specified amount deemed not to be payable or receivable
(10) Except for the purposes of this section and subparagraph 53(1)(e)(iv.1),
(a) the taxpayer is deemed not to have paid, and not to have been obligated to pay, the specified amount; and
(b) the recipient is deemed not to have received, and not to have been entitled to receive, the specified amount.
Marginal note:Eligible portion of a specified amount
(11) The eligible portion of a specified amount is
(a) an amount equal to the specified amount if
(i) the specified amount was paid before September 17, 2004,
(ii) the original amount is a tax imposed under a provincial law on the production of
(A) petroleum, natural gas or related hydrocarbons from a natural accumulation of petroleum or natural gas (other than a mineral resource) located in Canada, or from an oil or gas well located in Canada if the petroleum, natural gas or related hydrocarbons are not, before extraction, owned by the Crown in right of Canada or a province, or
(B) metals, minerals or coal from a mineral resource located in Canada if the metals, minerals or coal are not, before extraction, owned by the Crown in right of Canada or a province,
(iii) the specified amount does not exceed the taxpayer’s share of the original amount, or
(iv) the original amount is a prescribed amount; and
(b) the taxpayer’s share of the original amount, in any other case.
Marginal note:Taxpayer’s share of original amount
(12) A taxpayer’s share of an original amount in respect of a specified amount paid by the taxpayer to a recipient in respect of a property is the amount that may reasonably be considered to be the taxpayer’s share of the total of all amounts described in paragraph 12(1)(o) or 18(1)(m) in respect of the property, which share may not exceed the total of
(a) that proportion of the total of all amounts described in paragraph 12(1)(o) or 18(1)(m) in respect of the property that the taxpayer’s share of production from the property payable to the taxpayer as a royalty, which royalty is computed without reference to the costs of exploration or production, is of the total production from the property, and
(b) that proportion of the total of all amounts described in paragraph 12(1)(o) or 18(1)(m) in respect of the property (other than those amounts which the recipient has received or is entitled to receive as a reimbursement, contribution or allowance in respect of a royalty described in paragraph (a)) that the taxpayer’s share of the income from the property is of the total income from the property.
Marginal note:Reduction in original amount for Part XII of the regulations
(13) For the purpose of applying Part XII of the Income Tax Regulations, an original amount in respect of which a specified amount is received is deemed, for the taxation year in which the original amount was paid or became payable or receivable, not to include an amount equal to the eligible portion of the specified amount.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- R.S., 1985, c. 1 (5th Supp.), s. 80.2
- 2003, c. 28, s. 9
- 2013, c. 34, s. 215
- Date modified: