Jobs and Growth Act, 2012 (S.C. 2012, c. 31)
Full Document:
Assented to 2012-12-14
22. (1) The portion of subsection 100(1) of the Act before paragraph (b) is replaced by the following:
Marginal note:Disposition of interest in partnership
100. (1) If, as part of a transaction or event or series of transactions or events, a taxpayer disposes of an interest in a partnership and an interest in the partnership is acquired by a person or partnership described in any of paragraphs (1.1)(a) to (d), then notwithstanding paragraph 38(a), the taxpayer’s taxable capital gain for a taxation year from the disposition of the interest is deemed to be the total of
(a) 1/2 of such portion of the taxpayer’s capital gain for the year from the disposition as may reasonably be regarded as attributable to increases in the value of any partnership property of the partnership that is capital property other than depreciable property held directly by the partnership or held indirectly by the partnership through one or more other partnerships, and
(2) Section 100 of the Act is amended by adding the following after subsection (1):
Marginal note:Acquisition by certain persons or partnerships
(1.1) Subject to subsection (1.2), subsection (1) applies in respect of a disposition of a partnership interest by a taxpayer if the interest is acquired by
(a) a person exempt from tax under section 149;
(b) a non-resident person;
(c) another partnership to the extent that the interest can reasonably be considered to be held, at the time of its acquisition by the other partnership, indirectly through one or more partnerships, by a person that is
(i) exempt from tax under section 149,
(ii) a non-resident, or
(iii) a trust resident in Canada (other than a mutual fund trust) if
(A) an interest as a beneficiary (in this subsection and subsection (1.2) having the meaning assigned by subsection 108(1)) under the trust is held, directly or indirectly through one or more other partnerships, by a person that is exempt from tax under section 149 or that is a trust (other than a mutual fund trust), and
(B) the total fair market value of the interests as beneficiaries under the trust held by persons referred to in clause (A) exceeds 10% of the fair market value of all the interests as beneficiaries under the trust; or
(d) a trust resident in Canada (other than a mutual fund trust) to the extent that the trust can reasonably be considered to have a beneficiary that is
(i) exempt from tax under section 149,
(ii) a partnership, if
(A) an interest in the partnership is held, whether directly or indirectly through one or more other partnerships, by one or more persons that are exempt from tax under section 149 or are trusts (other than mutual fund trusts), and
(B) the total fair market value of the interests held by persons referred to in clause (A) exceeds 10% of the fair market value of all the interests in the partnership, or
(iii) another trust (other than a mutual fund trust), if
(A) one or more beneficiaries under the other trust are a person exempt from tax under section 149, a partnership or a trust (other than a mutual fund trust), and
(B) the total fair market value of the interests as beneficiaries under the other trust held by the beneficiaries referred to in clause (A) exceeds 10% of the fair market value of all the interests as beneficiaries under the other trust.
Marginal note:De minimis
(1.2) Subsection (1) does not apply to a taxpayer’s disposition of a partnership interest to a partnership or trust described in paragraph (1.1)(c) or (d) — other than a trust under which the amount of the income or capital to be distributed at any time in respect of any interest as a beneficiary under the trust depends on the exercise by any person or partnership of, or the failure by any person or partnership to exercise, any discretionary power — if the extent to which subsection (1) would, but for this subsection, apply to the taxpayer’s disposition of the interest because of subsection (1.1) does not exceed 10% of the taxpayer’s interest.
Marginal note:Exception — non-resident person
(1.3) Subsection (1) does not apply in respect of a disposition of an interest in a partnership by a taxpayer to a person referred to in paragraph (1.1)(b) if
(a) property of the partnership is used, immediately before and immediately after the acquisition of the interest by the non-resident person, in carrying on business through one or more permanent establishments in Canada; and
(b) the total fair market value of the property referred to in paragraph (a) equals at least 90% of the total fair market value of all property of the partnership.
Marginal note:Anti-avoidance — dilution
(1.4) Subsection (1.5) applies in respect of a taxpayer’s interest in a partnership if
(a) it is reasonable to conclude that one of the purposes of a dilution, reduction or alteration of the interest was to avoid the application of subsection (1) in respect of the interest; and
(b) as part of a transaction or event or series of transactions or events that includes the dilution, reduction or alteration, there is
(i) an acquisition of an interest in the partnership by a person or partnership described in any of paragraphs (1.1)(a) to (d), or
(ii) an increase in, or alteration of, an interest in the partnership held by a person or partnership described in any of paragraphs (1.1)(a) to (d).
Marginal note:Deemed gain — dilution
(1.5) If this subsection applies in respect of a particular interest in a partnership of a taxpayer, then for the purposes of subsection (1),
(a) the taxpayer is deemed to have disposed of an interest in the partnership at the time of the dilution, reduction or alteration;
(b) the taxpayer is deemed to have a capital gain from the disposition equal to the amount by which the fair market value of the particular interest immediately before the dilution, reduction or alteration exceeds its fair market value immediately thereafter; and
(c) the person or partnership referred to in paragraph (1.4)(b) is deemed to have acquired an interest in the partnership as part of the transaction or event or series of transactions or events that includes the disposition referred to in paragraph (a).
(3) Subsection (1) applies in respect of any disposition made after March 28, 2012, except that
(a) in respect of any disposition made before August 14, 2012, the portion of subsection 100(1) of the Act before paragraph (b), as enacted by subsection (1), is to be read as follows:
100. (1) If, as part of a transaction or event or series of transactions or events, a taxpayer disposes of an interest in a partnership and that interest is acquired by a person exempt from tax under section 149 or by a non-resident person, notwithstanding paragraph 38(a), the taxpayer’s taxable capital gain for a taxation year from the disposition of the interest is deemed to be
(a) 1/2 of such portion of the taxpayer’s capital gain for the year therefrom as may reasonably be regarded as attributable to increases in the value of any partnership property of the partnership that is capital property other than depreciable property,
plus
(b) subsection (1) does not apply in respect of a disposition of an interest in a partnership by a taxpayer before 2013 to a person with whom the taxpayer deals at arm’s length if the taxpayer is obligated to dispose of the interest to the person pursuant to a written agreement entered into by the taxpayer before March 29, 2012. A taxpayer is not considered to be obligated if, as a result of amendments to the Act, the taxpayer may be excused from the obligation.
(4) Subsection (2) is deemed to have come into force on March 29, 2012, except that subsections 100(1.1), (1.2), (1.4) and (1.5) of the Act, as enacted by subsection (2), do not apply
(a) before August 14, 2012; or
(b) in respect of a disposition, dilution, reduction or alteration of an interest in a partnership if the disposition, dilution, reduction or alteration occurs before 2013 pursuant to an obligation under a written agreement entered into before August 14, 2012 by parties that deal with each other at arm’s length and no party to the agreement may be excused from the obligation as a result of amendments to the Act.
23. (1) Paragraph (a) of the definition “trust” in subsection 108(1) of the Act is replaced by the following:
(a) an amateur athlete trust, an employee life and health trust, an employee trust, a trust described in paragraph 149(1)(o.4) or a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a foreign retirement arrangement, a pooled registered pension plan, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan, a registered supplementary unemployment benefit plan or a TFSA,
(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.
24. (1) Clause (a)(i)(C) of the definition “investment expense” in subsection 110.6(1) of the Act is replaced by the following:
(C) to make a contribution to a pooled registered pension plan, registered pension plan or deferred profit sharing plan, or
(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.
25. (1) Subparagraph (a)(i) of the definition “pension income” in subsection 118(7) of the Act is replaced by the following:
(i) a payment in respect of a life annuity out of or under a superannuation or pension plan (other than a pooled registered pension plan) or a specified pension plan,
(2) Paragraph (a) of the definition “pension income” in subsection 118(7) of the Act is amended by adding the following before subparagraph (iv):
(iii.2) an amount included under section 147.5,
(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.
26. (1) The portion of paragraph 122.3(1)(c) of the Act before subparagraph (i) is replaced by the following:
(c) an amount equal to that proportion of the specified amount for the year that the number of days
(2) Paragraph 122.3(1)(d) of the Act is replaced by the following:
(d) the specified percentage for the year of the individual’s income for the year from that employment that is reasonably attributable to duties performed on the days referred to in paragraph (c)
(3) Section 122.3 of the Act is amended by adding the following after subsection (1):
Marginal note:Specified amount
(1.01) For the purposes of paragraph (1)(c), the specified amount for a taxation year of an individual is
(a) for the 2013 to 2015 taxation years, the amount determined by the formula
[$80,000 × A/(A + B)] + [C × B/(A + B)]
where
- A
- is the individual’s income described in paragraph (1)(d) for the taxation year that is earned in connection with a contract that was committed to in writing before March 29, 2012 by a specified employer of the individual,
- B
- is the individual’s income described in paragraph (1)(d) for the taxation year, other than income included in the description of A, and
- C
- is
(i) for the 2013 taxation year, $60,000,
(ii) for the 2014 taxation year, $40,000, and
(iii) for the 2015 taxation year, $20,000; and
(b) for the 2016 and subsequent taxation years, nil.
Marginal note:Specified percentage
(1.02) For the purposes of paragraph (1)(d), the specified percentage for a taxation year of an individual is
(a) for the 2013 to 2015 taxation years, the amount determined by the formula
[80% × A/(A + B)] + [C × B/(A + B)]
where
- A
- is the value of A in subsection (1.01),
- B
- is the value of B in subsection (1.01), and
- C
- is
(i) for the 2013 taxation year, 60%,
(ii) for the 2014 taxation year, 40%, and
(iii) for the 2015 taxation year, 20%; and
(b) for the 2016 and subsequent taxation years, 0%.
(4) Subsections (1) to (3) apply to the 2013 and subsequent taxation years.
- Date modified: