Budget Implementation Act, 2016, No. 2 (S.C. 2016, c. 12)
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Assented to 2016-12-15
PART 1Amendments to the Income Tax Act and to Related Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
21 (1) Paragraph 73(3)(a) of the Act is replaced by the following:
(a) the property was, before the transfer, land in Canada or depreciable property in Canada of a prescribed class, of the taxpayer;
(2) Paragraph 73(3.1)(c) of the Act is repealed.
(3) Subsection 73(3.1) of the Act is amended by adding “and” at the end of paragraph (e) and by repealing paragraphs (f) and (g).
(4) Subsections (1) to (3) come into force or are deemed to have come into force on January 1, 2017.
22 (1) Paragraph 79(4)(b) of the Act is replaced by the following:
(b) paragraph 20(1)(hh.1) applies, where the cost of the property to the person was an eligible capital expenditure at the time the property was acquired;
(2) Subsection (1) comes into force or is deemed to have come into force on January 1, 2017.
23 (1) Paragraph 80(2)(c) of the Act is replaced by the following:
(c) subsections (3) to (5) and (8) to (13) apply in numerical order to the forgiven amount in respect of a commercial obligation;
(2) Paragraph 80(2)(f) of the Act is repealed.
(3) Subsection 80(7) of the Act is repealed.
(4) The portion of subsection 80(9) of the Act before paragraph (a) is replaced by the following:
Marginal note:Reductions of adjusted cost bases of capital properties
(9) If a commercial obligation issued by a debtor is settled at any time and amounts have been designated under subsections (5) and (8) to the maximum extent permitted in respect of the settlement, subject to subsection (18)
(5) Subsection 80(10) of the Act is replaced by the following:
Marginal note:Reduction of adjusted cost bases of certain shares and debts
(10) If a commercial obligation issued by a debtor is settled at any time in a taxation year and amounts have been designated by the debtor under subsections (5), (8) and (9) to the maximum extent permitted in respect of the settlement, subject to subsection (18) the remaining unapplied portion of that forgiven amount shall be applied (to the extent that it is designated in a prescribed form filed with the debtor’s return of income under this Part for the year) to reduce immediately after that time the adjusted cost bases to the debtor of capital properties, owned by the debtor immediately after that time, that are shares of the capital stock of corporations of which the debtor is a specified shareholder at that time and debts issued by corporations of which the debtor is a specified shareholder at that time (other than shares of the capital stock of corporations related to the debtor at that time, debts issued by corporations related to the debtor at that time and excluded properties).
(6) The portion of subsection 80(11) of the Act before paragraph (a) is replaced by the following:
Marginal note:Reduction of adjusted cost bases of certain shares, debts and partnership interests
(11) If a commercial obligation issued by a debtor is settled at any time in a taxation year and amounts have been designated by the debtor under subsections (5), (8), (9) and (10) to the maximum extent permitted in respect of the settlement, subject to subsection (18) the remaining unapplied portion of that forgiven amount shall be applied (to the extent that it is designated in a prescribed form filed with the debtor’s return of income under this Part for the year) to reduce immediately after that time the adjusted cost bases to the debtor of
(7) The portion of subsection 80(12) of the Act before paragraph (a) is replaced by the following:
Marginal note:Capital gain where current year capital loss
(12) If a commercial obligation issued by a debtor (other than a partnership) is settled at any time in a taxation year and amounts have been designated by the debtor under subsections (5), (8) and (9) to the maximum extent permitted in respect of the settlement,
(8) The portion of paragraph (a) of the description of D in subsection 80(13) of the Act before subparagraph (i) is replaced by the following:
(a) if the debtor has designated amounts under subsections (5), (8), (9) and (10) to the maximum extent permitted in respect of the settlement, the amount, if any, by which
(9) Paragraph 80(14.1)(c) of the Act is replaced by the following:
(c) amounts were designated under subsections (5), (8), (9) and (10) by each of those directed persons to the maximum extent permitted in respect of the settlement of each of those notional obligations; and
(10) Paragraph 80(15)(b) of the Act is replaced by the following:
(b) for the purpose of paragraph (a), the relevant limit in respect of the partnership obligation is the amount that would be included in computing the member’s income for the year as a consequence of the application of subsection (13) and section 96 to the settlement of the partnership obligation if the partnership had designated amounts under subsections (5), (8), (9) and (10) to the maximum extent permitted in respect of each obligation settled in that fiscal period and if income arising from the application of subsection (13) were from a source of income separate from any other sources of partnership income; and
(11) Subsections (1) to (10) come into force or are deemed to have come into force on January 1, 2017.
24 (1) Paragraph 80.4(2)(e) of the Act is replaced by the following:
(e) the total of
(i) the amount of interest for the year paid on all such loans and debts (other than loans deemed to have been made under subsection 15(2.17)) not later than 30 days after the end of the year, and
(ii) the specified interest amounts, for the year, in respect of all such loans that are deemed to have been made under subsection 15(2.17).
(2) Subsection 80.4(7) of the Act is amended by adding the following in alphabetical order:
- specified interest amount
specified interest amount, for a year, in respect of a loan (referred to in this definition as the deemed loan) deemed to have been made under subsection 15(2.17) by an ultimate funder (as defined in subsection 15(2.192)), means the amount determined by the formula
A × (B/C)
where
- A
- is the amount of interest for the year paid not later than 30 days after the end of the year on all debts — owing by one or more funders (as defined in subsection 15(2.192), but excluding any funders that are ultimate funders as defined in subsection 15(2.192)) under one or more funding arrangements (as defined in subsection 15(2.192)) to the ultimate funder — that gave rise to the deemed loan;
- B
- is the average amount outstanding for the year in respect of the deemed loan; and
- C
- is the total of all amounts each of which is the average amount outstanding in the year as or on account of an amount owing under a debt described in A. (montant d’intérêts déterminé)
(3) Subsections (1) and (2) apply in respect of
(a) loans received and indebtedness incurred after March 21, 2016; and
(b) any portion of a particular loan received or indebtedness incurred before March 22, 2016 that remains outstanding on that day, as if that portion were a separate loan or indebtedness that was received or incurred, as the case may be, on March 22, 2016 in the same manner and on the same terms as the particular loan or indebtedness.
25 (1) Subparagraph 84(1)(c.3)(i) of the Act is replaced by the following:
(i) on the issuance of shares of that class or shares of another class for which the shares of that class were substituted (other than an issuance to which section 51, 66.3, 84.1, 85, 85.1, 86 or 87 or subsection 192(4.1), 194(4.1) or 212.1(1.1) applied),
(2) Subsection (1) comes into force or is deemed to have come into force on March 22, 2016.
- Date modified: