Budget Implementation Act, 2017, No. 2 (S.C. 2017, c. 33)

• (a) a trust (in this section and section 138.2 referred to as the “related segregated fund trust”) is deemed to be created at the time that is the later of

• (f) the taxable income of the related segregated fund trust is deemed for the purposes of subsections 104(6), (13) and (24) to be an amount that has become payable in the year to the beneficiaries under the segregated fund trust and the amount therefor in respect of any particular beneficiary is equal to the amount determined by reference to the terms and conditions of the segregated fund policy;

• Marginal note:Transition — pre-2018 non-capital losses

  (2.1) For the purpose of determining the taxable income of a related segregated fund trust for a taxation year that begins after 2017, the non-capital losses of the related segregated fund trust that arise in a taxation year that begins before 2018 are deemed to be nil.

Marginal note:Qualifying transfer of funds

• 138.2 (1) For the purposes of this section, a qualifying transfer occurs at a particular time (in this section referred to as the “transfer time”) if

  • (a) all of the property that, immediately before the transfer time, was property of a related segregated fund trust has become, at the transfer time, the property of another related segregated fund trust (in this section referred to as the “transferor” and “transferee”, respectively, and collectively as the “funds”);

  • (b) every person that had an interest in the transferor immediately before the transfer time (in this section referred to as a “beneficiary”) has ceased to be a beneficiary of the transferor at the transfer time and has received no consideration for the interest other than an interest in the transferee;

  • (c) the trustee of the funds is a resident of Canada; and

  • (d) the trustee of the funds so elects, by filing a prescribed form with the Minister on or before the election’s due date.

• Marginal note:General

  (2) If there has been a qualifying transfer,

  • (a) the last taxation years of the funds that began before the transfer time are deemed to have ended at the transfer time and the next taxation year of the transferee is deemed to have begun immediately after the transfer time;

  • (b) no amount in respect of a non-capital loss, net capital loss, restricted farm loss, farm loss or limited partnership loss of a fund for a taxation year that began before the transfer time is deductible in computing the taxable income of the funds for a taxation year that begins after the transfer time;

  • (c) each beneficiary’s interest in the transferor is deemed to have been disposed of at the transfer time for proceeds of disposition, and each beneficiary’s interest in the transferee received in the qualifying transfer is deemed to have been acquired at a cost, equal to the cost amount to the beneficiary of the interest in the transferor immediately before the transfer time;

  • (d) any amount determined under subsection 138.1(6) in respect of a policyholder’s interest in the transferor is deemed

    • (i) to have been charged, transferred or paid in respect of the policyholder’s interest in the transferee that is acquired on the qualifying transfer, and

    • (ii) to not have been charged, transferred or paid in respect of the policyholder’s interest in the transferor; and

  • (e) subsections 138.1(4) and (5) do not apply in respect of any disposition of an interest in the transferor arising on the qualifying transfer.

• Marginal note:Transferor – capital gains and losses

  (3) In respect of a qualifying transfer, each property of the transferor held immediately before the transfer time is deemed to have been disposed of by the transferor immediately before the transfer time for proceeds of disposition, and to have been acquired by the transferee at the transfer time for a cost, equal to the lesser of

  • (a) the fair market value of the property immediately before the transfer time, and

  • (b) the greater of

    • (i) the cost amount of the property to the transferor immediately before the transfer time, and

    • (ii) the amount that is designated in respect of the property in the election in respect of the qualifying transfer.

• Marginal note:Transferee – capital gains and losses

  (4) In respect of a qualifying transfer, each property of the transferee held immediately before the transfer time is deemed to have been disposed of by the transferee immediately before the transfer time for proceeds of disposition, and to have been reacquired by the transferee at the transfer time for a cost, equal to the lesser of

  • (a) the fair market value of the property immediately before the transfer time, and

  • (b) the greater of

    • (i) the cost amount of the property to the transferee immediately before the transfer time, and

    • (ii) the amount that is designated in respect of the property in the election in respect of the qualifying transfer.

• Marginal note:Loss limitation

  (5) Subsection 138.1(3) does not apply to capital losses of a fund from the disposition of property on a qualifying transfer under subsection (3) or (4) to the extent that the amount of such capital losses exceeds the amount of capital gains of the fund from the disposition of property on the qualifying transfer under subsection (3) or (4), as the case may be.

• Marginal note:Due date

  (6) The due date of an election referred to in paragraph (1)(d) is the later of

  • (a) the day that is six months after the day that includes the transfer time, and

  • (b) a day that the Minister may specify.

• (B) a credit union that is a shareholder or member of a body corporate referred to as a “central” for the purposes of the Canadian Payments Act,

• Marginal note:Specified pension plan — account

  (21.2) For the purposes of paragraph (8.2)(b), subsection (8.21), paragraphs (16)(a) and (b) and 18(1)(u), subparagraph (a)(i) of the definition excluded right or interest in subsection 128.1(10), paragraph (b) of the definition excluded premium in subsection 146.01(1), paragraph (c) of the definition excluded premium in subsection 146.02(1), subsections 146.3(14) and 147(19), section 147.3 and paragraphs 147.5(21)(c) and 212(1)(j.1) and (m) and for the purposes of any regulations made under subsection 147.1(18), an individual’s account under a specified pension plan is deemed to be a registered retirement savings plan under which the individual is the annuitant.

• (b) a person (in this definition referred to as the “promoter”)

promoter

promoter, of an arrangement, means the person described as the promoter in the definition education savings plan; (promoteur)

• Marginal note:Trust not taxable

  (5) No tax is payable under this Part by a trust that is governed by a RESP on its taxable income for a taxation year, except that, if at any time in the taxation year, it holds one or more properties that are not qualified investments for the trust, tax is payable under this Part by the trust on the amount that would be its taxable income for the taxation year if it had no income or losses from sources other than those properties, and no capital gains or capital losses other than from dispositions of those properties, and for that purpose,

  • (a) income includes dividends described in section 83;

  • (b) the trust’s taxable capital gain or allowable capital loss from the disposition of a property is equal to its capital gain or capital loss, as the case may be, from the disposition; and

  • (c) the trust’s income shall be computed without reference to subsection 104(6).

• Marginal note:Educational assistance payments

  (7) There shall be included in computing an individual’s income for a taxation year the total of all educational assistance payments paid out of registered education savings plans to or for the individual in the year that exceeds the total of all excluded amounts in respect of those plans and the individual for the year.

• (a) each accumulated income payment (other than an accumulated income payment made under subsection (1.2)) received in the year by the taxpayer under a registered education savings plan that exceeds the total of all excluded amounts in respect of those plans and the individual for the year; and

• Marginal note:Excluded amount

  (7.2) An excluded amount in respect of a registered education savings plan is,

  • (a) for the purposes of subsection (7) and paragraph (7.1)(a), an amount in respect of which a subscriber pays a tax under section 207.05 in respect of the plan, or another plan for which the plan was substituted by the subscriber, that

    • (i) has not been waived, cancelled or refunded, and

    • (ii) has not reduced any other amount that would otherwise be included under subsections (7) or (7.1) in computing an individual’s income for the year or a preceding year; and

  • (b) for the purposes of paragraph (7.1)(b),

    • (i) any amount received under the plan,

    • (ii) any amount received in satisfaction of a right to a refund of payments under the plan, or

    • (iii) any amount received by a taxpayer under a decree, order or judgment of a competent tribunal, or under a written agreement, relating to a division of property between the taxpayer and the taxpayer’s spouse or common-law partner or former spouse or common-law partner in settlement of rights arising out of, or on the breakdown of, their marriage or common-law partnership.

• (d) other than for the purposes of paragraphs (4)(f) to (h) and (n),

• (i) a corporation (in this definition referred to as the “issuer”)

A

is 10% of the fair market value of the property held by the plan trust at the beginning of the calendar year (other than annuity contracts held by the plan trust that, at the beginning of the calendar year, are not described in paragraph (b) of the definition qualified investment), and

• (i) a periodic payment under an annuity contract held by the plan trust at the beginning of the calendar year (other than an annuity contract described at the beginning of the calendar year in paragraph (b) of the definition qualified investment) that is paid to the plan trust in the calendar year, or

specified year

specified year, for a disability savings plan of a beneficiary means the particular calendar year in which a medical doctor or a nurse practitioner licensed to practise under the laws of a province (or of the place where the beneficiary resides) certifies in writing that the beneficiary’s state of health is such that, in the professional opinion of the medical doctor or the nurse practitioner, the beneficiary is not likely to survive more than five years and

issuer

issuer, of an arrangement, means the person described as the “issuer” in the definition disability savings plan. (émetteur)

qualified investment

qualified investment, for a trust governed by a RDSP, 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 RDSP” 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 where

  • (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;

• (c) a contract for an annuity issued by a licensed annuities provider where

  • (i) annual or more frequent periodic payments are or may be made under the contract to the holder of the contract,

  • (ii) 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,

  • (iii) neither the time nor the amount of any payment under the contract may vary because of the length of any life, other than the life of the beneficiary under the plan,

  • (iv) the day on which the periodic payments began or are to begin is not later than the end of the later of

    • (A) the year in which the beneficiary under the plan attains the age of 60 years, and

    • (B) the year following the year in which the contract was acquired by the trust,

  • (v) the periodic payments are payable for the life of the beneficiary under the plan and either there is no guaranteed period under the contract or there is a guaranteed period that does not exceed 15 years,

  • (vi) the periodic payments

    • (A) are equal, or

    • (B) are not equal solely because of one or more adjustments that would, if the contract were an annuity under a retirement savings plan, be in accordance with subparagraphs 146(3)(b)(iii) to (v) or that arise because of a uniform reduction in the entitlement to the periodic payments as a consequence of a partial surrender of rights to the periodic payments, and

  • (vii) the contract requires that, in the event the plan must be terminated in accordance with paragraph (4)(p), any amounts that would otherwise be payable after the termination be commuted into a single payment; and

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

• Marginal note:Specified disability savings plan

  (1.1) If, in respect of a beneficiary under a registered disability savings plan, a medical doctor or a nurse practitioner licensed to practise under the laws of a province (or of the place where the beneficiary resides) certifies in writing that the beneficiary’s state of health is such that, in the professional opinion of the medical doctor or the nurse practitioner, the beneficiary is not likely to survive more than five years, the holder of the plan elects in prescribed form and provides the election and the medical certification in respect of the beneficiary to the issuer of the plan, and the issuer notifies the specified Minister of the election in a manner and format acceptable to the specified Minister, then the plan becomes a specified disability savings plan at the time the notification is received by the specified Minister.

• (i) the beneficiary is not a DTC-eligible individual in respect of the taxation year that includes that time, unless the contribution is a specified RDSP payment in respect of the beneficiary and, at that time, there is a valid election referred to in subsection (4.1) in respect of the beneficiary, or

A

is the fair market value of the property held by the plan trust at the beginning of the calendar year (other than annuity contracts held by the plan trust that, at the beginning of the calendar year, are not described in paragraph (b) of the definition qualified investment in subsection (1)),

• (i) a periodic payment under an annuity contract held by the plan trust at the beginning of the calendar year (other than an annuity contract described at the beginning of the calendar year in paragraph (b) of the definition qualified investment in subsection (1)) that is paid to the plan trust in the calendar year, or

• (a) a medical doctor or a nurse practitioner licensed to practise under the laws of a province certifies in writing that the nature of the beneficiary’s condition is such that, in the professional opinion of the medical doctor or the nurse practitioner, the beneficiary is likely to become a DTC-eligible individual for a future taxation year;

• (b) if the trust is not otherwise taxable under paragraph (a) on its taxable income for the year and, at any time in the year, it carries on one or more businesses or holds one or more properties that are not qualified investments for the trust, tax is payable under this Part by the trust on the amount that its taxable income for the year would be if it had no incomes or losses from sources other than those businesses and properties, and no capital gains or losses other than from dispositions of those properties, and for this purpose,

• Marginal note:Non-taxable portion of disability assistance payment

  (7) The non-taxable portion of a disability assistance payment made at a particular time from a registered disability savings plan of a beneficiary is the lesser of the amount of the disability assistance payment and the amount determined by the formula

  A × B/C + D

  where

  A

  is the amount of the disability assistance payment;

  B

  is the amount, if any, by which

  • (a) the total of all amounts each of which is the amount of a contribution made before the particular time to any registered disability savings plan of the beneficiary

  exceeds

  • (b) the total of all amounts each of which is the amount that would be the non-taxable portion of a disability assistance payment made before the particular time from any registered disability savings plan of the beneficiary, if the formula in this subsection were read without reference to the description of D;

  C

  is the amount by which the fair market value of the property held by the plan trust immediately before the payment exceeds the assistance holdback amount in relation to the plan; and

  D

  is the amount in respect of which a holder of the plan pays a tax under section 207.05 in respect of the plan, or another plan for which the plan was substituted by the holder, that

  • (a) has not been waived, cancelled or refunded; and

  • (b) has not otherwise been used in the year or a preceding year in computing the non-taxable portion of a disability assistance payment made from the plan or another plan for which the plan was substituted.