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Budget Implementation Act, 2018, No. 2 (S.C. 2018, c. 27)

Assented to 2018-12-13

PART 1Amendments to the Income Tax Act and to Other Legislation (continued)

R.S., c. 1 (5th Supp.)Income Tax Act (continued)

  •  (1) Section 128.1 of the Act is amended by adding the following after subsection (1.1):

    • Marginal note:Trusts and partnerships look-through rule

      (1.2) For the purposes of this subsection and paragraph (1)(c.1), if at any time shares of the capital stock of a corporation resident in Canada are owned by a trust or a partnership (each referred to in this subsection as a “conduit”), each person or partnership with an interest as a beneficiary under the conduit or that is a member of the conduit (each referred to in this subsection as a “holder”), as the case may be, is deemed to own the shares of each class of the capital stock of the corporation that are owned by the conduit the number of which is determined by the formula

      A × B/C

      where

      A
      is the total number of shares of the class of the capital stock of the corporation that is owned by the conduit at that time;
      B
      is the fair market value, at that time, of the holder’s interest in the conduit; and
      C
      is the total fair market value, at that time, of all interests in the conduit.
  • (2) Subsection (1) applies in respect of transactions or events that occur after February 26, 2018.

  •  (1) Section 129 of the Act is amended by adding the following after subsection (4):

    • Marginal note:Conditions for subsection (4.2)

      (4.1) Subsection (4.2) applies in respect of a particular taxation year of a particular corporation if the following conditions are met:

      • (a) the particular corporation has an amount of tax payable for the year under Part IV;

      • (b) the particular corporation has claimed amounts under paragraph 186(1)(c) or (d) in respect of the year; and

      • (c) the particular corporation would, in the absence of paragraphs 186(1)(c) and (d), have an amount determined, at the end of the year, under both paragraph (a) of the definition eligible refundable dividend tax on hand and paragraph (b) of the definition non-eligible refundable dividend tax on hand in subsection (4).

    • Marginal note:Part IV tax — allocation of losses

      (4.2) If this subsection applies in respect of a particular taxation year of a corporation, for the purpose of determining the amount under paragraph (a) of the definition eligible refundable dividend tax on hand in subsection (4), in respect of the corporation at the end of the year, the amount determined under subsection 186(1) in respect of the corporation for the year is deemed to be the amount determined by the formula

      A + B − C

      where

      A
      is the amount determined under paragraph 186(1)(a) in respect of the corporation for the year in respect of eligible dividends;
      B
      is the amount determined under paragraph 186(1)(b) in respect of the corporation for the year in respect of dividends that resulted in dividend refunds from the eligible refundable dividend tax on hand of other corporations; and
      C
      is the amount determined by the formula

      38 1/3% (D + E) − (F + G)

      where

      D
      is the amount claimed by the corporation under paragraph 186(1)(c) for the year,
      E
      is the amount claimed by the corporation under paragraph 186(1)(d) for the year,
      F
      is the amount determined under paragraph 186(1)(a) in respect of the corporation for the year in respect of taxable dividends (other than eligible dividends), and
      G
      is the amount determined under paragraph 186(1)(b) in respect of the corporation for the year in respect of dividends that resulted in dividend refunds from the non-eligible refundable dividend tax on hand of other corporations.
  • (2) Subsection (1) applies to taxation years that begin after 2018.

  •  (1) Section 142.5 of the Act is amended by adding the following after subsection (3):

    • Marginal note:Proceeds — mark-to-market property

      (4) For greater certainty, if a taxpayer is a financial institution in a taxation year and disposes of a share that is mark-to-market property of the taxpayer for the year, the taxpayer’s proceeds from the disposition do not include any amount that would otherwise be proceeds from the disposition to the extent that the amount is deemed by subsection 84(2) or (3) to be a dividend received except to the extent the dividend is deemed by subparagraph 88(2)(b)(ii) not to be a dividend.

  • (2) Subsection (1) applies in respect of dispositions that occur after February 26, 2018.

  •  (1) The definition political activity in subsection 149.1(1) of the Act is repealed.

  • (2) The definition charitable purposes in subsection 149.1(1) of the Act is replaced by the following:

    charitable purposes

    charitable purposes includes the disbursement of funds to a qualified donee; (fins de bienfaisance)

  • (3) Paragraph (a) of the definition charitable organization in subsection 149.1(1) of the Act is replaced by the following:

    • (a) constituted and operated exclusively for charitable purposes,

    • (a.1) all the resources of which are devoted to charitable activities carried on by the organization itself,

  • (4) Subsection 149.1(1) of the Act is amended by adding the following in alphabetical order:

    charitable activities

    charitable activities includes public policy dialogue and development activities carried on in furtherance of a charitable purpose; (activités de bienfaisance)

  • (5) The portion of subsection 149.1(1.1) of the Act before paragraph (a) is replaced by the following:

    • Marginal note:Exclusions

      (1.1) For the purposes of paragraphs (2)(b), (3)(b) and (4)(b) and subsection (21), the following shall be deemed to be neither an amount expended in a taxation year on charitable activities nor a gift made to a qualified donee:

  • (6) Subsection 149.1(1.1) of the Act is amended by adding “and” at the end of paragraph (a) and by repealing paragraph (b).

  • (7) Paragraphs 149.1(6)(b) and (c) of the Act are replaced by the following:

    • (b) in any taxation year, it disburses not more than 50% of its income for that year to qualified donees; or

    • (c) it disburses income to a registered charity that the Minister has designated in writing as a charity associated with it.

  • (8) Subsections 149.1(6.1) and (6.2) of the Act are replaced by the following:

    • Marginal note:Charitable purposes

      (6.1) For the purposes of the definition charitable foundation in subsection (1), a corporation or trust that devotes any part of its resources to the direct or indirect support of, or opposition to, any political party or candidate for public office shall not be considered to be constituted and operated exclusively for charitable purposes.

    • Marginal note:Charitable purposes

      (6.2) For the purposes of the definition charitable organization in subsection (1), an organization that devotes any part of its resources to the direct or indirect support of, or opposition to, any political party or candidate for public office shall not be considered to be constituted and operated exclusively for charitable purposes.

  • (9) Subsection 149.1(6.201) of the Act is replaced by the following:

    • Marginal note:Activities of Canadian amateur athletic associations

      (6.201) For the purposes of the definition Canadian amateur athletic association in subsection (1), an association that devotes any part of its resources to the direct or indirect support of, or opposition to, any political party or candidate for public office shall not be considered to devote that part of its resources to its exclusive purpose and exclusive function.

  • (10) Subsection 149.1(10) of the Act is replaced by the following:

    • Marginal note:Deemed charitable activity

      (10) An amount paid by a charitable organization to a qualified donee that is not paid out of the income of the charitable organization is deemed to be a devotion of a resource of the charitable organization to a charitable activity carried on by it.

  • (11) Section 149.1 of the Act is amended by adding the following after subsection (10):

    • Marginal note:Public policy activities

      (10.1) Subject to subsections (6.1) and (6.2), public policy dialogue and development activities carried on by an organization, corporation or trust in support of its stated purposes shall be considered to be carried on in furtherance of those purposes and not for any other purpose.

  • (12) Subsections (1), (2), (7) and (10) are deemed to have come into force

    • (a) on June 29, 2012 in respect of organizations, corporations and trusts that are registered charities on September 14, 2018 and in respect of associations that are registered Canadian amateur athletic associations on that date; and

    • (b) on September 14, 2018 in any other case.

  • (13) Subsections (3), (4), (6), (8) and (11) are deemed to have come into force

    • (a) on January 1, 2008 in respect of organizations, corporations and trusts that are registered charities on September 14, 2018; and

    • (b) on September 14, 2018 in any other case.

  • (14) Subsection (9) is deemed to have come into force

    • (a) on January 1, 2012 in respect of associations that are registered Canadian amateur athletic associations on September 14, 2018; and

    • (b) on September 14, 2018 in any other case.

 

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