Budget Implementation Act, 2021, No. 1 (S.C. 2021, c. 23)
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Assented to 2021-06-29
PART 1Amendments to the Income Tax Act and Other Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
31 (1) The description of A in subsection 146(1.1) of the Act is replaced by the following:
- A
- is the amount determined for F in subsection 118(1.1) for that preceding taxation year; and
(2) Subsection 146(16) of the Act is amended by striking out “or” at the end of paragraph (a) and by adding the following after that paragraph:
(a.1) to a licensed annuities provider to acquire an advanced life deferred annuity for the benefit of the transferor, or
(3) Subsection (1) applies to the 2021 and subsequent taxation years.
(4) Subsection (2) is deemed to have come into force on January 1, 2020.
32 (1) Paragraph 146.3(2)(f) of the Act is amended by striking out “or” at the end of subparagraph (vii), by adding “or” at the end of subparagraph (viii) and by adding the following after subparagraph (viii):
(ix) an advanced life deferred annuity under which the individual is the annuitant, if the transfer is a refund described under paragraph (g) of the definition advanced life deferred annuity in subsection 146.5(1);
(2) Subsection 146.3(14.1) of the Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) is transferred at the direction of the annuitant directly to a licensed annuities provider to acquire an advanced life deferred annuity for the benefit of the annuitant.
(3) Subsections (1) and (2) are deemed to have come into force on January 1, 2020.
33 (1) Paragraph (c) of the definition disability savings plan in subsection 146.4(1) of the Act is replaced by the following:
(c) that is entered into in a taxation year in respect of which
(i) the beneficiary is a DTC-eligible individual, or
(ii) the beneficiary is not a DTC-eligible individual and an amount is to be transferred from a registered disability savings plan of the beneficiary to the arrangement in accordance with subsection (8). (régime d’épargne-invalidité)
(2) Subparagraph 146.4(4)(f)(i) of the Act is replaced by the following:
(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, or
(3) The portion of subparagraph 146.4(4)(n)(i) of the Act before clause (A) is replaced by the following:
(i) if the calendar year is not a specified year for the plan and the conditions in clauses (p)(ii)(A) and (B) are not met in the calendar year, the total amount of disability assistance payments made from the plan to the beneficiary in the calendar year shall not exceed the specified maximum amount for the calendar year, except that, in calculating that total amount, any payment made following a transfer in the calendar year from another plan in accordance with subsection (8) is to be disregarded if it is made
(4) Subparagraph 146.4(4)(p)(ii) of the Act is replaced by the following:
(ii) the first calendar year in which the following conditions are met:
(A) the holder of the plan has requested that the issuer terminate the plan, and
(B) throughout the year, the beneficiary has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1).
(5) Section 146.4 of the Act is amended by adding the following after subsection (4):
Marginal note:Transitional rule
(4.01) If, after March 18, 2019 and before 2021, a registered disability savings plan would otherwise be required to be terminated because of subparagraph (4)(p)(ii) or any terms of the plan provided because of that subparagraph, then notwithstanding that subparagraph or those terms, the plan is not required to be terminated before 2021 in either of the following circumstances:
(a) the beneficiary of the plan has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1), or
(b) an election was made under subsection (4.1), as it read immediately before 2021, and the election ceases to be valid after March 18, 2019 and before 2021 because of paragraph (4.2)(b), as it read immediately before 2021.
(6) Subsections 146.4(4.1) to (4.3) of the Act are repealed.
(7) Subsections (1) to (4) and (6) are deemed to have come into force on January 1, 2021.
34 (1) The Act is amended by adding the following after section 146.4:
Advanced Life Deferred Annuity
Marginal note:Definitions
146.5 (1) The following definitions apply in this section.
- advanced life deferred annuity
advanced life deferred annuity means a contract for an annuity that meets the following conditions:
(a) it is issued by a licensed annuities provider;
(b) it specifies that it is intended to qualify as an advanced life deferred annuity under this Act;
(c) periodic annuity payments under the contract
(i) commence to be paid no later than the end of the calendar year in which the annuitant attains 85 years of age, and
(ii) are payable for the life of the annuitant or for the lives, jointly, of the annuitant and the annuitant’s spouse or common-law partner;
(d) periodic annuity payments under the contract are payable
(i) in equal amounts, or
(ii) in amounts that are not equal only because the payments
(A) are adjusted in whole or in part to reflect
(I) increases in the Consumer Price Index, as published by Statistics Canada under the authority of the Statistics Act, or
(II) increases at a rate specified in the contract, not exceeding 2% per annum, or
(B) are reduced on the death of the annuitant or the annuitant’s spouse or common-law partner;
(e) if an annuity is payable for the lives, jointly, of the annuitant and the annuitant’s spouse or common-law partner and the annuitant dies before payments commence to be paid, then the payments to the annuitant’s spouse or common-law partner shall
(i) commence no later than the date that they would have commenced if the annuitant were alive, and
(ii) be adjusted in accordance with generally accepted actuarial principles if the payments commence before the date they would have commenced if the annuitant were alive;
(f) the amount to be paid, if any, to one or more beneficiaries under the contract after the death of the annuitant — or, in the case of a joint-lives annuity, after the last death of the annuitant and the annuitant’s spouse or common-law partner — shall
(i) be paid as soon as practicable after the death of the annuitant or the last death of the annuitant and the annuitant’s spouse or common-law partner, as the case may be, and
(ii) not exceed the amount, if any, by which the total amount transferred to acquire the annuity exceeds the total amount of annuity payments made under the contract;
(g) it provides that all or part of the amount transferred to acquire the annuity may be refunded, if
(i) the refund is paid to reduce the amount of tax that would otherwise be payable by the annuitant under Part XI, and
(ii) the refund is
(A) paid to the annuitant, or
(B) transferred directly to
(I) the issuer of a registered retirement savings plan of the annuitant,
(II) the carrier of a registered retirement income fund of the annuitant,
(III) the administrator of a pooled registered pension plan under which the annuitant is a member, or
(IV) the administrator of a money purchase provision of a registered pension plan under which the annuitant is a member;
(h) if it provides that the spouse or common-law partner may request a payment in a single amount in full or partial satisfaction of the spouse’s or common-law partner’s entitlement to payments described in subparagraph (c)(ii) as a consequence of the death of the annuitant, then the single amount cannot exceed the present value (at the time the single amount is paid) of the other payments that, as a consequence of the payment of the single amount, cease to be provided;
(i) no right under the contract is capable of being assigned, charged, anticipated, given as security or surrendered; and
(j) it does not provide for any payment under the contract except as specified in this definition. (rente viagère différée à un âge avancé)
- annuitant
annuitant means an individual who has acquired a contract for an annuity from a licensed annuities provider. (rentier)
- beneficiary
beneficiary, under a contract for an annuity, means an individual who has a right under the contract to receive a payment after the death of the annuitant or the annuitant’s spouse or common-law partner. (bénéficiaire)
Marginal note:Taxable amount — annuity payments
(2) Amounts (excluding amounts described in paragraph (f) or (g) of the definition advanced life deferred annuity in subsection (1) and including amounts deemed to have been received under paragraph (7)(a)) received by a taxpayer in a taxation year under an advanced life deferred annuity shall be included in computing the income of the taxpayer for the taxation year.
Marginal note:Taxable amount — death benefits
(3) Amounts described in paragraph (f) of the definition advanced life deferred annuity in subsection (1) received by a taxpayer in a taxation year under an advanced life deferred annuity as a result of the death of an individual shall be included in computing the income of
(a) the taxpayer for the taxation year, if the taxpayer is
(i) the spouse or common-law partner of the individual, or
(ii) a child or grandchild of the individual who was, immediately before the death of the individual, financially dependent on the individual for support; and
(b) the individual for the taxation year in which the individual died, in any other case.
Marginal note:Taxation of refunds
(4) The amount of a refund described in clause (g)(ii)(A) of the definition advanced life deferred annuity in subsection (1) that is paid to an annuitant shall be included in the income of the annuitant.
Marginal note:Treatment of amount transferred
(5) If an amount is paid in circumstances described in clause (g)(ii)(B) of the definition advanced life deferred annuity in subsection (1),
(a) the amount shall not, by reason only of that payment, be included by reason of paragraph 56(1)(z.5) in computing the income of any taxpayer;
(b) no deduction may be made under any provision of this Act in respect of the amount in computing the income of any taxpayer;
(c) in the case of an amount paid to a registered pension plan, the amount is deemed not to be a contribution for the purpose of applying Parts LXXXIII and LXXXV of the Income Tax Regulations; and
(d) in the case of an amount paid to a registered retirement savings plan or a pooled registered pension plan, the amount shall not be included in determining the amount of the individual’s undeducted RRSP premiums under subsection 204.2(1.2).
Marginal note:Deemed payment to beneficiary
(6) An amount is deemed to have been received at a particular time by a beneficiary (as defined in subsection 108(1)) of a deceased annuitant’s estate, and not by the legal representative of the deceased annuitant, if
(a) the amount is described in paragraph (f) of the definition advanced life deferred annuity in subsection (1);
(b) the amount was paid to the legal representative;
(c) the beneficiary is described in paragraph (3)(a);
(d) the beneficiary is entitled to the amount in full or partial satisfaction of their rights as a beneficiary under the deceased annuitant’s estate; and
(e) the amount is designated jointly by the legal representative and the beneficiary in prescribed form filed with the Minister.
Marginal note:Amended contract
(7) If an amendment made at any time to a contract results in it no longer meeting the conditions in the definition advanced life deferred annuity in subsection (1), the following rules apply:
(a) the annuitant under the contract immediately before that time is deemed to have received under the contract at that time an amount equal to the fair market value of their interest in the contract at that time; and
(b) the annuitant is deemed to have acquired their interest in the contract at that time at a cost equal to the fair market value of the interest at that time.
(2) Subsection (1) is deemed to have come into force on January 1, 2020.
35 (1) The portion of subparagraph 147(2)(k)(vi) of the Act before clause (A) is replaced by the following:
(vi) by a trustee under the plan to a licensed annuities provider to purchase for the beneficiary an annuity (other than an advanced life deferred annuity), if
(2) Subparagraph 147(2)(k.1)(ii.1) of the Act is replaced by the following:
(ii.1) an amount paid pursuant to or under the plan by a trustee under the plan to a licensed annuities provider to purchase for a beneficiary under the plan an annuity to which subparagraph (k)(vi) or (19)(d)(v) applies,
(3) The portion of paragraph 147(19)(d) of the French version of the Act before subparagraph (i) is replaced by the following:
d) le montant est transféré directement à l’un des régimes, fonds ou fournisseurs ci-après au profit du particulier :
(4) Paragraph 147(19)(d) of the Act is amended by striking out “or” at the end of subparagraph (iii), by adding “or” at the end of subparagraph (iv) and by adding the following after subparagraph (iv):
(v) a licensed annuities provider to acquire an advanced life deferred annuity, if the individual is an employee or former employee of an employer who participated in the plan on the employee’s behalf.
(5) Subsections (1) to (4) are deemed to have come into force on January 1, 2020.
36 (1) The portion of paragraph 147.3(1)(c) of the French version of the Act before subparagraph (i) is replaced by the following:
c) le montant est transféré directement à l’un des régimes, fonds ou fournisseurs suivants :
(2) Paragraph 147.3(1)(c) of the Act is amended by striking out “or” at the end of subparagraph (ii), by adding “or” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):
(iv) a licensed annuities provider to acquire an advanced life deferred annuity for the benefit of the member.
(3) Paragraph 147.3(3)(c) of the Act is replaced by the following:
(c) is transferred directly to another registered pension plan to be held in connection with a defined benefit provision of the other plan, unless the transfer is to an individual pension plan (as defined in subsection 8300(1) of the Income Tax Regulations) and is in respect of benefits that are attributable to employment with a former employer that is not a participating employer (or its predecessor employer); and
(4) Subsections (1) and (2) are deemed to have come into force on January 1, 2020.
(5) Subsection (3) is deemed to have come into force on March 19, 2019.
- Date modified: