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Income Tax Regulations (C.R.C., c. 945)

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Regulations are current to 2022-09-22 and last amended on 2022-06-23. Previous Versions

PART XVProfit Sharing Plans

DIVISION IEmployees Profit Sharing Plans

  •  (1) An election under subsection 144(4.1) of the Act by the trustee of a trust governed by an employees profit sharing plan shall be made by filing with the Minister the prescribed form in duplicate.

  • (2) An election under subsection 144(4.2) of the Act by the trustee of a trust governed by an employees profit sharing plan shall be made by filing with the Minister the prescribed form in duplicate on or before the last day of a taxation year of the trust in respect of any capital property deemed to have been disposed of in that taxation year by virtue of the election.

  • (3) An election under subsection 144(10) of the Act shall be made by sending the following documents by registered mail to the Commissioner of Revenue at Ottawa:

    • (a) a letter from the employer stating that he elects to have the arrangement qualify as an employees profit sharing plan;

    • (b) if the employer is a corporation,

      • (i) where the directors of the corporation are legally entitled to administer the affairs of the corporation, a certified copy of their resolution authorizing the election to be made, and

      • (ii) where the directors of the corporation are not legally entitled to administer the affairs of the corporation, a certified copy of the authorization of the making of the election by the person or persons legally entitled to administer the affairs of the corporation; and

    • (c) a copy of the agreement and any supplementary agreement setting out the plan.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/94-686, ss. 69(F), 79(F)
  • SOR/2007-116, s. 4

DIVISION IIDeferred Profit Sharing Plans

Registration of Plans

 For the purpose of the definition deferred profit sharing plan in subsection 147(1) of the Act, an application for registration of a plan shall be made by sending the following documents by registered mail to the Commissioner of Revenue at Ottawa:

  • (a) a letter from the trustee and the employer whereby the trustee and the employer apply for the registration of the plan as a deferred profit sharing plan;

  • (b) if the employer is a corporation, a certified copy of a resolution of the directors authorizing the application to be made; and

  • (c) a copy of the agreement and any supplementary agreement setting out the plan.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/92-51, s. 4
  • SOR/94-686, s. 79(F)
  • SOR/2007-116, s. 5

 [Repealed, SOR/81-725, s. 1]

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/81-725, s. 1

DIVISION IIIElections in Respect of Certain Single Payments

 Any election by a beneficiary under subsection 147(10.1) of the Act shall be made by filing the prescribed form in duplicate as follows:

  • (a) one form shall be filed by the beneficiary with the trustee of the deferred profit sharing plan not later than 60 days after the end of the taxation year in which the beneficiary received the payment referred to in subsection 147(10.1) of the Act; and

  • (b) the other form shall be filed by the beneficiary with the Minister on or before the day on which the beneficiary is required to file a return of income pursuant to section 150 of the Act for the taxation year in which the beneficiary received the payment referred to in subsection 147(10.1) of the Act.

PART XVIPrescribed Countries

 For the purposes of subsection 10(4) of the Income Tax Application Rules, the following countries are hereby prescribed:

  • (a) Commonwealth of Australia;

  • (b) Kingdom of Denmark;

  • (c) Republic of Finland;

  • (d) French Republic;

  • (e) Federal Republic of Germany;

  • (f) Ireland;

  • (g) Jamaica;

  • (h) Japan;

  • (i) Kingdom of the Netherlands;

  • (j) New Zealand;

  • (k) Kingdom of Norway;

  • (l) Republic of South Africa;

  • (m) Kingdom of Sweden;

  • (n) Trinidad and Tobago;

  • (o) United Kingdom of Great Britain and Northern Ireland; and

  • (p) United States of America.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/94-686, s. 48

PART XVIICapital Cost Allowances, Farming and Fishing

[
  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/86-1092, s. 9(F)
]

DIVISION IDeductions Allowed

Rates

  •  (1) For the purposes of paragraph 20(1)(a) of the Act, there is hereby allowed to a taxpayer, in computing his income from farming or fishing, as the case may be, a deduction for each taxation year in respect of each property that was used for the purpose of gaining or producing income from farming or fishing equal to such amount as he may claim, not exceeding in the case of

    • (a) a building or other structure, not described elsewhere in this subsection, including component parts such as electric wiring, plumbing, sprinkler systems, air-conditioning equipment, heating equipment, lighting fixtures, elevators and escalators, 2 1/2 per cent,

    • (b) a building or other structure of

      • (i) frame,

      • (ii) log,

      • (iii) stucco on frame,

      • (iv) galvanized iron, or

      • (v) corrugated iron,

      construction including component parts such as electric wiring, plumbing, sprinkler systems, air-conditioning equipment, heating equipment, lighting fixtures, elevators and escalators, 5 per cent,

    • (c) a fence, 5 per cent,

    • (d) a scow or a vessel, including furniture, fittings or equipment attached thereto, but not including radiocommunication equipment, 7 1/2 per cent,

    • (e) nonautomotive equipment and machinery, 10 per cent,

    • (f) automotive equipment, a sleigh or a wagon, 15 per cent,

    • (g) radiocommunication equipment, 15 per cent,

    • (h) tile drainage acquired before the 1965 taxation year, 10 per cent,

    • (i) a water storage tank, 5 per cent,

    • (j) a gas well that is part of the equipment of a farm and from which the gas produced is not sold, 10 per cent, and

    • (k) a tool costing less than $100, 100 per cent,

    of the depreciable cost to the taxpayer of the property.

Taxation Years Less Than 12 Months
  • (2) Where a taxation year is less than 12 months, the amount allowed as a deduction under subsection (1) shall not exceed that proportion of the maximum amount otherwise allowable that the number of days in the taxation year is of 365.

Property Disposed of During Year
  • (3) Where a taxpayer has disposed of a property before the end of a taxation year, the amount allowed as a deduction under subsection (1) in respect of that property for the year shall not exceed that proportion of the maximum amount otherwise allowable that the number of months in the taxation year during which the property was owned by the taxpayer is of 12.

Leasehold Interest
  • (4) Where a taxpayer has property that was used for the purpose of gaining or producing income from farming or fishing and that would be included in Class 13 in Schedule II if he had claimed an allowance under Part XI, he may deduct, in computing his income from farming or fishing for a taxation year, an amount not exceeding the amount he could have deducted in respect of that property for the year under paragraph 1100(1)(b).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/78-377, s. 10

DIVISION IIMaximum Deductions

  •  (1) The amount allowed as a deduction under section 1700 in respect of a property shall not exceed the amount by which the capital cost of the property to the taxpayer exceeds the aggregate of the deductions from income allowed under this Part in respect of the property for previous taxation years.

  • (2) In respect of the 1972 and subsequent taxation years, where subsection 20(5) of the Income Tax Application Rules, applies to a particular property, notwithstanding subsection (1), the amount allowed as a deduction under section 1700 in respect of the property shall not exceed the amount by which

    • (a) the amount determined to be the undepreciated capital cost of the property, under paragraph 20(5)(b) of the Income Tax Application Rules,

    exceeds

    • (b) the aggregate of the deductions from income allowed under this Part in respect of the property for previous taxation years ending after 1971.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/94-686, s. 48

DIVISION IIIProperty not Included

  •  (1) Nothing in this Part shall be construed as allowing a deduction in respect of a property

    • (a) the cost of which is deductible in computing the taxpayer’s income;

    • (b) that is described in the taxpayer’s inventory;

    • (c) that was acquired by an expenditure in respect of which the taxpayer is allowed a deduction from income under section 37 of the Act;

    • (d) that has been constituted a prescribed class by subsection 24(2) of chapter 91, S.C. 1966-67;

    • (e) that is included in a separate prescribed class established under subsection 13(14) of the Act;

    • (f) that was not used in the business during the year;

    • (g) that is

      • (i) an animal, or

      • (ii) a tree, shrub, herb or similar growing thing;

    • (h) that was not acquired by the taxpayer for the purpose of gaining or producing income from farming or fishing;

    • (i) that has been included at any time by the taxpayer in a class prescribed under Part XI;

    • (j) that is a passenger automobile acquired after June 13, 1963, and before January 1, 1966, the cost to the taxpayer of which, minus the initial transportation charges and retail sales tax in respect thereof, exceeded $5,000, unless the automobile was acquired by a person before June 14, 1963 and has, by one or more transactions between persons not dealing at arm’s length, become vested in the taxpayer; or

    • (k) that was acquired by the taxpayer after 1971.

  • (2) Where a taxpayer is a member of a partnership, the properties referred to in this Part shall be deemed not to include any property that is an interest of the taxpayer in depreciable property that is partnership property of the partnership.

  • (3) The properties referred to in section 1700 shall be deemed not to include the land upon which a property described therein was constructed or is situated.

  • (4) Where the taxpayer is a non-resident person, the properties referred to in section 1700 shall be deemed not to include property that is situated outside Canada.

  • (5) The provisions of subsections 1102(11), (12) and (13) are applicable mutatis mutandis to paragraph (1)(j).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/94-686, ss. 15(F), 50(F), 58(F), 70(F), 78(F)
  • SOR/2010-93, s. 15(F)

DIVISION IVInterpretation

Taxation Years for Individuals in Business

  •  (1) Where a taxpayer is an individual and his income for the taxation year includes income from a business the fiscal period of which does not coincide with the calendar year, in respect of depreciable properties acquired for the purpose of gaining or producing income from the business, a reference in this Part to

    • (a) “the taxation year” shall be deemed to be a reference to the fiscal period of the business; and

    • (b) “the end of the taxation year” shall be deemed to be a reference to the end of the fiscal period of the business.

Depreciable Cost
  • (2) In this Part, depreciable cost to a taxpayer of property means, except as otherwise provided, the actual cost of the property to the taxpayer or the amount at which he is deemed under subsection 13(7) of the Act to have acquired the property, as the case may be.

  • (3) Notwithstanding the other provisions of this section, in the case of property the cost of which to a partnership has been determined under paragraph 20(5)(a) of the Income Tax Application Rules, the depreciable cost to the taxpayer of the property for the purposes of this Part shall be deemed to be an amount equal to the cost to the partnership of the particular property as determined under that paragraph.

Personal Use of Property
  • (4) Where a taxpayer has, in a taxation year, regularly used a property in part for the purpose of gaining or producing income from farming or fishing and in part for a purpose other than gaining or producing income, the depreciable cost to the taxpayer of the property for the purposes of this Part is the proportion of the amount that would otherwise be the depreciable cost that the use regularly made of the property for the purpose of gaining or producing income from farming or fishing is of the whole use regularly made of the property.

Grants, Subsidies or Other Government Assistance
  • (5) Where a taxpayer has received or is entitled to receive a grant, subsidy or other assistance from a government, municipality or other public authority in respect of or for the acquisition of property, the depreciable cost to the taxpayer of the property for the purposes of this Part is the amount that would otherwise be the depreciable cost minus the amount of the grant, subsidy or other assistance.

Transactions Not at Arm’s Length
  • (6) Where property did belong to a person (in this subsection referred to as the “original owner”) and has, by one or more transactions between persons not dealing at arm’s length, become vested in a taxpayer, the depreciable cost to the taxpayer of the property for the purposes of this part is the lesser of

    • (a) the actual capital cost of the property to the taxpayer; and

    • (b) the amount by which the actual capital cost of the property to the original owner exceeds the aggregate of

      • (i) the total amount of depreciation for the property that, since the commencement of 1917, has been or should have been taken into account in accordance with the practice of the Department of National Revenue in ascertaining the income of the original owner and all intervening owners for the purposes of the Income War Tax Act or in ascertaining a loss for a year when there was no income under that Act,

      • (ii) any accumulated depreciation reserves that the original owner or an intervening owner had for the property at the commencement of 1917 and that were recognized by the Minister for the purposes of the Income War Tax Act, and

      • (iii) the aggregate of the deductions, if any, allowed under this Part in respect of the property to the original owner and all intervening owners.

Property Acquired From a Parent
  • (7) Notwithstanding subsection (6), where depreciable property has been acquired by a taxpayer under such circumstances that the provisions of section 85H of the Act as it read in its application to the 1971 and prior taxation years are applicable for the determination of the capital cost of the property, the depreciable cost to the taxpayer of the property for the purposes of this Part is the capital cost as determined under that section.

Property Acquired by Gift
  • (8) Subsection (6) does not apply in respect of property which a taxpayer has acquired by gift.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/94-686, ss. 48, 78(F), 81(F)
  • SOR/2010-93, s. 16(F)
 
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