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

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Regulations are current to 2024-02-06 and last amended on 2024-02-02. Previous Versions

PART IIInformation Returns (continued)

Reporting of Payments in Respect of Construction Activities

  •  (1) In this section, construction activities includes the erection, excavation, installation, alteration, modification, repair, improvement, demolition, destruction, dismantling or removal of all or any part of a building, structure, surface or sub-surface construction, or any similar property.

  • (2) Every person or partnership that pays or credits, in a reporting period, an amount in respect of goods or services rendered on their behalf in the course of construction activities shall make an information return in the prescribed form in respect of that amount, if the person’s or partnership’s business income for that reporting period is derived primarily from those activities.

  • (3) The reporting period may be either on a calendar year basis or a fiscal period basis. Once a period is chosen, it cannot be changed for subsequent years, unless the Minister authorizes it.

  • (4) The return shall be filed within six months after the end of the reporting period to which it pertains.

  • (5) Subsection (2) does not apply in respect of an amount

    • (a) all of which is paid or credited in the reporting period in respect of goods for sale or lease by the person or partnership;

    • (b) to which section 212 of the Act applies; or

    • (c) that is paid or credited in respect of services rendered outside Canada by a person or partnership who was not resident in Canada during the period in which the services were rendered.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/2000-9, s. 1
  • SOR/2003-5, s. 11

PART IIIAnnuities and Life Insurance Policies

Capital Element of Annuity Payments

  •  (1) For the purposes of paragraphs 32.1(3)(b) and 60(a) of the Act, where an annuity is paid under a contract (other than an income-averaging annuity contract or an annuity contract purchased pursuant to a deferred profit sharing plan or pursuant to a plan referred to in subsection 147(15) of the Act as a “revoked plan”) at a particular time, that part of the annuity payment determined in prescribed manner to be a return of capital is that proportion of a taxpayer’s interest in the annuity payment that the adjusted purchase price of the taxpayer’s interest in the contract at that particular time is of his interest, immediately before the commencement under the contract of payments to which paragraph 56(1)(d) of the Act applies, in the total of the payments

    • (a) to be made under the contract, in the case of a contract for a term of years certain; or

    • (b) expected to be made under the contract, in the case of a contract under which the continuation of the payments depends in whole or in part on the survival of an individual.

  • (1.1) For the purposes of subsections (1) and (2), “annuity payment” does not include any portion of a payment under a contract the amount of which cannot be reasonably determined immediately before the commencement of payments under the contract except where the payment of such portion cannot be so determined because the continuation of the annuity payments under the contract depends in whole or in part on the survival of an individual.

  • (2) For the purposes of this section, if the continuance of the annuity payments under a contract depends in whole or in part on the survival of an individual,

    • (a) the total of the payments expected to be made under the contract is

      • (i) in the case of a contract that provides for equal payments and does not provide for a guaranteed period of payment, to be equal to the product obtained by multiplying the total of the annuity payments expected to be received throughout a year under the contract by the complete expectations of life determined

        • (A) using the table of mortality known as the 1971 Individual Annuity Mortality Table as published in Volume XXIII of the Transactions of the Society of Actuaries, if the annuity rates in respect of the contract were fixed and determined before 2017, and

          • (I) annuity payments under the contract commenced before 2017, or

          • (II) on December 31, 2016, the contract would be a prescribed annuity contract if paragraph 304(1)(c) were read without reference to its subparagraph (i) and the contract cannot be terminated other than on the death of an individual on whose life payments under the contract are contingent, and

        • (B) in any other case, using the table of mortality known as the Annuity 2000 Basic Table as published in the Transactions of Society of Actuaries, 1995–96 Reports, and

      • (ii) in any other case, to be calculated in accordance with subparagraph (i) with such modifications as the circumstances may require;

    • (b) the age of the individual on any particular date as of which a calculation is being made is

      • (i) if the life insured was determined by the insurer that issued the contract to be a substandard life at the time the contract was issued and the Annuity 2000 Basic Table as published in the Transactions of Society of Actuaries, 1995–96 Reports applies to determine the total of the payments expected to be made under the contract, the age that is equal to the total of the age used for the purpose of determining the annuity rate under the policy at the date of issue of the contract and the number determined by subtracting the calendar year in which the contract was issued from the calendar year in which the particular date occurs, and

      • (ii) in any other case, determined by subtracting the calendar year of the individual’s birth from the calendar year in which the particular date occurs; and

    • (c) if, in the event of the death of the individual before the annual payments total a stated sum, the contract provides that the unpaid balance of the stated sum is to be paid in a lump sum or instalments, then for the purpose of determining the expected term of the contract, the contract is deemed to provide for the continuance of the payments under the contract for a minimum term certain equal to the nearest whole number of years required to complete the payment of the stated sum.

  • (3) Where

    • (a) an annuity contract is a life annuity contract entered into before November 17, 1978 under which the annuity payments commence on the death of an individual,

    • (a.1) [Repealed, SOR/83-865, s. 1]

    • (b) an annuity contract (other than an annuity contract described in paragraph (a)) is

      • (i) a life annuity contract entered into before October 23, 1968, or

      • (ii) any other annuity contract entered into before January 4, 1968,

      under which the annuity payments commence

      • (iii) on the expiration of a term of years, and

      • (iv) before the later of January 1, 1970 and the tax anniversary date of the annuity contract,

    the adjusted purchase price of a taxpayer’s interest in the annuity contract shall be

    • (c) the lump sum, if any, that the person entitled to the annuity payments might have accepted in lieu thereof, at the date the annuity payments commence;

    • (d) if no lump sum described in paragraph (c) is provided for in the contract, the sum ascertainable from the contract as the present value of the annuity at the date the annuity payments commence; and

    • (e) if no lump sum described in paragraph (c) is provided for in the contract and no sum is ascertainable under paragraph (d),

      • (i) in the case of a contract issued under the Government Annuities Act, the premiums paid, accumulated with interest at the rate of four per cent per annum to the date the annuity payments commence, and

      • (ii) in the case of any other contract, the present value of the annuity payments at the date on which payments under the contract commence, computed by applying

        • (A) a rate of interest of four per cent per annum where the payments commence before 1972 and 5 1/2 per cent per annum where the payments commence after 1971, and

        • (B) the provisions of subsection (2) where the payments depend on the survival of a person.

  • (4) Where an annuity contract would be described in paragraph (3)(b) if the reference in subparagraph (iv) thereof to “before the later of” were read as a reference to “on or after the later of”, the adjusted purchase price of a taxpayer’s interest in the annuity contract at a particular time shall be the greater of

    • (a) the aggregate of

      • (i) the amount that would be determined in respect of that interest under paragraph (3)(c), (d) or (e), as the case may be, if the date referred to therein was the tax anniversary date of the contract and not the date the annuity payments commence, and

      • (ii) the adjusted purchase price that would be determined in respect of that interest if the expression “before that time” in the descriptions of A, B, C, D and H in the definition adjusted cost basis in subsection 148(9) of the Act were read as “before that time and after the tax anniversary date”; and

    • (b) the amount determined under paragraph (2)(b) in respect of that interest.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/82-499, s. 1
  • SOR/82-874, s. 1(E)
  • SOR/83-865, s. 1
  • SOR/2001-216, s. 10(F)
  • SOR/2011-188, s. 6
  • 2014, c. 39, s. 79

Life Annuity Contracts

  •  (1) For the purposes of this Part and section 148 of the Act, life annuity contract means a contract under which a person authorized under the laws of Canada or of a province to carry on in Canada an annuities business agrees to make annuity payments to one person or partnership (in this section referred to as “the annuitant”) or jointly to two or more annuitants, which annuity payments are, under the terms of the contract,

    • (a) to be paid annually or at more frequent periodic intervals;

    • (b) to commence on a specified day; and

    • (c) to continue throughout the lifetime of one or more individuals (each of whom is referred to in this section as “the identified individual”).

  • (2) For the purposes of subsection (1), a contract shall not fail to be a life annuity contract by reason that

    • (a) the contract provides that the annuity payments may be assigned by the annuitant or owner;

    • (b) the contract provides for annuity payments to be made for a period ending on the death of the identified individual or for a specified period of not less than 10 years, whichever is the lesser;

    • (c) the contract provides for annuity payments to be made for a specified period or throughout the lifetime of the identified individual, whichever is longer, to the annuitant and, if the specified period is longer, to a specified person after that period;

    • (d) the contract provides, in addition to the annuity payments to be made throughout the lifetime of the identified individual, for a payment to be made on the death of the identified individual;

    • (e) the contract provides that the date

      • (i) on which the annuity payments commence, or

      • (ii) on which the contract holder becomes entitled to proceeds of the disposition,

      may be changed with respect to the whole contract or any portion thereof at the option of the annuitant or owner; or

    • (f) the contract provides that all or a portion of the proceeds payable at any particular time under the contract may be received in the form of an annuity contract other than a life annuity contract.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/80-341, s. 1
  • SOR/82-499, s. 2
  • SOR/83-865, s. 2
  • SOR/2011-188, s. 7

 [Repealed, SOR/83-865, s. 3]

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/83-865, s. 3
  •  (1) Where in a taxation year the rights of a holder under an annuity contract cease upon termination or cancellation of the contract and

    • (a) the aggregate of all amounts, each of which is an amount in respect of the contract that was included in computing the income of the holder for the year or any previous taxation year by virtue of subsection 12(3) of the Act

    exceeds the aggregate of

    • (b) such proportion of the amount determined under paragraph (a) that the annuity payments made under the contract before the rights of the holder have ceased is of the total of the payments expected to be made under the contract, and

    • (c) the aggregate of all amounts, each of which is an amount in respect of the contract that was deductible in computing the income of the holder for the year or any previous year by virtue of subsection (2),

    the amount of such excess may be deducted by the holder under subsection 20(19) of the Act in computing his income for the year.

  • (2) For the purposes of subsection 20(19) of the Act, where an annuity contract was acquired after December 19, 1980 and annuity payments under the contract commenced before 1982, the amount that may be deducted by a holder under that subsection in respect of an annuity contract for a taxation year is that proportion of

    • (a) the aggregate of all amounts, each of which is an amount that was included in computing the income of the holder for any previous taxation year by virtue of subsection 12(3) of the Act in respect of the contract

    that

    • (b) the aggregate of all annuity payments received by the holder in the year in respect of the contract

    is of

    • (c) the total of the payments determined under paragraph 300(1)(a) or (b) in respect of the holder’s interest in the contract.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/82-499, s. 3
  • SOR/83-865, s. 4

Prescribed Annuity Contracts

  •  (1) For the purposes of this Part and of subsections 12.2(1) and 20(20) and paragraph 148(2)(b) of the Act, prescribed annuity contract, for a taxation year, means

    • (a) an annuity contract that is, or is issued pursuant to, an arrangement described in any of paragraphs 148(1)(a) to (b.3) and (d) of the Act;

    • (b) an annuity contract described in paragraph 148(1)(c) or (e) of the Act; and

    • (c) an annuity contract

      • (i) under which annuity payments have commenced in the taxation year or a preceding taxation year,

      • (ii) issued by any one of the following (referred to in this section as the “issuer”):

        • (A) a life insurance corporation,

        • (B) a registered charity,

        • (C) a corporation referred to in any of paragraphs (a) to (c) of the definition specified financial institution in subsection 248(1) of the Act,

        • (D) a corporation referred to in subparagraph (b)(ii) of the definition retirement savings plan in subsection 146(1) of the Act, and

        • (E) a corporation (other than a mutual fund corporation or a mortgage investment corporation) the principal business of which is the making of loans,

      • (iii) each holder of which

        • (A) is

          • (I) an individual other than a trust,

          • (II) a trust described in paragraph 104(4)(a) of the Act (in this paragraph referred to as a “specified trust”),

          • (III) a trust that is a qualified disability trust (as defined in subsection 122(3) of the Act) for the taxation year in which the annuity is issued, or

          • (IV) if the annuity is issued before 2016, a trust that is a testamentary trust at the time the annuity is issued,

        • (B) is an annuitant under the contract, and

        • (C) throughout the taxation year, dealt at arm’s length with the issuer,

      • (iv) the terms and conditions of which require that, from the time the contract meets the requirements of this paragraph,

        • (A) all payments made out of the contract be equal annuity payments made at regular intervals but not less frequently than annually, subject to the holder’s right to vary the frequency and quantum of payments to be made out of the contract in any taxation year without altering the present value at the beginning of the year of the total payments to be made in that year out of the contract,

        • (B) the annuity payments thereunder continue for a fixed term or

          • (I) if the holder is an individual (other than a trust), for the life of the first holder or until the day of the later of the death of the first holder and the death of any of the spouse, common-law partner, former spouse, former common-law partner, brothers and sisters (in this subparagraph referred to as “the survivor”) of the first holder, or

          • (II) if the holder is a trust

            1 in the case of a specified trust, for the life of an individual referred to in paragraph 104(4)(a) of the Act who is entitled to receive all of the income of the trust that arose before the individual’s death, or, in the case of a joint spousal or common-law partner trust, until the day of the later of the death of the individual and the death of the beneficiary under the trust who is the individual’s spouse or common-law partner,

            2 in the case of a qualified disability trust, for the life of an individual who is an electing beneficiary (as defined in subsection 122(3) of the Act) of the trust for the taxation year in which the annuity is issued,

            3 in the case of a trust (other than a qualified disability trust or specified trust) where the annuity is issued before October 24, 2012, for the life of an individual who is entitled to receive income from the trust, and

            4 in the case of a trust (other than a qualified disability trust or specified trust) where the annuity is issued after October 23, 2012, for the life of an individual who was entitled when the contract was first held to receive all of the trust’s income that is from an amount received by the trust on or before the individual’s death as a payment under the annuity,

        • (C) if the annuity payments are to be made over a term that is guaranteed or fixed, the guaranteed or fixed term not exceed 91 years minus the age, when the contract was first held, in whole years of the following individual:

          • (I) if the holder is not a trust, the individual who is

            1 in the case of a joint and last survivor annuity, the younger of the first holder and the survivor,

            2 in the case of a contract that is held jointly, the younger of the first holders, and

            3 in any other case, the first holder,

          • (II) if the holder is a specified trust, the individual who is

            1 in the case of a joint and last survivor annuity held by a joint spousal or common-law partner trust, the younger of the individuals referred to in paragraph 104(4)(a) of the Act who are in combination entitled to receive all of the income of the trust that arose before the later of their deaths, and

            2 in the case of an annuity that is not a joint and last survivor annuity, the individual referred to in paragraph 104(4)(a) of the Act who is entitled to receive all of the income of the trust that arose before the individual’s death,

          • (III) if the holder is a qualified disability trust, an individual who is an electing beneficiary of the trust for the taxation year in which the annuity is issued, and

          • (IV) if the holder is a trust (other than a qualified disability trust or specified trust) and the annuity is issued before 2016, the individual who was the youngest beneficiary under the trust when the contract was first held,

        • (D) no loans exist under the contract,

        • (E) the holder’s rights under the contract not be disposed of otherwise than

          • (I) if the holder is an individual, on the holder’s death,

          • (II) if the holder is a specified trust (other than a joint spousal or common-law partner trust), on the death of the individual referred to in paragraph 104(4)(a) of the Act who is entitled to receive all of the income of the trust that arose before the individual’s death,

          • (III) if the holder is a specified trust that is a joint spousal or common-law partner trust, on the later of the deaths of the individuals referred to in paragraph 104(4)(a) of the Act who are in combination entitled to receive all of the income of the trust that arose before the later of their deaths, and

          • (IV) if the holder is a trust, other than a specified trust, and the contract is first held after October 2011, on the earlier of

            1 the time at which the trust ceases to be a testamentary trust, and

            2 the death of the individual referred to in subclause (B)(II) or (C)(III) or (IV), as the case may be, in respect of the trust, and

        • (F) no payments be made out of the contract other than as permitted by this section,

      • (v) none of the terms and conditions of which provide for any recourse against the issuer for failure to make any payment under the contract, and

      • (vi) where annuity payments under the contract have commenced

        • (A) before 1987, in respect of which a holder thereof has notified the issuer in writing, before the end of the taxation year, that the contract is to be treated as a prescribed annuity contract,

        • (B) after 1986, in respect of which a holder thereof has not notified the issuer in writing, before the end of the taxation year in which the annuity payments under the contract commenced, that the contract is not to be treated as a prescribed annuity contract, or

        • (C) after 1986, in respect of which a holder thereof has notified the issuer in writing, before the end of the taxation year in which the annuity payments under the contract commenced, that the contract is not to be treated as a prescribed annuity contract and a holder thereof has rescinded the notification by so notifying the issuer in writing before the end of the taxation year.

  • (2) Notwithstanding subsection (1), an annuity contract shall not fail to be a prescribed annuity contract by reason that

    • (a) where the contract provides for a joint and last survivor annuity or is held jointly, the terms and conditions thereof provide that there will be a decrease in the amount of the annuity payments to be made under the contract from the time of death of one of the annuitants thereunder;

    • (b) the terms and conditions thereof provide that where the holder thereof dies at or before the time he attains the age of 91 years, the contract will terminate and an amount will be paid out of the contract not exceeding the amount, if any, by which the total premiums paid under the contract exceeds the total annuity payments made under the contract;

    • (c) where the annuity payments are to be made over a term that is guaranteed or fixed, the terms and conditions thereof provide that as a consequence of the death of the holder thereof during the guaranteed or fixed term any payments that, but for the death of the holder, would be made during the term may be commuted into a single payment; or

    • (d) the terms and conditions thereof, as they read on December 1, 1982 and at all subsequent times, provide that the holder participates in the investment earnings of the issuer and that the amount of such participation is to be paid within 60 days after the end of the year in respect of which it is determined.

  • (3) For the purposes of this section, the annuitant under an annuity contract is deemed to be the holder of the contract where

    • (a) the contract is held by another person in trust for the annuitant; or

    • (b) the contract was acquired by the annuitant under a group term life insurance policy under which life insurance was effected on the life of another person in respect of, in the course of, or by virtue of the office or employment or former office or employment of that other person.

  • (4) In this section, annuitant under an annuity contract, at any time, means a person who, at that time, is entitled to receive annuity payments under the contract.

  • (5) For the purpose of this section, spouse and former spouse of a particular individual include another individual who is a party to a void or voidable marriage with the particular individual.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/82-499, s. 3
  • SOR/83-865, s. 5
  • SOR/86-488, s. 1
  • SOR/88-165, s. 2
  • SOR/88-319, s. 1
  • SOR/94-415, s. 1
  • SOR/94-686, s. 2(F)
  • SOR/2001-188, s. 3
  • SOR/2001-216, s. 10(F)
  • SOR/2007-116, s. 1
  • 2009, c. 2, s. 90
  • SOR/2009-222, s. 1
  • SOR/2011-188, s. 8
  • 2012, c. 31, s. 60
  • 2013, c. 34, s. 378
  • 2014, c. 39, s. 80
 

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