Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Act current to 2017-10-13 and last amended on 2017-07-01. Previous Versions

Marginal note:Competent authority agreements
  •  (1) Notwithstanding any other provision of this Act, where the Minister and another person have, under a provision contained in a tax convention or agreement with another country that has the force of law in Canada, entered into an agreement with respect to the taxation of the other person, all determinations made in accordance with the terms and conditions of the agreement shall be deemed to be in accordance with this Act.

  • Marginal note:Transfer of rights and obligations

    (2) Where rights and obligations under an agreement described in subsection 115.1(1) have been transferred to another person with the concurrence of the Minister, that other person shall be deemed, for the purpose of subsection 115.1(1), to have entered into the agreement with the Minister.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 115.1;
  • 1994, c. 7, Sch. VIII, s. 51.

Non-Residents with Canadian Investment Service Providers

Marginal note:Definitions
  •  (1) The definitions in this subsection apply in this section.

    Canadian investor

    investisseur canadien

    Canadian investor, at any time in respect of a non-resident person, means a person that the non-resident person knows, or ought to know after reasonable inquiry, is at that time resident in Canada. (investisseur canadien)

    Canadian service provider

    fournisseur de services canadien

    Canadian service provider means a corporation resident in Canada, a trust resident in Canada or a Canadian partnership. (fournisseur de services canadien)

    designated investment services

    services de placement déterminés

    designated investment services provided to a person or partnership means any one or more of the services described in the following paragraphs:

    • (a) investment management and advice with respect to qualified investments, regardless of whether the manager has discretionary authority to buy or sell;

    • (b) purchasing and selling qualified investments, exercising rights incidental to the ownership of qualified investments such as voting, conversion and exchange, and entering into and executing agreements with respect to such purchasing and selling and the exercising of such rights;

    • (c) investment administration services, such as receiving, delivering and having custody of investments, calculating and reporting investment values, receiving subscription amounts from, and paying distributions and proceeds of disposition to, investors in and beneficiaries of the person or partnership, record keeping, accounting and reporting to the person or partnership and its investors and beneficiaries; and

    • (d) in the case of a corporation, trust or partnership the only undertaking of which is the investing of its funds in qualified investments, marketing investments in the corporation, trust or partnership to non-resident investors. (services de placement déterminés)

    promoter

    promoteur

    promoter of a corporation, trust or partnership means a particular person or partnership that initiates or directs the founding, organization or substantial reorganization of the corporation, trust or partnership, and a person or partnership that is affiliated with the particular person or partnership. (promoteur)

    qualified investment

    placement admissible

    qualified investment of a person or partnership means

    • (a) a share of the capital stock of a corporation, or an interest in a partnership, trust, entity, fund or organization, other than a share or an interest

      • (i) that is either

        • (A) not listed on a designated stock exchange, or

        • (B) listed on a designated stock exchange, if the person or partnership, together with all persons with whom the person or partnership does not deal at arm’s length, owns 25% or more of the issued shares of any class of the capital stock of the corporation or of the total value of interests in the partnership, entity, trust, fund or organization, as the case may be, and

      • (ii) of which more than 50% of the fair market value is derived from one or more of

        • (A) real or immovable property situated in Canada,

        • (B) Canadian resource property, and

        • (C) timber resource property;

    • (b) indebtedness;

    • (c) annuities;

    • (d) commodities or commodities futures purchased or sold, directly or indirectly in any manner whatever, on a commodities or commodities futures exchange;

    • (e) currency; and

    • (f) options, interests, rights and forward and futures agreements in respect of property described in any of paragraphs (a) to (e) or this paragraph, and agreements under which obligations are derived from interest rates, from the price of property described in any of those paragraphs, from payments made in respect of such a property by its issuer to holders of the property, or from an index reflecting a composite measure of such rates, prices or payments, whether or not the agreement creates any rights in or obligations regarding the referenced property itself. (placement admissible)

    qualified non-resident

    qualified non-resident[Repealed, 2002, c. 9, s. 35]

  • Marginal note:Not carrying on business in Canada

    (2) For the purposes of subsections 115(1) and 150(1) and Part XIV, a non-resident person is not considered to be carrying on business in Canada at any particular time solely because of the provision to the person, or to a partnership of which the person is a member, at the particular time of designated investment services by a Canadian service provider if

    • (a) in the case of services provided to a non-resident individual other than a trust, the individual is not affiliated at the particular time with the Canadian service provider;

    • (b) in the case of services provided to a non-resident person that is a corporation or trust,

      • (i) the person has not, before the particular time, directly or through its agents,

        • (A) directed any promotion of investments in itself principally at Canadian investors, or

        • (B) sold an investment in itself that is outstanding at the particular time to a person who was a Canadian investor at the time of the sale and who is a Canadian investor at the particular time,

      • (ii) the person has not, before the particular time, directly or through its agents, filed any document with a public authority in Canada in accordance with the securities legislation of Canada or of any province in order to permit the distribution of interests in the person to persons resident in Canada, and

      • (iii) when the particular time is more than one year after the time at which the person was created, the total of the fair market value, at the particular time, of investments in the person that are beneficially owned by persons and partnerships (other than a designated entity in respect of the Canadian service provider) that are affiliated with the Canadian service provider does not exceed 25% of the fair market value, at the particular time, of all investments in the person; and

    • (c) in the case of services provided to a partnership of which the non-resident person is a member,

      • (i) the particular time is not more than one year after the partnership was formed,

      • (ii) where the non-resident person is, or is affiliated with, a person or partnership described in clause (A) or (B), the total of the fair market value of all investments in the partnership at the particular time is not less than four times the total of the fair market value of each investment in the partnership beneficially owned at the particular time by

        • (A) a person or partnership (other than a designated entity in respect of the Canadian service provider), more than 25% of the total of the fair market value, at the particular time, of investments in which are beneficially owned by persons and partnerships (other than a designated entity in respect of the Canadian service provider) that are affiliated with the Canadian service provider, or

        • (B) a person or partnership (other than a designated entity in respect of the Canadian service provider) that is affiliated with the Canadian service provider, or

      • (iii) at the particular time, the non-resident person is not affiliated with the Canadian service provider and is not affiliated with any person or partnership (other than the partnership to which the services are provided) described in clause (ii)(A) or (B).

  • Marginal note:Interpretation

    (3) For the purposes of this subsection and subparagraphs (2)(b)(iii) and (c)(ii),

    • (a) the fair market value of an investment in a corporation, trust or partnership shall be determined without regard to any voting rights attaching to that investment; and

    • (b) a person or partnership is, at a particular time, a designated entity in respect of a Canadian service provider if the total of the fair market value at the particular time, of investments in the entity that are beneficially owned by persons and partnerships (other than another designated entity in respect of the Canadian service provider) that are affiliated with the Canadian service provider does not exceed 25% of the fair market value, at the particular time, of all investments in the entity.

  • Marginal note:Transfer pricing

    (4) For the purpose of section 247, where subsection (2) applies in respect of services provided to a person that is a corporation or trust or to a partnership, if the Canadian service provider referred to in that subsection does not deal at arm’s length with the promoter of the person or of the partnership, the service provider is deemed not to deal at arm’s length with the person or partnership.

  • (5) [Repealed, 2013, c. 34, s. 244]

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 2000, c. 19, s. 21;
  • 2002, c. 9, s. 35;
  • 2007, c. 35, s. 68;
  • 2013, c. 34, ss. 124, 244.
 
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