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

Act current to 2017-12-11 and last amended on 2017-07-01. Previous Versions

Marginal note:Definitions
  •  (1) In this section,

    breeding animals

    animaux reproducteurs

    breeding animals means deer, elk and other similar grazing ungulates, bovine cattle, bison, goats, sheep and horses that are over 12 months of age and are kept for breeding; (animaux reproducteurs)

    breeding bees

    abeilles reproductrices

    breeding bees means bees that are not used principally to pollinate plants in greenhouses and larvae of those bees; (abeilles reproductrices)

    breeding bee stock

    stock d’abeilles reproductrices

    breeding bee stock, of a taxpayer at any time, means a reasonable estimate of the quantity of a taxpayer’s breeding bees held at that time in the course of carrying on a farming business using a unit of measurement that is accepted as an industry standard; (stock d’abeilles reproductrices)

    breeding herd

    troupeau reproducteur

    breeding herd of a taxpayer at any time means the number determined by the formula

    A - (B - C)

    where

    A
    is the total number of the taxpayer’s breeding animals held in the course of carrying on a farming business at that time,
    B
    is the total number of the taxpayer’s breeding animals held in the business at that time that are female bovine cattle that have not given birth to calves, and
    C
    is the lesser of the number determined as the value of B and one-half the total number of the taxpayer’s breeding animals held in the business at that time that are female bovine cattle that have given birth to calves.
  • Marginal note:Income deferral from the destruction of livestock

    (2) Where a particular amount in respect of the forced destruction of livestock under statutory authority in a taxation year of a taxpayer is included in computing the income of the taxpayer for the year from a farming business, there may be deducted in computing that income such amount as the taxpayer claims not exceeding the particular amount.

  • Marginal note:Inclusion of deferred amount

    (3) The amount deducted under subsection (2) in computing the income of a taxpayer from a farming business for a taxation year shall be deemed to be income of the taxpayer from the business for the taxpayer’s immediately following taxation year.

  • Marginal note:Income deferral for regions of drought, flood or excessive moisture

    (4) If in a taxation year a taxpayer carries on a farming business in a region that is at any time in the year a prescribed drought region or a prescribed region of flood or excessive moisture and the taxpayer’s breeding herd at the end of the year in respect of the business does not exceed 85% of the taxpayer’s breeding herd at the beginning of the year in respect of the business, there may be deducted in computing the taxpayer’s income from the business for the year the amount that the taxpayer claims, not exceeding the amount, if any, determined by the formula

    (A - B) × C

    where

    A
    is the amount by which
    • (a) the total of all amounts included in computing the taxpayer’s income for the year from the business in respect of the sale of breeding animals in the year

    exceeds

    • (b) the total of all amounts deducted under paragraph 20(1)(n) in computing the taxpayer’s income from the business for the year in respect of an amount referred to in paragraph (a) of this description;

    B
    is the total of all amounts deducted in computing the taxpayer’s income from the business for the year in respect of the acquisition of breeding animals; and
    C
    is
    • (a) 30% where the taxpayer’s breeding herd at the end of the year in respect of the business exceeds 70% of the taxpayer’s breeding herd at the beginning of the year in respect of the business, and

    • (b) 90% where the taxpayer’s breeding herd at the end of the year in respect of the business does not exceed 70% of the taxpayer’s breeding herd at the beginning of the year in respect of the business.

  • Marginal note:Income deferral

    (4.1) If in a taxation year a taxpayer carries on a farming business in a region that is at any time in the year a prescribed drought region or a prescribed region of flood or excessive moisture and the taxpayer’s breeding bee stock at the end of the year in respect of the business does not exceed 85% of the taxpayer’s breeding bee stock at the beginning of the year in respect of the business, there may be deducted in computing the taxpayer’s income from the business for the year the amount that the taxpayer claims, not exceeding the amount, if any, determined by the formula

    (A – B) × C

    where

    A
    is the amount by which
    • (a) the total of all amounts included in computing the taxpayer’s income from the business for the year in respect of the sale of breeding bees in the year

    exceeds

    • (b) the total of all amounts deducted under paragraph 20(1)(n) in computing the taxpayer’s income from the business for the year in respect of an amount referred to in paragraph (a);

    B
    is the total of all amounts deducted in computing the taxpayer’s income from the business for the year in respect of the acquisition of breeding bees; and
    C
    is
    • (a) 30% if the taxpayer’s breeding bee stock in respect of the business at the end of the year exceeds 70% of the taxpayer’s breeding bee stock in respect of the business at the beginning of the year, and

    • (b) 90% if the taxpayer’s breeding bee stock in respect of the business at the end of the year does not exceed 70% of the taxpayer’s breeding bee stock in respect of the business at the beginning of the year.

  • Marginal note:Inclusion of deferred amount

    (5) An amount deducted under subsection (4) or (4.1) in computing the income of a taxpayer for a particular taxation year from a farming business carried on in a region prescribed under those subsections may, to the extent that the taxpayer so elects, be included in computing the taxpayer’s income from the business for a taxation year ending after the particular taxation year, and is, except to the extent that the amount has been included under this subsection in computing the taxpayer’s income from the business for a preceding taxation year after the particular year, deemed to be income of the taxpayer from the business for the taxation year of the taxpayer that is the earliest of

    • (a) the first taxation year beginning after the end of the period or series of continuous periods, as the case may be, for which the region is prescribed under those subsections,

    • (b) the first taxation year, following the particular taxation year, at the end of which the taxpayer is

      • (i) non-resident, and

      • (ii) not carrying on business through a fixed place of business in Canada, and

    • (c) the taxation year in which the taxpayer dies.

  • Marginal note:Subsections (2), (4) and (4.1) not applicable

    (6) Subsections (2), (4) and (4.1) do not apply to a taxpayer in respect of a farming business for a taxation year

    • (a) in which the taxpayer died; or

    • (b) where at the end of the year the taxpayer is non-resident and not carrying on the business through a fixed place of business in Canada.

  • Marginal note:Measuring breeding bee stock

    (7) In applying subsection (4.1) in respect of a taxation year, the unit of measurement used for estimating the quantity of a taxpayer’s breeding bee stock held in the course of carrying on a farming business at the end of the year is to be the same as that used for the beginning of the year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 80.3;
  • 1994, c. 7, Sch. II, s. 59, Sch. VIII, s. 31;
  • 2009, c. 31, s. 2;
  • 2014, c. 39, s. 17.
Marginal note:Loans
  •  (1) Where a person or partnership receives a loan or otherwise incurs a debt because of or as a consequence of a previous, the current or an intended office or employment of an individual, or because of the services performed or to be performed by a corporation carrying on a personal services business, the individual or corporation, as the case may be, shall be deemed to have received a benefit in a taxation year equal to the amount, if any, by which the total of

    • (a) all interest on all such loans and debts computed at the prescribed rate on each such loan and debt for the period in the year during which it was outstanding, and

    • (b) the total of all amounts each of which is an amount of interest that was paid or payable in respect of the year on such a loan or debt by

      • (i) a person or partnership (in this paragraph referred to as the “employer”) that employed or intended to employ the individual,

      • (ii) a person (other than the debtor) related to the employer, or

      • (iii) a person or partnership to or for whom or which the services were or were to be provided or performed by the corporation or a person (other than the debtor) who does not deal at arm’s length with that person or any member of that partnership,

    exceeds the total of

    • (c) the amount of interest for the year paid on all such loans and debts not later than 30 days after the end of the year, and

    • (d) any portion of the total determined in respect of the year under paragraph 80.4(1)(b) that is reimbursed in the year or within 30 days after the end of the year by the debtor to the person or entity who made the payment referred to in that paragraph.

  • Marginal note:Interpretation

    (1.1) A loan or debt is deemed to have been received or incurred because of an individual’s office or employment, or because of services performed by a corporation that carries on a personal services business, as the case may be, if it is reasonable to conclude that, but for an individual’s previous, current or intended office or employment, or the services performed or to be performed by the corporation,

    • (a) the terms of the loan or debt would have been different; or

    • (b) the loan would not have been received or the debt would not have been incurred.

  • Marginal note:Idem

    (2) Where a person (other than a corporation resident in Canada) or a partnership (other than a partnership each member of which is a corporation resident in Canada) was

    • (a) a shareholder of a corporation,

    • (b) connected with a shareholder of a corporation, or

    • (c) a member of a partnership, or a beneficiary of a trust, that was a shareholder of a corporation,

    and by virtue of that shareholding that person or partnership received a loan from, or otherwise incurred a debt to, that corporation, any other corporation related thereto or a partnership of which that corporation or any corporation related thereto was a member, the person or partnership shall be deemed to have received a benefit in a taxation year equal to the amount, if any, by which

    • (d) all interest on all such loans and debts computed at the prescribed rate on each such loan and debt for the period in the year during which it was outstanding

    exceeds

    • (e) the total of

      • (i) the amount of interest for the year paid on all such loans and debts (other than loans deemed to have been made under subsection 15(2.17)) not later than 30 days after the end of the year, and

      • (ii) the specified interest amounts, for the year, in respect of all such loans that are deemed to have been made under subsection 15(2.17).

  • Marginal note:Where ss. (1) and (2) do not apply

    (3) Subsections 80.4(1) and (2) do not apply in respect of any loan or debt, or any part thereof,

    • (a) on which the rate of interest was equal to or greater than the rate that would, having regard to all the circumstances (including the terms and conditions of the loan or debt), have been agreed on, at the time the loan was received or the debt was incurred, between parties dealing with each other at arm’s length if

      • (i) none of the parties received the loan or incurred the debt by virtue of an office or employment or by virtue of the shareholding of a person or partnership, and

      • (ii) the ordinary business of the creditor included the lending of money,

      except where an amount is paid or payable in any taxation year to the creditor in respect of interest on the loan or debt by a party other than the debtor; or

    • (b) that was included in computing the income of a person or partnership under this Part.

  • Marginal note:Interest on loans for home purchase or relocation

    (4) For the purpose of computing the benefit under subsection 80.4(1) in a taxation year in respect of a home purchase loan or a home relocation loan and for the purpose of paragraph 110(1)(j), the amount of interest determined under paragraph 80.4(1)(a) shall not exceed the amount of interest that would have been determined thereunder if it had been computed at the prescribed rate in effect at the time the loan was received or the debt was incurred, as the case may be.

  • Marginal note:Idem

    (5) Where an individual has, before November 13, 1981,

    • (a) received a housing loan, or

    • (b) made arrangements in writing in respect of a home purchase loan that would, if the loan were made before 1982, have been a housing loan,

    for the purpose of computing the amount of interest referred to in paragraph 80.4(1)(a) on the loan, the amount of the loan may be reduced

    • (c) for the 1982 taxation year, by the amount, if any, by which $40,000 exceeds the total of

      • (i) all amounts claimed as a reduction under this subsection for the year by the individual’s spouse or common-law partner with whom the individual resided in the year, and

      • (ii) all amounts claimed as a reduction under this subsection for the year by the individual on all other loans, and

    • (d) for the 1983 taxation year, by the amount, if any, by which $20,000 exceeds the total of

      • (i) all amounts claimed as a reduction under this subsection for the year by the individual’s spouse or common-law partner with whom the individual resided in the year, and

      • (ii) all amounts claimed as a reduction under this subsection for the year by the individual on all other loans.

  • Marginal note:Deemed new home purchase loans

    (6) For the purposes of this section, other than paragraph 80.4(3)(a) and subsection 80.4(5), where a home purchase loan or a home relocation loan of an individual has a term for repayment exceeding five years, the balance outstanding on the loan on the date that is five years from the day the loan was received or was last deemed by this subsection to have been received shall be deemed to be a new home purchase loan received by the individual on that date.

  • Marginal note:Definitions

    (7) In this section,

    home purchase loan

    home purchase loan means that portion of any loan received or debt otherwise incurred by an individual in the circumstances described in subsection 80.4(1) that is used to acquire, or to repay a loan or debt that was received or incurred to acquire, a dwelling, or a share of the capital stock of a cooperative housing corporation acquired for the sole purpose of acquiring the right to inhabit a dwelling owned by the corporation, where the dwelling is for the habitation of

    • (a) the individual by virtue of whose office or employment the loan is received or the debt is incurred,

    • (b) a specified shareholder of the corporation by virtue of whose services the loan is received or the debt is incurred, or

    • (c) a person related to a person described in paragraph (a) or (b),

    or that is used to repay a home purchase loan; (prêt consenti pour l’achat d’une maison)

    prescribed rate

    prescribed rate of interest means

    • (a) 6% per annum before 1978,

    • (b) 8% per annum for 1978, and

    • (c) for any year, or part thereof, after 1978, such rate of interest as is prescribed therefor except that, for the purpose of computing the benefit under subsection 80.4(1) in a taxation year on a home purchase loan received after November 12, 1981 and before 1982, the prescribed rate of interest at the time the loan was received shall be deemed to be 16% per annum; (taux prescrit)

    specified interest amount

    specified interest amount, for a year, in respect of a loan (referred to in this definition as the deemed loan) deemed to have been made under subsection 15(2.17) by an ultimate funder (as defined in subsection 15(2.192)), means the amount determined by the formula

    A × (B/C)

    where

    A
    is the amount of interest for the year paid not later than 30 days after the end of the year on all debts — owing by one or more funders (as defined in subsection 15(2.192), but excluding any funders that are ultimate funders as defined in subsection 15(2.192)) under one or more funding arrangements (as defined in subsection 15(2.192)) to the ultimate funder — that gave rise to the deemed loan;
    B
    is the average amount outstanding for the year in respect of the deemed loan; and
    C
    is the total of all amounts each of which is the average amount outstanding in the year as or on account of an amount owing under a debt described in A. (montant d’intérêts déterminé)
  • Marginal note:Meaning of connected

    (8) For the purposes of subsection (2), a person or partnership is connected with a shareholder of a corporation if that person or partnership does not deal at arm’s length with, or is affiliated with, the shareholder, unless, in the case of a person, that person is

    • (a) a foreign affiliate of the corporation; or

    • (b) a foreign affiliate of a person resident in Canada with which the corporation does not deal at arm’s length.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 80.4;
  • 1994, c. 7, Sch. II, s. 60, Sch. VIII, s. 32;
  • 1999, c. 22, s. 22;
  • 2000, c. 12, s. 142;
  • 2013, c. 34, s. 216;
  • 2016, c. 12, s. 24.
 
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