Income Tax Amendments Act, 2000 (S.C. 2001, c. 17)
Full Document:
Assented to 2001-06-14
128. (1) Paragraph 131(1)(b) of the Act is replaced by the following:
(b) notwithstanding any other provision of this Act, any amount received by a taxpayer in a taxation year as, on account of, in lieu of payment of or in satisfaction of, the dividend shall not be included in computing the taxpayer’s income for the year as income from a share of the capital stock of the corporation, and
(i) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred before February 28, 2000, and the taxation year of the taxpayer began after February 27, 2000 and ended before October 18, 2000, 9/8 of the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year,
(ii) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred before February 28, 2000, and the taxation year of the taxpayer includes February 27, 2000, the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year and before February 28, 2000,
(iii) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred before February 28, 2000, and the taxation year of the taxpayer began after October 17, 2000, 3/2 of the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year,
(iii.1) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred before February 28, 2000 and the taxation year of the taxpayer begins after February 27, 2000 and ends after October 17, 2000, 9/8 of the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of capital property in the year and before October 18, 2000,
(iv) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred after February 27, 2000 and before October 18, 2000, and the taxation year of the taxpayer began after October 17, 2000, 4/3 of the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year,
(v) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred after February 27, 2000 and before October 18, 2000, and the taxation year of the taxpayer includes October 17, 2000, the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year and in the period that began after February 27, 2000 and ended before October 18, 2000,
(vi) where the dividend was in respect of capital gains of the corporation from dispositions of property that occurred after February 27, 2000, and before October 17, 2000 and the taxation year of the taxpayer began after February 27, 2000 and ended before October 18, 2000, the dividend is deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of a capital property in the year, and
(vii) in any other case, the dividend is deemed to be a capital gain of the taxpayer from the disposition of capital property after October 17, 2000 and in the year,
and, for the purpose of this paragraph,
(viii) dividends paid by a corporation are deemed to be paid in respect of the corporation’s net capital gains in the order in which those net capital gains were realized by the corporation,
(viii.1) capital gains redemptions are deemed to be made in respect of net capital gains in the order in which those net capital gains were realized by the corporation to the extent that they are not reduced by dividends, and
(ix) for the purposes of applying subparagraphs (viii) and (viii.1)
(A) net capital gains of a corporation for a year is the amount by which the corporation’s capital gains from dispositions of property in the year exceed the corporation’s capital losses from dispositions of property in the year,
(B) net capital losses of a corporation for a year is the amount by which the corporation’s capital losses from dispositions of property in the year exceed the corporation’s capital gains from dispositions of property in the year,
(C) net capital gains of a corporation for a year are deemed to be realized evenly throughout the year, and
(D) net capital losses of a corporation for a year are deemed to be a capital loss of the corporation from the disposition of property in the following year.
(2) Section 131 of the Act is amended by adding the following after subsection (1.4):
Marginal note:Reporting
(1.5) Where paragraph (1)(b) applies to a dividend paid by a mutual fund corporation to a shareholder of any class of shares of its capital stock, the corporation shall disclose to the shareholder in prescribed form the amount of the dividend that is in respect of capital gains realized on dispositions of property that occurred
(a) before February 28, 2000,
(b) after February 27, 2000 and before October 18, 2000, and
(c) after October 17, 2000,
and if it does not do so, the dividend is deemed to be in respect of capital gains from dispositions of property that occurred before February 28, 2000.
Marginal note:Allocation
(1.6) Where subsection (1) applies in respect of a dividend paid by a mutual fund corporation in the period that begins 60 days after the beginning of the corporation’s taxation year that includes February 28, 2000 or October 17, 2000 and ends 60 days after the end of that year, and the corporation does not elect under subsection (1.7), the following rules apply:
(a) the portion of the dividend that is in respect of capital gains of the mutual fund corporation from dispositions of property by the mutual fund corporation in the year and in the particular period that began at the beginning of the year and ended at the end of February 27, 2000 is deemed to be that proportion of the dividend that the corporation’s net capital gains from dispositions of property in the particular period to which the dividend relates is of the total of the corporation’s net capital gains from dispositions of property in each of the particular periods referred to in this subsection,
(b) the portion of the dividend that is in respect of capital gains of the mutual fund corporation from dispositions of property by the mutual fund corporation in the year and in the particular period that began at the beginning of February 28, 2000 and ended at the end of October 17, 2000 is deemed to be that proportion of the dividend that the corporation’s net capital gains from dispositions of property in the particular period is of the total of the corporation’s net capital gains from dispositions of property in each of the particular periods referred to in this subsection, and
(c) the portion of the dividend that is in respect of capital gains of the mutual fund corporation from dispositions of property by the mutual fund corporation in the year and in the particular period that begins at the beginning of October 18, 2000 and ends at the end of the year, is deemed to be that proportion of the dividend that the corporation’s net capital gains from dispositions of property in the particular period is of the total of the corporation’s net capital gains from dispositions of property in each of the particular periods referred to in this subsection,
and, in this subsection and in subsection (1.8), net capital gains from dispositions of property in a particular period means the amount, if any, by which the corporation’s capital gains from dispositions of property in the particular period exceeds the corporation’s capital losses from dispositions of property in the particular period.
Marginal note:Allocation
(1.7) Where subsection (1) applies in respect of a dividend paid by a mutual fund corporation in the period that begins 60 days after the beginning of the corporation’s taxation year that includes February 28, 2000 or October 17, 2000 and ends 60 days after the end of that year, and the corporation so elects under this paragraph in its return of income
(a) the portion of the dividend that is in respect of capital gains from dispositions of property that occurred in the year and before February 28, 2000 is deemed to be that proportion of the dividend that the number of days that are in that year and before February 28, 2000 is of the number of days that are in that year;
(b) the portion of the dividend that is in respect of capital gains from dispositions of property that occurred in the year and in the period that began at the beginning of February 28, 2000 and ended at the end of October 17, 2000 is deemed to be that proportion of the dividend that the number of days that are in the year and in that period is of the number of days that are in the year; and
(c) the portion of the dividend that is in respect of capital gains from dispositions of property that occurred in the year and in the period that begins at the beginning of October 18, 2000 and ends at the end of the year, is deemed to be that proportion of the dividend that the number of days that are in the year and in that period is of the number of days that are in the year.
Marginal note:Allocation
(1.8) For the purposes of subsection (1.6) and (1.7), where the total amount of dividends paid by a mutual fund corporation in the period that begins 60 days after the beginning of the corporation’s taxation year that includes February 28, 2000 or October 17, 2000 and ends 60 days after the end of that year and to which subsection (1) applies exceeds the total amount of the corporation’s net capital gains from dispositions of property in that year
(a) the amount of those dividends to which subsections (1.6) and (1.7) apply is the amount of the corporation’s net capital gains from dispositions of property in that year, and
(b) the amount, if any, by which total amount of the dividends paid by the corporation in the period exceeds the total amount of the corporation’s net capital gains from dispositions of property in that year is deemed to be a dividend in respect of capital gains from dispositions of property in the first of the periods described in subsection (1.6) that ends in the year.
Marginal note:Allocation
(1.9) Where no dividend to which subsection (1.7) applies is paid by a mutual fund corporation in respect of its net taxable capital gains for its taxation year that includes February 28, 2000 or October 17, 2000, the corporation has net capital gains or net capital losses from dispositions of property in the year, and the corporation so elects under this subsection in its return of income for the year
(a) the portion of those net capital gains and net capital losses that is in respect of capital gains and losses from dispositions of property that occurred before February 28, 2000 is deemed to be that proportion of the net capital gains or net capital losses respectively that the number of days that are in the year and before February 28, 2000 is of the number of days that are in the year,
(b) the portion of those net capital gains and net capital losses that is in respect of capital gains and losses from dispositions of property that occurred in the year and in the period that began at the beginning of February 28, 2000 and ended at the end of October 17, 2000, is deemed to be that proportion of the net capital gains or net capital losses respectively that the number of days that are in the year and in that period is of the number of days that are in the year, and
(c) the portion of those net capital gains and net capital losses that is in respect of capital gains and losses from dispositions of property that occurred in the year and in the period that began at the beginning of October 18, 2000 and ended at the end of the year, is deemed to be that proportion of the net capital gains or net capital losses respectively that the number of days that are in the year and in that period is of the number of days that are in the year,
and, for the purpose of this subsection,
(d) the net capital gains of a mutual fund corporation from dispositions of property in the year is the amount, if any, by which the corporation’s capital gains from dispositions of property in a year exceeds the corporation’s capital losses from dispositions of property in the year, and
(e) the net capital losses of a mutual fund corporation from dispositions of property in the year is the amount, if any, by which the corporation’s capital losses from dispositions of property in a year exceeds the corporation’s capital gains from dispositions of property in the year.
(3) Paragraph 131(2)(a) of the Act is replaced by the following:
(a) may, on sending the notice of assessment for the year, refund an amount (in this subsection referred to as its “capital gains refund” for the year) equal to the lesser of
(i) the total of
(A) 14% of the total of
(I) all capital gains dividends paid by the corporation in the period commencing 60 days after the beginning of the year and ending 60 days after the end of the year, and
(II) its capital gains redemptions for the year, and
(B) the amount, if any, that the Minister determines to be reasonable in the circumstances, after giving consideration to the percentages applicable in determining the corporation’s capital gains refund for the year and preceding taxation years and the percentages applicable in determining the corporation’s refundable capital gains tax on hand at the end of the year, and
(ii) the corporation’s refundable capital gains tax on hand at the end of the year; and
(4) Subparagraph (b)(iii) of the definition “capital gains dividend account” in subsection 131(6) of the Act is replaced by the following:
(iii) the total of all amounts each of which is
(A) an amount equal to 100/21 of its capital gains refund for any taxation year throughout which it was a mutual fund corporation where the year ended
(I) more than 60 days before that time, and
(II) before February 28, 2000,
(B) an amount equal to 100/18.7 of its capital gains refund for any taxation year throughout which it was a mutual fund corporation where the year ended
(I) more than 60 days before that time, and
(II) after February 27, 2000 and before October 18, 2000, or
(C) an amount equal to 100/14 of its capital gain refund for any taxation year throughout which it was a mutual fund corporation where the year ended
(I) more than 60 days before that time, and
(II) after October 17, 2000;
(5) The description of C in the definition “capital gains redemptions” in subsection 131(6) of the Act is amended by replacing the reference to the fraction “100/21” with a reference to the fraction “100/14”.
(6) Paragraph 131(8.1)(a) of the Act is replaced by the following:
(a) throughout the period that begins on the later of February 21, 1990 and the day of its incorporation and ends at that time, all or substantially all of its property consisted of property other than property that would be taxable Canadian property if the definition “taxable Canadian property” in subsection 248(1) were read without reference to paragraph (b) of that definition; or
(7) Subsections (1) to (5) apply to taxation years that end after February 27, 2000 except that, for a taxation year of a mutual fund corporation that includes February 28, 2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000,
(a) the reference to the percentage “14%” in clause 131(2)(a)(i)(A) of the Act, as enacted by subsection (3), shall be read as a reference to the percentage determined when 28% is multiplied by the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the corporation for the year;
(b) the reference to the fraction “100/18.7” in clause (b)(iii)(B) and the fraction “100/14” in clause (b)(iii)(C) of the definition “capital gains dividend account” in subsection 131(6) of the Act, as enacted by subsection (4), shall be read as a reference to the fraction “100/28X”, where “X” is the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the corporation for the year; and
(c) the reference to the fraction “100/14” in the description of C in the definition “capital gains redemptions” in subsection 131(6) of the Act, as enacted by subsection (5), shall be read as a reference to the fraction “100/28X”, where “X” is the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the corporation for the year.
(8) Subsection (6) applies after October 1, 1996.
- Date modified: