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Income Tax Amendments Act, 2000 (S.C. 2001, c. 17)

Assented to 2001-06-14

  •  (1) Paragraph 132(1)(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) 14.5% of the total of the trust’s 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 trust’s capital gains refunds for the year and preceding taxation years and the percentages applicable in determining the trust’s refundable capital gains tax on hand at the end of the year, and

      • (ii) the trust’s refundable capital gains tax on hand at the end of the year; and

  • (2) The first formula in the definition “capital gains redemptions” in subsection 132(4) of the Act is replaced by the following:

    (A / B × (C + D)) – E

  • Marginal note:

    (3) The description of A in the definition “capital gains redemptions” in subsection 132(4) of the Act is replaced by the following:

    A 
    is the total of all amounts each of which is the portion of an amount paid by the trust in the year on the redemption of a unit in the trust that is included in the proceeds of disposition in respect of that redemption,
  • (4) The description of C in the definition “capital gains redemptions” in subsection 132(4) of the Act is amended by replacing the reference to the fraction “100/21.75” with a reference to the fraction “100/14.5”.

  • (5) The definition “capital gains redemptions” in subsection 132(4) of the Act is amended by striking out the word “and” at the end of the description of C, by adding the word “and” at the end of the description of D and by adding the following after the description of D:

    E 
    is twice the total of all amounts each of which is an amount designated under subsection 104(21) for the year by the trust in respect of a unit of the trust redeemed by the trust at any time in the year and after December 21, 2000;
  • (6) Section 132 of the Act is amended by adding the following after subsection (6.1):

    • Marginal note:Retention of status as mutual fund trust

      (6.2) A trust is deemed to be a mutual fund trust throughout a calendar year where

      • (a) at any time in the year, the trust would, if this section were read without reference to this subsection, have ceased to be a mutual fund trust

        • (i) because the condition described in paragraph 108(2)(a) ceased to be satisfied,

        • (ii) because of the application of paragraph (6)(c), or

        • (iii) because the trust ceased to exist;

      • (b) the trust was a mutual fund trust at the beginning of the year; and

      • (c) the trust would, throughout the portion of the year throughout which it was in existence, have been a mutual fund trust if

        • (i) in the case where the condition described in paragraph 108(2)(a) was satisfied at any time in the year, that condition were satisfied throughout the year,

        • (ii) subsection (6) were read without reference to paragraph (c) of that subsection, and

        • (iii) this section were read without reference to this subsection.

  • (7) Paragraphs 132(7)(a) and (b) of the Act are replaced by the following:

    • (a) throughout the period that began on the later of February 21, 1990 and the day of its creation and ended 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

    • (b) it has not issued any unit (other than a unit issued to a person as a payment, or in satisfaction of the person’s right to enforce payment, of an amount out of the trust’s income determined before the application of subsection 104(6), or out of the trust’s capital gains) of the trust after February 20, 1990 and before that time to a person who, after reasonable inquiry, it had reason to believe was non-resident, except where the unit was issued to that person under an agreement in writing entered into before February 21, 1990.

  • (8) Subsections (1), (2), (4) and (5) apply to taxation years that end after February 27, 2000 except that, for a taxation year of a mutual fund trust 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 “14.5%” in paragraph 132(1)(a) of the Act, as enacted by subsection (1), shall be read as a reference to the percentage determined when 29% is multiplied by the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the trust for the year;

    • (b) the reference to the fraction “100/14.5” in the description of C in the definition “capital gains redemptions” in subsection 132(4) of the Act, as enacted by subsection (4), shall be read as a reference to the fraction “100/29X”, where “X” is the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the trust for the year; and

    • (c) the reference to the word “twice” in the description of E in the definition “capital gains redemption” in subsection 132(4) of the Act, as enacted by subsection (5), shall be read as a reference to the expression “the fraction that is the reciprocal of the fraction in paragraph 38(a), as enacted by subsection 22(1) of the Income Tax Amendments Act, 2000, that applies to the taxpayer for the year, multiplied by”.

  • (9) Subsection (3) applies to taxation years that end after February 27, 2000.

  • (10) Subsection (6) applies to the 1990 and subsequent taxation years.

  • (11) Paragraph 132(7)(a) of the Act, as enacted by subsection (7), applies after October 1, 1996.

  • (12) Paragraph 132(7)(b) of the Act, as enacted by subsection (7), applies after February 20, 1990.

  •  (1) Paragraph 132.11(1)(b) of the Act is replaced by the following:

    • (b) where the trust’s taxation year ends on December 15 because of paragraph (a), subject to subsection (1.1), each subsequent taxation year of the trust is deemed to be the period that begins at the beginning of December 16 of a calendar year and ends at the end of December 15 of the following calendar year or at such earlier time as is determined under paragraph 132.2(1)(b) or subsection 142.6(1); and

  • (2) Section 132.11 of the Act is amended by adding the following after subsection (1):

    • Marginal note:Revocation of election

      (1.1) Where a particular taxation year of a trust ends on December 15 of a calendar year because of an election made under paragraph (1)(a), the trust applies to the Minister in writing before December 15 of that calendar year (or before a later time that is acceptable to the Minister) to have this subsection apply to the trust, with the concurrence of the Minister

      • (a) the trust’s taxation year following the particular taxation year is deemed to begin immediately after the end of the particular taxation year and end at the end of that calendar year; and

      • (b) each subsequent taxation year of the trust is deemed to be determined as if that election had not been made.

  • (3) Subsection 132.11(4) of the Act is replaced by the following:

    • Marginal note:Amounts paid or payable to beneficiaries

      (4) For the purposes of subsections (5) and (6) and 104(6) and (13) and notwithstanding subsection 104(24), each amount that is paid, or that becomes payable, by a trust to a beneficiary after the end of a particular taxation year of the trust that ends on December 15 of a calendar year because of subsection (1) and before the end of that calendar year, is deemed to have been paid or to have become payable, as the case may be, to the beneficiary at the end of the particular year and not at any other time.

  • (4) Subsection 132.11(6) of the Act is amended by adding the word “and” at the end of paragraph (a), by striking out the word “and” at the end of paragraph (b) and by repealing paragraph (c).

  • (5) Subsections (1) and (2) apply to taxation years that end after 1999.

  • (6) Subsections (3) and (4) apply to the 2000 and subsequent taxation years.

  •  (1) Paragraph 133(1)(c) of the Act is replaced by the following:

    • (c) the only taxable capital gains and allowable capital losses referred to in paragraph 3(b) were from dispositions of taxable Canadian property,

  • (2) Paragraph 133(1)(d) of the Act is amended by replacing the reference to the expression “4/3 of” with a reference to the word “twice”.

  • (3) Paragraph (a) of the definition “Canadian property” in subsection 133(8) of the Act is replaced by the following:

    • (a) taxable Canadian property, and

  • (4) The description of M in paragraph (c) of the definition “capital gains dividend account” in subsection 133(8) of the Act is replaced by the following:

    M 
    is the total of the corporation’s capital gains for taxation years ending in the period from dispositions in the period of taxable Canadian property, and
  • (5) The portion of the definition “non-resident-owned investment corporation” in subsection 133(8) of the Act after paragraph (d) is replaced by the following:

    • (e) it has, on or before the earlier of February 27, 2000 and the day that is 90 days after the beginning of its first taxation year that begins after 1971, elected in prescribed manner to be taxed under this section, and

    • (f) it has not, before the end of the last taxation year in the period, revoked in prescribed manner its election,

    except that

    • (g) a new corporation (within the meaning assigned by section 87) formed as a result of an amalgamation after June 18, 1971 of two or more predecessor corporations is not a non-resident-owned investment corporation unless each of the predecessor corporations was, immediately before the amalgamation, a non-resident-owned investment corporation,

    • (h) where a corporation is a new corporation described in paragraph (g), and each of the predecessor corporations elected in a timely manner under paragraph (e), paragraph (e) shall be read, in its application to the new corporation, without reference to the words “the earlier of February 27, 2000 and”, and

    • (i) subject to section 134.1, a corporation is not a non-resident-owned investment corporation in any taxation year that ends after the earlier of,

      • (i) the first time, if any, after February 27, 2000 at which the corporation effects an increase in capital, and

      • (ii) the corporation’s last taxation year that begins before 2003;

  • (6) Subsection 133(8) of the Act is amended by adding the following in alphabetical order:

    “increase in capital”

    « augmentation de capital »

    “increase in capital” in respect of a corporation means a transaction (other than a transaction carried out pursuant to an agreement in writing made before February 28, 2000, referred to in this definition as a “specified transaction”) in the course of which the corporation issues additional shares of its capital stock or incurs indebtedness, if the transaction has the effect of increasing the total of

    • (a) the corporation’s liabilities, and

    • (b) the fair market value of all the shares of its capital stock

    to an amount that is substantially greater than that total would have been on February 27, 2000 if all specified transactions had been carried out immediately before that day;

  • (7) Subsections (1), (3) and (4) apply after October 1, 1996.

  • (8) Subsection (2) applies to taxation years that end after February 27, 2000 except that, for the taxation year of a corporation that includes February 28, 2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000, the reference to the word “twice” in paragraph 133(1)(d) of the Act, as enacted by subsection (2), shall be read as a reference to the expression “the fraction that is the reciprocal of the fraction in paragraph 38(a), as enacted by subsection 22(1) of the Income Tax Amendments Act, 2000, that applies to the taxpayer for the year, multiplied by”.

  • (9) Subsections (5) and (6) apply after February 27, 2000.

 
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