Income Tax Amendments Act, 2000 (S.C. 2001, c. 17)
Full Document:
Assented to 2001-06-14
11. (1) The portion of subsection 19(1) of the Act before subparagraph (b)(i) is replaced by the following:
Marginal note:Limitation re advertising expense — newspapers
19. (1) In computing income, no deduction shall be made in respect of an otherwise deductible outlay or expense of a taxpayer for advertising space in an issue of a newspaper for an advertisement directed primarily to a market in Canada unless
(a) the issue is a Canadian issue of a Canadian newspaper; or
(b) the issue is an issue of a newspaper that would be a Canadian issue of a Canadian newspaper except that
(2) The definition “substantially the same” in subsection 19(5) of the Act is repealed.
(3) The definition “Canadian issue” in subsection 19(5) of the Act is replaced by the following:
“Canadian issue”
« édition canadienne »
“Canadian issue” of a newspaper means an issue, including a special issue,
(a) the type of which, other than the type for advertisements or features, is set in Canada,
(b) all of which, exclusive of any comics supplement, is printed in Canada,
(c) that is edited in Canada by individuals resident in Canada, and
(d) that is published in Canada;
(4) The portion of the definition “Canadian newspaper or periodical” in subsection 19(5) of the Act before paragraph (a) is replaced by the following:
“Canadian newspaper”
« journal canadien »
“Canadian newspaper” means a newspaper the exclusive right to produce and publish issues of which is held by one or more of the following:
(5) Section 19 of the Act is amended by adding the following after subsection (5):
Marginal note:Interpretation
(5.1) In this section, each of the following is deemed to be a Canadian citizen:
(a) a trust or corporation described in paragraph 149(1)(o) or (o.1) formed in connection with a pension plan that exists for the benefit of individuals a majority of whom are Canadian citizens;
(b) a trust described in paragraph 149(1)(r) or (x), the annuitant in respect of which is a Canadian citizen;
(c) a mutual fund trust, within the meaning assigned by subsection 132(6), other than a mutual fund trust the majority of the units of which are held by citizens or subjects of a country other than Canada;
(d) a trust, each beneficiary of which is a person, partnership, association or society described in any of paragraphs (a) to (e) of the definition “Canadian newspaper” in subsection (5); and
(e) a person, association or society described in paragraph (c) or (d) of the definition “Canadian newspaper” in subsection (5).
(6) Subsections 19(6) to (8) of the Act are replaced by the following:
Marginal note:Trust property
(6) Where the right that is held by any person, partnership, association or society described in the definition “Canadian newspaper” in subsection (5) to produce and publish issues of a newspaper is held as property of a trust or estate, the newspaper is not a Canadian newspaper unless each beneficiary under the trust or estate is a person, partnership, association or society described in that definition.
Marginal note:Grace period
(7) A Canadian newspaper that would, but for this subsection, cease to be a Canadian newspaper, is deemed to continue to be a Canadian newspaper until the end of the 12th month that follows the month in which it would, but for this subsection, have ceased to be a Canadian newspaper.
Marginal note:Non-Canadian newspaper
(8) Where at any time one or more persons or partnerships that are not described in any of paragraphs (a) to (e) of the definition “Canadian newspaper” in subsection (5) have any direct or indirect influence that, if exercised, would result in control in fact of a person or partnership that holds a right to produce or publish issues of a newspaper, the newspaper is deemed not to be a Canadian newspaper at that time.
(7) Subsections (1) to (4) and (6) apply in respect of advertisements placed in an issue dated after May 2000.
(8) Subsection (5) applies in respect of advertisements placed in an issue dated after June 1996 except that, in applying subsection 19(5.1) of the Act, as enacted by subsection (5), to advertisements placed in an issue dated after June 1996 and before June 2000, the references in that subsection 19(5.1) to “Canadian newspaper” shall be read as references to “Canadian newspaper or periodical”.
12. (1) The Act is amended by adding the following after section 19:
Marginal note:Definitions
19.01 (1) The definitions in this subsection apply in this section.
“advertisement directed at the Canadian market”
« annonce destinée au marché canadien »
“advertisement directed at the Canadian market” has the same meaning as the expression “directed at the Canadian market” in section 2 of the Foreign Publishers Advertising Services Act and includes a reference to that expression made by or under that Act.
“original editorial content”
« contenu rédactionnel original »
“original editorial content” in respect of an issue of a periodical means non-advertising content
(a) the author of which is a Canadian citizen or a permanent resident of Canada within the meaning assigned by the Immigration Act and, for this purpose, “author” includes a writer, a journalist, an illustrator and a photographer; or
(b) that is created for the Canadian market and has not been published in any other edition of that issue of the periodical published outside Canada.
“periodical”
« périodique »
“periodical” has the meaning assigned by section 2 of the Foreign Publishers Advertising Services Act.
Marginal note:Limitation re advertising expenses — periodicals
(2) Subject to subsections (3) and (4), in computing income, no deduction shall be made by a taxpayer in respect of an otherwise deductible outlay or expense for advertising space in an issue of a periodical for an advertisement directed at the Canadian market.
Marginal note:100% deduction
(3) A taxpayer may deduct in computing income an outlay or expense of the taxpayer for advertising space in an issue of a periodical for an advertisement directed at the Canadian market if
(a) the original editorial content in the issue is 80% or more of the total non-advertising content in the issue; and
(b) the outlay or expense would, but for subsection (2), be deductible in computing the taxpayer’s income.
Marginal note:50% deduction
(4) A taxpayer may deduct in computing income 50% of an outlay or expense of the taxpayer for advertising space in an issue of a periodical for an advertisement directed at the Canadian market if
(a) the original editorial content in the issue is less than 80% of the total non-advertising content in the issue; and
(b) the outlay or expense would, but for subsection (2), be deductible in computing the taxpayer’s income.
Marginal note:Application
(5) For the purposes of subsections (3) and (4),
(a) the percentage that original editorial content is of total non-advertising content is the percentage that the total space occupied by original editorial content in the issue is of the total space occupied by non-advertising content in the issue; and
(b) the Minister may obtain the advice of the Department of Canadian Heritage for the purpose of
(i) determining the result obtained under paragraph (a), and
(ii) interpreting any expression defined in this section that is defined in the Foreign Publishers Advertising Services Act.
Marginal note:Editions of issues
(6) For the purposes of this section,
(a) where an issue of a periodical is published in several versions, each version is an edition of that issue; and
(b) where an issue of a periodical is published in only one version, that version is an edition of that issue.
(2) Subsection (1) applies in respect of advertisements placed in an issue dated after May 2000.
13. (1) Paragraph 20(1)(b) of the Act is replaced by the following:
Marginal note:Cumulative eligible capital amount
(b) such amount as the taxpayer claims in respect of a business, not exceeding 7% of the taxpayer’s cumulative eligible capital in respect of the business at the end of the year except that, where the year is less than 12 months, the amount allowed as a deduction under this paragraph shall not exceed that proportion of the maximum amount otherwise allowable that the number of days in the taxation year is of 365;
(2) The portion of paragraph 20(1)(e) of the Act before subparagraph (i) is replaced by the following:
Marginal note:Expenses re financing
(e) such part of an amount (other than an excluded amount) that is not otherwise deductible in computing the income of the taxpayer and that is an expense incurred in the year or a preceding taxation year
(3) The portion of paragraph 20(1)(e) of the Act after subparagraph (ii.2) and before subparagraph (iii) is replaced by the following:
(including a commission, fee, or other amount paid or payable for or on account of services rendered by a person as a salesperson, agent or dealer in securities in the course of the issuance, sale or borrowing) that is the lesser of
(4) Paragraph 20(1)(e) of the Act is amended by adding the following before subparagraph (v):
(iv.1) “excluded amount” means
(A) an amount paid or payable as or on account of the principal amount of a debt obligation or interest in respect of a debt obligation,
(B) an amount that is contingent or dependent on the use of, or production from, property, or
(C) an amount that is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation,
(5) Subparagraph 20(1)(f)(ii) of the Act is amended by replacing the reference to the fraction “3/4” with a reference to the fraction “1/2”.
(6) Paragraph 20(1)(z.1) of the Act is amended by replacing the reference to the fraction “3/4” with a reference to the fraction “1/2”.
(7) Subparagraph 20(1)(hh)(ii) of the Act is replaced by the following:
(ii) that is, by reason of subparagraph 12(1)(x)(vi) or subsection 12(2.2), not included under paragraph 12(1)(x) in computing the taxpayer’s income for the year or a preceding taxation year, where the particular amount relates to an outlay or expense (other than an outlay or expense that is in respect of the cost of property of the taxpayer or that is or would be, if amounts deductible by the taxpayer were not limited by reason of paragraph 66(4)(b), subsection 66.1(2), subparagraph 66.2(2)(a)(ii), the words “30% of” in clause 66.21(4)(a)(ii)(B), clause 66.21(4)(a)(ii)(C) or (D) or subparagraph 66.4(2)(a)(ii), deductible under section 66, 66.1, 66.2, 66.21 or 66.4) that would, if the particular amount had not been received, have been deductible in computing the taxpayer’s income for the year or a preceding taxation year;
(8) Subsection 20(4.2) of the Act is replaced by the following:
Marginal note:Bad debts re eligible capital property
(4.2) Where, in respect of one or more dispositions of eligible capital property by a taxpayer, an amount that is described in paragraph (a) of the description of E in the definition “cumulative eligible capital” in subsection 14(5) in respect of the taxpayer is established by the taxpayer to have become a bad debt in a taxation year, there shall be deducted in computing the taxpayer’s income for the year the amount determined by the formula
(A + B) – (C + D + E + F + G + H)
where
- A
- is the lesser of
(a) 1/2 of the total of all amounts each of which is such an amount that was so established to have become a bad debt in the year or a preceding taxation year, and
(b) the amount that is
(i) where the year ended after February 27, 2000, the amount, if any, that would be the total of all amounts determined by the formula in paragraph 14(1)(b) (if that formula were read without reference to the description of D) for the year, or for a preceding taxation year that ended after February 27, 2000, and
(ii) where the year ended before February 28, 2000, nil;
- B
- is the amount, if any, by which
(a) 3/4 of the total of all amounts each of which is such an amount that was so established to be a bad debt in the year or a preceding taxation year
exceeds the total of
(b) 3/2 of the amount by which
(i) the value of A
exceeds
(ii) the amount included in the value of A because of subparagraph (b)(i) of the description of A in respect of taxation years that ended after February 27, 2000 and before October 18, 2000, and
(c) 9/8 of the amount included in the value of A because of subparagraph (b)(i) of the description of A in respect of taxation years that ended after February 27, 2000 and before October 18, 2000;
- C
- is the total of all amounts each of which is an amount determined under subsection 14(1) or (1.1) for the year, or a preceding taxation year, that ends after October 17, 2000 and in respect of which a deduction can reasonably be considered to have been claimed under section 110.6 by the taxpayer;
- D
- is the total of all amounts each of which is an amount determined under subsection 14(1) or (1.1) for the year, or a preceding taxation year, that ended after February 27, 2000 and before October 18, 2000 and in respect of which a deduction can reasonably be considered to have been claimed under section 110.6 by the taxpayer;
- E
- is the total of all amounts each of which is an amount determined under subsection 14(1) or (1.1) for a preceding taxation year that ended before February 28, 2000 and in respect of which a deduction can reasonably be considered to have been claimed under section 110.6 by the taxpayer;
- F
- is the total of
(a) 2/3 of the total of all amounts each of which is the value determined in respect of the taxpayer for D in the formula in paragraph 14(1)(b) for the year, or a preceding taxation year, that ends after October 17, 2000, and
(b) 8/9 of the total of all amounts each of which is the value determined in respect of the taxpayer for D in the formula in paragraph 14(1)(b) for the year, or a preceding taxation year, that ended after February 27, 2000 and before October 18, 2000;
- G
- is the total of all amounts each of which is the value determined in respect of the taxpayer for D in the formula in subparagraph 14(1)(a)(v) (as that subparagraph applied for taxation years that ended before February 28, 2000) for a preceding taxation year; and
- H
- is the total of all amounts deducted by the taxpayer under this subsection for preceding taxation years.
Marginal note:Deemed allowable capital loss
(4.3) Where, in respect of one or more dispositions of eligible capital property by a taxpayer, an amount that is described in paragraph (a) of the description of E in the definition “cumulative eligible capital” in subsection 14(5) in respect of the taxpayer is established by the taxpayer to have become a bad debt in a taxation year, the taxpayer is deemed to have an allowable capital loss from a disposition of capital property in the year equal to the lesser of
(a) the total of the value determined for A and 2/3 of the value determined for B in the formula in subsection (4.2) in respect of the taxpayer for the year; and
(b) the total of all amounts each of which is
(i) the value determined for C or paragraph (a) of the description of F in the formula in subsection (4.2) in respect of the taxpayer for the year,
(ii) 3/4 of the value determined for D or paragraph (b) of the description of F in the formula in subsection (4.2) in respect of the taxpayer for the year, or
(iii) 2/3 of the value determined for E or G in the formula in subsection (4.2) in respect of the taxpayer for the year.
(9) Subsection (1) applies to taxation years that begin after December 21, 2000.
(10) Subsections (2) to (4) apply to expenses incurred by a taxpayer after November 1999, other than expenses incurred pursuant to a written agreement made by the taxpayer before December 1999.
(11) Subsections (5) and (6) apply in respect of amounts that become payable after February 27, 2000 except that, for amounts that became payable after February 27, 2000 and before October 18, 2000, the reference to the fraction “1/2” in subparagraph 20(1)(f)(ii) of the Act, as enacted by subsection (5), and in paragraph 20(1)(z.1) of the Act, as enacted by subsection (6), shall be read as a reference to the fraction “2/3”.
(12) Subsection (7) applies to taxation years that begin after 2000.
(13) Subsection (8) applies to taxation years that end after February 27, 2000 except that, for taxation years that ended after February 27, 2000 and before October 18, 2000,
(a) the reference to the fraction “1/2” in paragraph (a) of the description of A in subsection 20(4.2) of the Act, as enacted by subsection (8), shall be read as a reference to the fraction “2/3”;
(b) the reference to the fraction “3/2” in paragraph (b) of the description of B in subsection 20(4.2) of the Act, as enacted by subsection (8), shall be read as a reference to the fraction “9/8”;
(c) the reference to the fraction “2/3” in paragraph 20(4.3)(a) and subparagraph 20(4.3)(b)(iii) of the Act, as enacted by subsection (8), shall be read as a reference to the fraction “8/9”; and
(d) subparagraph 20(4.3)(b)(ii) of the Act, as enacted by subsection (8), shall be read without reference to the expression “3/4 of”.
- Date modified: