Income Tax Amendments Act, 2000 (S.C. 2001, c. 17)
Full Document:
Assented to 2001-06-14
15. (1) Subsection 21(2) of the Act is replaced by the following:
Marginal note:Borrowed money used for exploration or development
(2) Where in a taxation year a taxpayer has used borrowed money for the purpose of exploration, development or the acquisition of property and the expenses incurred by the taxpayer in respect of those activities are Canadian exploration and development expenses, Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses, foreign resource expenses in respect of a country, or foreign exploration and development expenses, as the case may be, if the taxpayer so elects under this subsection in the taxpayer’s return of income for the year,
(a) in computing the taxpayer’s income for the year and for such of the three immediately preceding taxation years as the taxpayer had, paragraphs 20(1)(c), (d), (e) and (e.1) do not apply to the amount or to the part of the amount specified in the taxpayer’s election that, but for that election, would be deductible in computing the taxpayer’s income (other than exempt income or income that is exempt from tax under this Part) for any such year in respect of the borrowed money used for the exploration, development or acquisition of property, as the case may be; and
(b) the amount or the part of the amount, as the case may be, described in paragraph (a) is deemed to be Canadian exploration and development expenses, Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses, foreign resource expenses in respect of a country, or foreign exploration and development expenses, as the case may be, incurred by the taxpayer in the year.
(2) Subsection 21(4) of the Act is amended by striking out the word “and” at the end of paragraph (a) and by replacing the portion after paragraph (a) with the following:
(b) in each taxation year, if any, after that preceding taxation year and before the particular year, made an election under this subsection covering the total amount that, but for that election, would have been deductible in computing the taxpayer’s income (other than exempt income or income that is exempt from tax under this Part) for each such year in respect of the borrowed money used for the exploration, development or acquisition of property, as the case may be, and
(c) so elects in the taxpayer’s return of income for the particular year,
the following rules apply:
(d) paragraphs 20(1)(c), (d), (e) and (e.1) do not apply to the amount or to the part of the amount specified in the election that, but for the election, would be deductible in computing the taxpayer’s income (other than exempt income or income that is exempt from tax under this Part) for the particular year in respect of the borrowed money used for the exploration, development or acquisition of property, and
(e) the amount or part of the amount, as the case may be, is deemed to be Canadian exploration and development expenses, Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses, foreign resource expenses in respect of a country, or foreign exploration and development expenses, as the case may be, incurred by the taxpayer in the particular year.
(3) Subsections (1) and (2) apply to taxation years that begin after 2000.
16. (1) Paragraph 24(2)(d) of the Act is replaced by the following:
(d) for the purpose of determining after that time the amount required to be included under paragraph 14(1)(b) in computing the income of the spouse, the common-law partner or the corporation in respect of any subsequent disposition of property of the business, there shall be added to the amount otherwise determined for Q in the definition “cumulative eligible capital” in subsection 14(5) the amount, if any, determined for Q in that definition in respect of the business of the individual immediately before the individual ceased to carry on business.
(2) Subsection (1) applies to taxation years that end after February 27, 2000.
17. (1) Subsection 27(2) of the Act is replaced by the following:
Marginal note:Presumption
(2) Notwithstanding any other provision of this Act, a prescribed federal Crown corporation and any corporation controlled by such a corporation are each deemed not to be a private corporation and paragraphs 149(1)(d) to (d.4) do not apply to those corporations.
(2) Subsection (1) applies to taxation years and fiscal periods that begin after 1998.
18. (1) Paragraphs 28(4)(a) and (b) of the Act are replaced by the following:
(a) for the year, if the taxpayer was non-resident throughout the year; and
(b) for the part of the year throughout which the taxpayer was resident in Canada, if the taxpayer was resident in Canada at any time in the year.
(2) Subsection 28(4.1) of the Act is repealed.
(3) Subsection (1) applies to the 1998 and subsequent taxation years.
(4) Subsection (2) applies after December 23, 1998.
19. (1) The definition “foreign bank” in subsection 33.1(1) of the Act is replaced by the following:
“foreign bank”
« banque étrangère »
“foreign bank” has the meaning assigned by the definition “foreign bank” in section 2 of the Bank Act (read without reference to paragraph (g)), except that an authorized foreign bank is not considered to be a foreign bank in respect of its Canadian banking business;
(2) Subsection (1) applies after June 27, 1999.
20. (1) The definition “mining property” in subsection 35(2) of the Act is replaced by the following:
“mining property”
« bien minier »
“mining property” means
(a) a right, licence or privilege to prospect, explore, drill or mine for minerals in a mineral resource in Canada, or
(b) real property in Canada (other than depreciable property) the principal value of which depends on its mineral resource content;
(2) Subsection (1) applies to shares received after December 21, 2000.
21. (1) Subsection 37(1) of the Act is amended by adding the following after paragraph (d):
(d.1) the total of all amounts each of which is the super-allowance benefit amount (within the meaning assigned by subsection 127(9)) for the year or for a preceding taxation year in respect of the taxpayer in respect of a province,
(2) Subsection (1) applies to taxation years that begin after February 2000 except that, if a taxpayer’s first taxation year that begins after February 2000 ends before 2001, subsection (1) applies to the taxpayer’s taxation years that begin after 2000.
22. (1) Paragraph 38(a) of the Act is replaced by the following:
(a) subject to paragraphs (a.1) and (a.2), a taxpayer’s taxable capital gain for a taxation year from the disposition of any property is 1/2 of the taxpayer’s capital gain for the year from the disposition of the property;
(2) Paragraph 38(a.1) of the Act is amended by replacing the reference to the fraction “3/8” with a reference to the fraction “1/4”.
(3) Section 38 of the Act is amended by adding the following after paragraph (a.1):
(a.2) a taxpayer’s taxable capital gain for a taxation year from the disposition of a property is 1/4 of the taxpayer’s capital gain for the year from the disposition of the property where
(i) the disposition is the making of a gift to a qualified donee (other than a private foundation) of a property described, in respect of the taxpayer, in paragraph 110.1(1)(d) or in the definition “total ecological gifts” in subsection 118.1(1), or
(ii) the disposition is deemed by section 70 to have occurred and the taxpayer is deemed by subsection 118.1(5) to have made a gift described in subparagraph (i) of the property;
(4) Paragraphs 38(b) and (c) of the Act are amended by replacing the references to the fraction “3/4” with references to the fraction “1/2”.
(5) Subsections (1) and (4) apply to the 2000 and subsequent taxation years except that
(a) for a taxation year of a taxpayer that ended before February 28, 2000, the references to the fraction “1/2” in paragraph 38(a) of the Act, as enacted by subsection (1), and in paragraphs 38(b) and (c) of the Act, as enacted by subsection (4), shall be read as references to the fraction “3/4”,
(b) for a taxpayer’s taxation year that began after February 28, 2000 and ended before October 17, 2000, the references to the fraction “1/2” in paragraph 38(a) of the Act as enacted by subsection (1) and in paragraphs 38(b) and (c) of the Act, as enacted by subsection (4), shall be read as references to the fraction “2/3”,
(c) for a taxation year of a taxpayer that includes February 28, 2000 but does not include October 18, 2000, the references to the fraction “1/2” in paragraph 38(a) of the Act, as enacted by subsection (1), and in paragraphs 38(b) and (c) of the Act, as enacted by subsection (4), shall be read as references to the fraction that applies to the taxpayer for that year, and for this purpose,
(i) where the amount of the taxpayer’s net capital gains from dispositions of property in the period that began at the beginning of the year and ended at the end of February 27, 2000 (in this paragraph referred to as the “first period”) exceeds the amount of the taxpayer’s net capital losses from dispositions of property in the period that begins at the beginning of February 28, 2000 and ends at the end of the year (in this paragraph referred to as the “second period”), the fraction that applies to the taxpayer for the year is 3/4,
(ii) where the amount of the taxpayer’s net capital losses from dispositions of property in the first period exceeds the amount of the taxpayer’s net capital gains from dispositions of property in the second period, the fraction that applies to the taxpayer for the year is 3/4,
(iii) where the amount of the taxpayer’s net capital gains from dispositions of property in the first period is less than the amount of the taxpayer’s net capital losses from dispositions of property in the second period, the fraction that applies to the taxpayer for the year is 2/3,
(iv) where the amount of the taxpayer’s net capital losses from dispositions of property in the first period is less than the amount of the taxpayer’s net capital gains from dispositions of property in the second period, the fraction that applies to the taxpayer for the year is 2/3,
(v) where the taxpayer has only net capital gains, or only net capital losses, from dispositions of property in each of the first and second periods, the fraction that applies to the taxpayer for the year is the fraction determined by the formula
(3/4 × A + 2/3 × B) / (A + B)
where
- A
- is the net capital gains or the net capital losses, as the case may be, of the taxpayer from dispositions of property in the first period, and
- B
- is the net capital gains or the net capital losses, as the case may be, of the taxpayer from dispositions of property in the second period, and
(vi) where the net capital gains and net capital losses of the taxpayer for the year are nil, the fraction that applies to the taxpayer for the year is 2/3,
(d) for a taxation year of a taxpayer that began after February 27, 2000 and includes October 18, 2000, the references to the fraction “1/2” in paragraph 38(a) of the Act, as enacted by subsection (1), and in paragraphs 38(b) and (c) of the Act, as enacted by subsection (4), shall be read as references to the fraction that applies to the taxpayer for that year, and for this purpose,
(i) where the amount of the taxpayer’s net capital gains from dispositions of property in the period that began at the beginning of the year and ended at the end of October 17, 2000 (in this paragraph referred to as the “first period”) exceeds the amount of the taxpayer’s net capital losses from dispositions of property in the period that begins at the beginning of October 18, 2000 and ends at the end of the year (in this paragraph referred to as the “second period”), the fraction that applies to the taxpayer for the year is 2/3,
(ii) where the amount of the taxpayer’s net capital losses from dispositions of property in the first period exceeds the amount of the taxpayer’s net capital gains from dispositions of property in the second period, the fraction that applies to the taxpayer for the year is 2/3,
(iii) where the amount of the taxpayer’s net capital gains from dispositions of property in the first period is less than the amount of the taxpayer’s net capital losses from dispositions of property in the second period, the fraction that applies to the taxpayer for the year is 1/2,
(iv) where the amount of the taxpayer’s net capital losses from dispositions of property in the first period is less than the amount of the taxpayer’s net capital gains from dispositions of property in the second period, the fraction that applies to the taxpayer for the year is 1/2,
(v) where the taxpayer has only net capital gains, or only net capital losses, from dispositions of property in each of the first and second periods, the fraction that applies to the taxpayer for the year is the fraction determined by the formula
(2/3 × A + 1/2 × B)/(A + B)
where
- A
- is the net capital gains or the net capital losses, as the case may be, of the taxpayer from dispositions of property in the first period, and
- B
- is the net capital gains or the net capital losses, as the case may be, of the taxpayer from dispositions of property in the second period, and
(vi) where the net capital gains and net capital losses of the taxpayer for the year are nil, the fraction that applies to the taxpayer for the year is 1/2,
(e) for a taxation year of a taxpayer that includes February 27, 2000 and October 18, 2000, the references to the fraction “1/2” in paragraph 38(a) of the Act, as enacted by subsection (1), and in paragraphs 38(b) and (c) of the Act, as enacted by subsection (4), shall be read as references to the fraction that applies to the taxpayer for that year, and for this purpose,
(i) the fraction that applies to the taxpayer for the year is 3/4, where
(A) the amount by which the amount of the taxpayer’s net capital gains from dispositions of property in the period that began at the beginning of the year and ended at the end of February 27, 2000 (in this paragraph referred to as the “first period”) exceeds the amount of the taxpayer’s net capital losses from dispositions of property in the period that began at the beginning of February 28, 2000 and ended at the end of October 17, 2000 (in this paragraph referred to as the “second period”)
exceeds
(B) the amount of the taxpayer’s net capital losses from dispositions of property in the period that begins at the beginning of October 18, 2000 and ends at the end of the year (in this paragraph referred to as the “third period”),
(ii) the fraction that applies to the taxpayer for the year is 3/4, where
(A) the amount by which the amount of the taxpayer’s net capital losses from dispositions of property in the first period exceeds the amount of the taxpayer’s net capital gains from dispositions of property in the second period
exceeds
(B) the amount of the taxpayer’s net capital gains from dispositions of property in the third period,
(iii) the fraction that applies to the taxpayer for the year is 2/3, where
(A) the amount by which the amount of the taxpayer’s net capital gains from dispositions of property in the second period exceeds the amount of the taxpayer’s net capital losses from dispositions of property in the first period
exceeds
(B) the amount of the taxpayer’s net capital losses from dispositions of property in the third period,
(iv) the fraction that applies to the taxpayer for the year is 2/3, where
(A) the amount by which the amount of the taxpayer’s net capital losses from dispositions of property in the second period exceeds the amount of the taxpayer’s net capital gains from dispositions of property in the first period
exceeds
(B) the amount of the taxpayer’s net capital gains from dispositions of property in the third period,
(v) where the taxpayer has net capital gains in each of the first and second periods and the total amount of those net capital gains in those periods exceeds the amount of the taxpayer’s net capital losses in the third period, the fraction that applies to the taxpayer for the year is the fraction that is determined by the formula
(3/4 × A + 2/3 × B) / (A + B)
where
- A
- is the net capital gains of the taxpayer from dispositions of property in the first period, and
- B
- is the net capital gains of the taxpayer from dispositions of property in the second period,
(vi) where the taxpayer has net capital losses in each of the first and second periods and the total amount of those net capital losses in those periods exceeds the amount of the taxpayer’s net capital gains in the third period, the fraction that applies to the taxpayer for the year is the fraction that is determined by the formula
(3/4 × A + 2/3 × B) / (A + B)
where
- A
- is the net capital losses of the taxpayer from dispositions of property in the first period, and
- B
- is the net capital losses of the taxpayer from dispositions of property in the second period,
(vii) where the taxpayer has only net capital gains, or only net capital losses, from dispositions of property in each of the first, second and third periods, the fraction that applies to the taxpayer for the year is the fraction that is determined by the formula
(3/4 × A + 2/3 × B + 1/2 × C) / (A + B + C)
where
- A
- is the taxpayer’s net capital gains or net capital losses, as the case may be, from dispositions of property in the first period,
- B
- is the taxpayer’s net capital gains or net capital losses, as the case may be, from dispositions of property in the second period, and
- C
- is the taxpayer’s net capital gains or net capital losses, as the case may be, from dispositions of property in the third period,
(viii) where the amount of the taxpayer’s net capital gains from dispositions of property in the first period exceeds the amount of the taxpayer’s net capital losses from dispositions of property in the second period and the taxpayer has net capital gains from dispositions of property in the third period, the fraction that applies to the taxpayer for the year is the fraction that is determined by the formula
(3/4 × A + 1/2 × B) / (A + B)
where
- A
- is the amount by which the taxpayer’s net capital gains from dispositions of property in the first period exceeds the amount of the taxpayer’s net capital losses from dispositions of property in the second period, and
- B
- is the taxpayer’s net capital gains from dispositions of property in the third period,
(ix) where the amount of the taxpayer’s net capital losses from dispositions of property in the first period exceeds the amount of the taxpayer’s net capital gains from dispositions of property in the second period and the taxpayer has net capital losses from dispositions of property in the third period, the fraction that applies to the taxpayer for the year is the fraction that is determined by the formula
(3/4 × A + 1/2 × B) / (A + B)
where
- A
- is the amount by which the taxpayer’s net capital losses from dispositions of property in the first period exceeds the amount of the taxpayer’s net capital gains from dispositions of property in the second period, and
- B
- is the taxpayer’s net capital losses from dispositions of property in the third period,
(x) where the amount of the taxpayer’s net capital gains from dispositions of property in the second period exceeds the amount of the taxpayer’s net capital losses from dispositions of property in the first period and the taxpayer has net capital gains from dispositions of property in the third period, the fraction that applies to the taxpayer for the year is the fraction that is determined by the formula
(2/3 × A + 1/2 × B) / (A + B)
where
- A
- is the amount by which the taxpayer’s net capital gains from dispositions of property in the second period exceeds the amount of the taxpayer’s net capital losses from dispositions of property in the first period, and
- B
- is the taxpayer’s net capital gains from dispositions of property in the third period,
(xi) where the amount of the taxpayer’s net capital losses from dispositions of property in the second period exceeds the amount of the taxpayer’s net capital gains from dispositions of property in the first period and the taxpayer has net capital losses from dispositions of property in the third period, the fraction that applies to the taxpayer for the year is the fraction that is determined by the formula
(2/3 × A + 1/2 × B) / (A + B)
where
- A
- is the amount by which the taxpayer’s net capital losses from dispositions of property in the second period exceeds the amount of the taxpayer’s net capital gains from dispositions of property in the first period, and
- B
- is the taxpayer’s net capital losses from dispositions of property in the third period, and
(xii) in any other case, the fraction that applies to the taxpayer for the year is 1/2, and
in determining the fraction that applies to a taxpayer under paragraphs (a) to (e) for the year, the following rules apply:
(f) the net capital gains of the taxpayer from dispositions of property in a period is the amount, if any, by which the taxpayer’s capital gains from dispositions of property in the period exceed the taxpayer’s capital losses from dispositions of property in the period,
(g) the net capital losses of the taxpayer from dispositions of property in a period is the amount, if any, by which the taxpayer’s capital losses from dispositions of property in the period exceed the taxpayer’s capital gains from dispositions of property in the period,
(h) the net amount included as a capital gain of the taxpayer for a taxation year from a disposition to which paragraph 38(a.2) of the Act, as enacted by subsection (3), applies or from a disposition to which paragraph 38(a.1) of the Act, as enacted by subsection (2), applies, is deemed to be equal to one half of the capital gain,
(i) the net amount included as a capital gain of the taxpayer for a taxation year from a disposition of property before the year because of subparagraphs 40(1)(a)(ii) and (iii) of the Act is deemed to be a capital gain of the taxpayer from a disposition of property on the first day of the year,
(j) each capital loss that is a business investment loss shall be determined without reference to subsections 39(9) and (10) of the Act,
(k) where an amount is included in computing the income of the taxpayer for the year because of subsection 80(13) of the Act in respect of a commercial obligation that is settled, the amount that would be determined under that subsection in respect of the obligation, if the value of E in the formula in that subsection were 1, is deemed to be a capital gain of the taxpayer from a disposition of property on the day on which the settlement occurs,
(l) the taxpayer’s capital gains and losses from dispositions of property (other than taxable Canadian property) while the taxpayer is a non-resident are deemed to be nil,
(m) where an election is made by a taxpayer under paragraph 104(21.4)(d) of the Act, as enacted by subsection 78(23), subsection 104(21.5) of the Act, as enacted by subsection 78(23), subsection 130.1(4.4) or (4.5) of the Act, as enacted by subsection 127(4), or subsection 131(1.7) or (1.9) of the Act, as enacted by subsection 128(2), for a year, the portion of the taxpayer’s net capital gains for the year that are to be treated as being in respect of capital gains realized on dispositions of property that occurred in a particular period in the year is that proportion of those net capital gains that the number of days in the particular period is of the number of days in the year,
(n) where the election made under paragraph 104(21.4)(d) of the Act, as enacted by subsection 78(23), or subsection 104(21.5) of the Act, as enacted by subsection 78(23), for the year was made by a personal trust, the portion of the taxpayer’s net capital gains for the year that are to be treated as being in respect of capital gains realized on dispositions of property that occurred in a particular period in the year is that proportion of those net capital gains that the number of days in the particular period is of the number of days that are in all periods in the year in which a net gain was realized,
(o) where an amount is designated under subsection 104(21) of the Act in respect of a beneficiary by a trust in respect of the net taxable capital gains of the trust for a taxation year of the trust and the trust does not elect under paragraph 104(21.4)(d) of the Act, as enacted by subsection 78(23), for the year, the deemed gains of the beneficiary referred to in subsection 104(21.4) of the Act, as enacted by subsection 78(23), are deemed to have been realized in each period in the year in a proportion that is equal to the same proportion that the net capital gains of the trust realized by the trust in that period is of all the net capital gains realized by the trust in the year,
(p) where in the course of administering the estate of a deceased taxpayer, a capital loss from a disposition of property by the legal representative of a deceased taxpayer is deemed under paragraph 164(6)(c) of the Act to be a capital loss of the deceased taxpayer from the disposition of property by the taxpayer in the taxpayer’s last taxation year and not to be a capital loss of the estate, the capital loss is deemed to be from the disposition of a property by the taxpayer immediately before the taxpayer’s death,
(q) each capital gain referred to in paragraph 104(21.4)(a) of the Act, as enacted by subsection 78(23), in respect of a beneficiary, shall be determined as if that paragraph were read without reference to subparagraph 104(21.4)(a)(ii) of the Act,
(r) where no capital gains or losses are realized in a period, the amount of net capital gains or losses for that period is deemed to be nil,
(s) where a net amount is included as a capital gain of a taxpayer for a taxation year because of the granting of an option under subsection 49(1) of the Act, the net amount is deemed to be a capital gain of the taxpayer from a disposition of property on the day on which the option was granted,
(t) where a net amount is included as a capital gain of a corporation for its taxation year under subsection 49(2) of the Act because of the expiration of an option that was granted by the corporation, the net amount is deemed to be a capital gain of the corporation from a disposition of property on the day on which the option expired,
(u) where a net amount is included as a capital gain of a trust for its taxation year under subsection 49(2.1) of the Act because of the expiration of an option that was granted by the trust, the net amount is deemed to be a capital gain of the trust from a disposition of property on the day on which the option expired, and
(v) where a net amount is included as a capital gain of a taxpayer for a taxation year because of subsection 49(3), (3.01) or (3.1) of the Act, the net amount is deemed to be a capital gain of the taxpayer from a disposition of property on the day on which the option was exercised.
(6) Subsection (2) applies to the 2000 and subsequent taxation years except that
(a) for a taxation year of a taxpayer that includes February 28, 2000 or October 17, 2000, the reference to the fraction “1/4” in paragraph 38(a.1) of the Act, as enacted by subsection (2), shall be read as a reference to 1/2 of the fraction in paragraph 38(a) of the Act, as enacted by subsection (1), that applies to the taxpayer for the year;
(a.1) for a taxation year that began after February 28, 2000 and ended before October 17, 2000, the reference to the fraction “1/4” in paragraph 38(a.1) of the Act, as enacted by subsection (2), shall be read as a reference to the fraction “1/3”; and
(b) for a taxation year that ended before February 28, 2000, the reference to the fraction “1/4” in paragraph 38(a.1) of the Act, as enacted by subsection (2), shall be read as a reference to the fraction “3/8”.
(7) Subsection (3) applies to gifts made by a taxpayer after February 27, 2000 except that
(a) if the taxpayer’s taxation year began after February 28, 2000 and ended before October 17, 2000, the reference to the fraction “1/4” in paragraph 38(a.2) of the Act, as enacted by subsection (3), shall be read as a reference to the fraction “1/3”; and
(b) if the taxpayer’s taxation year includes February 28, 2000 or October 17, 2000, the reference to the fraction “1/4” in paragraph 38(a.2) of the Act, as enacted by subsection (3), shall be read as a reference to 1/2 of the fraction in paragraph 38(a) of the Act, as enacted by subsection (1), that applies to the taxpayer for the year.
- Date modified: