Budget Implementation Act, 2004, No. 2 (S.C. 2005, c. 19)
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Assented to 2005-05-13
PART 3AMENDMENTS TO THE INCOME TAX ACT AND CERTAIN OTHER ACTS AS A CONSEQUENCE AND A COORDINATING AMENDMENT
R.S., c. 1 (5th Supp.)Income Tax Act
46. (1) Subsection 211.1(2) of the Act is replaced by the following:
Marginal note:Taxable Canadian life investment income
(2) For the purposes of this Part, the taxable Canadian life investment income of a life insurer for a taxation year is the amount, if any, by which its Canadian life investment income for the year exceeds the total of its Canadian life investment losses for the ten taxation years immediately preceding the year, to the extent that those losses were not deducted in computing its taxable Canadian life investment income for any preceding taxation year.
(2) Subsection (1) applies in respect of losses that arise in taxation years that end after March 22, 2004.
47. (1) The Act is amended by adding the following after section 218.2:
PART XIII.2NON-RESIDENT INVESTORS IN CANADIAN MUTUAL FUNDS
Marginal note:Definitions
218.3 (1) The following definitions apply in this Part.
“assessable distribution”
« distribution déterminée »
“assessable distribution”, in respect of a Canadian property mutual fund investment, means the portion of any amount that is paid or credited, by the mutual fund that issued the investment, to a non-resident investor who holds the investment, and that is not otherwise subject to tax under Part I or Part XIII.
“Canadian property mutual fund investment”
« placement collectif en biens canadiens »
“Canadian property mutual fund investment” means a share of the capital stock of a mutual fund corporation, or a unit of a mutual fund trust, if
(a) the share or unit is listed on a prescribed stock exchange; and
(b) more than 50% of the fair market value of the share or unit is attributable to one or more properties each of which is real property in Canada, a Canadian resource property or a timber resource property.
“Canadian property mutual fund loss”
« perte collective en biens canadiens »
“Canadian property mutual fund loss” — of a non-resident investor for a taxation year for which the non-resident investor has filed, on or before their filing-due date for the taxation year, a return of income under this Part in prescribed form, in respect of a Canadian property mutual fund investment — means the lesser of
(a) the non-resident investor’s loss (for greater certainty as determined under section 40) for the taxation year from the disposition of the Canadian property mutual fund investment, and
(b) the total of all assessable distributions that were paid or credited on the Canadian property mutual fund investment after the non-resident investor last acquired the investment and at or before the time of the disposition.
“non-resident investor”
« investisseur non résident »
“non-resident investor” means a non-resident person or a partnership other than a Canadian partnership.
“unused Canadian property mutual fund loss”
« perte collective en biens canadiens inutilisée »
“unused Canadian property mutual fund loss”, of a non-resident investor for a taxation year, means the portion of the total of the non-resident investor’s Canadian mutual fund property losses for preceding taxation years that has neither reduced under subsection (3) the amount of tax payable, nor increased under subsection (5) the amount of a refund of tax paid, under this Part for any preceding taxation year.
Marginal note:Tax payable
(2) If at any time a person (referred to in this section as the “payer”) pays or credits, to a non-resident investor who holds a Canadian property mutual fund investment, an amount as, on account of, in lieu of payment of or in satisfaction of, an assessable distribution,
(a) the non-resident investor is deemed for the purposes of this Act, other than section 150, to have disposed at that time, for proceeds equal to the amount of the assessable distribution, of a property
(i) that is a taxable Canadian property the adjusted cost base of which to the non-resident investor immediately before that time is nil, and
(ii) that is in all other respects identical to the Canadian property mutual fund investment;
(b) the non-resident investor is liable to pay an income tax of 15% on the amount of any gain (for greater certainty as determined under section 40) from the disposition; and
(c) the payer shall, notwithstanding any agreement or law to the contrary,
(i) deduct or withhold 15% from the amount paid or credited,
(ii) immediately remit that amount to the Receiver General on behalf of the non-resident investor on account of the tax, and
(iii) submit with the remittance a statement in prescribed form.
Marginal note:Use of losses
(3) If a non-resident investor files, on or before their filing-due date for a taxation year, a return of income under this Part in prescribed form for the taxation year, the non-resident investor is liable, instead of paying tax under paragraph (2)(b) in respect of any amount paid or credited in the taxation year, to pay an income tax of 15% for the taxation year on the amount, if any, by which
(a) the total of the non-resident investor’s gains under subsection (2) for the taxation year
exceeds
(b) the total of the non-resident investor’s Canadian property mutual fund losses for the year and the non-resident investor’s unused Canadian property mutual fund loss for the taxation year.
Marginal note:Deemed tax paid
(4) If a non-resident investor files, on or before their filing-due date for a taxation year, a return of income under this Part in prescribed form for the taxation year, any amount that is remitted to the Receiver General in respect of an assessable distribution paid or credited to the non-resident investor in the taxation year is deemed to have been paid on account of the non-resident investor’s tax under subsection (3) for the taxation year.
Marginal note:Refund
(5) The amount, if any, by which the total of all amounts paid on account of a non-resident investor’s tax under subsection (3) for a taxation year exceeds the non-resident investor’s liability for tax under this Part for the taxation year shall be refunded to the non-resident investor.
Marginal note:Excess loss — carryback
(6) If a non-resident investor files, on or before their filing-due date for a taxation year, a return of income under this Part in prescribed form for the taxation year, the Minister shall refund to the non-resident investor an amount equal to the lesser of
(a) the total amount of tax under this Part paid by the non-resident investor in each of the three preceding taxation years, to the extent that the Minister has not previously refunded that tax, and
(b) 15% of the amount, if any, by which
(i) the total of the non-resident investor’s Canadian property mutual fund losses for the taxation year and the non-resident investor’s unused Canadian property mutual fund loss for the taxation year
exceeds
(ii) the total of all assessable distributions paid or credited to the non-resident investor in the taxation year.
Marginal note:Ordering
(7) In applying subsection (6), amounts of tax are to be considered to be refunded in the order in which they were paid.
Marginal note:Partnership filing-due date
(8) For the purposes of this Part, the taxation year of a partnership is its fiscal period and the filing-due date for the taxation year is to be determined as if the partnership were a corporation.
Marginal note:Partnership — member resident in Canada
(9) If a non-resident investor is a partnership a member of which is resident in Canada, the portion of the tax paid by the partnership under this Part in respect of an assessable distribution paid or credited to the partnership in a particular taxation year of the partnership (or, if the partnership files a return of income for the particular taxation year in accordance with subsection (3), the portion of the tax paid by the partnership under that subsection for the taxation year) that can reasonably be considered to be the member’s share is deemed
(a) to be an amount paid on account of that member’s liability for tax under Part I for that member’s taxation year in which the particular taxation year of the partnership ends; and
(b) except for the purposes of this subsection, to be neither a tax paid on account of the partnership’s tax under this Part nor a tax paid by the partnership.
Marginal note:Provisions applicable
(10) Section 150.1, subsections 161(1), (7) and (11), sections 162 to 167, Division J of Part I, paragraph 214(3)(f), subsections 215(2), (3) and (6) and sections 227 and 227.1 apply to this Part with any modifications that the circumstances require.
(2) Subsection (1) applies to distributions paid or credited after 2004.
48. (1) Subsections 220(3.1) and (3.2) of the Act are replaced by the following:
Marginal note:Waiver of penalty or interest
(3.1) The Minister may, on or before the day that is ten calendar years after the end of a taxation year of a taxpayer (or in the case of a partnership, a fiscal period of the partnership) or on application by the taxpayer or partnership on or before that day, waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by the taxpayer or partnership in respect of that taxation year or fiscal period, and notwithstanding subsections 152(4) to (5), any assessment of the interest and penalties payable by the taxpayer or partnership shall be made that is necessary to take into account the cancellation of the penalty or interest.
Marginal note:Late, amended or revoked elections
(3.2) The Minister may extend the time for making an election or grant permission to amend or revoke an election if
(a) the election was otherwise required to be made by a taxpayer or by a partnership, under a prescribed provision, on or before a day in a taxation year of the taxpayer (or in the case of a partnership, a fiscal period of the partnership); and
(b) the taxpayer or the partnership applies, on or before the day that is ten calendar years after the end of the taxation year or the fiscal period, to the Minister for that extension or permission.
(2) Subsection 220(3.1) of the Act, as enacted by subsection (1), applies after 2004 except that if a taxpayer or a partnership has, before 2005, applied to the Minister of National Revenue under subsection 220(3.1) of the Act in respect of a taxation year or fiscal period, that subsection is to be read in respect of that taxation year or fiscal period as follows:
(3.1) The Minister may waive or cancel all or any portion of any penalty or interest otherwise payable under this Act by a taxpayer or partnership in respect of a taxation year or fiscal period, as the case may be, and notwithstanding subsections 152(4) to (5), any assessment of the interest and penalties payable by the taxpayer or partnership shall be made that is necessary to take into account the cancellation of the penalty or interest.
(3) Subsection 220(3.2) of the Act, as enacted by subsection (1), applies in respect of applications made after 2004.
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