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Budget Implementation Act, 2006 (S.C. 2006, c. 4)

Full Document:  

Assented to 2006-06-22

PART 2R.S., c. 1 (5th Supp.)AMENDMENTS TO THE INCOME TAX ACT

  • 65. (1) The description of C in subsection 118.61(1) of the Act is replaced by the following:

    C
    is the lesser of the value of B and the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.01, 118.3 and 118.7);

  • (2) Paragraph 118.61(2)(b) of the Act is replaced by the following:

    • (b) the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.01, 118.3 and 118.7).

  • (3) Section 118.61 of the Act is amended by adding the following after subsection (3):

    • Marginal note:Change of Appropriate Percentage

      (4) For the purpose of determining the amount that may be deducted under subsection (2) in computing an individual’s tax payable for a taxation year, in circumstances where the appropriate percentage for the taxation year is different from the appropriate percentage for the preceding taxation year, the individual’s unused tuition fee and education tax credit at the end of the preceding taxation year is deemed to be the amount determined by the formula

      A/B × C

      where

      A
      is the appropriate percentage for the current taxation year;
      B
      is the appropriate percentage for the preceding taxation year; and
      C
      is the amount that would be the individual’s unused tuition and education tax credits at the end of the preceding taxation year if this section were read without reference to this subsection.

  • (4) Subsection (1) applies to the 2002 and subsequent taxation years except that, for taxation years that are after 2001 and before 2005, the description of C in subsection 118.61(1) of the Act, as enacted by subsection (1), shall be read as follows:

    C
    is the lesser of the value of B and the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.3 and 118.7);

  • (5) Subsection (2) applies to the 2002 and subsequent taxation years except that, for taxation years that are after 2001 and before 2005, paragraph 118.61(2)(b) of the Act, as enacted by subsection (2), shall be read as follows:

    • (b) the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.3 and 118.7).

  • (6) Subsection (3) applies to the 2005 and subsequent taxation years.

  • 66. (1) Subparagraph (ii) of the description of A in paragraph 118.81(a) of the Act is replaced by the following:

    • (ii) the amount determined by the formula

      C × D

      where

      C
      is the appropriate percentage for the taxation year, and
      D
      is $5,000.

  • (2) The description of B in paragraph 118.81(a) of the Act is replaced by the following:

    B
    is the amount that would be the person’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under any of sections 118, 118.01, 118.3, 118.61 and 118.7), and

  • (3) Subsections (1) and (2) apply to the 2005 and subsequent taxation years.

  • 67. (1) Subparagraph 118.91(b)(i) of the Act is replaced by the following:

    • (i) such of the deductions permitted under subsection 118(3) and sections 118.01, 118.1, 118.2, 118.5, 118.6, 118.62 and 118.7 as can reasonably be considered wholly applicable, and

  • (2) Subsection (1) applies to the 2005 and subsequent taxation years.

  • 68. (1) Sections 118.92 to 118.94 of the Act are replaced by the following:

    Marginal note:Ordering of credits

    118.92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsection 118(3) and sections 118.01, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62 and 121.

    Marginal note:Credits in separate returns

    118.93 Where a separate return of income with respect to a taxpayer is filed under subsection 70(2), 104(23) or 150(4) for a particular period and another return of income under this Part with respect to the taxpayer is filed for a period ending in the calendar year in which the particular period ends, for the purpose of computing the tax payable under this Part by the taxpayer in those returns, the total of all deductions claimed in all those returns under any of subsection 118(3) and sections 118.01 to 118.7 and 118.9 shall not exceed the total that could be deducted under those provisions for the year with respect to the taxpayer if no separate returns were filed under subsections 70(2), 104(23) and 150(4).

    Marginal note:Tax payable by non-residents (credits restricted)

    118.94 Sections 118, 118.01 and 118.2, subsections 118.3(2) and (3) and sections 118.6, 118.8 and 118.9 do not apply for the purpose of computing the tax payable under this Part for a taxation year by an individual who at no time in the year is resident in Canada unless all or substantially all of the individual’s income for the year is included in computing the individual’s taxable income earned in Canada for the year.

  • (2) Subsection (1) applies to the 2005 and subsequent taxation years.

  • 69. (1) Paragraph 118.95(a) of the Act is replaced by the following:

    • (a) such of the deductions as the individual is entitled to under subsection 118(3) and sections 118.01, 118.1, 118.2, 118.5, 118.6, 118.62 and 118.7 as can reasonably be considered wholly applicable to the taxation year, and

  • (2) Subsection (1) applies to the 2005 and subsequent taxation years.

  • 70. (1) Paragraph (a) of the description of A in subsection 122.51(2) of the Act is replaced by the following:

    • (a) $1,000, and

  • (2) Paragraph (b) of the description of B in subsection 122.51(2) of the Act is replaced by the following:

    • (b) $21,663.

  • (3) Subsection (1) applies to the 2006 and subsequent taxation years.

  • (4) Subsection (2) applies to the 2005 and subsequent taxation years.

  • 71. (1) The portion of the description of N in the description of M in subsection 122.61(1) of the Act before paragraph (a) is replaced by the following:

    N
    is the product obtained by multiplying $2,300 by the number of qualified dependants in respect of whom both

  • (2) The description of P in the description of M in subsection 122.61(1) of the Act is replaced by the following:

    P
    is 4% (or where the person is an eligible individual in respect of only one qualified dependant included in the description of N at the beginning of the month, 2%) of the amount determined for the description of O,

  • (3) Subsections (1) and (2) apply in respect of overpayments deemed to arise during months that are after June 2006.

  • 72. (1) Subsections 123.2(2) and (3) of the Act are replaced by the following:

    • Marginal note:Specified percentage

      (2) The specified percentage of a corporation for a taxation year is that proportion of 4% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year.

  • (2) Section 123.2 of the Act is repealed.

  • (3) Subsection (2) applies to taxation years that begin after 2007.

  • 73. (1) The definition “general rate reduction percentage” in subsection 123.4(1) of the Act is replaced by the following:

    “general rate reduction percentage”

    « pourcentage de réduction du taux général »

    “general rate reduction percentage” of a corporation for a taxation year is the total of

    • (a) that proportion of 7% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year,

    • (b) that proportion of 7.5% that the number of days in the taxation year that are in 2008 is of the number of days in the taxation year,

    • (c) that proportion of 8% that the number of days in the taxation year that are in 2009 is of the number of days in the taxation year, and

    • (d) that proportion of 9% that the number of days in the taxation year that are after 2009 is of the number of days in the taxation year.

  • (2) The portion of paragraph (a) of the definition “full rate taxable income” in subsection 123.4(1) of the Act before subparagraph (ii) is replaced by the following:

    • (a) if the corporation is not a corporation described in paragraph (b) or (c) for the year, the amount by which the corporation’s taxable income for the year (or, for greater certainty, if the corporation is non-resident, its taxable income earned in Canada for the year) exceeds the total of

      • (i) if an amount is deducted under subsection 125.1(1) from the corporation’s tax otherwise payable under this Part for the year, the amount obtained by dividing the amount so deducted by the corporation’s general rate reduction percentage for the taxation year,

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