Budget Implementation Act, 2006 (S.C. 2006, c. 4)
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Assented to 2006-06-22
PART 2R.S., c. 1 (5th Supp.)AMENDMENTS TO THE INCOME TAX ACT
63. (1) Paragraph 118.3(1)(a) of the Act is replaced by the following:
(a) an individual has one or more severe and prolonged impairments in physical or mental functions,
(2) The portion of subsection 118.3(1)(a.1) of the Act before subparagraph (i) is replaced by the following:
(a.1) the effects of the impairment or impairments are such that the individual’s ability to perform more than one basic activity of daily living is significantly restricted where the cumulative effect of those restrictions is equivalent to having a marked restriction in the ability to perform a basic activity of daily living or are such that the individual’s ability to perform a basic activity of daily living is markedly restricted or would be markedly restricted but for therapy that
(3) Paragraph 118.3(1)(a.2) of the Act is replaced by the following:
(a.2) in the case of an impairment in physical or mental functions the effects of which are such that the individual’s ability to perform a single basic activity of daily living is markedly restricted or would be so restricted but for therapy referred to in paragraph (a.1), a medical practitioner has certified in prescribed form that the impairment is a severe and prolonged impairment in physical or mental functions the effects of which are such that the individual’s ability to perform a basic activity of daily living is markedly restricted or would be markedly restricted, but for therapy referred to in paragraph (a.1), where the medical practitioner is a medical doctor or, in the case of
(i) a sight impairment, an optometrist,
(ii) a speech impairment, a speech-language pathologist,
(iii) a hearing impairment, an audiologist,
(iv) an impairment with respect to an individual’s ability in feeding or dressing themself, an occupational therapist,
(v) an impairment with respect to an individual’s ability in walking, an occupational therapist, or after February 22, 2005, a physiotherapist, and
(vi) an impairment with respect to an individual’s ability in mental functions necessary for everyday life, a psychologist,
(a.3) in the case of one or more impairments in physical or mental functions the effects of which are such that the individual’s ability to perform more than one basic activity of daily living is significantly restricted, a medical practitioner has certified in prescribed form that the impairment or impairments are severe and prolonged impairments in physical or mental functions the effects of which are such that the individual’s ability to perform more than one basic activity of daily living is significantly restricted and that the cumulative effect of those restrictions is equivalent to having a marked restriction in the ability to perform a single basic activity of daily living, where the medical practitioner is, in the case of
(i) an impairment with respect to the individual’s ability in feeding or dressing themself, or in walking, a medical doctor or an occupational therapist, and
(ii) in the case of any other impairment, a medical doctor,
(4) Section 118.3 of the Act is amended by adding the following after subsection (1):
Marginal note:Time spent on therapy
(1.1) For the purpose of paragraph 118.3(1)(a.1), in determining whether therapy is required to be administered at least three times each week for a total duration averaging not less than an average of 14 hours a week, the time spent on administering therapy
(a) includes only time spent on activities that require the individual to take time away from normal everyday activities in order to receive the therapy;
(b) in the case of therapy that requires a regular dosage of medication that is required to be adjusted on a daily basis, includes (subject to paragraph (d)) time spent on activities that are directly related to the determination of the dosage of the medication;
(c) in the case of a child who is unable to perform the activities related to the administration of the therapy as a result of the child’s age, includes the time, if any, spent by the child’s primary caregivers performing or supervising those activities for the child; and
(d) does not include time spent on activities related to dietary or exercise restrictions or regimes (even if those restrictions or regimes are a factor in determining the daily dosage of medication), travel time, medical appointments, shopping for medication or recuperation after therapy.
(5) Subsections (1) to (4) apply to the 2005 and subsequent taxation years.
64. (1) Subsection 118.4(1) of the Act is amended by adding the following after paragraph (b):
(b.1) an individual is considered to have the equivalent of a marked restriction in a basic activity of daily living only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual’s ability to perform more than one basic activity of daily living (including for this purpose, the ability to see) is significantly restricted, and the cumulative effect of those restrictions is tantamount to the individual’s ability to perform a basic activity of daily living being markedly restricted;
(2) Subparagraph 118.4(1)(c)(i) of the Act is replaced by the following:
(i) mental functions necessary for everyday life,
(3) Subsection 118.4(1) of the Act is amended by adding the following after paragraph (c):
(c.1) mental functions necessary for everyday life include
(i) memory,
(ii) problem solving, goal-setting and judgement (taken together), and
(iii) adaptive functioning;
(4) The portion of subsection 118.4(2) of the Act before paragraph (a) is replaced by the following:
Marginal note:Reference to medical practitioners, etc.
(2) For the purposes of sections 63, 64, 118.2, 118.3 and 118.6, a reference to an audiologist, dentist, medical doctor, medical practitioner, nurse, occupational therapist, optometrist, pharmacist, physiotherapist, psychologist, or speech-language pathologist is a reference to a person authorized to practise as such,
(5) Subsections (1) to (3) apply to the 2005 and subsequent taxation years.
(6) Subsection (4) applies to the 2004 and subsequent taxation years, except that in its application before February 23, 2005, the portion of subsection 118.4(2) of the Act before paragraph (a), as enacted by subsection (4), is to be read as follows:
(2) For the purposes of sections 63, 64, 118.2, 118.3 and 118.6, a reference to an audiologist, dentist, medical doctor, medical practitioner, nurse, occupational therapist, optometrist, pharmacist, psychologist or speech-language pathologist is a reference to a person authorized to practise as such,
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,
74. (1) The portion of subsection 125.1(1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Manufacturing and processing profits deductions
125.1 (1) There may be deducted from the tax otherwise payable under this Part by a corporation for a taxation year an amount equal to the corporation’s general rate reduction percentage for the taxation year (within the meaning assigned by subsection 123.4(1)) multiplied by the lesser of
(2) The portion of subsection 125.1(2) of the Act before the formula is replaced by the following:
Marginal note:Electrical energy and steam
(2) A corporation that generates electrical energy for sale, or produces steam for sale, in a taxation year may deduct from its tax otherwise payable under this Part for the year an amount equal to the corporation’s general rate reduction percentage for the taxation year (within the meaning assigned by subsection 123.4(1)) multiplied by the amount determined by the formula
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