Budget and Economic Statement Implementation Act, 2007 (S.C. 2007, c. 35)
Full Document:
Assented to 2007-12-14
43. (1) The portion of paragraph 127(5)(a) of the Act before clause (ii)(B) is replaced by the following:
(a) the total of
(i) the taxpayer’s investment tax credit at the end of the year in respect of property acquired before the end of the year, of the taxpayer’s apprenticeship expenditure for the year or a preceding taxation year, of the taxpayer’s child care space amount for the year or a preceding taxation year, of the taxpayer’s flow-through mining expenditure for the year or a preceding taxation year, of the taxpayer’s pre-production mining expenditure for the year or a preceding taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the year or at the end of a preceding taxation year, and
(ii) the lesser of
(A) the taxpayer’s investment tax credit at the end of the year in respect of property acquired in a subsequent taxation year, of the taxpayer’s apprenticeship expenditure for a subsequent taxation year, of the taxpayer’s child care space amount for a subsequent taxation year, of the taxpayer’s flow-through mining expenditure for a subsequent taxation year, of the taxpayer’s pre-production mining expenditure for a subsequent taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the subsequent taxation year to the extent that an investment tax credit was not deductible under this subsection for the subsequent taxation year, and
(2) Subsection 127(7) of the Act is replaced by the following:
Marginal note:Investment tax credit of testamentary trust
(7) If, in a particular taxation year of a taxpayer who is a beneficiary under a testamentary trust or under an inter vivos trust that is deemed to be in existence by section 143, an amount is determined in respect of the trust under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9) for its taxation year that ends in that particular taxation year, the trust may, in its return of income for its taxation year that ends in that particular taxation year, designate the portion of that amount that can, having regard to all the circumstances including the terms and conditions of the trust, reasonably be considered to be attributable to the taxpayer and was not designated by the trust in respect of any other beneficiary of the trust, and that portion shall be added in computing the investment tax credit of the taxpayer at the end of that particular taxation year and shall be deducted in computing the investment tax credit of the trust at the end of its taxation year that ends in that particular taxation year.
(3) The portion of subsection 127(8) of the Act before paragraph (a) is replaced by the following:
Marginal note:Investment tax credit of partnership
(8) Subject to subsections (28) and (28.1), where, in a particular taxation year of a taxpayer who is a member of a partnership, an amount would be determined in respect of the partnership, for its taxation year that ends in the particular taxation year, under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9), if
(4) Subparagraph 127(8.2)(b)(i) of the Act is amended by striking out the word “or” at the end of clause (A.1) and by adding the following after clause (A.1):
(A.2) an amount that would be the child care space amount in respect of a property of the partnership if the reference to “$10,000” in paragraph (a) of the definition “child care space amount” in subsection (9) were read as a reference to “$40,000” and paragraph (b) of that definition were read without reference to “25% of”, or
(5) Paragraph 127(8.31)(a) of the Act is replaced by the following:
(a) the total of all amounts each of which is an amount that would, if the partnership were a person and its fiscal period were its taxation year, be determined in respect of the partnership under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9) for a taxation year that is the fiscal period,
(6) Subsection 127(8.31) of the Act is amended by adding the word “and” at the end of subparagraph (b)(i), by striking out the word “and” at the end of subparagraph (b)(ii), and by repealing subparagraph (b)(iii).
(7) The definition “eligible apprentice” in subsection 127(9) of the Act is replaced by the following;
“eligible apprentice”
« apprenti admissible »
“eligible apprentice” means an individual who is employed in Canada in a trade prescribed in respect of a province or in respect of Canada, during the first twenty-four months of the individual’s apprenticeship contract registered with the province or Canada, as the case may be, under an apprenticeship program designed to certify or license individuals in the trade;
(8) Paragraph (a) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act is replaced by the following:
(a) that is a Canadian exploration expense incurred by a corporation after March 2007 and before 2009 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2009) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition “mineral resource” in subsection 248(1),
(9) Paragraphs (c) and (d) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act are replaced by the following:
(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2007 and before April 2008, and
(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2007 and before April 2008;
(10) The definition “investment tax credit” in subsection 127(9) of the Act is amended by adding the following after paragraph (a.4):
(a.5) the child care space amount of the taxpayer for the taxation year,
(11) Paragraph (e.1) of the definition “investment tax credit” in subsection 127(9) of the Act is amended by striking out the word “or” at the end of subparagraph (iv), by striking out the word “and” at the end of subparagraph (v) and by adding the following after subparagraph (v):
(vi) the amount of eligible salary and wages payable by the taxpayer to an eligible apprentice under paragraph (11.1)(c.4), to the extent that that reduction had the effect of reducing the amount of an apprenticeship expenditure of the taxpayer, or
(vii) the amount of an eligible child care space expenditure of the taxpayer under paragraph (11.1)(c.5), to the extent that that reduction had the effect of reducing the amount of a child care space amount of the taxpayer, and
(12) Paragraph (f.1) of the definition “specified percentage” in subsection 127(9) is replaced by the following:
(f.1) in respect of the repayment of government assistance, non-government assistance or a contract payment that reduced
(i) a qualified expenditure incurred by the taxpayer under any of subsections (18) to (20), 20%,
(ii) the amount of eligible salary and wages payable (by the taxpayer) to an eligible apprentice under paragraph (11.1)(c.4), 10%, or
(iii) the amount of the taxpayer’s eligible child care space expenditure under paragraph (11.1)(c.5), 25%;
(13) Subsection 127(9) of the Act is amended by adding the following definitions in alphabetical order:
“child care space amount”
« somme relative à une place en garderie »
“child care space amount” of a taxpayer for a taxation year is, if the provision of child care spaces is ancillary to one or more businesses of the taxpayer that are carried on in Canada in the taxation year and that do not otherwise include the provision of child care spaces, the lesser of
(a) the amount obtained when $10,000 is multiplied by the number of new child care spaces created by the taxpayer during the taxation year in a licensed child care facility for the benefit of children of the taxpayer’s employees, or of a combination of children of the taxpayer’s employees and other children; and
(b) 25% of the taxpayer’s eligible child care space expenditure for the taxation year;
“eligible child care space expenditure”
« dépense admissible relative à une place en garderie »
“eligible child care space expenditure” of a taxpayer for a taxation year is the total of all amounts each of which is an amount
(a) that is incurred by the taxpayer in the taxation year for the sole purpose of the creation of one or more new child care spaces in a licensed child care facility operated for the benefit of children of the taxpayer’s employees, or of a combination of children of the taxpayer’s employees and other children, and
(b) that is
(i) incurred by the taxpayer to acquire depreciable property of a prescribed class (other than a specified property) for use in the child care facility, or
(ii) incurred by the taxpayer to make a specified child care start-up expenditure in respect of the child care facility;
“specified child care start-up expenditure”
« dépense de démarrage déterminée pour la garde d’enfants »
“specified child care start-up expenditure” of a taxpayer in respect of a child care facility is an expenditure incurred by the taxpayer (other than to acquire a depreciable property) that is
(a) a landscaping cost incurred to create, at the child care facility, an outdoor play area for children,
(b) an architectural fee for designing the child care facility or a fee for advice on planning, designing and establishing the child care facility,
(c) a cost of construction permits in respect of the child care facility,
(d) an initial licensing or regulatory fee in respect of the child care facility, including fees for mandatory inspections,
(e) a cost of educational materials for children, or
(f) a similar amount incurred for the sole purpose of the initial establishment of the child care facility;
“specified property”
« bien déterminé »
“specified property” in respect of a taxpayer means any property that is
(a) a motor vehicle or any other motorized vehicle, or
(b) a property that is, or is located in, or attached to, a residence
(i) of the taxpayer,
(ii) an employee of the taxpayer,
(iii) a person who holds an interest in the taxpayer, or
(iv) a person related to a person referred to in any of subparagraphs (i) to (iii);
(14) Paragraph 127(11.1)(c.4) of the Act is replaced by the following:
(c.4) the amount of a taxpayer’s eligible salary and wages for a taxation year is deemed to be the amount of the taxpayer’s eligible salary and wages for the year otherwise determined less the amount of any government assistance or non-government assistance in respect of the eligible salary and wages for the year that, at the time of the filing of the taxpayer’s return of income for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive;
(c.5) the amount of a taxpayer’s eligible child care space expenditure for a taxation year is deemed to be the amount of the taxpayer’s eligible child care space expenditure for the taxation year otherwise determined less the amount of any government assistance or non-government assistance in respect of the eligible child care space expenditure for the taxation year that, at the time of the filing of the taxpayer’s return of income for the taxation year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive; and
(15) Subsection 127(11.2) of the Act is replaced by the following:
Marginal note:Time of expenditure and acquisition
(11.2) In applying subsections (5), (7) and (8), paragraphs (a), (a.1) and (a.5) of the definition “investment tax credit” in subsection (9) and section 127.1,
(a) certified property, qualified property and first term shared-use-equipment are deemed not to have been acquired, and
(b) expenditures incurred to acquire property described in subparagraph 37(1)(b)(i) or included in an eligible child care expenditure are deemed not to have been incurred
by a taxpayer before the property is considered to have become available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and 13(28)(d), and subparagraph (27.12)(b)(i).
(16) Section 127 of the Act is amended by adding the following after subsection (27):
Marginal note:Recapture of investment tax credit — child care space amount
(27.1) There shall be added to a taxpayer’s tax otherwise payable under this Part for a particular taxation year, the total of all amounts each of which is an amount determined under subsection (27.12) in respect of a disposition by the taxpayer in the particular taxation year of a property a percentage of the cost of which can reasonably be considered to have been included in the child care space amount of the taxpayer for a taxation year, if the property was acquired in respect of a child care space that was created at a time that is less than 60 months before the disposition.
Marginal note:Disposition
(27.11) For the purpose of subsection (27.1),
(a) if a particular child care space, in respect of which any amount is included in the child care space amount of a taxpayer or a partnership for a taxation year or a fiscal period, ceases at any particular time to be available, the child care space is, except where the child care space has been disposed of by the taxpayer or the partnership before the particular time, deemed to be a property
(i) disposed of by the taxpayer or the partnership, as the case maybe, at the particular time,
(ii) a percentage of the cost of which can reasonably be considered to be included in the child care space amount of the taxpayer or the partnership, as the case may be, for a taxation year or a fiscal period, and
(iii) acquired in respect of a child care space that was created at the time the child care space was created,
(b) child care spaces that cease to be available are deemed to so cease in reverse chronological order to their creation, and
(c) a property acquired by a taxpayer or a partnership in respect of a child care space is deemed to be disposed of by the taxpayer or the partnership, as the case maybe, in a disposition described in clause (27.12)(b)(ii)(B) if the property is leased by the taxpayer or the partnership to a lessee for any purpose or is converted to a use by the taxpayer or the partnership other than to a use for the child care space.
Marginal note:Amount of recapture
(27.12) For the purposes of subsection (27.1) and (27.11), the amount determined under this subsection in respect of a disposition of a property by a taxpayer or a partnership is,
(a) where the property disposed of is a child care space, the amount that can reasonably be considered to have been included under paragraph (a.5) of the definition “investment tax credit” in subsection (9) in respect of the taxpayer or partnership in respect of the child care space, and
(b) in any other case, the lesser of,
(i) the amount that can reasonably be considered to have been included under paragraph (a.5) of the definition “investment tax credit” in subsection (9) in respect of the taxpayer or partnership in respect of the cost of the property, and
(ii) 25% of
(A) if the property, or a part of the property, is disposed of to a person who deals at arm’s length with the taxpayer or the partnership, the proceeds of disposition of the property, or of the part of the property, and
(B) in any other case, the fair market value of the property or of the part of the property, at the time of the disposition.
(17) Section 127 of the Act is amended by adding the following after subsection (28):
Marginal note:Recapture of partnership’s investment tax credits — child care property
(28.1) For the purpose of computing the amount determined under subsection (8) in respect of a partnership at the end of a particular fiscal period of the partnership, there shall be deducted the total of all amounts, each of which is an amount determined under subsection (27.12) in respect of a disposition by the partnership in the particular fiscal period of a property a percentage of the cost of which can reasonably be considered to have been included in the child care space amount of the partnership for a fiscal period, if the property was acquired in respect of a child care space that was created at a time that is less than 60 months before the disposition.
(18) Subsection 127(30) of the Act is replaced by the following:
Marginal note:Addition to tax
(30) Where a taxpayer is a member of a partnership at the end of a fiscal period of the partnership, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxpayer’s taxation year in which that fiscal period ends the amount that can reasonably be considered to be the taxpayer’s share of the amount, if any, by which
(a) the total of
(i) the total of all amounts each of which is the lesser of the amounts described in paragraphs (28)(d) and (e) in respect of the partnership in respect of the fiscal period,
(ii) the total of all amounts each of which is the lesser of the amounts described in paragraphs (35)(c) and (d) in respect of the partnership in respect of the fiscal period, and
(iii) the total of all amounts each of which is an amount required by subsection (28.1) to be deducted in computing the amount determined in respect of the partnership in respect of the fiscal period under subsection (8),
exceeds
(b) the amount that would be determined in respect of the partnership under subsection (8) if that subsection were read without reference to subsections (28), (28.1), and (35).
(19) Subsections (1) to (5) and (15) to (18) apply on and after March 19, 2007.
(20) Subsection (6) applies to the 2007 and subsequent taxation years.
(21) Subsection (7) applies to taxation years ending on or after May 2, 2006.
(22) Subsections (8) and (9) apply to expenses renounced under agreements made after March 2007.
(23) Subsections (10) and (13) apply to expenditures incurred on and after March 19, 2007.
(24) Subsections (11), (12) and (14) apply to taxation years that end on or after May 2, 2006, except that subparagraph (e.1) (vii) of the definition “investment tax credit” in subsection 127(9) of the Act, as enacted by subsection (11), subparagraph (f.1)(iii) of the definition “specified percentage” in subsection 127(9) of the Act, as enacted by subsection (12), and paragraph 127(11.1)(c.5) of the Act, as enacted by subsection (14), apply to taxation years that end on or after March 19, 2007.
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