Budget Implementation Act, 2009 (S.C. 2009, c. 2)
Full Document:
Assented to 2009-03-12
52. (1) Paragraph (h) of the definition “regular eligible amount” in subsection 146.01(1) of the Act is replaced by the following:
(h) the total of the amount and all other eligible amounts received by the individual in the calendar year that includes the particular time does not exceed $25,000, and
(2) Paragraph (g) of the definition “supplemental eligible amount” in subsection 146.01(1) of the Act is replaced by the following:
(g) the total of the amount and all other eligible amounts received by the individual in the calendar year that includes the particular time does not exceed $25,000, and
(3) Subsections (1) and (2) apply to the 2009 and subsequent taxation years in respect of withdrawals made after January 27, 2009.
53. (1) Subparagraph (b)(ii) of the definition “qualifying arrangement” in subsection 146.2(1) of the Act is replaced by the following:
(ii) an annuity contract with an issuer that is a licensed annuities provider, or
(2) Subsections 146.2(3) to (9) of the Act are replaced by the following:
Marginal note:Paragraphs (2)(a), (b) and (e) not applicable
(3) The conditions in paragraphs (2)(a), (b) and (e) do not apply to the extent that they are inconsistent with subsection (4).
Marginal note:Using TFSA interest as security for a loan
(4) A holder of a TFSA may use the holder’s interest or, for civil law, right in the TFSA as security for a loan or other indebtedness if
(a) the terms and conditions of the indebtedness are terms and conditions that persons dealing at arm’s length with each other would have entered into; and
(b) it can reasonably be concluded that none of the main purposes for that use is to enable a person (other than the holder) or a partnership to benefit from the exemption from tax under this Part of any amount in respect of the TFSA.
Marginal note:TFSA
(5) If the issuer of an arrangement that is, at the time it is entered into, a qualifying arrangement files with the Minister, before March of the calendar year following the calendar year in which the arrangement was entered into, an election in prescribed form and manner to register the arrangement as a TFSA under the Social Insurance Number of the individual with whom the arrangement was entered into, the arrangement becomes a TFSA at the time the arrangement was entered into and ceases to be a TFSA at the earliest of the following times:
(a) the time at which the last holder of the arrangement dies;
(b) the time at which the arrangement ceases to be a qualifying arrangement; or
(c) the earliest time at which the arrangement is not administered in accordance with the conditions in subsection (2).
Marginal note:Trust not taxable
(6) No tax is payable under this Part by a trust that is governed by a TFSA on its taxable income for a taxation year, except that, if at any time in the taxation year, it carries on one or more businesses or holds one or more properties that are non-qualified investments (as defined in subsection 207.01(1)) for the trust, tax is payable under this Part by the trust on the amount that would be its taxable income for the taxation year if it had no incomes or losses from sources other than those businesses and properties, and no capital gains or capital losses other than from dispositions of those properties, and for that purpose,
(a) “income” includes dividends described in section 83; and
(b) the trust’s taxable capital gain or allowable capital loss from the disposition of a property is equal to its capital gain or capital loss, as the case may be, from the disposition.
Marginal note:Amount credited to a deposit
(7) An amount that is credited or added to a deposit that is a TFSA as interest or other income in respect of the TFSA is deemed not to be received by the holder of the TFSA solely because of that crediting or adding.
Marginal note:Trust ceasing to be a TFSA
(8) If an arrangement that governs a trust ceases, at a particular time, to be a TFSA,
(a) the trust is deemed
(i) to have disposed, immediately before the particular time, of each property held by the trust for proceeds equal to the property’s fair market value immediately before the particular time, and
(ii) to have acquired, at the particular time, each such property at a cost equal to that fair market value;
(b) the trust’s last taxation year that began before the particular time is deemed to have ended immediately before the particular time; and
(c) a taxation year of the trust is deemed to begin at the particular time.
Marginal note:Trust ceasing to be a TFSA on death of holder
(9) If an arrangement that governs a trust ceases to be a TFSA because of the death of the holder of the TFSA,
(a) the arrangement is deemed, for the purposes of subsections (6) and (8), any regulations made under subsection (13), the definition “trust” in subsection 108(1), paragraph 149(1)(u.2) and the definitions “qualified investment” and “non-qualified investment” in subsection 207.01(1), to continue to be a TFSA until, and to cease to be a TFSA immediately after, the exemption-end time, being in this subsection the earlier of
(i) the time at which the trust ceases to exist, and
(ii) the end of the first calendar year that begins after the holder dies;
(b) there shall be included in computing a taxpayer’s income for a taxation year the total of all amounts each of which is an amount determined by the formula
A – B
where
- A
- is the amount of a payment made out of or under the trust, in satisfaction of all or part of the taxpayer’s beneficial interest in the trust, in the taxation year, after the holder’s death and at or before the exemption-end time, and
- B
- is an amount designated by the trust not exceeding the lesser of
(i) the amount of the payment, and
(ii) the amount by which the fair market value of all of the property held by the trust immediately before the holder’s death exceeds the total of all amounts each of which is the value of B in respect of any other payment made out of or under the trust; and
(c) there shall be included in computing the trust’s income for its first taxation year, if any, that begins after the exemption-end time the amount determined by the formula
A – B
where
- A
- is the fair market value of all of the property held by the trust at the exemption-end time, and
- B
- is the amount by which the fair market value of all of the property held by the trust immediately before the holder’s death exceeds the total of all amounts each of which is the value of B in paragraph (b) in respect of a payment made out of or under the trust.
Marginal note:Annuity contract ceasing to be a TFSA
(10) If an annuity contract ceases, at a particular time, to be a TFSA,
(a) the holder of the TFSA is deemed to have disposed of the contract immediately before the particular time for proceeds equal to its fair market value immediately before the particular time;
(b) the contract is deemed to be a separate annuity contract issued and effected at the particular time otherwise than pursuant to or as a TFSA; and
(c) each person who has an interest or, for civil law, a right in the separate annuity contract at the particular time is deemed to acquire the interest at the particular time at a cost equal to its fair market value at the particular time.
Marginal note:Deposit ceasing to be a TFSA
(11) If a deposit ceases, at a particular time, to be a TFSA,
(a) the holder of the TFSA is deemed to have disposed of the deposit immediately before the particular time for proceeds equal to its fair market value immediately before the particular time; and
(b) each person who has an interest or, for civil law, a right in the deposit at the particular time is deemed to acquire the interest at the particular time at a cost equal to its fair market value at the particular time.
Marginal note:Arrangement is TFSA only
(12) An arrangement that is a qualifying arrangement at the time it is entered into is deemed not to be a retirement savings plan, an education savings plan, a retirement income fund or a disability savings plan.
Marginal note:Regulations
(13) The Governor in Council may make regulations requiring issuers of TFSAs to file information returns in respect of TFSAs.
(3) Subsections (1) and (2) apply to the 2009 and subsequent taxation years.
54. (1) Section 146.3 of the Act is amended by adding the following after subsection (1):
Marginal note:Adjusted minimum amount for 2008
(1.1) The minimum amount under a retirement income fund for 2008 is 75 per cent of the amount that would, in the absence of this subsection, be the minimum amount under the fund for the year.
Marginal note:Exceptions
(1.2) Subsection (1.1) does not apply to a retirement income fund
(a) for the purposes of subsections (5.1) and 153(1) and the definition “periodic pension payment” in section 5 of the Income Tax Conventions Interpretation Act; nor
(b) if the individual who was the annuitant under the fund on January 1, 2008 attained 70 years of age in 2007.
(2) Section 146.3 of the Act is amended by adding the following after subsection (6.2):
Marginal note:Deduction for post-death reduction in value
(6.3) If the last annuitant under a registered retirement income fund dies, there may be deducted in computing the annuitant’s income for the taxation year in which the annuitant dies an amount not exceeding the amount determined, after all amounts payable out of or under the fund have been paid, by the formula
A – B
where
- A
- is the total of all amounts each of which is
(a) the amount deemed by subsection (6) to have been received by the annuitant out of or under the fund,
(b) an amount (other than an amount described in paragraph (c)) received, after the death of the annuitant, by a taxpayer out of or under the fund and included, because of subsection (5), in computing the taxpayer’s income, or
(c) an amount that would, if the fund were a registered retirement savings plan, be a tax-paid amount (within the meaning assigned by subsection 146(1)) in respect of the fund; and
- B
- is the total of all amounts paid out of or under the fund after the death of the annuitant.
Marginal note:Subsection (6.3) not applicable
(6.4) Except where the Minister has waived in writing the application of this subsection with respect to all or any portion of the amount determined in subsection (6.3) in respect of a registered retirement income fund, that subsection does not apply if
(a) at any time after the death of the annuitant, a trust governed by the fund held an investment that is not a qualified investment; or
(b) the last payment out of or under the fund was made after the end of the year following the year in which the annuitant died.
(3) Subsection (2) applies in respect of a registered retirement income fund in respect of which the last payment out of the fund is made after 2008.
- Date modified: