Budget Implementation Act, 2009 (S.C. 2009, c. 2)
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Assented to 2009-03-12
PART 1AMENDMENTS IN RESPECT OF INCOME TAX
C.R.C., c. 945Income Tax Regulations
111. (1) Subsection 5906(2) of the Regulations is replaced by the following:
(2) For the purposes of subsection (1), the expression “permanent establishment” has:
(a) if the expression is given a particular meaning in a tax treaty with a country, the meaning assigned by that tax treaty with respect to a business carried on in that country; and
(b) in any other case, the meaning that would be assigned by subsection 400(2) if that subsection were read without reference to its paragraph (e.1).
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
112. (1) Subsection 5907(11) of the Regulations is replaced by the following:
(11) For the purposes of this Part, a sovereign state or other jurisdiction is a “designated treaty country” for a taxation year of a foreign affiliate of a corporation if Canada has entered into a comprehensive agreement or convention for the elimination of double taxation on income, or a comprehensive tax information exchange agreement, in respect of that sovereign state or jurisdiction, that has entered into force and has effect for that taxation year, but any territory, possession, department, dependency or area of that sovereign state or jurisdiction to which that agreement or convention does not apply is not considered to be part of that sovereign state or jurisdiction for the purpose of determining whether it is a designated treaty country.
(2) Section 5907 of the Regulations is further amended by adding the following after subsection (11.1):
(11.11) For the purpose of applying subsection (11) in respect of a foreign affiliate of a corporation, where a comprehensive tax information exchange agreement enters into force on a particular day, the agreement is deemed to enter into force and to come into effect on the first day of the foreign affiliate’s taxation year that includes the particular day.
(3) Subsections (1) and (2) apply after 2007.
113. (1) Paragraphs 7305.1(a) and (b) of the Regulations are replaced by the following:
(a) if a taxpayer is employed in a taxation year by a particular person principally in selling or leasing automobiles and an automobile is made available in the year to the taxpayer or a person related to the taxpayer by the particular person or a person related to the particular person, 21 cents; and
(b) in any other case, 24 cents.
(2) Subsection (1) applies to taxation years that end after 2007.
114. (1) Paragraph 7306(a) of the Regulations is replaced by the following:
(a) the product of 46 cents multiplied by the number of those kilometres;
(2) Subsection (1) applies to kilometres driven after 2007.
115. (1) Section 8308.1 of the Regulations is amended by adding the following after subsection (2):
Pension Credit — Tax Treaty
(2.1) For the purposes of applying subsection (2) in determining an individual’s pension credit for a calendar year with respect to an employer under a foreign plan, if any contributions made to, or benefits accruing under, the plan in respect of the individual and the calendar year benefit from the application of paragraph 8 of Article XVIII of the Canada-United States Tax Convention signed at Washington on September 26, 1980, or from the application of a similar provision in another tax treaty,
(a) subparagraph (2)(b)(ii) shall be read without reference to the words “was resident in Canada and”; and
(b) the portion of subsection (2) after subparagraph (b)(iv) shall be read as “the lesser of the money purchase limit for the year and 18% of the individual’s resident compensation from the employer for the year”.
(2) Subsection (1) applies in determining pension credits for the 2009 and subsequent calendar years.
116. (1) Section 8308.2 of the Regulations is replaced by the following:
8308.2 (1) For the purposes of the descriptions of B in the definitions “RRSP deduction limit” and “unused RRSP deduction room” in subsection 146(1) of the Act and the description of B in paragraph 204.2(1.1)(b) of the Act, there is prescribed in respect of an individual for a calendar year the lesser of the money purchase limit for the preceding calendar year (in this section referred to as the “service year”) and the amount determined by subsection (2), if the individual
(a) rendered services to an employer (excluding services that were primarily services rendered in Canada or services rendered in connection with a business carried on by the employer in Canada, or a combination of those services) throughout a period in the service year in which the individual was resident in Canada;
(b) became entitled, either absolutely or contingently, in the service year to benefits under a foreign plan (as defined in subsection 8308.1(1)) in respect of the services; and
(c) continued to be entitled at the end of the service year, either absolutely or contingently, to all or part of the benefits.
(2) The amount determined for the purpose of subsection (1) is,
(a) if the only benefits to which the individual became entitled in the service year under the foreign plan were provided under one or more money purchase provisions of the foreign plan, the total of all amounts each of which is the individual’s pension credit for the service year with respect to the employer under a money purchase provision of the foreign plan, determined
(i) as though the foreign plan were a registered pension plan,
(ii) without regard to any contributions made by the individual, and
(iii) if, under the laws of the country in which the foreign plan is established, any contributions made after the end of the service year are treated as having been made in the service year, as though those contributions were made in the service year and not when the contributions were actually made; and
(b) in any other case, the greater of
(i) the total that would be determined under paragraph (a) if the individual had not become entitled in the service year to any benefits under a defined benefit provision of the foreign plan, and
(ii) 10% of the portion of the individual’s resident compensation from the employer for the service year that is attributable to services rendered to the employer and included under paragraph (1)(a).
(2) Subsection (1) applies in determining prescribed amounts for the 2009 and subsequent calendar years except that in determining prescribed amounts for 2009, the amount of the money purchase limit for 2008 is deemed to be reduced by $600.
117. (1) Subsection 8506(7) of the Regulations and the heading before it are replaced by the following:
Special Rules for Minimum Amount
(7) The minimum amount for a member’s account under a money purchase provision of a registered pension plan for a calendar year is
(a) nil, if an individual who is either the member or the specified beneficiary of the member for the year in relation to the provision
(i) is alive at the beginning of the year, and
(ii) had not attained 71 years of age at the end of the preceding calendar year; and
(b) if paragraph (a) does not apply and the year is 2008, 75 per cent of the amount that would, in the absence of this subsection, be the minimum amount for the account for the year.
(2) Section 8506 of the Regulations is amended by adding the following after subsection (8):
Recontribution — Adjusted Minimum Amount for 2008
(9) If a contribution made by a member of a registered pension plan and credited to the member’s account under a money purchase provision of the plan complies with the conditions in subsection (10), the contribution
(a) is deemed to have been made in accordance with the plan as registered;
(b) is to be disregarded for the purposes of paragraph (2)(c.1); and
(c) is deemed to be an excluded contribution for the purposes of paragraph 8301(4)(a).
Conditions Referred to in Subsection (9)
(10) The conditions referred to in subsection (9) are as follows:
(a) the contribution is made in 2008;
(b) the contribution is designated for the purposes of this subsection in a manner acceptable to the Minister; and
(c) the amount of the contribution does not exceed the amount determined by the formula
A – B – C
where
- A
- is the lesser of
(i) the total of all amounts each of which is the amount of a retirement benefit (other than a retirement benefit permissible under any of paragraphs (1)(a) to (e)) paid from the plan in 2008 in respect of the account and included, because of paragraph 56(1)(a) of the Act, in computing the taxpayer’s income for the taxation year, and
(ii) the amount that would, in the absence of paragraph (7)(b), be the minimum amount for the account for 2008,
- B
- is the minimum amount for the account for 2008, and
- C
- is the total of all other contributions made by the member under the money purchase provision at or before the time of the contribution and designated for the purposes of this subsection.
(3) Contributions described in subsections 8506(9) and (10) of the Regulations, as enacted by subsection (2), that are made during the period that begins after 2008 and ends on the day that is 30 days after the day on which this Act is assented to (or such longer period as is acceptable to the Minister of National Revenue) are deemed for the purpose of subsection 8506(10) of the Regulations, as enacted by subsection (2), to have been made on December 31, 2008 and not when they were actually made, except that the amounts so deemed shall not exceed the amount that would be determined in respect of the account under paragraph 8506(10)(c) of the Regulations, as enacted by subsection (2), if the value of C in the formula in that paragraph were nil.
118. (1) Part XC of the Regulations is replaced by the following:
PART XCFINANCIAL INSTITUTIONS — PRESCRIBED ENTITIES AND PROPERTIES
Prescribed Trust not a Financial Institution
9000. For the purpose of paragraph (e) of the definition “financial institution” in subsection 142.2(1) of the Act, a trust is, at any particular time, a prescribed person if the following conditions are satisfied at that particular time:
(a) the trust is a related segregated fund trust (within the meaning assigned by paragraph 138.1(1)(a) of the Act);
(b) the trust is deemed, under paragraph 138.1(1)(a) of the Act, to have been created at a time that is not more than two years before that particular time; and
(c) the cost of the trustee’s interest (as determined by paragraph 138.1(1)(c) and (d) of the Act) in the trust does not exceed $5,000,000.
Prescribed Property not Mark-to-Market Property
9001. (1) In this section, “qualified small business corporation”, at any time, means a corporation in respect of which the following conditions are satisfied at that time:
(a) the corporation is a Canadian-controlled private corporation;
(b) the corporation either is an eligible corporation (as defined in subsection 5100(1)) or would be an eligible corporation if the definition “eligible corporation” in subsection 5100(1) were read without reference to its paragraph (e);
(c) the carrying value of the total assets of the corporation and all corporations related to it (determined in accordance with generally accepted accounting principles on a consolidated or combined basis, where applicable) does not exceed $50,000,000; and
(d) the number of employees of the corporation and all corporations related to it does not exceed 500.
(2) For the purpose of paragraph (e) of the definition “excluded property” in subsection 142.2(1) of the Act, a share of the capital stock of a corporation is a prescribed property of a taxpayer if
(a) immediately after the time at which the taxpayer acquired the share, the corporation was a qualified small business corporation, and
(i) the corporation continued to be a qualified small business corporation for one year after that time, or
(ii) the taxpayer could not reasonably expect at that time that the corporation would cease to be a qualified small business corporation within one year after that time; or
(b) the share was issued to the taxpayer in exchange for one or more shares of the capital stock of the corporation that were, at the time of the exchange, prescribed property of the taxpayer under this subsection.
Prescribed Property not Mark-to-Market Property
9002. (1) For the purposes of paragraph (e) of the definition “excluded property” in subsection 142.2(1) of the Act, and of subparagraph 142.6(4)(a)(ii) of the Act, a debt obligation held by a bank is a prescribed property of the bank if the obligation is
(a) an exposure to a designated country (within the meaning assigned by section 8006);
(b) a United Mexican States Collateralized Par Bond due 2019; or
(c) a United Mexican States Collateralized Discount Bond due 2019.
(2) For the purpose of paragraph (e) of the definition “excluded property” in subsection 142.2(1) of the Act, a share is a prescribed property of a taxpayer for a taxation year if
(a) the share is a lending asset of the taxpayer in the year; or
(b) the share was, immediately after its issuance, a share described in paragraph (e) of the definition “term preferred share” in subsection 248(1) of the Act, and the share would, at any time in the year, be a term preferred share if
(i) that definition were read without reference to the portion following paragraph (b), and
(ii) where the share was issued or acquired on or before June 28, 1982, it were issued or acquired after that day.
(3) For the purpose of paragraph (e) of the definition “excluded property” in subsection 142.2(1) of the Act, a share of the capital stock of a corporation that is held by a credit union is a prescribed property of the credit union for a taxation year if, throughout that taxation year,
(a) the corporation is a credit union; or
(b) credit unions hold
(i) shares of the corporation that give the credit unions more than 50% of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation, and
(ii) shares of the corporation having a fair market value of more than 50% of the fair market value of all the issued shares of the corporation.
Prescribed Payment Card Corporation Share not Mark-to-Market Property
9002.1 For the purpose of paragraph (b) of the definition “excluded property” in subsection 142.2(1) of the Act, a prescribed payment card corporation share of a taxpayer at any time means a share of the capital stock of a particular corporation if, at that time,
(a) the particular corporation is any one of the following
(i) MasterCard International Incorporated,
(ii) MasterCard Incorporated, or
(iii) Visa Inc.; and
(b) the share
(i) is of a class of shares that is not listed on a stock exchange,
(ii) is not convertible into or exchangeable for a share of the class of the capital stock of a corporation that is listed on a stock exchange, and
(iii) was issued by the particular corporation to the taxpayer or to a person related to the taxpayer.
Prescribed Securities Exchange Investment not Mark-to-Market Property
9002.2 For the purpose of paragraph (c) of the definition “excluded property” in subsection 142.2(1) of the Act, a prescribed securities exchange investment of a taxpayer at any time means a share of the capital stock of a corporation if, at that time, the corporation is not a public corporation and is
(a) The Toronto Stock Exchange Inc.;
(b) TSX Inc.;
(c) TSX Group Inc.;
(d) Bourse de Montréal Inc.; or
(e) Canadian Venture Exchange Inc.
Significant Interest in a Corporation
9003. For the purpose of paragraph 142.2(3)(c) of the Act, a share described in paragraph 9002(2)(b) is prescribed in respect of all taxpayers.
Financing Arrangement not a Specified Debt Obligation
9004. For the purpose of paragraph (c) of the definition “specified debt obligation” in subsection 142.2(1) of the Act, a property is a prescribed property throughout a taxation year if
(a) the property is a direct financing lease, or any other financing arrangement, of a taxpayer that is reported as a loan in the taxpayer’s financial statements for the year prepared in accordance with generally accepted accounting principles; and
(b) in computing the taxpayer’s income for the year, an amount is deductible under paragraph 20(1)(a) of the Act in respect of the property that is the subject of the arrangement.
(2) Subsection 9002(3) of the Regulations is replaced by the following:
(3) For the purpose of paragraph (e) of the definition “excluded property” in subsection 142.2(1) of the Act, a share of the capital stock of a corporation that is held by a credit union is a prescribed property of the credit union for a taxation year if, throughout the period (referred to in this subsection as the “holding period”) in that taxation year during which the credit union holds the share
(a) the corporation is a credit union; or
(b) the following conditions are satisfied:
(i) credit unions hold shares of the corporation that
(A) give those credit unions at least 50% of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation, and
(B) have a fair market value of at least 50% of the fair market value of all the issued shares of the corporation,
(ii) the corporation is not controlled, directly or indirectly in any manner whatever, by any person that is not a credit union, and
(iii) the corporation would not be controlled by a person that is not a credit union if each share of the corporation that is not owned at any time in the holding period by a credit union were owned, at that time, by the person.
(3) Section 9002.2 of the Regulations is repealed.
(4) The portion of Part XC before section 9002.2 and section 9003 of the Regulations, as enacted by subsection (1), apply to taxation years that end after February 22, 1994, except that
(a) in applying sections 9001 and 9002 of the Regulations, as enacted by subsection (1), to taxation years that begin before October 2006, the references in those sections to “excluded property” are to be read as references to “mark-to-market property”; and
(b) in applying section 9002.1 of the Regulations, as enacted by subsection (1), to taxation years that begin before October 2006, the reference in that section to “paragraph (b) of the definition “excluded property”” is to be read as a reference to “paragraph (d.1) of the definition “mark-to-market property””.
(5) Section 9002.2 of the Regulations, as enacted by subsection (1), applies to taxation years that begin after 1998 and before 2008, except that in applying that section to taxation years that begin before October 2006, the reference in that section to “paragraph (c) of the definition “excluded property”” is to be read as a reference to “paragraph (d.2) of the definition “mark-to-market property””.
(6) Section 9004 of the Regulations, as enacted by subsection (1), applies to taxation years that begin after February 2, 2009.
(7) Subsection 9002(3) of the Regulations, as enacted by subsection (2), applies to taxation years that begin after February 2, 2009, except that
(a) it also applies to taxation years, of a taxpayer, that end after 2002 and begin before February 3, 2009, if the taxpayer so elects in writing and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year in which this Act is assented to; and
(b) if a taxpayer makes an election under paragraph (a), in applying subsection 9002(3) of the Regulations, as enacted by subsection (2), for taxation years of the taxpayer that begin before October 2006, the reference in that subsection to “excluded property” is to be read as a reference to “mark-to-market property”.
(8) Subsection (3) applies to taxation years that begin after 2007.
- Date modified: