Budget Implementation Act, 2009 (S.C. 2009, c. 2)
Full Document:
Assented to 2009-03-12
42. (1) The definition “qualifying trust” in subsection 127.4(1) of the Act is replaced by the following:
“qualifying trust”
« fiducie admissible »
“qualifying trust” for an individual in respect of a share means
(a) a trust governed by a registered retirement savings plan, under which the individual is the annuitant, that is not a spousal or common-law partner plan (in this definition having the meaning assigned by subsection 146(1)) in relation to another individual,
(b) a trust governed by a registered retirement savings plan, under which the individual or the individual’s spouse or common-law partner is the annuitant, that is a spousal or common-law partner plan in relation to the individual or the individual’s spouse or common-law partner, if the individual and no other person claims a deduction under subsection (2) in respect of the share, or
(c) a trust governed by a TFSA of which the individual is the holder;
(2) Subsection (1) applies to the 2001 and subsequent taxation years, except that the definition “qualifying trust” in subsection 127.4(1) of the Act, as enacted by subsection (1),
(a) shall, for taxation years before 2009, be read without reference to its paragraph (c); and
(b) if a taxpayer and a person have jointly elected under section 144 of the Modernization of Benefits and Obligations Act in respect of the 1998, 1999 or 2000 taxation year, applies to the taxpayer and the person in respect of that taxation year and subsequent taxation years.
43. (1) Section 128.3 of the Act is replaced by the following:
Marginal note:Former resident — replaced shares
128.3 If, in a transaction to which section 51, subparagraphs 85.1(1)(a)(i) and (ii), subsection 85.1(8) or section 86 or 87 applies, a person acquires a share (in this section referred to as the “new share”) in exchange for another share or equity in a SIFT wind-up entity (in this section referred to as the “old share”), for the purposes of section 119, subsections 126(2.21) to (2.23), 128.1(6) to (8), 180.1(1.4) and 220(4.5) and (4.6), the person is deemed not to have disposed of the old share, and the new share is deemed to be the same share as the old share.
(2) Subsection (1) applies after December 19, 2007.
44. (1) The portion of the definition “qualifying exchange” in subsection 132.2(2) of the Act before paragraph (a) is replaced by the following:
“qualifying exchange”
« échange admissible »
“qualifying exchange” means a transfer at any time (in this section referred to as the “transfer time”) of all or substantially all of the property of a mutual fund corporation (other than a SIFT wind-up corporation) or mutual fund trust to a mutual fund trust (in this section referred to as the “transferor” and “transferee”, respectively, and as the “funds”), if
(2) Subsection (1) applies after December 19, 2007.
45. (1) The portion of subsection 138(10) of the Act before paragraph (b) is replaced by the following:
Marginal note:Application of financial institution rules
(10) Notwithstanding sections 142.3, 142.4, 142.5 and 142.51, where in a taxation year an insurer (other than an insurer resident in Canada that does not carry on a life insurance business) carries on an insurance business in Canada and in a country other than Canada, in computing its income for the year from carrying on an insurance business in Canada,
(a) sections 142.3, 142.5 and 142.51 apply only in respect of property that is designated insurance property for the year in respect of the business; and
(2) Subsection 138(12) of the Act is amended by adding the following in alphabetical order:
“base year”
« année de base »
“base year” of a life insurer means the life insurer’s taxation year that immediately precedes its transition year;
“reserve transition amount”
« montant transitoire »
“reserve transition amount” of a life insurer, in respect of a life insurance business carried on by it in Canada in its transition year, is the positive or negative amount determined by the formula
A – B
where
- A
- is the maximum amount that the life insurer would be permitted to claim under subparagraph 138(3)(a)(i) (and that would be prescribed by section 1404 of the Regulations for the purpose of subparagraph 138(3)(a)(i)) as a policy reserve for its base year in respect of its life insurance policies in Canada if
(a) the generally accepted accounting principles that applied to the life insurer in valuing its assets and liabilities for its transition year had applied to it for its base year, and
(b) section 1404 of the Regulations were read in respect of the life insurer’s base year as it reads in respect of its transition year, and
- B
- is the maximum amount that the life insurer is permitted to claim under subparagraph 138(3)(a)(i) as a policy reserve for its base year;
“transition year”
« année transitoire »
“transition year” of a life insurer means the life insurer’s first taxation year that begins after September 2006;
(3) Section 138 of the Act is amended by adding the following after subsection (15):
Marginal note:Transition year income inclusion
(16) There shall be included in computing a life insurer’s income for its transition year from a life insurance business carried on by it in Canada in the transition year, the positive amount, if any, of the life insurer’s reserve transition amount in respect of that life insurance business.
Marginal note:Transition year income deduction
(17) There shall be deducted in computing a life insurer’s income for its transition year from a life insurance business carried on by it in Canada in the transition year, the absolute value of the negative amount, if any, of the life insurer’s reserve transition amount in respect of that life insurance business.
Marginal note:Transition year income inclusion reversal
(18) If an amount has been included under subsection (16) in computing a life insurer’s income for its transition year from a life insurance business carried on by it in Canada, there shall be deducted in computing the life insurer’s income, for each particular taxation year of the life insurer that ends after the beginning of the transition year, from that life insurance business, the amount determined by the formula
A × B/1825
where
- A
- is the amount included under subsection (16) in computing the life insurer’s income for the transition year from that life insurance business; and
- B
- is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.
Marginal note:Transition year income deduction reversal
(19) If an amount has been deducted under subsection (17) in computing a life insurer’s income for its transition year from a life insurance business carried on by it in Canada, there shall be included in computing the life insurer’s income, for each particular taxation year of the life insurer that ends after the beginning of the transition year, from that life insurance business, the amount determined by the formula
A × B/1825
where
- A
- is the amount deducted under subsection (17) in computing the life insurer’s income for the transition year from that life insurance business; and
- B
- is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.
Marginal note:Winding-up
(20) If a life insurer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the “parent”), and immediately after the winding-up the parent carries on a life insurance business, in applying subsections (18) and (19) in computing the income of the life insurer and of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the “start day”) on which assets of the life insurer were distributed to the parent on the winding-up,
(a) the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the life insurer in respect of
(i) any amount included under subsection (16) or deducted under subsection (17) in computing the life insurer’s income from a life insurance business for its transition year,
(ii) any amount deducted under subsection (18) or included under subsection (19) in computing the life insurer’s income from a life insurance business for a taxation year of the life insurer that begins before the start day, and
(iii) any amount that would — in the absence of this subsection and if the life insurer existed and carried on a life insurance business on each day that is the start day or a subsequent day and on which the parent carries on a life insurance business — be required to be deducted or included, in respect of any of those days, under subsection (18) or (19) in computing the life insurer’s income from a life insurance business; and
(b) the life insurer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (18) and (19) without reference to the start day and days after the start day.
Marginal note:Amalgamations
(21) If there is an amalgamation (within the meaning assigned by subsection 87(1)) of a life insurer with one or more other corporations to form one corporation (referred to in this subsection as the “new corporation”), and immediately after the amalgamation the new corporation carries on a life insurance business, in applying subsections (18) and (19) in computing the income of the new corporation for particular taxation years of the new corporation that begin on or after the day on which the amalgamation occurred, the new corporation is, on and after that day, deemed to be the same corporation as and a continuation of the life insurer in respect of
(a) any amount included under subsection (16) or deducted under subsection (17) in computing the life insurer’s income from a life insurance business for its transition year;
(b) any amount deducted under subsection (18) or included under subsection (19) in computing the life insurer’s income from a life insurance business for a taxation year that begins before the day on which the amalgamation occurred; and
(c) any amount that would — in the absence of this subsection and if the life insurer existed and carried on a life insurance business on each day that is the day on which the amalgamation occurred or a subsequent day and on which the new corporation carries on a life insurance business — be required to be deducted or included, in respect of any of those days, under subsection (18) or (19) in computing the life insurer’s income from a life insurance business.
Marginal note:Application of subsection (23)
(22) Subsection (23) applies if, at any time, a life insurer (referred to in this subsection and subsection (23) as the “transferor”) transfers, to a corporation (referred to in this subsection and subsection (23) as the “transferee”) that is related to the transferor, property in respect of a life insurance business carried on by the transferor in Canada (referred to in this subsection and subsection (23) as the “transferred business”) and
(a) subsection 138(11.5) or (11.94) applies to the transfer; or
(b) subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee carries on a life insurance business.
Marginal note:Transfer of life insurance business
(23) If this subsection applies in respect of the transfer, at any time, of property
(a) the transferee is, at and after that time, deemed to be the same corporation as and a continuation of the transferor in respect of
(i) any amount included under subsection (16) or deducted under subsection (17) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,
(ii) any amount deducted under subsection (18) or included under subsection (19) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business, and
(iii) any amount that would — in the absence of this subsection and if the transferor existed and carried on a life insurance business on each day that includes that time or is a subsequent day and on which the transferee carries on a life insurance business — be required to be deducted or included, in respect of any of those days, under subsection (18) or (19) in computing the transferor’s income that can reasonably be attributed to the transferred business; and
(b) in determining, in respect of the day that includes that time or any subsequent day, any amount that is required under subsection (18) or (19) to be deducted or included in computing the transferor’s income for each particular taxation year from the transferred business, the description of A in the formulas in those subsections is deemed to be nil.
Marginal note:Ceasing to carry on business
(24) If at any time a life insurer ceases to carry on all or substantially all of a life insurance business (referred to in this subsection as the “discontinued business”), and none of subsections (20) to (22) apply,
(a) there shall be deducted, in computing the life insurer’s income from the discontinued business for the life insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula
A – B
where
- A
- is the amount included under subsection (16) in computing the life insurer’s income from the discontinued business for its transition year, and
- B
- is the total of all amounts each of which is an amount deducted under subsection (18) in computing the life insurer’s income from the discontinued business for a taxation year that began before that time; and
(b) there shall be included, in computing the life insurer’s income from the discontinued business for the life insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula
C – D
where
- C
- is the amount deducted under subsection (17) in computing the life insurer’s income from the discontinued business for its transition year, and
- D
- is the total of all amounts each of which is an amount included under subsection (19) in computing the life insurer’s income from the discontinued business for a taxation year that began before that time.
Marginal note:Ceasing to exist
(25) If at any time a life insurer that carried on a life insurance business ceases to exist (otherwise than as a result of a winding-up or amalgamation described in subsection (20) or (21)), for the purposes of subsection (24), the life insurer is deemed to have ceased to carry on the life insurance business at the earlier of
(a) the time (determined without reference to this subsection) at which the life insurer ceased to carry on the life insurance business, and
(b) the time that is immediately before the end of the last taxation year of the life insurer that ended at or before the time at which the life insurer ceased to exist.
(4) Subsections (1) to (3) apply to taxation years that begin after September 2006.
- Date modified: