Keeping Canada’s Economy and Jobs Growing Act (S.C. 2011, c. 24)
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Assented to 2011-12-15
PART 1AMENDMENTS TO THE INCOME TAX ACT AND RELATED REGULATIONS
R.S., c. 1 (5th Supp.)Income Tax Act
14. (1) Paragraph (f) of the definition “Canadian exploration expense” in subsection 66.1(6) of the Act is amended by striking out “or” at the end of subparagraph (v) and by replacing subparagraph (vi) with the following:
(v.1) any expense described in subparagraph (i), (iii) or (iv) in respect of the mineral resource, incurred before a new mine in the mineral resource comes into production in reasonable commercial quantities, that results in revenue or can reasonably be expected to result in revenue earned before the new mine comes into production in reasonable commercial quantities, except to the extent that the total of all such expenses exceeds the total of those revenues, or
(vi) any expense that may reasonably be considered to be related to a mine in the mineral resource that has come into production in reasonable commercial quantities or to be related to a potential or actual extension of the mine,
(2) Paragraph (g) of the definition “Canadian exploration expense” in subsection 66.1(6) of the Act is replaced by the following:
(g) any expense incurred by the taxpayer after November 16, 1978 for the purpose of bringing a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production, in reasonable commercial quantities and incurred before the new mine comes into production in such quantities, including an expense for clearing, removing overburden, stripping, sinking a mine shaft or constructing an adit or other underground entry, but not including any expense that results in revenue or can reasonably be expected to result in revenue earned before the new mine comes into production in reasonable commercial quantities, except to the extent that the total of all such expenses exceeds the total of those revenues,
(3) The definition “Canadian exploration expense” in subsection 66.1(6) of the Act is amended by adding the following after paragraph (g.1):
(g.2) any expense incurred by the taxpayer after March 21, 2011, that is
(i) a specified oil sands mine development expense, or
(ii) an eligible oil sands mine development expense,
(4) Paragraph (k.2) of the definition “Canadian exploration expense” in subsection 66.1(6) of the Act is repealed.
(5) Subsection 66.1(6) of the Act is amended by adding the following in alphabetical order:
“bitumen mine development project”
« projet de mise en valeur d’une mine de bitume »
“bitumen mine development project”, of a taxpayer, means an undertaking for the sole purpose of developing a new mine to extract and process tar sands from a mineral resource of the taxpayer to produce bitumen or a similar product;
“bitumen upgrading development project”
« projet de valorisation du bitume »
“bitumen upgrading development project”, of a taxpayer, means an undertaking for the sole purpose of constructing an upgrading facility to process bitumen or a similar feedstock (all or substantially all of which is from a mineral resource of the taxpayer) from a new mine to the crude oil stage or its equivalent;
“completion”
« achèvement »
“completion”, of a specified oil sands mine development project, means the first attainment of a level of average output, measured over a 60-day period, equal to at least 60% of the planned level of average daily output (as determined in paragraph (b) of the definition “specified oil sands mine development project”) for the specified oil sands mine development project;
“designated asset”
« bien désigné »
“designated asset”, in respect of an oil sands mine development project of a taxpayer, means a property that is a building, a structure, machinery or equipment and is, or is an integral and substantial part of,
(a) in the case of a bitumen mine development project,
(i) a crusher,
(ii) a froth treatment plant,
(iii) a primary separation unit,
(iv) a steam generation plant,
(v) a cogeneration plant, or
(vi) a water treatment plant, or
(b) in the case of a bitumen upgrading development project,
(i) a gasifier unit,
(ii) a vacuum distillation unit,
(iii) a hydrocracker unit,
(iv) a hydrotreater unit,
(v) a hydroprocessor unit, or
(vi) a coker;
“eligible oil sands mine development expense”
« frais d’aménagement admissibles relatifs à une mine de sables bitumineux »
“eligible oil sands mine development expense”, of a taxpayer, means an expense incurred by the taxpayer after March 21, 2011 and before 2016, the amount of which is determined by the formula
A × B
where
- A
- is an expense that would be a Canadian exploration expense of the taxpayer described in paragraph (g) of the definition “Canadian exploration expense” if that paragraph were read without reference to “other than a bituminous sands deposit or an oil shale deposit”, but does not include an expense that is a specified oil sands mine development expense, and
- B
- is
(a) 100% if the expense is incurred before 2013,
(b) 80% if the expense is incurred in 2013,
(c) 60% if the expense is incurred in 2014, and
(d) 30% if the expense is incurred in 2015;
“oil sands mine development project”
« projet de mise en valeur d’une mine de sables bitumineux »
“oil sands mine development project”, of a taxpayer, means a bitumen mine development project or a bitumen upgrading development project of the taxpayer;
“preliminary work activity”
« travaux préliminaires »
“preliminary work activity”, in respect of an oil sands mine development project, means activity that is preliminary to the acquisition, construction, fabrication or installation by or on behalf of a taxpayer of designated assets in respect of the taxpayer’s oil sands mine development project including, without limiting the generality of the foregoing, the following activities:
(a) obtaining permits or regulatory approvals,
(b) performing design or engineering work,
(c) conducting feasibility studies,
(d) conducting environmental assessments, and
(e) entering into contracts;
“specified oil sands mine development expense”
« frais d’aménagement déterminés relatifs à une mine de sables bitumineux »
“specified oil sands mine development expense”, of a taxpayer, means an expense that
(a) would be a Canadian exploration expense described in paragraph (g) of the definition “Canadian exploration expense” if that paragraph were read without reference to “other than a bituminous sands deposit or an oil shale deposit”,
(b) is incurred by the taxpayer after March 21, 2011 and before 2015, and
(c) is incurred by the taxpayer to achieve completion of a specified oil sands mine development project of the taxpayer;
“specified oil sands mine development project”
« projet déterminé de mise en valeur d’une mine de sables bitumineux »
“specified oil sands mine development project”, of a taxpayer, means an oil sands mine development project (not including any preliminary work activity) in respect of which
(a) one or more designated assets was, before March 22, 2011,
(i) acquired by the taxpayer, or
(ii) in the process of being constructed, fabricated or installed, by or on behalf of the taxpayer, and
(b) the planned level of average daily output (where that output is bitumen or a similar product in the case of a bitumen mine development project, or synthetic crude oil or a similar product in the case of a bitumen upgrading development project) that can reasonably be expected, is the lesser of
(i) the level that was the demonstrated intention of the taxpayer as of March 21, 2011 to produce from the oil sands mine development project, and
(ii) the maximum level of output associated with the design capacity, as of March 21, 2011, of the designated asset referred to in paragraph (a);
(6) Subsections (1), (2) and (4) apply to expenses incurred after November 5, 2010 except that in respect of expenses incurred before March 22, 2011 paragraph (g) of the definition “Canadian exploration expense” in subsection 66.1(6) of the Act, as enacted by subsection (2), is to be be read without reference to “, other than a bituminous sands deposit or an oil shale deposit,”.
(7) Subsection (3) applies to expenses incurred after March 21, 2011.
(8) Subsection (5) is deemed to have come into force on March 22, 2011.
15. (1) The definition “Canadian development expense” in subsection 66.2(5) of the Act is amended by adding the following after paragraph (c):
(c.1) any expense, or portion of any expense, that is not a Canadian exploration expense, incurred by the taxpayer for the purpose of bringing a new mine in a mineral resource in Canada that is a bituminous sands deposit or an oil shale deposit into production and incurred before the new mine comes into production in reasonable commercial quantities, including an expense for clearing the land, removing overburden and stripping, or building an entry ramp,
(2) The portion of the description of F in the definition “cumulative Canadian development expense” in subsection 66.2(5) of the Act before paragraph (a) is replaced by the following:
- F
- is the total of all amounts each of which is an amount in respect of property described in paragraph (b), (e) or (f) of the definition “Canadian resource property” in subsection 66(15) or property disposed of after March 21, 2011 which was described in any of those paragraphs and the cost of which when acquired by the taxpayer was included in the Canadian development expense of the taxpayer, or any right to or interest in — or, for civil law, any right in or to — such a property, other than such a right or an interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership, (in this description referred to as “the particular property”) disposed of by the taxpayer before that time equal to the amount, if any, by which
(3) Subsection (1) applies to expenses incurred after March 21, 2011.
(4) Subsection (2) is deemed to have come into force on March 22, 2011.
16. (1) Subsection 74.1(1) of the Act is replaced by the following:
Marginal note:Transfers and loans to spouse or common-law partner
74.1 (1) If an individual has transferred or lent property (otherwise than by an assignment of any portion of a retirement pension under section 65.1 of the Canada Pension Plan or a comparable provision of a provincial pension plan as defined in section 3 of that Act), either directly or indirectly, by means of a trust or by any other means whatever, to or for the benefit of a person who is the individual’s spouse or common-law partner or who has since become the individual’s spouse or common-law partner, any income or loss, as the case may be, of that person for a taxation year from the property or from property substituted therefor, that relates to the period in the year throughout which the individual is resident in Canada and that person is the individual’s spouse or common-law partner, is deemed to be income or a loss, as the case may be, of the individual for the year and not of that person.
(2) Subsection (1) applies to transfers and loans made after 2010.
17. (1) Paragraph 74.5(12)(a.1) of the Act is repealed.
(2) Subsection (1) applies to transfers made after 2010.
18. (1) The portion of subsection 81(4) of the Act after paragraph (b) is replaced by the following:
there shall not be included in computing the individual’s income derived from the performance of those duties the lesser of $1,000 and the total of those amounts, other than, if the individual makes a claim under section 118.06 for the year, amounts received in respect of duties as a firefighter.
(2) Subsection (1) applies to the 2011 and subsequent taxation years.
19. (1) Clause (a)(i)(A) of the definition “capital dividend account” in subsection 89(1) of the Act is replaced by the following:
(A) the amount of the corporation’s capital gain from the disposition (other than a disposition under subsection 40(12) or that is the making of a gift after December 8, 1997 that is not a gift described in subsection 110.1(1)) of a property in the period beginning at the beginning of its first taxation year (that began after the corporation last became a private corporation and that ended after 1971) and ending immediately before the particular time (in this definition referred to as “the period”)
(2) Subparagraph (a)(i) of the definition “capital dividend account” in subsection 89(1) of the Act is amended by striking out “and” at the end of clause (B) and by adding the following after that clause:
(B.1) the corporation’s taxable capital gain from a disposition in the period under subsection 40(12), and
(3) Subsections (1) and (2) apply to dispositions that occur on or after March 22, 2011.
20. (1) Subparagraphs 96(1)(d)(i) and (ii) of the Act are replaced by the following:
(i) this Act were read without reference to sections 34.1 and 34.2, subsection 59(1), paragraph 59(3.2)(c.1) and subsections 66.1(1), 66.2(1) and 66.4(1), and
(ii) no deduction were permitted under any of section 29 of the Income Tax Application Rules, subsection 65(1) and sections 66, 66.1, 66.2, 66.21 and 66.4;
(2) Subsection (1) applies to the 2011 and subsequent taxation years.
21. (1) Paragraph 110.1(1)(a) of the Act is amended by adding the following after subparagraph (iv):
(iv.1) a municipal or public body performing a function of government in Canada,
(2) The portion of paragraph 110.1(1)(a) of the Act, as amended by subsection (1), before the formula is replaced by the following:
Marginal note:Charitable gifts
(a) the total of all amounts each of which is the fair market value of a gift (other than a gift described in paragraph (b), (c) or (d)) made by the corporation in the year or in any of the five preceding taxation years to a qualified donee, not exceeding the lesser of the corporation’s income for the year and the amount determined by the formula
(3) Subparagraph 110.1(3)(a)(i) of the Act is replaced by the following:
(i) capital property to a qualified donee, or
(4) Subsection 110.1(6) of the Act is replaced by the following:
Marginal note:Non-qualifying securities
(6) Subsections 118.1(13) to (14) and (16) to (20) apply to a corporation as if the references in those subsections to an individual were read as references to a corporation and as if a non-qualifying security of a corporation included a share (other than a share listed on a designated stock exchange) of the capital stock of the corporation.
(5) Section 110.1 of the Act is amended by adding the following after subsection (9):
Marginal note:Options
(10) Subject to subsections (12) and (13), if a corporation has granted an option to a qualified donee in a taxation year, no amount in respect of the option is to be included in computing an amount under any of paragraphs (1)(a) to (d) in respect of the corporation for any year.
Marginal note:Application of subsection (12)
(11) Subsection (12) applies if
(a) an option to acquire a property of a corporation is granted to a qualified donee;
(b) the option is exercised so that the property is disposed of by the corporation and acquired by the qualified donee at a particular time; and
(c) either
(i) the amount that is 80% of the fair market value of the property at the particular time is greater than or equal to the total of
(A) the consideration received by the corporation from the qualified donee for the property, and
(B) the consideration received by the corporation from the qualified donee for the option, or
(ii) the corporation establishes to the satisfaction of the Minister that the granting of the option or the disposition of the property was made by the corporation with the intention to make a gift to the qualified donee.
Marginal note:Granting of an option
(12) If this subsection applies, notwithstanding subsection 49(3),
(a) the corporation is deemed to have received proceeds of disposition of the property equal to the property’s fair market value at the particular time; and
(b) there shall be included in the total referred to in paragraph (1)(a), for the corporation’s taxation year that includes the particular time, the amount by which the property’s fair market value exceeds the total described in subparagraph (11)(c)(i).
Marginal note:Disposition of an option
(13) If an option to acquire a particular property of a corporation is granted to a qualified donee and the option is disposed of by the qualified donee (otherwise than by the exercise of the option) at a particular time
(a) the corporation is deemed to have disposed of a property at the particular time
(i) the adjusted cost base of which to the corporation immediately before the particular time is equal to the consideration, if any, paid by the qualified donee for the option, and
(ii) the proceeds of disposition of which are equal to the lesser of the fair market value of the particular property at the particular time and the fair market value of any consideration (other than a non-qualifying security of any person) received by the qualified donee for the option; and
(b) there shall be included in the total referred to in paragraph (1)(a) for the corporation’s taxation year that includes the particular time the amount, if any, by which the proceeds of disposition as determined by paragraph (a) exceed the consideration, if any, paid by the qualified donee for the option.
Marginal note:Returned property
(14) Subsection (15) applies if a qualified donee has issued to a corporation a receipt referred to in subsection (2) in respect of a transfer of a property (in this subsection and subsection (15) referred to as the “original property”) and a particular property that is
(a) the original property is later transferred to the corporation (unless that later transfer is reasonable consideration or remuneration for property acquired by or services rendered to a person); or
(b) any other property that may reasonably be considered compensation for or a substitute for, in whole or in part, the original property, is later transferred to the corporation.
Marginal note:Returned property
(15) If this subsection applies, then
(a) irrespective of whether the transfer of the original property by the corporation to the qualified donee referred to in subsection (14) was a gift, the corporation is deemed not to have disposed of the original property at the time of that transfer nor to have made a gift;
(b) if the particular property is identical to the original property, the particular property is deemed to be the original property; and
(c) if the particular property is not the original property, then
(i) the corporation is deemed to have disposed of the original property at the time that the particular property is transferred to the corporation for proceeds of disposition equal to the greater of the fair market value of the particular property at that time and the fair market value of the original property at the time that it was transferred by the corporation to the donee, and
(ii) if the transfer of the original property by the corporation would be a gift if this section were read without reference to paragraph (a), the corporation is deemed to have, at the time of that transfer, transferred to the donee a property that is the subject of a gift having a fair market value equal to the amount, if any, by which the fair market value of the original property at the time of that transfer exceeds the fair market value of the particular property at the time that it is transferred to the corporation.
Marginal note:Information return
(16) If subsection (15) applies in respect of a transfer of property to a corporation and that property has a fair market value greater than $50, the transferor must file an information return containing prescribed information with the Minister not later than 90 days after the day on which the property was transferred and provide a copy of the return to the corporation.
Marginal note:Reassessment
(17) If subsection (15) applies in respect of a transfer of property to a corporation, the Minister may reassess a return of income of any person to the extent that the reassessment can reasonably be regarded as relating to the transfer.
(6) Subsection (1) applies to gifts made after May 8, 2000.
(7) Subsections (2) and (3) come into force on the later of the day on which this Act receives royal assent and January 1, 2012.
(8) Subsection (4) is deemed to have come into force on March 22, 2011.
(9) Subsections 110.1(10) to (13) of the Act, as enacted by subsection (5), apply to options granted on or after March 22, 2011.
(10) Subsections 110.1(14) to (17) of the Act, as enacted by subsection (5), apply to transfers of property made on or after March 22, 2011, except that an information return required to be filed under subsection 110.1(16) of the Act, as enacted by subsection (5), that is filed before November 16, 2011 is deemed to have been filed on time.
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