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
22. (1) The portion of subsection 112(3.01) of the Act before paragraph (a) is replaced by the following:
Marginal note:Loss on share that is capital property — excluded dividends
(3.01) A qualified dividend shall not be included in the total determined under subparagraph (3)(a)(i) or paragraph (3)(b) if the taxpayer establishes that
(2) The portion of subsection 112(3.11) of the Act before paragraph (a) is replaced by the following:
Marginal note:Loss on share held by partnership — excluded dividends
(3.11) A qualified dividend shall not be included in the total determined under subparagraph (3.1)(a)(i) or paragraph (3.1)(b) or (c) if the taxpayer establishes that
(3) The portion of clause 112(3.2)(a)(ii)(C) of the Act before subclause (I) is replaced by the following:
(C) that is a qualified dividend received on the share and designated under subsection 104(19) by the trust in respect of a beneficiary that was a corporation, partnership or another trust where the trust establishes that
(4) The portion of clause 112(3.3)(a)(ii)(C) of the Act before subclause (I) is replaced by the following:
(C) that is a qualified dividend received on the share after that time and designated under subsection 104(19) by the trust in respect of a beneficiary that was a corporation, partnership or another trust where the trust establishes that
(5) The portion of subsection 112(3.31) of the Act before paragraph (a) is replaced by the following:
Marginal note:Loss on share held by trust — excluded dividends
(3.31) A qualified dividend received by a trust shall not be included under subparagraph (3.2)(a)(i) or (b)(ii) or (3.3)(a)(i) if the trust establishes that the dividend
(6) The portion of subsection 112(3.32) of the Act before paragraph (a) is replaced by the following:
Marginal note:Loss on share held by trust — excluded dividends
(3.32) A qualified dividend that is a taxable dividend received on the share and that is designated under subsection 104(19) by the trust in respect of a beneficiary that was a corporation, partnership or trust, shall not be included under paragraph (3.2)(b) or (3.3)(b) if the trust establishes that the dividend was received by an individual (other than a trust), or
(7) The portion of subsection 112(4.01) of the Act before paragraph (a) is replaced by the following:
Marginal note:Loss on share that is not capital property — excluded dividends
(4.01) A qualified dividend shall not be included in the total determined under paragraph (4)(a), (b) or (c) if the taxpayer establishes that
(8) The portion of subsection 112(4.11) of the Act before paragraph (a) is replaced by the following:
Marginal note:Fair market value of shares held as inventory — excluded dividends
(4.11) A qualified dividend shall not be included in the total determined under paragraph (4.1)(a), (b) or (c) if the shareholder establishes that
(9) The portion of subsection 112(4.21) of the Act before paragraph (a) is replaced by the following:
Marginal note:Loss on share held by trust — excluded dividends
(4.21) A qualified dividend shall not be included in the total determined under paragraph (4.2)(a) if the taxpayer establishes that
(10) The portion of subsection 112(4.22) of the Act before paragraph (a) is replaced by the following:
Marginal note:Loss on share held by trust — excluded dividends
(4.22) A qualified dividend shall not be included in the total determined under paragraph (4.2)(b) if the taxpayer establishes that
(11) Paragraph 112(5)(c) of the Act is replaced by the following:
(c) the taxpayer received
(i) a dividend on the share at a time when the taxpayer and persons with whom the taxpayer was not dealing at arm’s length held in total more than 5% of the issued shares of any class of the capital stock of the corporation from which the dividend was received, or
(ii) a dividend on the share under subsection 84(3).
(12) The portion of subsection 112(5.21) of the Act before paragraph (a) is replaced by the following:
Marginal note:Subsection (5.2) — excluded dividends
(5.21) A dividend, other than a dividend received under subsection 84(3), shall not be included in the total determined under paragraph (b) of the description of B in subsection (5.2) unless
(13) Subsection 112 of the Act is amended by adding the following after subsection (6):
Marginal note:Interpretation — qualified dividend
(6.1) For the purposes of this section, a dividend on a share is a qualified dividend to the extent that
(a) it is a dividend other than a dividend received under subsection 84(3); or
(b) it is received under subsection 84(3) and,
(i) if the share is held by an individual other than a trust, the dividend is received by the individual,
(ii) if the share is held by a corporation, the dividend is received by the corporation while it is a private corporation, and is paid by another private corporation,
(iii) if the share is held by a trust,
(A) the dividend is received by the trust,
(B) the dividend is designated under subsection 104(19) by the trust in respect of a beneficiary and
(I) the beneficiary is an individual other than a trust,
(II) the beneficiary is a private corporation when the dividend is received by it and the dividend is paid by another private corporation,
(III) the beneficiary is another trust that does not designate the dividend under subsection 104(19), or
(IV) the beneficiary is a partnership all of the members of which are, when the dividend is received, a person described by any of subclauses (I) to (III), or
(C) the dividend is designated by the trust under subsection 104(19) in respect of a beneficiary that is another trust or a partnership and the trust establishes that the dividend is received by a person described by any of subclauses (B)(I) to (III), and
(iv) if the share is held by a partnership,
(A) the dividend is included in the income of a member of a partnership and
(I) the member is an individual, or
(II) the member is a private corporation when the dividend is received by it and the dividend is paid by another private corporation, or
(B) the dividend is designated under subsection 104(19) by a member of a partnership that is a trust in respect of a beneficiary described by any of subclauses (iii)(B)(I) to (IV) or is described by clause (iii)(C).
(14) Subsections (1) to (13) apply to dispositions occurring on or after March 22, 2011.
23. (1) Subparagraphs (a)(i) and (ii) of the description of B in subsection 118(1) of the Act are replaced by the following:
(i) $10,527, and
(ii) the amount determined by the formula
$10,527 + C – C.1
where
- C
- is
(A) $2,000 if the spouse or common-law partner is dependent on the individual by reason of mental or physical infirmity, and
(B) in any other case, nil, and
- C.1
- is the income of the individual’s spouse or common-law partner for the year or, if the individual and the individual’s spouse or common-law partner are living separate and apart at the end of the year because of a breakdown of their marriage or common-law partnership, the spouse’s or common-law partner’s income for the year while married to, or in a common-law partnership with, the individual and not so separated,
(2) Subparagraphs (b)(iii) and (iv) of the description of B in subsection 118(1) of the Act are replaced by the following:
(iii) $10,527, and
(iv) the amount determined by the formula
$10,527 + D – D.1
where
- D
- is
(A) $2,000 if
(I) the dependent person is, at the end of the taxation year, 18 years of age or older and is, at any time in the year, dependent on the individual by reason of mental or physical infirmity, or
(II) the dependent person is a person, other than a child of the individual in respect of whom paragraph (b.1) applies, who, at the end of the taxation year, is under the age of 18 years and who, by reason of mental or physical infirmity, is likely to be, for a long and continuous period of indefinite duration, dependent on others for significantly more assistance in attending to the dependent person’s personal needs and care, when compared to persons of the same age, and is so dependent on the individual at any time in the year, and
(B) in any other case, nil, and
- D.1
- is the dependent person’s income for the year,
(3) Paragraph (b.1) of the description of B in subsection 118(1) of the Act is replaced by the following:
Marginal note:Child amount
(b.1) if
(i) a child, who is under the age of 18 years at the end of the taxation year, of the individual ordinarily resides throughout the taxation year with the individual together with another parent of the child, the total of
(A) $2,131 for each such child, and
(B) $2,000 for each such child who, by reason of mental or physical infirmity, is likely to be, for a long and continuous period of indefinite duration, dependent on others for significantly more assistance in attending to the child’s personal needs and care, when compared to children of the same age, or
(ii) except where subparagraph (i) applies, the individual may deduct an amount under paragraph (b) in respect of the individual’s child who is under the age of 18 years at the end of the taxation year, or could deduct such an amount in respect of that child if paragraph (4)(a) and the reference in paragraph (4)(b) to “or the same domestic establishment” did not apply to the individual for the taxation year and if the child had no income for the year, the total of
(A) $2,131 for each such child, and
(B) $2,000 for each such child who, by reason of mental or physical infirmity, is likely to be, for a long and continuous period of indefinite duration, dependent on others for significantly more assistance in attending to the child’s personal needs and care, when compared to children of the same age,
(4) The portion of paragraph (c.1) of the description of B in subsection 118(1) of the Act after subparagraph (iii) is replaced by the following:
the amount determined by the formula
$18,906 + E – E.1
where
- E
- is
(I) $2,000 if the particular person is dependent on the individual by reason of mental or physical infirmity, and
(II) in any other case, nil, and
- E.1
- is the greater of $14,624 and the particular person’s income for the year,
(5) The portion of paragraph (d) of the description of B in subsection 118(1) of the Act after subparagraph (ii) is replaced by the following:
the amount determined by the formula
$10,358 + $2,000 – F
where
- F
- is the greater of $6,076 and the dependant’s income for the year, and
(6) Paragraph 118(4)(b) of the Act is replaced by the following:
(b) not more than one individual is entitled to a deduction under subsection (1) because of paragraph (b) of the description of B in that subsection for a taxation year in respect of the same person or the same domestic establishment and where two or more individuals otherwise entitled to such a deduction fail to agree as to the individual by whom the deduction may be made, no such deduction for the year shall be allowed to either or any of them;
(b.1) not more than one individual is entitled to a deduction under subsection (1) because of paragraph (b.1) of the description of B in that subsection for a taxation year in respect of the same child and where two or more individuals otherwise entitled to such a deduction fail to agree as to the individual by whom the deduction may be made, no such deduction for the year shall be allowed to either or any of them;
(7) Subparagraph (a)(i) of the definition “pension income” in subsection 118(7) of the Act is replaced by the following:
(i) a payment in respect of a life annuity out of or under a superannuation plan, a pension plan or a specified pension plan,
(8) Paragraph 118(8)(e) of the Act is replaced by the following:
(e) a payment received out of or under a salary deferral arrangement, a retirement compensation arrangement, an employee benefit plan or an employee trust; or
(9) Subsections (1) to (6) apply to the 2011 and subsequent taxation years, except that
(a) for the 2011 taxation year, the reference to “$2,000” in paragraphs (a), (b), (b.1), (c.1) and (d) of the description of B in subsection 118(1) of the Act, as amended by subsections (1) to (5) respectively, is to be read as a reference to “nil”;
(b) for the 2011 taxation year, subsection 117.1(1) of the Act does not apply for the purposes of computing the amounts to be used under paragraphs (a), (b), (b.1), (c.1) and (d) of the description of B in subsection 118(1) of the Act, as amended by subsections (1) to (5) respectively;
(c) for the 2012 taxation year, for the purpose of making the adjustment provided under subsection 117.1(1) of the Act as it applies to paragraph (d) of the description of B in subsection 118(1) of the Act, as amended by subsection (5), in lieu of the amounts of $10,358 and $6,076, the amounts to be used for the preceding year are $10,527 and $6,245, respectively; and
(d) for the 2012 taxation year, subsection 117.1(1) of the Act does not apply in respect of the amount of $2,000 referred to in paragraphs (a), (b), (b.1), (c.1) and (d) of the description of B in subsection 118(1) of the Act, as amended by subsections (1) to (5) respectively.
(10) Subsections (7) and (8) apply after 2009.
- Date modified: