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
53. (1) Subsection 168(1) of the Act is replaced by the following:
Marginal note:Notice of intention to revoke registration
168. (1) The Minister may, by registered mail, give notice to a person described in any of paragraphs (a) to (c) of the definition “qualified donee” in subsection 149.1(1) that the Minister proposes to revoke its registration if the person
(a) applies to the Minister in writing for revocation of its registration;
(b) ceases to comply with the requirements of this Act for its registration;
(c) in the case of a registered charity or registered Canadian amateur athletic association, fails to file an information return as and when required under this Act or a regulation;
(d) issues a receipt for a gift otherwise than in accordance with this Act and the regulations or that contains false information;
(e) fails to comply with or contravenes any of sections 230 to 231.5; or
(f) in the case of a registered Canadian amateur athletic association, accepts a gift the granting of which was expressly or implicitly conditional on the association making a gift to another person, club, society or association.
(2) Subsection 168(4) of the Act is replaced by the following:
Marginal note:Objection to proposal or designation
(4) A person may, on or before the day that is 90 days after the day on which the notice was mailed, serve on the Minister a written notice of objection in the manner authorized by the Minister, setting out the reasons for the objection and all the relevant facts, and the provisions of subsections 165(1), (1.1) and (3) to (7) and sections 166, 166.1 and 166.2 apply, with any modifications that the circumstances require, as if the notice were a notice of assessment made under section 152, if
(a) in the case of a person that is or was registered as a registered charity or is an applicant for such registration, it objects to a notice under any of subsections (1) and 149.1(2) to (4.1), (6.3), (22) and (23);
(b) in the case of a person that is or was registered as a registered Canadian amateur athletic association or is an applicant for such registration, it objects to a notice under any of subsections (1) and 149.1(4.2) and (22); or
(c) in the case of a person described in any of subparagraphs (a)(i) to (v) of the definition “qualified donee” in subsection 149.1(1), that is or was registered by the Minister as a qualified donee or is an applicant for such registration, it objects to a notice under any of subsections (1) and 149.1(4.3) and (22).
(3) Subsections (1) and (2) come into force on the later of the day on which this Act receives royal assent and January 1, 2012.
54. (1) Paragraph 172(3)(a) of the Act is replaced by the following:
(a) confirms a proposal or decision in respect of which a notice was issued under any of subsections 149.1(4.2) and (22) and 168(1) by the Minister, to a person that is or was registered as a registered Canadian amateur athletic association or is an applicant for registration as a registered Canadian amateur athletic association, or does not confirm or vacate that proposal or decision within 90 days after service of a notice of objection by the person under subsection 168(4) in respect of that proposal or decision,
(2) Subsection 172(3) of the Act is amended by adding the following after paragraph (a.1):
(a.2) confirms a proposal or decision in respect of which a notice was issued under any of subsections 149.1(4.3), (22) and 168(1) by the Minister, to a person that is a person described in any of subparagraphs (a)(i) to (v) of the definition “qualified donee” in subsection 149.1(1) that is or was registered by the Minister as a qualified donee or is an applicant for such registration, or does not confirm or vacate that proposal or decision within 90 days after service of a notice of objection by the person under subsection 168(4) in respect of that proposal or decision,
(3) Paragraph 172(3)(d) of the Act is repealed.
(4) The portion of subsection 172(3) of the Act after paragraph (g) is replaced by the following:
the person in a case described in paragraph (a), (a.1) or (a.2), the applicant in a case described in paragraph (b), (e) or (g), a trustee under the plan or an employer of employees who are beneficiaries under the plan, in a case described in paragraph (c), the promoter in a case described in paragraph (e.1), or the administrator of the plan or an employer who participates in the plan, in a case described in paragraph (f) or (f.1), may appeal from the Minister’s decision, or from the giving of the notice by the Minister, to the Federal Court of Appeal.
(5) Paragraph 172(4)(c) of the Act is repealed.
(6) Subsections (1) to (5) come into force on the later of the day on which this Act receives royal assent and January 1, 2012.
55. (1) Paragraph 180(1)(b) of the Act is repealed.
(2) Subsection (1) comes into force on the later of the day on which this Act receives royal assent and January 1, 2012.
56. (1) Subsection 180.01(2) of the Act is amended by striking out “and” at the end of paragraph (d) and by adding the following after paragraph (e):
(f) subparagraph 127.52(1)(h)(ii) is to be read as “the amount deducted under paragraph 110(1)(d)” for the year in respect of the particular securities; and
(g) notwithstanding subsection 152(4) and as the circumstances require, the Minister shall re-determine the taxpayer’s additional tax under subsection 120.2(3) for the taxation year and reassess any taxation year in which an amount has been deducted under subsection 120.2(1).
(2) Subsection (1) is deemed to have come into force on March 4, 2010.
57. (1) The heading of Part V of the Act is replaced by the following:
TAX AND PENALTIES IN RESPECT OF QUALIFIED DONEES
(2) Subsection (1) comes into force on the later of the day on which this Act receives royal assent and January 1, 2012.
58. (1) Section 188 of the Act is amended by adding the following after subsection (1.3):
Marginal note:Eligible donee
(1.4) In this Part, an eligible donee in respect of a particular Canadian amateur athletic association is a registered Canadian amateur athletic association
(a) of which more than 50% of the members of the board of directors or trustees of the registered Canadian amateur athletic association deal at arm’s length with each member of the board of directors or trustees of the particular Canadian amateur athletic association;
(b) that is not the subject of a suspension under subsection 188.2(1);
(c) that has no unpaid liabilities under this Act or under the Excise Tax Act; and
(d) that has filed all information returns required by subsection 149.1(14).
(2) Subsection (1) comes into force on the later of the day on which this Act receives royal assent and January 1, 2012.
59. (1) Subsections 188.1(1) and (2) of the Act are replaced by the following:
Marginal note:Penalty — carrying on business
188.1 (1) Subject to subsection (2), a person is liable to a penalty under this Part equal to 5% of its gross revenue for a taxation year from any business that it carries on in the taxation year, if
(a) the person is a registered charity that is a private foundation;
(b) the person is a registered charity that is not a private foundation and the business is not a related business in relation to the charity; or
(c) the person is a registered Canadian amateur athletic association and the business is not a related business in relation to the association.
Marginal note:Increased penalty for subsequent assessment
(2) A person that, less than five years before a particular time, was assessed a liability under subsection (1) or this subsection, for a taxation year, is liable to a penalty under this Part equal to its gross revenue for a subsequent taxation year from any business that, after that assessment and in the subsequent taxation year, it carries on at the particular time if
(a) the person is a registered charity that is a private foundation;
(b) the person is a registered charity that is not a private foundation and the business is not a related business in relation to the charity; or
(c) the person is a registered Canadian amateur athletic association and the business is not a related business in relation to the association.
(2) Subsections 188.1(4) to (9) of the Act are replaced by the following:
Marginal note:Undue benefits
(4) A registered charity or registered Canadian amateur athletic association that, at a particular time in a taxation year, confers on a person an undue benefit is liable to a penalty under this Part for the taxation year equal to
(a) 105% of the amount of the benefit, except if the charity or association is liable under paragraph (b) for a penalty in respect of the benefit; or
(b) if the Minister has, less than five years before the particular time, assessed a liability under paragraph (a) or this paragraph for a preceding taxation year of the charity or association and the undue benefit was conferred after that assessment, 110% of the amount of the benefit.
Marginal note:Meaning of undue benefits
(5) For the purposes of this Part, an undue benefit conferred on a person (referred to in this Part as the “beneficiary”) by a registered charity or registered Canadian amateur athletic association includes a disbursement by way of a gift or the amount of any part of the income, rights, property or resources of the charity or association that is paid, payable, assigned or otherwise made available for the personal benefit of any person who is a proprietor, member, shareholder, trustee or settlor of the charity or association, who has contributed or otherwise paid into the charity or association more than 50% of the capital of the charity or association, or who deals not at arm’s length with such a person or with the charity or association, as well as any benefit conferred on a beneficiary by another person, at the direction or with the consent of the charity or association, that would, if it were not conferred on the beneficiary, be an amount in respect of which the charity or association would have a right, but does not include a disbursement or benefit to the extent that it is
(a) an amount that is reasonable consideration or remuneration for property acquired by or services rendered to the charity or association;
(b) a gift made, or a benefit conferred,
(i) in the case of a registered charity, in the course of a charitable act in the ordinary course of the charitable activities carried on by the charity, unless it can reasonably be considered that the eligibility of the beneficiary for the benefit relates solely to the relationship of the beneficiary to the charity, and
(ii) in the case of a registered Canadian amateur athletic association, in the ordinary course of promoting amateur athletics in Canada on a nationwide basis; or
(c) a gift to a qualified donee.
Marginal note:Failure to file information returns
(6) Every registered charity and registered Canadian amateur athletic association that fails to file a return for a taxation year as and when required by subsection 149.1(14) is liable to a penalty equal to $500.
Marginal note:Incorrect information
(7) Except where subsection (8) or (9) applies, every registered charity and registered Canadian amateur athletic association that issues, in a taxation year, a receipt for a gift otherwise than in accordance with this Act and the regulations is liable for the taxation year to a penalty equal to 5% of the amount reported on the receipt as representing the amount in respect of which a taxpayer may claim a deduction under subsection 110.1(1) or a credit under subsection 118.1(3).
Marginal note:Increased penalty for subsequent assessment
(8) Except where subsection (9) applies, if the Minister has, less than five years before a particular time, assessed a penalty under subsection (7) or this subsection for a taxation year of a registered charity or registered Canadian amateur athletic association and, after that assessment and in a subsequent taxation year, the charity or association issues, at the particular time, a receipt for a gift otherwise than in accordance with this Act and the regulations, the charity or association is liable for the subsequent taxation year to a penalty equal to 10% of the amount reported on the receipt as representing the amount in respect of which a taxpayer may claim a deduction under subsection 110.1(1) or a credit under subsection 118.1(3).
Marginal note:False information
(9) If at any time a person makes or furnishes, participates in the making of or causes another person to make or furnish a statement that the person knows, or would reasonably be expected to know but for circumstances amounting to culpable conduct (within the meaning assigned by subsection 163.2(1)), is a false statement (within the meaning assigned by subsection 163.2(1)) on a receipt issued by, on behalf of or in the name of another person for the purposes of subsection 110.1(2) or 118.1(2), the person (or, where the person is an officer, employee, official or agent of a registered charity or registered Canadian amateur athletic association, the charity or association) is liable for their taxation year that includes that time to a penalty equal to 125% of the amount reported on the receipt as representing the amount in respect of which a taxpayer may claim a deduction under subsection 110.1(1) or a credit under subsection 118.1(3).
(3) Subsections (1) and (2) apply to taxation years that begin on or after the later of the day on which this Act receives royal assent and January 1, 2012.
60. (1) Subsections 188.2(1) to (4) of the Act are replaced by the following:
Marginal note:Notice of suspension with assessment
188.2 (1) The Minister shall, with an assessment referred to in this subsection, give notice by registered mail to a registered charity or registered Canadian amateur athletic association that the authority of the charity or association to issue an official receipt referred to in Part XXXV of the Income Tax Regulations is suspended for one year from the day that is seven days after the day on which the notice is mailed, if the Minister has assessed the charity or association for a taxation year for
(a) a penalty under subsection 188.1(2);
(b) a penalty under paragraph 188.1(4)(b) in respect of an undue benefit, other than an undue benefit conferred by the charity or association by way of a gift; or
(c) a penalty under subsection 188.1(9) if the total of all such penalties for the taxation year exceeds $25,000.
Marginal note:Notice of suspension — general
(2) The Minister may give notice by registered mail to a person referred to in any of paragraphs (a) to (c) of the definition “qualified donee” in subsection 149.1(1) that the authority of the person to issue an official receipt referred to in Part XXXV of the Income Tax Regulations is suspended for one year from the day that is seven days after the day on which the notice is mailed
(a) if the person contravenes any of sections 230 to 231.5;
(b) if it may reasonably be considered that the person has acted, in concert with another person that is the subject of a suspension under this section, to accept a gift or transfer of property on behalf of that other person;
(c) in the case of a person referred to in paragraph (a) of the definition “qualified donee” in subsection 149.1(1), if the person has issued a receipt for a gift otherwise than in accordance with this Act and the regulations; or
(d) in the case of a person that is a registered charity or registered Canadian amateur athletic association, if an ineligible individual is a director, trustee, officer or like official of the person, or controls or manages the person, directly or indirectly, in any manner whatever.
Marginal note:Effect of suspension
(3) If the Minister has issued a notice to a qualified donee under subsection (1) or (2), subject to subsection (4),
(a) the qualified donee is deemed, in respect of gifts made and property transferred to the qualified donee within the one-year period that begins on the day that is seven days after the day on which the notice is mailed, not to be a qualified donee for the purposes of subsections 110.1(1) and 118.1(1) and Part XXXV of the Income Tax Regulations; and
(b) if the qualified donee is, during that period, offered a gift from any person, the qualified donee shall, before accepting the gift, inform that person that
(i) it has received the notice,
(ii) no deduction under subsection 110.1(1) or credit under subsection 118.1(3) may be claimed in respect of a gift made to it in the period, and
(iii) a gift made to it in the period is not a gift to a qualified donee.
Marginal note:Application for postponement
(4) If a notice of objection to a suspension under subsection (1) or (2) has been filed by a qualified donee, the qualified donee may file an application to the Tax Court of Canada for a postponement of that portion of the period of suspension that has not elapsed until the time determined by the Court.
(2) Subsection (1) applies to taxation years that begin on or after the later of the day on which this Act receives royal assent and January 1, 2012.
61. (1) The portion of subsection 189(6.3) of the Act before paragraph (b) is replaced by the following:
Marginal note:Reduction of liability for penalties
(6.3) If the Minister has assessed a particular person in respect of the particular person’s liability for penalties under section 188.1 for a taxation year, and that liability exceeds $1,000, that liability is, at any particular time, reduced by the total of all amounts, each of which is an amount, in respect of a property transferred by the particular person after the day on which the Minister first assessed that liability and before the particular time to another person that was at the time of the transfer an eligible donee in respect of the particular person, equal to the amount, if any, by which the fair market value of the property, when transferred, exceeds the total of
(a) the consideration given by the other person for the transfer, and
(2) Subsection 189(7) of the Act is replaced by the following:
Marginal note:Minister may assess
(7) Without limiting the authority of the Minister to revoke the registration of a registered charity or registered Canadian amateur athletic association, the Minister may also at any time assess a taxpayer in respect of any amount that a taxpayer is liable to pay under this Part.
(3) Subsections (1) and (2) apply to taxation years that begin on or after the later of the day on which this Act receives royal assent and January 1, 2012.
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