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
62. (1) Subparagraph 204.9(5)(c)(ii) of the Act is replaced by the following:
(ii) a parent of a beneficiary under the transferee plan was a parent of an individual who was, immediately before the particular time, a beneficiary under the transferor plan and
(A) the transferee plan is a plan that allows more than one beneficiary under the plan at any one time, or
(B) in any other case, the beneficiary under the transferee plan had not attained 21 years of age at the time the transferee plan was entered into;
(2) Subsection (1) applies in respect of property transferred after 2010.
63. (1) The heading of Part XI.01 of the Act is replaced by the following:
TAXES IN RESPECT OF RRIFs, RRSPs and TFSAs
(2) Subsection (1) is deemed to have come into force on March 23, 2011.
64. (1) The portion of subsection 207.01(1) of the Act before the definition “advantage” is replaced by the following:
Marginal note:Definitions
207.01 (1) The following definitions and the definitions in subsections 146(1) (other than the definition “benefit”), 146.2(1) and 146.3(1) apply in this Part and in Parts XLIX and L of the Income Tax Regulations.
(2) The definitions “advantage”, “non-qualified investment”, “specified non-qualified investment income” and “swap transaction” in subsection 207.01(1) of the Act are replaced by the following:
“advantage”
« avantage »
“advantage”, in relation to a registered plan, means
(a) any benefit, loan or indebtedness that is conditional in any way on the existence of the registered plan, other than
(i) a benefit derived from the provision of administrative or investment services in respect of the registered plan,
(ii) a loan or an indebtedness (including, in the case of a TFSA, the use of the TFSA as security for a loan or an indebtedness) the terms and conditions of which are terms and conditions that persons dealing at arm’s length with each other would have entered into,
(iii) a payment out of or under the registered plan in satisfaction of all or part of the controlling individual’s interest in the registered plan, and
(iv) the payment or allocation of any amount to the registered plan by the issuer or carrier;
(b) a benefit that is an increase in the total fair market value of the property held in connection with the registered plan if it is reasonable to consider, having regard to all the circumstances, that the increase is attributable, directly or indirectly, to
(i) a transaction or event or a series of transactions or events that
(A) would not have occurred in an open market in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly, and
(B) had as one of its main purposes to enable a person or a partnership to benefit from the exemption from tax under Part I of any amount in respect of the registered plan,
(ii) a payment received as, on account or in lieu of, or in satisfaction of, a payment
(A) for services provided by a person who is, or who does not deal at arm’s length with, the controlling individual of the registered plan, or
(B) of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition, in respect of property (other than property held in connection with the registered plan) held by a person who is, or who does not deal at arm’s length with, the controlling individual of the registered plan,
(iii) a swap transaction, or
(iv) specified non-qualified investment income that has not been paid from the registered plan to its controlling individual within 90 days of receipt by the controlling individual of a notice issued by the Minister under subsection 207.06(4);
(c) a benefit that is income (including a capital gain) that is reasonably attributable, directly or indirectly, to
(i) a prohibited investment in respect of the registered plan or any other registered plan of the controlling individual,
(ii) in the case of a RRIF or RRSP, an amount received by the controlling individual of the registered plan, or by a person who does not deal at arm’s length with the controlling individual (if it is reasonable to consider, having regard to all the circumstances, that the amount was paid in relation to, or would not have been paid but for, property held in connection with the registered plan) and the amount was paid as, on account or in lieu of, or in satisfaction of, a payment
(A) for services provided by a person who is, or who does not deal at arm’s length with, the controlling individual of the registered plan, or
(B) of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition, or
(iii) a deliberate over-contribution;
(d) an RRSP strip in respect of the registered plan; and
(e) a prescribed benefit.
“non-qualified investment”
« placement non admissible »
“non-qualified investment” for a trust governed by a registered plan means property that is not a qualified investment for the trust.
“specified non-qualified investment income”
« revenu de placement non admissible déterminé »
“specified non-qualified investment income”, in respect of a registered plan and its controlling individual, means income (including a capital gain) that is reasonably attributable, directly or indirectly, to an amount in respect of which tax was payable under Part I by a trust governed by the registered plan or by any other registered plan of the controlling individual.
“swap transaction”
« opération de swap »
“swap transaction”, in respect of a registered plan, means a transfer of property between the registered plan and its controlling individual or a person with whom the controlling individual does not deal at arm’s length, but does not include
(a) a payment out of or under the registered plan in satisfaction of all or part of the controlling individual’s interest in the registered plan;
(b) a payment into the registered plan that is a contribution, a premium, or an amount transferred in accordance with paragraph 146.3(2)(f);
(c) a transfer of a prohibited investment or a non-qualified investment from the registered plan, in circumstances where the controlling individual is entitled to a refund under subsection 207.04(4) on the transfer; or
(d) a transfer of property from one registered plan of a controlling individual to another registered plan of the controlling individual if
(i) both registered plans are RRIFs or RRSPs, or
(ii) both registered plans are TFSAs.
(3) The portion of the definition “prohibited investment” in subsection 207.01(1) of the Act before paragraph (c) is replaced by the following:
“prohibited investment”
« placement interdit »
“prohibited investment”, at any time, for a trust governed by a registered plan, means property (other than prescribed excluded property) that is at that time
(a) a debt of the controlling individual of the registered plan;
(b) a share of the capital stock of, an interest in, or a debt of
(i) a corporation, partnership or trust in which the controlling individual has a significant interest, or
(ii) a person or partnership that does not deal at arm’s length with the controlling individual or with a person or partnership described in subparagraph (i);
(4) Subsection 207.01(1) of the Act is amended by adding the following in alphabetical order:
“controlling individual”
« particulier contrôlant »
“controlling individual”, of a registered plan, means the holder of a TFSA or the annuitant of a RRIF or RRSP, as the case may be.
“registered plan”
« régime enregistré »
“registered plan” means a RRIF, RRSP or TFSA.
“RRSP strip”
« somme découlant d’un dépouillement de REER »
“RRSP strip”, in respect of a RRIF or RRSP, means an amount used or obtained by the controlling individual of the RRIF or RRSP, or a person who does not deal at arm’s length with the controlling individual, as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable the controlling individual, or a person who does not deal at arm’s length with the controlling individual, to use or obtain the benefit of property held in connection with the RRIF or RRSP, but does not include an amount that is
(a) included in the income of the controlling individual or their spouse or common-law partner under section 146 or 146.3;
(b) an excluded withdrawal under section 146.01 or 146.02;
(c) described in subsection 146(16) or 146.3(14.2); or
(d) the principal amount of a debt obligation that is a prescribed excluded property.
“transitional prohibited investment benefit”
« bénéfice transitoire provenant d’un placement interdit »
“transitional prohibited investment benefit”, of a controlling individual for a taxation year, means the amount determined by the formula
A – B
where
- A
- is the total of all amounts each of which is income earned, or a capital gain realized, in the taxation year by a trust governed by a RRIF or RRSP of the controlling individual that
(a) is attributable to a property that was, on March 23, 2011, a prohibited investment for a trust governed by a RRIF or RRSP of the controlling individual, and
(b) in the case of income, is earned after March 22, 2011 and before 2022 and, in the case of a capital gain, accrues after March 22, 2011 and is realized before 2022; and
- B
- is the total of all amounts each of which is a capital loss, determined without reference to subparagraph 40(2)(g)(i) and subsection 40(3.4), realized in the taxation year by a trust governed by a RRIF or RRSP of the controlling individual that
(a) is attributable to a property that was, on March 23, 2011, a prohibited investment for a trust governed by a RRIF or RRSP of the controlling individual, and
(b) accrues after March 22, 2011 and is realized before 2022.
(5) Subsection 207.01(5) of the Act is replaced by the following:
Marginal note:Obligation of issuer
(5) The issuer or carrier of a registered plan shall exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a trust governed by the registered plan holds a non-qualified investment.
(6) Subsections (1) and (2) apply to transactions occurring, income earned, capital gains accruing and investments acquired, after March 22, 2011, except that the definition “swap transaction” in subsection 207.01(1) of the Act, as enacted by subsection (2), applies
(a) after 2021 in relation to a swap transaction undertaken to remove a property from a RRIF or RRSP if it is reasonable to conclude that the retention of the property in the RRIF or RRSP would result in a tax being payable under Part XI.01 of the Act, and
(b) in any other case, after June 2011.
(7) Subsection (3) applies after March 22, 2011 in respect of investments acquired at any time.
(8) Subsections (4) and (5) are deemed to have come into force on March 23, 2011.
65. (1) The portion of subsection 207.04(1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Tax payable on prohibited or non-qualified investment
207.04 (1) The controlling individual of a registered plan that governs a trust shall pay a tax under this Part for a calendar year if, at any time in the year,
(2) Subsection 207.04(3) of the Act is replaced by the following:
Marginal note:Both prohibited and non-qualified investment
(3) For the purposes of this section and subsections 146(10.1), 146.2(6) and 146.3(9), if a trust governed by a registered plan holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.
(3) The portion of subsection 207.04(4) of the Act before paragraph (a) is replaced by the following:
Marginal note:Refund of tax on disposition of investment
(4) If in a calendar year a trust governed by a registered plan disposes of a property in respect of which a tax is imposed under subsection (1) on the controlling individual of the registered plan, the controlling individual is entitled to a refund for the year of an amount equal to
(4) Subparagraph 207.04(4)(b)(i) of the Act is replaced by the following:
(i) if it is reasonable to consider that the controlling individual knew, or ought to have known, at the time the property was acquired by the trust, that it was, or would become, a property described in subsection (1), or
(5) Subsections (1) to (4) apply
(a) in respect of any investment acquired after March 22, 2011, except that those subsections do not apply in the case of a prohibited investment acquired after that date by a RRIF or RRSP of an annuitant if the investment was a prohibited investment for another RRIF or RRSP of the same annuitant on March 23, 2011; and
(b) in respect of any investment acquired before March 23, 2011 that first becomes
(i) a prohibited investment after the day on which this Act has been tabled in Parliament, or
(ii) a non-qualified investment after March 22, 2011.
66. (1) Subsection 207.05(1) of the Act is replaced by the following:
Marginal note:Tax payable in respect of advantage
207.05 (1) A tax is payable under this Part for a calendar year if, in the year, an advantage in relation to a registered plan is extended to, or is received or receivable by, the controlling individual of the registered plan, a trust governed by the registered plan, or any other person who does not deal at arm’s length with the controlling individual.
(2) Subsection 207.05(2) of the Act is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) in the case of an RRSP strip, the amount of the RRSP strip.
(3) Subsection 207.05(3) of the Act is replaced by the following:
Marginal note:Liability for tax
(3) The controlling individual of a registered plan in connection with which a tax is imposed under subsection (1) is liable to pay the tax except that, if the advantage is extended by the issuer or carrier of the registered plan or by a person with whom the issuer or carrier is not dealing at arm’s length, the issuer or carrier, and not the controlling individual, is liable to pay the tax.
Marginal note:Transitional rule
(4) If an individual so elects before July 2012 in prescribed form, subsection (1) does not apply in respect of any advantage that is an amount included in the calculation of the transitional prohibited investment benefit of the individual for a taxation year provided that the transitional prohibited investment benefit
(a) is paid to the individual, from a RRIF or RRSP of the individual, within 90 days after the end of the taxation year; and
(b) is not paid by way of transfer to another RRIF or RRSP of the individual.
(4) Subsections (1) to (3) are deemed to have come into force on March 23, 2011.
67. (1) Paragraph 207.06(2)(b) of the Act is replaced by the following:
(b) the extent to which the transaction or series of transactions that gave rise to the tax also gave rise to another tax under this Act.
(2) Subsections 207.06(3) and (4) of the Act are replaced by the following:
Marginal note:Waiver of tax payable — advantage
(3) The Minister shall not waive or cancel a liability imposed under subsection 207.05(3) on an individual in respect of a registered plan unless one or more payments are made without delay from the registered plan to the individual, the total amount of which is not less than the amount of the liability waived or cancelled.
Marginal note:Other powers of Minister
(4) The Minister may notify the controlling individual of a registered plan that the controlling individual must cause a payment to be made from the registered plan to the controlling individual within 90 days of receipt of the notice, the amount of which is not less than the amount of specified non-qualified investment income in respect of the registered plan.
(3) Subsections (1) and (2) are deemed to have come into force on March 23, 2011.
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