Jobs and Growth Act, 2012 (S.C. 2012, c. 31)
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Assented to 2012-12-14
PART 1AMENDMENTS TO THE INCOME TAX ACT AND RELATED REGULATIONS
R.S., c. 1 (5th Supp.)Income Tax Act
36. (1) The Act is amended by adding the following after section 147.4:
Pooled Registered Pension Plans
Marginal note:Definitions
147.5 (1) The following definitions apply in this section.
“administrator”
« administrateur »
“administrator”, of a pooled pension plan, means
(a) a corporation resident in Canada that is responsible for the administration of the plan and that is authorized under the Pooled Registered Pension Plans Act or a similar law of a province to act as an administrator for one or more pooled pension plans; or
(b) an entity designated in respect of the plan under section 21 of the Pooled Registered Pension Plans Act or any provision of a law of a province that is similar to that section.
“designated pooled pension plan”
« régime de pension collectif désigné »
“designated pooled pension plan”, for a calendar year, means a pooled pension plan that, at any time in the year (other than the year in which the plan became registered as a PRPP), meets any of the following conditions:
(a) the plan has fewer than 10 participating employers;
(b) the fair market value of the property held in connection with the accounts of all members of the plan employed by a particular participating employer exceeds 50% of the fair market value of the property held in connection with the plan;
(c) more than 50% of the members of the plan are employed by a particular participating employer; or
(d) it is reasonable to conclude that the participation in the plan of one or more participating employers occurs primarily to avoid the application of any of paragraphs (a) to (c).
“exempt earned income”
« revenu gagné exonéré »
“exempt earned income”, of a taxpayer for a taxation year, means the total of all amounts each of which is an amount that is
(a) not included in the taxpayer’s earned income (as defined in subsection 146(1)) for the year and that would be so included but for paragraph 81(1)(a) as it applies with respect to the Indian Act; and
(b) reported by the taxpayer in prescribed form filed with the Minister by the taxpayer’s filing-due date for the year, or such later date as is acceptable to the Minister, provided that the later date is within three calendar years following the end of the year.
“exempt-income contribution amount”
« cotisation provenant du revenu exonéré »
“exempt-income contribution amount”, of a taxpayer for a taxation year, means the total of
(a) all amounts each of which is a contribution to a PRPP made by the taxpayer for the year that is not deductible in computing the income of the taxpayer because of subsection (32), and
(b) the amount, if any, designated under subsection (34) by the taxpayer for the year in prescribed form filed with the Minister by the taxpayer’s filing-due date for the year, or such later date as is acceptable to the Minister, provided that the later date is within three calendar years following the end of the year.
“member”
« participant »
“member”, of a pooled pension plan, means an individual (other than a trust) who holds an account under the plan.
“participating employer”
« employeur participant »
“participating employer”, in relation to a pooled pension plan for a calendar year, means an employer that, in the year,
(a) makes contributions to the plan in respect of all or a class of its employees or former employees; or
(b) remits to the administrator of the plan contributions made by members of the plan under a contract with the administrator in respect of all or a class of its employees.
“pooled pension plan”
« régime de pension collectif »
“pooled pension plan” means a plan that is registered under the Pooled Registered Pension Plan Act or a similar law of a province.
“pooled registered pension plan” or “PRPP”
« régime de pension agréé collectif » ou « RPAC »
“pooled registered pension plan” or “PRPP” means a pooled pension plan that has been accepted for registration by the Minister for the purposes of this Act, which registration has not been revoked.
“qualifying annuity”
« rente admissible »
“qualifying annuity”, for an individual, means an annuity that
(a) is payable to
(i) the individual for the individual’s life, or
(ii) the individual for the lives, jointly, of the individual and the individual’s spouse or common-law partner and to the survivor of them for the survivor’s life;
(b) is payable beginning no later than the later of
(i) the end of the calendar year in which the individual attains 71 years of age, and
(ii) the end of the calendar year in which the annuity is acquired;
(c) unless the annuity is subsequently commuted into a single payment, is payable
(i) at least annually, and
(ii) in equal amounts or is not so payable solely because of an adjustment that would, if the annuity were an annuity under a retirement savings plan, in accordance with any of subparagraphs 146(3)(b)(iii) to (v);
(d) if the annuity includes a guaranteed period, requires that
(i) the period not exceed 15 years, and
(ii) in the event of the later of the death of the individual and that of the individual’s spouse or common-law partner during the period, any remaining amounts otherwise payable be commuted into a single payment as soon as practicable after the later death; and
(e) does not permit any premiums to be paid, other than the premium paid from the PRPP to acquire the annuity.
“qualifying survivor”
« survivant admissible »
“qualifying survivor”, in relation to a member of a PRPP, means an individual who, immediately before the death of the member
(a) was a spouse or common-law partner of the member; or
(b) was a child or grandchild of the member who was financially dependent on the member for support.
“restricted investment”
« placement non admissible »
“restricted investment”, for a pooled pension plan, means
(a) a debt of a member of the plan;
(b) a share of, an interest in, or a debt of
(i) a corporation, partnership or trust in which a member of the plan has a significant interest, or
(ii) a person or partnership that does not deal at arm’s length with the member of the plan or with a person or partnership described in subparagraph (i);
(c) an interest (or, for civil law, a right) in, or a right to acquire, a share, interest or debt described in paragraph (a) or (b); or
(d) prescribed property.
“single amount”
« montant unique »
“single amount” means an amount that is not part of a series of periodic payments.
“successor member”
« participant remplaçant »
“successor member” means an individual who was the spouse or common-law partner of a member of a PRPP immediately before the death of the member and who acquires, as a consequence of the death, all of the member’s rights in respect of the member’s account under the PRPP.
“unused non-deductible PRPP room”
« somme inutilisée non déductible au titre des RPAC »
“unused non-deductible PRPP room”, of a taxpayer at the end of a taxation year, means the amount determined by the formula
A – B
where
- A
- is the amount of the taxpayer’s unused RRSP deduction room at the end of the year, determined in accordance with subsection (33); and
- B
- is the taxpayer’s unused RRSP deduction room at the end of the year.
Marginal note:Registration conditions
(2) The Minister may accept for registration a pooled pension plan for the purposes of this Act, but shall not accept for registration any plan unless application for registration is made in prescribed manner by the plan administrator and, in the Minister’s opinion, the plan complies with the following conditions:
(a) the primary purpose of the plan is to accept and invest contributions in order to provide retirement income to plan members, subject to the limits and other requirements under this Act;
(b) a single and separate account is maintained for each member under the member’s Social Insurance Number
(i) to which are credited all contributions made to the plan in respect of the member, and any earnings of the plan allocated to the member, and
(ii) to which are charged all payments and distributions made in respect of the member;
(c) the only benefits provided under the plan in respect of each member are benefits determined solely with reference to, and provided by, the amount in the member’s account;
(d) all earnings of the plan are allocated to plan members on a reasonable basis and no less frequently than annually;
(e) the arrangement under which property is held in connection with the plan is acceptable to the Minister;
(f) no right of a person under the plan is capable of being assigned, charged, anticipated, given as security or surrendered, other than
(i) an assignment pursuant to a decree, order or judgment of a competent tribunal, or a under a written agreement, relating to a division of property between the member and the member’s spouse or common-law partner or former spouse or common-law partner, in settlement of rights arising out of, or on a breakdown of, their marriage or common-law partnership, or
(ii) an assignment by the legal representative of a deceased individual on the distribution of the individual’s estate;
(g) the plan requires that all amounts contributed or allocated to a member’s account vest immediately and indefeasibly for the benefit of the member;
(h) the plan permits the payment of an amount to a member if the amount is paid to reduce the amount of tax that would otherwise be payable under Part X.1 by the member;
(i) any amount payable from an account of a member after the death of the member is paid as soon as practicable after the death;
(j) there is no reason to expect that the plan may become a revocable plan; and
(k) any prescribed conditions.
Marginal note:Conditions applicable to PRPPs
(3) A pooled registered pension plan becomes a revocable plan at any time that
(a) a contribution is made to the plan other than an amount
(i) paid by a member of the plan,
(ii) paid by an employer or former employer of a member of the plan in respect of the member, or
(iii) transferred to the plan in accordance with any of subsections (21), 146(16) and (21), 146.3(14) and (14.1), 147(19) and 147.3(1), (4) and (5) to (7);
(b) a contribution is made to the plan in respect of a member after the calendar year in which the member attains 71 years of age, other than an amount described in subparagraph (a)(iii);
(c) a participating employer makes contributions to the plan in a calendar year in respect of a member of the plan in excess of the RRSP dollar limit for the year, except in accordance with a direction by the member;
(d) a distribution is made from the plan other than
(i) a payment of benefits in accordance with subsection (5), or
(ii) a return of contributions
(A) if a contribution to the plan has been made as a result of a reasonable error by a member of the plan or a participating employer in relation to the plan and the return of contributions is made to the person who made the contribution no later than December 31 of the year following the calendar year in which the contribution was made,
(B) to avoid the revocation of the registration of the plan,
(C) to reduce the amount of tax that would otherwise be payable under Part X.1 by a member, or
(D) to comply with any requirement under this Act;
(e) property is held in connection with the plan that
(i) the administrator knew or ought to have known was a restricted investment for the plan, or
(ii) in the case of a designated pooled pension plan, is a share or debt of, or an interest in, a participating employer of the plan or any person or partnership that does not deal at arm’s length with a participating employer, or an interest (or, for civil law, a right) in, or a right to acquire, such a share, debt or interest;
(f) the value of a member’s right under the plan depends on the value of, or income or capital gains in respect of, property that would be described in paragraph (e) if it were held in connection with the plan;
(g) the administrator borrows money or other property for the purposes of the plan; or
(h) the plan or the administrator does not comply with a prescribed condition.
Marginal note:Non-payment of minimum amount
(4) A PRPP becomes a revocable plan at the beginning of a calendar year if the total amount distributed from a member’s account under the PRPP in the calendar year is less than the amount that would be the minimum amount for the calendar year under subsection 8506(5) of the Income Tax Regulations if the member’s account were an account under a money purchase provision of a registered pension plan.
Marginal note:Permissible benefits
(5) The following benefits may be provided under a pooled pension plan:
(a) the payment of benefits to a member that would be in accordance with paragraph 8506(1)(e.1) of the Income Tax Regulations if the benefits were provided under a money purchase provision of a registered pension plan; and
(b) the payment of a single amount from the member’s account.
Marginal note:Additional conditions
(6) The Minister may, at any time, impose reasonable conditions, in writing, applicable with respect to PRPPs, a class of PRPPs or a particular PRPP.
Marginal note:Acceptance of amendments
(7) The Minister shall not accept an amendment to a PRPP unless
(a) application for the acceptance is made in prescribed manner by the administrator of the PRPP; and
(b) the amendment and the PRPP as amended comply with the registration conditions specified in subsection (2).
Marginal note:Trust not taxable
(8) No tax is payable under this Part by a trust governed by a PRPP on its taxable income for a taxation year, except that, if at any time in the year, it carries on a business, tax is payable under this Part by the trust on the amount that would be its taxable income for the year if it had no income or losses from sources other than the business, and for this purpose,
(a) all capital gains and capital losses from the disposition of property held in connection with the business are deemed to be income or losses, as the case may be, from the business; and
(b) the trust’s income is to be computed without reference to subsections 104(6), (19) and (21).
Marginal note:Obligations of administrator
(9) The administrator of a PRPP shall exercise the care, diligence and skill of a reasonably prudent trustee to minimize the possibility that the registration of the PRPP may be revoked other than at the request of the administrator.
Marginal note:Employer contributions deductible
(10) There may be deducted in computing a taxpayer’s income for a taxation year, the total of all amounts each of which is a contribution made by the taxpayer in the year or within 120 days after the end of the year to a PRPP in respect of the taxpayer’s employees or former employees to the extent that the contribution
(a) was made in accordance with the PRPP as registered and in respect of periods before the end of the year; and
(b) was not deducted in computing the taxpayer’s income for a preceding taxation year.
Marginal note:Member contributions
(11) For the purposes of paragraphs 60(j), (j.1) and (l), section 146 (other than subsections (8.3) to (8.7)), paragraphs 146.01(3)(a) and 146.02(3)(a) and Parts X.1 and X.5, a contribution made to a PRPP by a member of a PRPP is deemed to be a premium paid by the member to an RRSP under which the member is the annuitant.
Marginal note:Member’s account
(12) For the purposes of paragraph 18(1)(u), subparagraph (a)(i) of the definition “excluded right or interest” in subsection 128.1(10), paragraph 146(8.2)(b), subsection 146(8.21), paragraphs 146(16)(a) and (b), subparagraph 146(21)(a)(i), paragraph (b) of the definition “excluded premium” in subsection 146.01(1), paragraph (c) of the definition “excluded premium” in subsection 146.02(1), subsections 146.3(14) and 147(19) to (21), section 147.3 and paragraphs 212(1)(j.1) and (m), and of regulations made under 147.1(18), a member’s account under a PRPP is deemed to be a registered retirement savings plan under which the member is the annuitant.
Marginal note:Taxable amounts
(13) There shall be included in computing the income of a taxpayer for a taxation year
(a) if the taxpayer is a member of a PRPP, the total of all amounts each of which is a distribution made in the year from the member’s account under the PRPP, other than an amount that is
(i) included in computing the income of another taxpayer for the year under paragraph (b),
(ii) described in subsection (22), or
(iii) distributed after the death of the member;
(b) if the taxpayer is a participating employer in relation to a PRPP, the total of all amounts each of which is a return of contributions that is described in clause (3)(d)(ii)(A) and that is made to the taxpayer in the year.
Marginal note:Treatment on death — no successor member
(14) If a member of a PRPP dies and there is no successor member in respect of the deceased member’s account under the PRPP, an amount, equal to the amount by which the fair market value of all property held in connection with the account immediately before the death exceeds the total of all amounts distributed from the account that are described in subsection (16), is deemed to have been distributed from the account immediately before the death.
Marginal note:Treatment on death — successor member
(15) If a member of a PRPP dies and there is a successor member in respect of the deceased member’s account under the PRPP,
(a) the account ceases to be an account of the deceased member at the time of the death;
(b) the successor member is, after the time of the death, deemed to hold the account as a member of the PRPP; and
(c) the successor member is deemed to be a separate member in respect of any other account under the PRPP that the successor member holds.
Marginal note:Qualifying survivor
(16) If, as a consequence of the death of a member of a PRPP, an amount is distributed in a taxation year from the member’s account under the PRPP to, or on behalf of, a qualifying survivor of the member, the amount shall be included in computing the survivor’s income for the year, except to the extent that it is an amount described in subsection (22).
Marginal note:Deemed distribution to qualifying survivor
(17) If an amount is distributed at any time from a deceased member’s account under a PRPP to the member’s legal representative and a qualifying survivor of the member is entitled to all or a portion of the amount in full or partial satisfaction of the survivor’s rights as a beneficiary (as defined in subsection 108(1)) under the deceased’s estate, then, for the purposes of subsection (16), the amount or portion of the amount, as the case may be, is deemed to have been distributed at that time from the member’s account to the qualifying survivor (and not to the legal representative) to the extent that it is so designated jointly by the legal representative and the qualifying survivor in prescribed form filed with the Minister.
Marginal note:Post-death increase in value
(18) There shall be included in computing the income for a taxation year of a taxpayer who is not a qualifying survivor in relation to a member of a PRPP, the total of all amounts each of which is an amount determined by the formula
A – B
where
- A
- is the amount of a distribution made in the year from the member’s account under the PRPP as a consequence of the member’s death to, or on behalf of, the taxpayer, and
- B
- is an amount designated by the administrator of the PRPP not exceeding the lesser of
(a) the amount of the distribution, and
(b) the amount by which the fair market value of all property held in connection with the account immediately before the death exceeds the total of all amounts each of which is
(i) the value of B in respect of any prior distribution made from the account, or
(ii) an amount included under subsection (16) in computing the income of a qualifying survivor in relation to the member.
Marginal note:Post-death decrease in value
(19) There may be deducted in computing the income of a member of a PRPP for the taxation year in which the member dies, an amount not exceeding the amount determined, after all amounts payable from the member’s account under the PRPP have been distributed, by the formula
A – B
where
- A
- is the total of all amounts each of which is an amount in respect of the account
(a) included in the member’s income under subsection (13) because of the application of subsection (14),
(b) included in the income of another taxpayer under subsection (16) or (18), or
(c) transferred in accordance with subsection (21) in circumstances described in subparagraph (21)(b)(iii); and
- B
- is the total of all distributions made from the account after the member’s death.
Marginal note:Subsection (19) not applicable
(20) Except where the Minister has waived in writing the application of this subsection with respect to all or any portion of the amount determined in subsection (19) in respect of a member’s account under a PRPP, that subsection does not apply if the last distribution from the account was made after the end of the calendar year following the year in which the member died.
Marginal note:Transfer of amounts
(21) An amount is transferred from a member’s account under a PRPP in accordance with this subsection if the amount
(a) is a single amount;
(b) is transferred on behalf of an individual who
(i) is the member,
(ii) is a spouse or common-law partner or former spouse or common-law partner of the member and who is entitled to the amount under a decree, order or judgment of a competent tribunal, or under a written agreement, relating to a division of property between the member and the individual, in settlement of rights arising out of, or on a breakdown of, their marriage or common-law partnership, or
(iii) is entitled to the amount as a consequence of the death of the member and was a spouse or common-law partner of the member immediately before the death; and
(c) is transferred directly to
(i) the individual’s account under the PRPP,
(ii) another PRPP in respect of the individual,
(iii) a registered pension plan for the benefit of the individual,
(iv) a registered retirement savings plan or registered retirement income fund under which the individual is the annuitant, or
(v) a licensed annuities provider to acquire a qualifying annuity for the individual.
Marginal note:Taxation of transfers
(22) If subsection (21) applies to an amount transferred from a member’s account under a PRPP on behalf of an individual,
(a) the amount shall not, by reason only of that transfer, be included in computing the income of the individual; and
(b) no deduction may be made in respect of the amount in computing the income of any taxpayer.
Marginal note:Taxation of qualifying annuity
(23) If an amount is transferred in accordance with subsection (21) to acquire a qualifying annuity, there shall be included — under this section and not under any other provision of this Act — in computing an individual’s income for a taxation year any amount received by the individual during the year out of or under the annuity or as proceeds from a disposition in respect of the annuity.
Marginal note:Notice of intent
(24) The Minister may give notice (in subsections (25) and (26) referred to as a “notice of intent”) to an administrator of a PRPP in writing that the Minister intends to revoke the registration of the plan as a PRPP if
(a) the plan does not comply with the conditions for registration in subsection (2);
(b) the plan is not administered in accordance with the terms of the plan as registered;
(c) the plan becomes a revocable plan;
(d) a condition imposed under subsection (6) that applies with respect to the plan is not complied with; or
(e) registration of the plan under the Pooled Registered Pension Plans Act or a similar law of a province is refused or revoked.
Marginal note:Date of revocation
(25) The notice of intent shall specify the date on which revocation of a PRPP is to be effective, which date shall not be earlier than the earliest date on which one of the events described in subsection (24) occurs.
Marginal note:Notice of revocation
(26) At any time after 30 days after the day on which the notice of intent is mailed to an administrator of a PRPP, the Minister may give notice (in this subsection and in subsection (27) referred to as a “notice of revocation”) in writing to the administrator that the registration of the PRPP is revoked as of the date specified in the notice of revocation and that date may not be earlier than the date specified in the notice of intent.
Marginal note:Revocation of registration
(27) If the Minister gives a notice of revocation to the administrator of a PRPP, the registration of the PRPP is revoked as of the date specified in the notice of revocation, unless the Federal Court of Appeal or a judge of that Court, on application made at any time before the determination of an appeal pursuant to subsection 172(3), orders otherwise.
Marginal note:Voluntary revocation
(28) If the administrator of a PRPP so requests in writing, the Minister may give notice in writing to the administrator that the registration of the PRPP is revoked as of a specified date and that date may not be earlier than the date specified in the administrator’s request.
Marginal note:Single employer
(29) For the purposes of the definition “designated pooled pension plan” in subsection (1), all employers that are related to each other are deemed to be a single employer and all the structural units of a trade union, including each local, branch, national and international unit, are deemed to be a single employer.
Marginal note:Significant interest
(30) For the purposes of the definition “restricted investment” in subsection (1), a member of a pooled pension plan has a significant interest in a corporation, trust or partnership at any time if, at that time,
(a) in the case of a corporation, the member is a specified shareholder of the corporation; and
(b) in the case of a partnership or trust,
(i) the member is a specified unitholder of the partnership or the trust, as the case may be, or
(ii) the total fair market value of the member’s interests in the partnership or the trust, as the case may be, together with all interests in the partnership or the trust held by persons or partnerships with whom the member does not deal at arm’s length or is affiliated, is 10% or more of the fair market value of all interests in the partnership or the trust.
Marginal note:Contributions from exempt income
(31) Contributions may be made to a PRPP in respect of a member of the PRPP as if the member’s earned income (as defined in subsection 146(1)) for a taxation year included the member’s exempt earned income for the year.
Marginal note:Non-deductible contributions
(32) A contribution made by a member of a PRPP to the member’s account under the PRPP out of or from the member’s exempt earned income may not be deducted in computing the income of the member for any taxation year.
Marginal note:Exempt contributions not over-contributions
(33) For the purposes of Part X.1 as it applies because of subsection (11) in respect of contributions made to a PRPP,
(a) an individual’s earned income (as defined in subsection 146(1)) for any taxation year after 2012 includes the individual’s exempt earned income for that year;
(b) an individual’s exempt-income contribution amount for any taxation year is deemed to have been deducted by the individual under subsection 146(5) in computing the individual’s income for that year; and
(c) the description of D in paragraph (b) of the definition “unused RRSP deduction room” in subsection 146(1) is to be read without reference to subparagraph (iv).
Marginal note:Designation of exempt-income contribution amount
(34) A taxpayer may designate an amount as the taxpayer’s exempt-income contribution amount for a taxation year if the amount designated does not exceed the lesser of
(a) the taxpayer’s unused non-deductible PRPP room at the end of the preceding taxation year, and
(b) the total of the taxpayer’s contributions as a member to a PRPP for the year (other than contributions to which subsection (32) applies).
Marginal note:Regulations — other
(35) The Governor in Council may make regulations
(a) prescribing conditions applicable to administrators;
(b) requiring administrators to file information returns respecting pooled pension plans;
(c) enabling the Minister to require any person to provide the Minister with information for the purposes and provisions of this Act relating to PRPPs; and
(d) generally to carry out the purposes and provisions of this Act relating to PRPPs.
(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.
- Date modified: