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Technical Tax Amendments Act, 2012 (S.C. 2013, c. 34)

Assented to 2013-06-26

  •  (1) The portion of subsection 122.3(1) of the Act before paragraph (a) is replaced by the following:

    Marginal note:Overseas employment tax credit
    • 122.3 (1) If an individual is resident in Canada in a taxation year and, throughout any period of more than six consecutive months that began before the end of the year and included any part of the year (in this section referred to as the “qualifying period”)

  • (2) Subsection 122.3(1.1) of the Act is replaced by the following:

    • Marginal note:Excluded income

      (1.1) No amount may be included under paragraph (1)(d) in respect of an individual’s income for a taxation year from the individual’s employment by an employer

      • (a) if

        • (i) the employer carries on a business of providing services and does not employ in the business throughout the year more than five full-time employees,

        • (ii) the individual

          • (A) does not deal at arm’s length with the employer, or is a specified shareholder of the employer, or

          • (B) where the employer is a partnership, does not deal at arm’s length with a member of the partnership, or is a specified shareholder of a member of the partnership, and

        • (iii) but for the existence of the employer, the individual would reasonably be regarded as being an employee of a person or partnership that is not a specified employer; or

      • (b) if at any time in that portion of the qualifying period that is in the taxation year

        • (i) the employer provides the services of the individual to a corporation, partnership or trust with which the employer does not deal at arm’s length, and

        • (ii) the fair market value of all the issued shares of the capital stock of the corporation or of all interests in the partnership or trust, as the case may be, that are held, directly or indirectly, by persons who are resident in Canada is less than 10% of the fair market value of all those shares or interests.

  • (3) Subsections (1) and (2) apply to taxation years that begin after the day on which this Act receives royal assent.

 Subsection 122.5(7) of the Act is replaced by the following:

  • Marginal note:Effect of bankruptcy

    (7) For the purpose of this section, if in a taxation year an individual becomes bankrupt, the individual’s income for the taxation year shall include the individual’s income for the taxation year that begins on January 1 of the calendar year that includes the date of bankruptcy.

  •  (1) Paragraph (a) of the definition “full rate taxable income” in subsection 123.4(1) of the Act is amended by striking out “and” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

    • (iii) the corporation’s income for the year from a personal services business; and

  • (2) The portion of paragraph (b) of the definition “full rate taxable income” in subsection 123.4(1) of the Act before subparagraph (i) is replaced by the following:

    • (b) if the corporation is a Canadian-controlled private corporation throughout the year, the amount by which that portion of the corporation’s taxable income for the year that is subject to tax under subsection 123(1) exceeds the total of

  • (3) Subparagraph (b)(iii) of the definition “full rate taxable income” in subsection 123.4(1) of the Act is replaced by the following:

    • (iii) except for a corporation that is, throughout the year, a cooperative corporation (within the meaning assigned by subsection 136(2)) or a credit union, the corporation’s aggregate investment income for the year, within the meaning assigned by subsection 129(4), and

  • (4) Subsection (1) applies to taxation years that begin after October 31, 2011.

  • (5) Subsection (2) applies to taxation years that end after October 31, 2011.

  • (6) Subsection (3) applies to the 2001 and subsequent taxation years.

  •  (1) Subparagraphs 125(1)(b)(i) and (ii) of the Act are replaced by the following:

    • (i) 100/28 of the total of the amounts that would be deductible under subsection 126(1) from the tax for the year otherwise payable under this Part by it if those amounts were determined without reference to sections 123.3 and 123.4,

    • (ii) the amount determined by multiplying the total of the amounts that would be deductible under subsection 126(2) from the tax for the year otherwise payable under this Part by it, if those amounts were determined without reference to section 123.4, by the relevant factor for the year, and

  • (2) The description of B in subsection 125(5.1) of the Act is replaced by the following:

    B 
    is the amount determined by the formula

    0.225% × (D – $10 million)

    where

    D 
    is
    • (a) if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the preceding taxation year,

    • (b) if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the particular taxation year, or

    • (c) if, in the particular taxation year, the corporation is associated with one or more particular corporations, the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation or of any of the particular corporations for its last taxation year that ended in the preceding calendar year.

  • (3) Subparagraph 125(1)(b)(i) of the Act, as enacted by subsection (1), applies to taxation years that end after October 31, 2011, except that, for a taxation year that includes that day, that subparagraph, as enacted by subsection (1), is to be read as follows:

    • (i) the total of

      • (A) 10/3 of the total of the amounts that would be deductible under subsection 126(1) from the tax for the year otherwise payable under this Part by it if those amounts were determined without reference to sections 123.3 and 123.4, that the number of days in the taxation year that are on or before October 31, 2011 is of the total of days in the taxation year, and

      • (B) 100/28 of the total of the amounts that would be deductible under subsection 126(1) from the tax for the year otherwise payable under this Part by it if those amounts were determined without reference to sections 123.3 and 123.4, that the number of days in the taxation year that are after October 31, 2011 is of the total of days in the taxation year,

  • (4) Subparagraph 125(1)(b)(ii) of the Act, as enacted by subsection (1), applies to the 2003 and subsequent taxation years.

  • (5) Subsection (2) applies to taxation years that begin after December 20, 2002, except that, in its application to a corporation described in subsection 181.1(3) of the Act for taxation years of the corporation that began before the day on which this Act receives royal assent, the description of B in subsection 125(5.1) of the Act, as enacted by subsection (2), is to be read as follows:

    B 
    is
    • (a) if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the amount that would, but for subsections 181.1(2) and (4), be the corporation’s tax payable under Part I.3 for the preceding taxation year,

    • (b) if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the amount that would, but for subsections 181.1(2) and (4), be the corporation’s tax payable under Part I.3 for the particular taxation year, and

    • (c) if, in the particular taxation year, the corporation is associated with one or more particular corporations, the amount determined by the formula

      0.225% x (D – E)

      where

      D 
      is the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation or of any of the particular corporations for its last taxation year that ended in the preceding calendar year, and
      E 
      is $10 million.
  •  (1) Subparagraph 125.1(1)(b)(ii) of the Act is replaced by the following:

    • (ii) the amount determined by multiplying the total of the amounts that would be deductible under subsection 126(2) from the tax for the year otherwise payable under this Part by it, if those amounts were determined without reference to section 123.4, by the relevant factor for the year, and

  • (2) The definition bénéfices de fabrication et de transformation au Canada in subsection 125.1(3) of the French version of the Act is replaced by the following:

    « bénéfices de fabrication et de transformation au Canada »

    “Canadian manufacturing and processing profits”

    bénéfices de fabrication et de transformation au Canada En ce qui concerne une société pour une année d’imposition, la partie du total des montants représentant chacun le revenu que la société a tiré pour l’année d’une entreprise exploitée activement au Canada, déterminée en vertu des règles établies à cette fin par règlement pris sur recommandation du ministre des Finances, qui doit s’appliquer à la fabrication ou à la transformation au Canada de marchandises destinées à la vente ou à la location.

  • (3) Subparagraphs (l)(i) and (ii) of the definition fabrication ou transformation in subsection 125.1(3) of the French version of the Act are replaced by the following:

    • (i) de la vente ou de la location de marchandises qu’elle a fabriquées ou transformées au Canada,

    • (ii) de la fabrication ou de la transformation au Canada de marchandises destinées à la vente ou à la location, sauf des marchandises qu’elle devait vendre ou louer elle-même.

  • (4) Subsection (1) applies to the 2003 and subsequent taxation years.

 

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