Economic Action Plan 2014 Act, No. 2 (S.C. 2014, c. 39)
Full Document:
Assented to 2014-12-16
42. (1) Subsection 127(7) of the Act is replaced by the following:
Marginal note:Investment tax credit of certain trusts
(7) If, in a particular taxation year of a taxpayer who is a beneficiary under a trust that is a graduated rate estate or that is deemed to be in existence by section 143, an amount is determined in respect of the trust under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9) for its taxation year that ends in that particular taxation year, the trust may, in its return of income for its taxation year that ends in that particular taxation year, designate the portion of that amount that can, having regard to all the circumstances including the terms and conditions of the trust, reasonably be considered to be attributable to the taxpayer and was not designated by the trust in respect of any other beneficiary of the trust, and that portion is to be added in computing the investment tax credit of the taxpayer at the end of that particular taxation year and is to be deducted in computing the investment tax credit of the trust at the end of its taxation year that ends in that particular taxation year.
(2) Subsection (1) applies to the 2016 and subsequent taxation years.
43. (1) The description of C in section 127.51 of the Act is replaced by the following:
- C
- is
(a) $40,000, in the case of an individual (other than a trust) or a graduated rate estate; and
(b) nil, in any other case; and
(2) Subsection (1) applies to the 2016 and subsequent taxation years.
44. (1) Subparagraph 127.52(1)(h)(i) of the Act is replaced by the following:
(i) the amounts deducted under any of subsections 110(2), 110.6(2), (2.1) and (12) and 110.7(1),
(2) Subparagraph 127.52(1)(h)(i) of the Act, as enacted by subsection (1), is replaced by the following:
(i) the amounts deducted under any of subsections 110(2), 110.6(2) and (2.1) and 110.7(1),
(3) Subsection (1) applies to amounts deducted in respect of the 2014 and subsequent taxation years.
(4) Subsection (2) applies to amounts deducted in respect of the 2016 and subsequent taxation years.
45. (1) Section 127.53 of the Act is repealed.
(2) Subsection (1) applies to the 2016 and subsequent taxation years.
46. (1) Subparagraph 128.1(1)(b)(iv) of the Act is replaced by the following:
(iv) an excluded right or interest of the taxpayer, other than an interest described in paragraph (k) of the definition “excluded right or interest” in subsection (10),
(2) Paragraph (k) of the definition “excluded right or interest” in subsection 128.1(10) of the Act is replaced by the following:
(k) an interest of the individual in a non-resident testamentary trust that is an estate that arose on and as a consequence of a death if
(i) the interest was never acquired for consideration, and
(ii) the estate has been in existence for no more than 36 months; or
(3) Subsections (1) and (2) apply to the 2016 and subsequent taxation years.
47. (1) The portion of paragraph 138.1(1)(a) of the Act before subparagraph (i) is replaced by the following:
(a) a trust (in this section referred to as the “related segregated fund trust”) is deemed to be created at the time that is the later of
(2) Subsection (1) applies to the 2016 and subsequent taxation years.
48. (1) The portion of paragraph 143(1)(a) of the Act before subparagraph (i) is replaced by the following:
(a) a trust is deemed to be created on the day that is the later of
(2) The portion of subsection 143(2) of the Act before paragraph (a) is replaced by the following:
Marginal note:Election in respect of income
(2) If the trust referred to in subsection (1) in respect of a congregation so elects in respect of a taxation year in writing filed with the Minister on or before the trust’s filing-due date for the year and all the congregation’s participating members are specified in the election in accordance with subsection (5), the following rules apply:
(3) The portion of subsection 143(3.1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Election in respect of gifts
(3.1) For the purposes of section 118.1, if the eligible amount of a gift made in a taxation year by a trust referred to in subsection (1) in respect of a congregation would, but for this subsection, be included in the total charitable gifts, total cultural gifts or total ecological gifts of the trust for the year and the trust so elects in its return of income under this Part for the year,
(4) The definition “total Crown gifts” in subsection 143(4) of the Act is repealed.
(5) The portion of subsection 143(5) of the Act before paragraph (a) is replaced by the following:
Marginal note:Specification of family members
(5) For the purpose of applying subsection (2) to a particular election by the trust referred to in subsection (1) in respect of a congregation for a particular taxation year,
(6) Subsections (1) to (5) apply to the 2016 and subsequent taxation years.
49. (1) The portion of paragraph 143.1(1.2)(a) of the Act before subparagraph (i) is replaced by the following:
(a) a trust (in this section referred to as the “amateur athlete trust”) is deemed
(2) Subsection (1) applies to the 2016 and subsequent taxation years.
50. (1) The portion of paragraph (a) of the definition “earned income” in subsection 146(1) of the Act before subparagraph (i) is replaced by the following:
(a) the taxpayer’s income (other than an amount described in paragraph 12(1)(z)) for a period in the year throughout which the taxpayer was resident in Canada from
(2) The definition “earned income” in subsection 146(1) of the Act is amended by adding the following after paragraph (b.1):
(b.2) the taxpayer’s qualifying performance income (as defined in subsection 143.1(1)) that is deemed by paragraph 143.1(1.2)(c) to be income of an amateur athlete trust for the year,
(3) The portion of paragraph (c) of the definition “earned income” in subsection 146(1) of the Act before subparagraph (i) is replaced by the following:
(c) the taxpayer’s income (other than an amount described in paragraph 12(1)(z)) for a period in the year throughout which the taxpayer was not resident in Canada from
(4) Subsections (1) to (3) apply to an individual’s 2014 and subsequent taxation years, except that if an individual elects in writing under this subsection in respect of the individual’s 2011, 2012 or 2013 taxation year and the election is filed with the Minister of National Revenue before March 3, 2015, subsections (1) to (3) apply to the individual’s taxation year in respect of which the election is filed and subsequent taxation years.
51. (1) Subsection 146.1(11) of the Act is repealed.
(2) Subsection (1) applies to the 2016 and subsequent taxation years.
52. (1) Subsection 148(2) of the Act is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):
(e) if, in respect of a life insurance policy issued after 2016 that is an exempt policy, a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy is paid at any time, the payment results in the termination of the coverage but not the policy and the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) paid in respect of the coverage at that time exceeds the amount determined in respect of the coverage under subclause (A)(I) of the description of B in subparagraph 306(4)(a)(iii) of the Income Tax Regulations on the policy anniversary (as defined in section 310 of the Income Tax Regulations) that is on, or that first follows, the date of the death of an individual whose life is insured under the coverage, then a policyholder with an interest in the policy that gives rise to an entitlement (of the policyholder, beneficiary or assignee, as the case may be) to receive all or a portion of that excess, is deemed, at that time, to dispose of a part of the interest and to be entitled to receive proceeds of the disposition equal to that excess or portion, as the case may be.
(2) Subsection 148(4) of the Act is replaced by the following:
Marginal note:Partial surrender — ACB prorated
(4) If a taxpayer disposes (other than because of paragraph (2)(a) or as described in paragraph (b) of the definition “disposition” in subsection (9)) of a part of the taxpayer’s interest in a life insurance policy (other than an annuity contract) last acquired after December 1, 1982 or an annuity contract, the adjusted cost basis to the taxpayer, immediately before the disposition, of the part is the amount determined by the formula
A × B/C
where
- A
- is the adjusted cost basis to the taxpayer of the taxpayer’s interest immediately before the disposition,
- B
- is the proceeds of the disposition, and
- C
- is
(a) if the policy is a policy (other than an annuity contract) issued after 2016, the amount determined by the formula
D – E
where
- D
- is the interest’s cash surrender value immediately before the disposition, and
- E
- is the total of all amounts each of which is an amount payable, immediately before the disposition, by the taxpayer in respect of a policy loan in respect of the policy, and
(b) in any other case, the accumulating fund with respect to the taxpayer’s interest, as determined in prescribed manner, immediately before the disposition.
Marginal note:Repayment of policy loan on partial surrender
(4.01) For the purposes of the definition “adjusted cost basis” in subsection (9) and paragraph 60(s), a particular amount is deemed to be a repayment made at a particular time by a taxpayer in respect of a policy loan in respect of a life insurance policy if
(a) the policy is issued after 2016;
(b) the taxpayer disposes of a part of the taxpayer’s interest in the policy immediately after the particular time;
(c) paragraph (a) of the definition “proceeds of the disposition” in subsection (9) applies to determine the proceeds of the disposition of the interest;
(d) the particular amount is not
(i) otherwise a repayment by the taxpayer in respect of the policy loan, and
(ii) described in subparagraph (i) of the description of C in the definition “adjusted cost basis” in subsection (9); and
(e) the amount payable by the taxpayer in respect of the policy loan is reduced by the particular amount as a consequence of the disposition.
(3) The portion of the definition “adjusted cost basis” in subsection 148(9) of the Act before the description of A is replaced by the following:
“adjusted cost basis”
« coût de base rajusté »
“adjusted cost basis”, at any time to a policyholder of the policyholder’s interest in a life insurance policy, means the amount determined by the formula
(A + B + C + D + E + F + G + G.1) – (H + I + J + K + L + M + N + O)
where
(4) The description of E in the definition “adjusted cost basis” in subsection 148(9) of the Act is replaced by the following:
- E
- is the total of all amounts each of which is an amount that is in respect of the repayment, before that time and after March 31, 1978, of a policy loan and that does not exceed the amount determined by the formula,
E.1 – E.2
where
- E.1
- is the total of
(a) the proceeds of the disposition, if any, in respect of the loan,
(b) if the policy is issued after 2016 (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the repayment is at or after the particular time), the portion of the loan applied, immediately after the loan, to pay a premium under the policy as provided for under the terms and conditions of the policy (except to the extent that the portion is described in subparagraph (i) of the description of C in the definition “proceeds of the disposition” in this subsection), and
(c) the amount, if any, described in the description of J in this definition (but not including any payment of interest) in respect of the loan, and
- E.2
- is the total all amounts each of which is an amount in respect of a repayment, of the loan, referred to in clause (2)(a)(ii)(B) or deductible under paragraph 60(s) of this Act or paragraph 20(1)(hh) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952 (as it applied in taxation years before 1985),
(5) The description of G.1 in the definition “adjusted cost basis” in subsection 148(9) of the Act is replaced by the following:
- G.1
- is, in the case of an interest in a life insurance policy (other than an annuity contract) to which subsection (8.2) applied before that time, the total of all amounts each of which is a mortality gain, as defined by regulation and determined by the issuer of the policy in accordance with the regulations, in respect of the interest immediately before the end of the calendar year that ended in a taxation year that began before that time,
(6) The definition “adjusted cost basis” in subsection 148(9) of the Act is amended by striking out “and” at the end of the description of K and by adding the following after the description of L:
- M
- is, in the case of a policy that is issued after 2016 and is not an annuity contract, the total of all amounts each of which is a premium paid by or on behalf of the policyholder, or a cost of insurance charge incurred by the policyholder, before that time (and, in the case where the particular time at which the policy is issued is determined under subsection (11), at or after the particular time), to the extent that the premium or charge is in respect of a benefit under the policy other than a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations),
- N
- is, in the case of a policy that is issued after 2016 and is not an annuity contract, the total of all amounts each of which is the policyholder’s interest in an amount paid — to the extent that the cash surrender value of the policy, if any, or the fund value of the policy (as defined in subsection 1401(3) of the Income Tax Regulations), if any, is reduced by the amount paid — before that time (and, in the case where the particular time at which the policy is issued is determined under subsection (11), at or after the particular time) that
(a) is a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations), or a disability benefit, under the policy, and
(b) does not result in the termination of a coverage (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy,
- O
- is, in the case of a policy that is issued after 2016 and is not an annuity contract, the total of all amounts each of which is — if a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy is paid before that time (and, in the case where the particular time at which the policy is issued is determined under subsection (11), at or after the particular time) and the payment results in the termination of the coverage — the amount, if any, determined with respect to the coverage by the formula
[P × (Q + R + S)/T] – U
where
- P
- is the adjusted cost basis of the policyholder’s interest immediately before the termination,
- Q
- is the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy paid in respect of the coverage on the termination,
- R
- is the amount that would be the present value, determined for the purposes of section 307 of the Income Tax Regulations, on the last policy anniversary (as defined in section 310 of the Income Tax Regulations) on or before the termination, of the fund value of the coverage (as defined in subsection 1401(3) of the Income Tax Regulations) if the fund value of the coverage on that policy anniversary were equal to the fund value of the coverage on the termination,
- S
- is the amount that would be determined, on that policy anniversary, for paragraph (a) of the description of C in the definition “net premium reserve” in subsection 1401(3) of the Income Tax Regulations in respect of the coverage, if the benefit on death under the coverage, and the fund value of the coverage, on that policy anniversary were equal to the benefit on death under the coverage and the fund value of the coverage, as the case may be, on the termination,
- T
- is the amount that would be, on that policy anniversary, the net premium reserve (as defined in subsection 1401(3) of the Income Tax Regulations) in respect of the policy for the purposes of section 307 of the Income Tax Regulations, if the fund value benefit under the policy, the benefit on death under each coverage and the fund value of each coverage on that policy anniversary were equal to the fund value benefit, the benefit on death under each coverage and the fund value of each coverage, as the case may be, under the policy on the termination, and
- U
- is the amount, if any, determined under subsection (4) in respect of a disposition before that time of the interest because of paragraph (2)(e) in respect of the payment in respect of the fund value benefit under the policy paid in respect of the coverage on the termination;
(7) Paragraph (c) of the definition “premium” in subsection 148(9) of the Act is replaced by the following:
(c) the portion of any amount paid under the policy with respect to an accidental death benefit, a disability benefit, an additional risk as a result of insuring a substandard life, an additional risk in respect of the conversion of a term policy into another policy after the end of the year, an additional risk under a settlement option, or an additional risk under a guaranteed insurability benefit, if
(i) in the case of an annuity contract, a policy issued before 2017 or in respect of which the particular time at which the policy is issued is determined under subsection (11), where the interest in the policy was last acquired after December 1, 1982, the payment is made after May 31, 1985 and, if the particular time at which the policy is issued is determined under subsection (11), before the particular time, or
(ii) in the case where the taxpayer’s interest in the policy was last acquired before December 2, 1982,
(A) subsection 12.2(9) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, applies to the interest,
(B) the particular time at which the policy is issued is determined under subsection (11), and
(C) the payment is made in the period that starts at the later of May 31, 1985 and the first time at which that subsection 12.2(9) applies in respect of the interest and that ends at the particular time;
(8) Subparagraph (i) of the description of C in paragraph (a) of the definition “proceeds of the disposition” in subsection 148(9) of the Act is replaced by the following:
(i) an amount by which the amount payable in respect of a policy loan in respect of the policy is reduced as a consequence of the disposition, except that if the policy is issued after 2016 and the disposition is of a part of the interest (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the disposition occurs at or after the particular time), only to the extent that the amount represents the portion of the loan applied, immediately after the loan, to pay a premium under the policy, as provided for under the terms and conditions of the policy,
(9) Section 148 of the Act is amended by adding the following after subsection (10):
Marginal note:Loss of grandfathering
(11) For the purposes of determining at and after a particular time whether a life insurance policy (other than an annuity contract) issued before 2017 is treated as issued after 2016 under this section (other than this subsection) and sections 306 (other than subsection (9)), 307, 308, 310, 1401 and 1403 of the Income Tax Regulations (except as they apply for the purposes of subsection 211.1(3)), the policy is deemed to be a policy issued at the particular time if the particular time is the first time after 2016 at which life insurance — in respect of a life, or two or more lives jointly insured, and in respect of which a particular schedule of premium or cost of insurance rates applies — is
(a) converted (other than only because of a change in premium or cost of insurance rates) into another type of life insurance; or
(b) if the insurance (other than insurance paid for with policy dividends or that is reinstated) is medically underwritten after 2016 (other than to obtain a reduction in the premium or cost of insurance rates under the policy), added to the policy.
- Date modified: