Economic Action Plan 2014 Act, No. 2 (S.C. 2014, c. 39)
Full Document:
Assented to 2014-12-16
20. (1) Subsection 90(8) of the Act is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):
(d) subject to subsection (8.1), an upstream deposit owing to an eligible bank affiliate.
(2) Section 90 of the Act is amended by adding the following after subsection (8):
Marginal note:Upstream deposit — eligible bank affiliate
(8.1) For the purposes of this section, if a taxpayer is an eligible Canadian bank and an eligible bank affiliate of the taxpayer is owed, at any time in a particular taxation year of the affiliate or the immediately preceding taxation year, an upstream deposit,
(a) the affiliate is deemed to make a loan to the taxpayer immediately before the end of the particular year equal to the amount determined by the following formula, where all amounts referred to in the formula are to be determined using Canadian currency:
A – B – C
where
- A
- is 90% of the average of all amounts each of which is, in respect of a calendar month that ends in the particular year, the greatest total amount at any time in the month of the upstream deposits owing to the affiliate,
- B
- is the lesser of
(i) the amount, if any, by which the affiliate’s excess liquidity for the particular year exceeds the average of all amounts each of which is, in respect of a calendar month that ends in the particular year, the greatest total amount at any time in the month of eligible Canadian indebtedness owing to the affiliate, and
(ii) the amount determined for A, and
- C
- is the amount, if any, by which the amount determined for A for the immediately preceding year exceeds the amount determined for B for the immediately preceding year; and
(b) if the formula in paragraph (a) would, in the absence of section 257, result in a negative amount for the particular year,
(i) the taxpayer is deemed to repay immediately before the end of the particular year — in an amount equal to the absolute value of the negative amount and in the order in which they arose — loans made by the affiliate under paragraph (a) in a prior taxation year and not previously repaid, and
(ii) the repayment is deemed to not be part of a series of loans or other transactions and repayments.
(3) Subsection 90(15) of the Act is amended by adding the following in alphabetical order:
“eligible bank affiliate”
« filiale bancaire admissible »
“eligible bank affiliate” has the same meaning as in subsection 95(2.43).
“eligible Canadian bank”
« banque canadienne admissible »
“eligible Canadian bank” has the same meaning as in subsection 95(2.43).
“eligible Canadian indebtedness”
« dettes canadiennes admissibles »
“eligible Canadian indebtedness” has the same meaning as in subsection 95(2.43).
“excess liquidity”
« liquidités excédentaires »
“excess liquidity” has the same meaning as in subsection 95(2.43).
“upstream deposit”
« dépôt en amont »
“upstream deposit” has the same meaning as in subsection 95(2.43).
(4) Subsections (1) to (3) apply in respect of taxation years of a foreign affiliate of a taxpayer that begin after February 27, 2014.
21. (1) The portion of subsection 93.1(1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Shares held by partnership
93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2) and 20(12), sections 93 and 113, paragraph 128.1(1)(d), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions), subsection 95(2.2) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that
(2) The portion of subsection 93.1(1) of the Act before paragraph (a), as enacted by subsection (1), is replaced by the following:
Marginal note:Shares held by partnership
93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2), 20(12) and 39(2.1), sections 90, 93 and 113, paragraph 128.1(1)(d), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions), paragraph 95(2)(g.04), subsection 95(2.2) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that
(3) The portion of subsection 93.1(1) of the Act before paragraph (a), as enacted by subsection (2), is replaced by the following:
Marginal note:Shares held by partnership
93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2), 20(12) and 39(2.1), sections 90, 93 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3 and subsection 219.1(2), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions), paragraph 95(2)(g.04), subsection 95(2.2) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that
(4) The portion of subsection 93.1(1) of the Act before paragraph (a), as enacted by subsection (3), is replaced by the following:
Marginal note:Shares held by partnership
93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of a specified provision, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that
(5) Section 93.1 of the Act is amended by adding the following after subsection (1):
Marginal note:Specified provisions for subsection (1)
(1.1) For the purposes of subsection (1), the specified provisions are
(a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93, 93.3 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3, subsection 219.1(2) and section 233.4;
(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);
(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and
(d) paragraph 95(2)(g.04), subsection 95(2.2) and section 126.
(6) Paragraph 93.1(2)(a) of the Act is replaced by the following:
(a) for the purposes of sections 93 and 113 and any regulations made for the purposes of those sections, each member of the partnership (other than another partnership) is deemed to have received the proportion of the partnership dividend that
(i) the fair market value of the member’s interest held, directly or indirectly through one or more other partnerships, in the partnership at that time
is of
(ii) the fair market value of all the interests in the partnership held directly by members of the partnership at that time;
(7) Paragraph 93.1(3)(c) of the Act is replaced by the following:
(c) subsections 39(2.1), 40(3.6) and 87(8.3).
(8) Section 93.1 of the Act is amended by adding the following after subsection (3):
Marginal note:Partnership deemed to be corporation
(4) For the purpose of applying clause 95(2)(a)(ii)(D) in respect of an amount paid or payable by a partnership to a foreign affiliate, of a taxpayer, that is a member of the partnership or to another foreign affiliate of the taxpayer,
(a) if, at any time, all the members (in this subsection referred to as “member affiliates”) of the partnership are foreign affiliates of the taxpayer,
(i) the partnership is deemed to be, at that time in respect of the taxpayer and the member affiliates, a non-resident corporation without share capital, and
(ii) all the membership interests in the partnership are deemed to be, at that time, equity interests in the corporation held by the member affiliates; and
(b) if, at any time, all the member affiliates are resident in a particular country and the partnership does not carry on business outside the particular country, the partnership is deemed to be, at that time, resident in the particular country.
Marginal note:Computing FAPI in respect of partnership
(5) For the purpose of applying a relevant provision in respect of a foreign affiliate of a taxpayer resident in Canada, if at any time the taxpayer is a partnership of which a particular corporation resident in Canada, or a foreign affiliate of the particular corporation, is a member and if, based on the relevant assumptions, the particular corporation and the taxpayer would be related, then
(a) a non-resident corporation that is, at that time, a foreign affiliate of the particular corporation is deemed to be, at that time, a foreign affiliate of the taxpayer; and
(b) the taxpayer is deemed to have, at that time, a qualifying interest in respect of that foreign affiliate if the particular corporation has, at that time, a qualifying interest in respect of the non-resident corporation.
Marginal note:Relevant provisions and assumptions
(6) For the purposes of subsection (5),
(a) the relevant provisions are
(i) paragraph (b) of the description of A in the definition “foreign accrual property income” in subsection 95(1),
(ii) in determining whether a property of a foreign affiliate of a taxpayer is excluded property of the affiliate, the description of B in the definition “foreign accrual property income” in subsection 95(1),
(iii) paragraphs 95(2)(a) and (g), and
(iv) subsections 95(2.2) and (2.21); and
(b) the relevant assumptions are that
(i) the partnership is a non-resident corporation having capital stock of a single class divided into 100 issued shares that each have full voting rights, and
(ii) each member of the partnership (other than another partnership) owns, at any time, the proportion of the issued shares of that class that
(A) the fair market value of the member’s interest held, directly or indirectly through one or more partnerships, in the partnership at that time
is of
(B) the fair market value of all the interests in the partnership held directly by members of the partnership at that time.
(9) Subsection (1) applies to taxation years of a foreign affiliate of a taxpayer that end after 1999.
(10) Subsection (2) is deemed to have come into force on August 20, 2011.
(11) Subsection (3) is deemed to have come into force on March 29, 2012.
(12) Subsections (4) and (5) are deemed to have come into force on July 12, 2013. However, if a taxpayer elects under subsection (15), then in respect of the taxpayer, subsections (4) and (5) are deemed to have come into force on January 1, 2010 and subsection 93.1(1.1) of the Act, as enacted by subsection (5), is to be read
(a) in respect of any time that is after 2009 and before August 20, 2011 as follows:
(1.1) For the purposes of subsection (1), the specified provisions are
(a) subsections (2), (5) and 20(12), sections 93 and 113 and paragraph 128.1(1)(d);
(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);
(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and
(d) subsection 95(2.2) and section 126.
(b) in respect of any time that is after August 19, 2011 and before March 29, 2012 as follows:
(1.1) For the purposes of subsection (1), the specified provisions are
(a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93 and 113 and paragraph 128.1(1)(d);
(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);
(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and
(d) paragraph 95(2)(g.04), subsection 95(2.2) and section 126.
(c) in respect of any time that is after March 28, 2012 and before July 12, 2013 as follows:
(1.1) For the purposes of subsection (1), the specified provisions are
(a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3 and subsection 219.1(2);
(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);
(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and
(d) paragraph 95(2)(g.04), subsection 95(2.2) and section 126.
(13) Subsection (6) applies to dividends received after November 1999.
(14) Subsection (7) and subsection 93.1(4) of the Act, as enacted by subsection (8), apply in respect of taxation years of a foreign affiliate of a taxpayer that end after July 12, 2013.
(15) Subsections 93.1(5) and (6) of the Act, as enacted by subsection (8), apply in respect of taxation years of foreign affiliates of a taxpayer that end after July 12, 2013. However, if the taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the day that an information return referred to in subsection 229(1) of the Income Tax Regulations is required (or would be required if the taxpayer were a Canadian partnership), pursuant to subsections 229(5) and (6) of the Income Tax Regulations, to be filed in respect of the fiscal period of the taxpayer that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then subsections 93.1(5) and (6) of the Act, as enacted by subsection (8), are deemed to have come into force on January 1, 2010.
- Date modified: