Budget Implementation Act, 2016, No. 2 (S.C. 2016, c. 12)
Full Document:
Assented to 2016-12-15
16 Subparagraph 53(1)(e)(iii) of the Act is replaced by the following:
(iii) the taxpayer’s share of the amount, if any, by which
(A) any proceeds of a life insurance policy received by the partnership after 1971 and before that time in consequence of the death of any person whose life was insured under the policy,
exceeds the total of all amounts each of which is
(B) the adjusted cost basis (in this subparagraph as defined in subsection 148(9)), immediately before the death, of
(C) the amount by which the fair market value of consideration given in respect of a disposition of an interest in the policy exceeds the greater of the amount determined under subparagraph 148(7)(a)(i) in respect of the disposition and the adjusted cost basis to the policyholder of the interest immediately before the disposition, if
(D) if the death occurs after March 21, 2016, an interest in the policy was disposed of by a policyholder (other than a taxable Canadian corporation) after 1999 and before March 22, 2016 and subsection 148(7) applied to the disposition, the amount, if any, determined by the formula
A − B
where
- A
- is the amount, if any, by which the lesser of the adjusted cost basis to the policyholder of the interest immediately before the disposition and the fair market value of consideration given in respect of the disposition exceeds the amount determined under subparagraph 148(7)(a)(i) in respect of the disposition, and
- B
- is the absolute value of the negative amount, if any, that would be, in the absence of section 257, the adjusted cost basis, immediately before the death, of the interest in the policy,
17 (1) The definition eligible capital property in section 54 of the Act is repealed.
(2) Paragraph (k) of the definition proceeds of disposition in section 54 of the Act is replaced by the following:
(k) any amount that would otherwise be proceeds of disposition of property of a taxpayer to the extent that the amount is deemed by subsection 84.1(1), 212.1(1.1) or 212.2(2) to be a dividend paid to the taxpayer; (produit de disposition)
(3) Subsection (1) comes into force or is deemed to have come into force on January 1, 2017.
(4) Subsection (2) applies in respect of dispositions that occur after March 21, 2016.
18 (1) The definition goodwill amount in subsection 56.4(1) of the Act is replaced by the following:
- goodwill amount
goodwill amount, of a taxpayer, is an amount the taxpayer has or may become entitled to receive that would, if this Act were read without reference to this section, be required to be included in the proceeds of disposition of a property included in Class 14.1 of Schedule II to the Income Tax Regulations, or is an amount to which subsection 13(38) applies, in respect of a business carried on by the taxpayer through a permanent establishment located in Canada. (montant pour achalandage)
(2) Paragraph 56.4(3)(b) of the Act is replaced by the following:
(b) the amount would, if this Act were read without reference to this section, be required to be included in the proceeds of disposition of a property included in Class 14.1 of Schedule II to the Income Tax Regulations, or is an amount to which subsection 13(38) applies, in respect of the business to which the restrictive covenant relates, and the particular taxpayer elects (or if the amount is payable by the purchaser in respect of a business carried on in Canada by the purchaser, the particular taxpayer and the purchaser jointly elect) in prescribed form to apply this paragraph in respect of the amount; or
(3) Paragraph 56.4(4)(b) of the Act is replaced by the following:
(b) if an election has been made under paragraph (3)(b) in respect of the amount, to be considered to be incurred by the purchaser on account of capital for the purpose of determining the cost of the property or for the purposes of subsection 13(35), as the case may be, and not to be an amount paid or payable for all other purposes of the Act; and
(4) Subsections (1) to (3) come into force or are deemed to have come into force on January 1, 2017.
19 (1) Paragraph 69(5)(d) of the Act is replaced by the following:
(d) subsections 13(21.2), 18(15) and 40(3.4) and (3.6) do not apply in respect of any property disposed of on the winding-up.
(2) Subsection (1) comes into force or is deemed to have come into force on January 1, 2017.
20 (1) Subsection 70(3.1) of the Act is replaced by the following:
Marginal note:Exception
(3.1) For the purposes of this section, rights or things do not include an interest in a life insurance policy (other than an annuity contract of a taxpayer where the payment therefor was deductible in computing the taxpayer’s income because of paragraph 60(l) or was made in circumstances in which subsection 146(21) applied), land included in the inventory of a business, a Canadian resource property or a foreign resource property.
(2) Subsection 70(5.1) of the Act is replaced by the following:
Marginal note:Transfer or distribution — Class 14.1
(5.1) Notwithstanding subsection (6), if property included in Class 14.1 of Schedule II to the Income Tax Regulations of the taxpayer in respect of a business carried on by the taxpayer immediately before the taxpayer’s death that is a property to which subsection (5) would otherwise apply is, as a consequence of the death, transferred or distributed (otherwise than by way of a distribution of property by a trust that claimed a deduction under paragraph 20(1)(a) or (b) in respect of the property or in circumstances to which subsection 24(2) applies) to any person (in this subsection referred to as the beneficiary), the following rules apply:
(a) paragraphs (5)(a) and (b) do not apply in respect of the property;
(b) the taxpayer is deemed to have, immediately before the taxpayer’s death, disposed of the property and received proceeds of disposition equal to the lesser of the capital cost and the cost amount to the taxpayer of the property immediately before the death;
(c) the beneficiary is deemed to have acquired the property at the time of the death at a cost equal to those proceeds; and
(d) paragraph (5)(c) applies as if the references to “paragraph (a)” were read as references to “paragraph (5.1)(b)” and the reference to “paragraph (b)” were read as reference to “paragraph (5.1)(c)”.
(3) Subsection 70(6.2) of the Act is replaced by the following:
Marginal note:Election
(6.2) Subsection (5.1), (6) or (6.1) does not apply to any property of a deceased taxpayer in respect of which the taxpayer’s legal representative elects, in the taxpayer’s return of income under this Part (other than a return of income filed under subsection (2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) for the year in which the taxpayer died, to have subsection (5) or (5.4), as the case may be, apply.
(4) The portion of subsection 70(9.8) of the Act before paragraph (a) is replaced by the following:
Marginal note:Leased farm or fishing property
(9.8) For the purposes of subsections (9) and 73(3) and paragraph (d) of the definition qualified farm or fishing property in subsection 110.6(1), a property of an individual is, at a particular time, deemed to be used by the individual in a farming or fishing business carried on in Canada if, at that particular time, the property is being used, principally in the course of carrying on a farming or fishing business in Canada, by
(5) Subsections (1) to (4) come into force or are deemed to have come into force on January 1, 2017.
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