Budget Implementation Act, 2017, No. 2 (S.C. 2017, c. 33)
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Assented to 2017-12-14
PART 1Amendments to the Income Tax Act and to Related Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
74 (1) The portion of subparagraph 212(1)(h)(iii.1) of the Act before clause (A) is replaced by the following:
(iii.1) the portion of the payment that is transferred by the payer on behalf of the non-resident person, pursuant to an authorization in prescribed form, to a pooled registered pension plan, registered pension plan, registered retirement savings plan, registered retirement income fund or specified pension plan and that
(2) Subsection (1) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, the portion of subparagraph 212(1)(h)(iii.1) of the Act before clause (A), as enacted by subsection (1), is to be read without reference to “pooled registered pension plan”.
75 (1) Paragraph 212.3(1)(a) of the Act is replaced by the following:
(a) the subject corporation is immediately after the investment time, or becomes as part of a transaction or event or series of transactions or events that includes the making of the investment, a foreign affiliate of
(i) the CRIC, or
(ii) a corporation that does not deal at arm’s length with the CRIC (if the condition in this paragraph is satisfied because of this subparagraph and not because of subparagraph (i), such a corporation is referred to in paragraph (b) as an “other Canadian corporation”);
(2) The portion of paragraph 212.3(1)(b) of the Act before subparagraph (ii) is replaced by the following:
(b) the CRIC or an other Canadian corporation is immediately after the investment time, or becomes after the investment time and as part of a transaction or event or series of transactions or events that includes the making of the investment, controlled by a non-resident corporation (in this section referred to as the “parent”), and any of the following conditions is satisfied:
(i) if, at the investment time, the parent owned all shares of the capital stock of the CRIC and the other Canadian corporation, if applicable, that are owned — determined without reference to paragraph (25)(b) in the case of partnerships referred to in this subparagraph and as if all rights referred to in paragraph 251(5)(b), of the parent, each person that does not deal at arm’s length with the parent and all of those partnerships, were immediate and absolute and the parent and each of the other persons and partnerships had exercised those rights at the investment time — by the parent, persons that are not dealing at arm’s length with the parent and partnerships of which the parent or a non-resident person that is not dealing at arm’s length with the parent is a member (other than a limited partner within the meaning assigned by subsection 96(2.4)), the parent would own shares of the capital stock of the CRIC or the other Canadian corporation that
(A) give the holders of those shares 25% or more of all of the votes that could be cast at any annual meeting of the shareholders in respect of all shares of the capital stock of the CRIC or the other Canadian corporation, as the case may be, or
(B) have a fair market value of 25% or more of the fair market value of all of the issued and outstanding shares of the capital stock of the CRIC or the other Canadian corporation, as the case may be,
(3) Section 212.3 of the Act is amended by adding the following after subsection (7):
Marginal note:Election to not reduce deemed dividend
(7.1) Subsection (7) does not apply in respect of an investment made by a CRIC if
(a) the investment was made after March 28, 2012 and before August 16, 2013;
(b) at the investment time, each share of the capital stock of the CRIC, and each qualifying substitute corporation in respect of the CRIC, that was not owned by the parent was owned by persons or partnerships with which the parent did not deal at arm’s length; and
(c) the CRIC files an election with the Minister before 2017 to have this subsection apply in respect of the investment.
(4) Subsections (1) and (2) apply in respect of transactions or events that occur after September 15, 2016. For this purpose, a portion of a particular amount owing by, or debt obligation of, a subject corporation is deemed to be a separate amount owing or debt obligation that became owing or was acquired, as the case may be, on January 1, 2017 in the same manner and on the same terms as the particular amount owing or debt obligation, if
(a) subsection 212.3(2) of the Act would not apply in respect of the separate amount owing or debt obligation absent the application of subsections (1) and (2);
(b) the particular amount owing or debt obligation became owing to, or was acquired by, a CRIC
(i) after March 28, 2012 and before September 16, 2016, or
(ii) before March 29, 2012, if its maturity date was extended after March 28, 2012 and before September 16, 2016; and
(c) the portion is the amount outstanding in respect of the particular amount owing or debt obligation on January 1, 2017.
(5) Subsection (3) is deemed to have come into force on March 29, 2012.
76 (1) Subsection 220(3.21) of the Act is amended by striking out “and” at the end of paragraph (a) and by adding the following after that paragraph:
(a.1) a designation is deemed to be an election under a prescribed provision of this Act if the designation is made under the definition principal residence in section 54; and
(2) Subsection (1) applies to taxation years that end after October 2, 2016.
77 (1) Paragraph (b) of the definition derivative forward agreement in subsection 248(1) of the Act is amended by striking out “or” at the end of subparagraph (i), by replacing “and” at the end of subparagraph (ii) with “or” and by adding the following after subparagraph (ii):
(iii) an underlying interest that relates to a purchase of currency, if it can reasonably be considered that the purchase is agreed to by the taxpayer in order to reduce its risk of fluctuations in the value of the currency in which a purchase or sale by the taxpayer of a capital property is denominated, in which an obligation that is a capital property of the taxpayer is denominated or from which a capital property of the taxpayer derives its value, and
(2) Subparagraph (c)(i) of the definition derivative forward agreement in subsection 248(1) of the Act is amended by striking out “or” at the end of clause (A), by replacing “and” at the end of clause (B) with “or” and by adding the following after clause (B):
(C) an underlying interest that relates to a sale of currency, if it can reasonably be considered that the sale is agreed to by the taxpayer in order to reduce its risk of fluctuations in the value of the currency in which a purchase or sale by the taxpayer of a capital property is denominated, in which an obligation that is a capital property of the taxpayer is denominated or from which a capital property of the taxpayer derives its value, and
(3) Subsections (1) and (2) are deemed to have come into force on March 21, 2013.
78 (1) Section 249.1 of the Act is amended by adding the following after subsection (9):
Marginal note:When subsection (9) ceases to apply
(9.1) If paragraph (1)(c) did not apply to end the fiscal period of a partnership on December 31 of a calendar year (in this subsection referred to as the “preceding year”) because subsection (9) applies to the partnership, and to each other partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), (in this subsection referred to collectively as the “aligned multi-tier partnerships” and each individually as an “aligned multi-tier partnership”),
(a) subsection (9) ceases to apply — for the purpose of applying paragraph (1)(c) to each of the aligned multi-tier partnerships — in the calendar year following the preceding year (in this subsection referred to as the “current year”) if another partnership (in this subsection referred to as the “new partnership”) becomes in the current year a member of any of the aligned multi-tier partnerships, or any of the aligned multi-tier partnerships becomes in the current year a member of the new partnership, unless
(i) the fiscal period of the new partnership, and each other partnership described in relation to the new partnership by any of subparagraphs (1)(c)(ii) to (iv), ends in the current year on the same day as the fiscal period of each of the aligned multi-tier partnerships, and
(ii) each member (other than a partnership) of each aligned multi-tier partnership — or a subsidiary wholly-owned corporation of such a member — has been a member of the aligned multi-tier partnership from the end of the last fiscal period ending in the preceding year until the time at which the new partnership becomes a member of an aligned multi-tier partnership, or any of the aligned multi-tier partnerships becomes a member of the new partnership, as the case may be; and
(b) if paragraph (a) does not apply because the conditions in subparagraphs (a)(i) and (ii) are met, the new partnership is deemed — for the purpose of applying paragraph (1)(c) to each of the aligned multi-tier partnerships and the new partnership in the current year and subsequent years — to have made the multi-tier alignment election referred to in subsection (9).
(2) Subsection (1) applies to fiscal periods of partnerships that end after March 2014.
79 (1) Section 256 of the Act is amended by adding the following after subsection (5.1):
Marginal note:Factual control — interpretation
(5.11) For the purposes of the Act, the determination of whether a taxpayer has, in respect of a corporation, any direct or indirect influence that, if exercised, would result in control in fact of the corporation, shall
(a) take into consideration all factors that are relevant in the circumstances; and
(b) not be limited to, and the relevant factors need not include, whether the taxpayer has a legally enforceable right or ability to effect a change in the board of directors of the corporation, or its powers, or to exercise influence over the shareholder or shareholders who have that right or ability.
(2) Subsection 256(7) of the Act is amended by adding the following after paragraph (c.1):
(c.2) subject to paragraph (a), if, at any particular time, as part of a series of transactions or events, two or more persons acquire shares of a corporation (in this paragraph referred to as the “acquiring corporation”) in exchange for or upon a redemption or surrender of interests in, or as a consequence of a distribution from, a partnership or trust, control of the acquiring corporation and of each corporation controlled by it immediately before the particular time is deemed to have been acquired by a person or group of persons at the particular time unless
(i) in respect of each of the corporations, a person affiliated with the partnership or trust owned immediately before the particular time shares of the particular corporation having a total fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the particular corporation immediately before the particular time,
(ii) if all the securities (in this subparagraph as defined in subsection 122.1(1)) of the acquiring corporation that were acquired at or before the particular time as part of the series were acquired by one person, the person would
(A) not at the particular time control the acquiring corporation, and
(B) have at the particular time acquired securities of the acquiring corporation having a fair market value of not more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation, or
(iii) paragraph (c.1) applies, or this paragraph or paragraph (c.1) previously applied, to deem an acquisition of control of the acquiring corporation upon an acquisition of shares that was part of the same series of transactions or events;
(3) Subsection (1) applies to taxation years that begin after March 21, 2017.
(4) Subsection (2) applies to transactions completed after September 15, 2016, other than transactions the parties to which are obligated to complete pursuant to the terms of an agreement in writing between the parties entered into before September 16, 2016. However, for this purpose, the parties to a transaction shall be considered not to be obligated to complete the transaction if one or more of those parties may be excused from completing the transaction as a result of amendments to the Act.
80 (1) The definition designated provisions in subsection 259(5) of the Act is replaced by the following:
- designated provisions
designated provisions means sections 146 and 146.1 to 146.4 and Parts X, XI.01 and XI.1, as they apply in respect of investments that are not qualified investments for a trust, and Part X.2; (dispositions désignées)
(2) Subsection (1) is deemed to have come into force on March 23, 2017.
81 (1) The definition relevant spot rate in subsection 261(1) of the Act is replaced by the following:
- relevant spot rate
relevant spot rate, for a particular day, means, in respect of a conversion of an amount from a particular currency to another currency,
(a) if the particular currency or the other currency is Canadian currency, the rate quoted by the Bank of Canada on the particular day (or, if the Bank of Canada ordinarily quotes such a rate, but there is no such rate quoted for the particular day, the closest preceding day for which such a rate is quoted) for the exchange of the particular currency for the other currency, or, in applying paragraphs (2)(b) and (5)(c), another rate of exchange that is acceptable to the Minister; and
(b) if neither the particular currency nor the other currency is Canadian currency, the rate — calculated by reference to the rates quoted by the Bank of Canada on the particular day (or, if the Bank of Canada ordinarily quotes such rates, but either of such rates is not quoted for the particular day, the closest preceding day for which both such rates are quoted) for the exchange of Canadian currency for each of those currencies — for the exchange of the particular currency for the other currency, or, in applying paragraphs (2)(b) and (5)(c), another rate of exchange that is acceptable to the Minister. (taux de change au comptant)
(2) Subparagraph 261(5)(h)(ii) of the Act is replaced by the following:
(ii) the reference in paragraph 95(2)(f.13) to “the rate of exchange quoted by the Bank of Canada on” is to be read, in respect of the foreign affiliate and the taxation year, and with such modifications as the context requires, as a reference to “the relevant spot rate for”.
(3) Subsections (1) and (2) are deemed to have come into force on March 1, 2017.
2013, c. 40Economic Action Plan 2013 Act, No. 2
82 If an individual has filed the election referred to in subsection 60(4) of the Economic Action Plan 2013 Act, No. 2, as and when allowed under that subsection, then for the individual
(a) the reference in paragraph 60(4)(a) of that Act to “2006” is to be read as “2003”; and
(b) the references in paragraph 60(4)(b) of that Act to “2005” and “2006” are to be read as “2002” and “2003”, respectively.
C.R.C., c. 945Income Tax Regulations
83 (1) Subsection 221(2) of the Income Tax Regulations is replaced by the following:
(2) Where in any taxation year a reporting person (other than a registered investment) claims that a share of its capital stock issued by it, or an interest as a beneficiary under it, is a qualified investment under section 146, 146.1, 146.3, 146.4, 204 or 207.01 of the Act, the reporting person shall, in respect of the year and within 90 days after the end of the year, make an information return in prescribed form.
(2) Subsection (1) is deemed to have come into force on March 23, 2017.
84 (1) The Regulations are amended by adding the following after section 221:
222 The issuer of a RDSP, or the promoter of a RESP, that governs a trust shall notify the holders of the RDSP, or subscribers of the RESP, in prescribed form and manner before March of a calendar year if, at any time during the preceding calendar year,
(a) the trust acquires or disposes of property that is a not a qualified investment for the trust; or
(b) property held by the trust becomes or ceases to be a qualified investment for the trust.
(2) Subsection (1) is deemed to have come into force on March 23, 2017.
85 (1) The portion of paragraph 306(3)(a) of the Regulations before subparagraph (i) is replaced by the following:
(a) in the case of a life insurance policy issued before 2017, a separate exemption test policy is deemed, subject to subsection (7), to be issued in respect of the life insurance policy
(2) The portion of subparagraph 306(3)(a)(ii) of the Regulations before clause (A) is replaced by the following:
(ii) on each policy anniversary of the life insurance policy on which
(3) The portion of paragraph 306(3)(b) of the Regulations before clause (i)(A) is replaced by the following:
(b) in the case of a life insurance policy issued after 2016, a separate exemption test policy is deemed, subject to subsection (7), to be issued in respect of each coverage under the life insurance policy
(i) on the date of
(4) The portion of subparagraph 306(3)(b)(ii) of the Regulations before clause (A) is replaced by the following:
(ii) on each policy anniversary of the life insurance policy on which
(5) The portion of subparagraph 306(3)(b)(iii) of the Regulations before clause (A) is replaced by the following:
(iii) on each policy anniversary of the life insurance policy — except to the extent that another exemption test policy has been issued on that date under this subparagraph in respect of a coverage under the life insurance policy — on which
(6) The portion of subsection 306(4) of the Regulations before paragraph (a) is replaced by the following:
(4) For the purpose of determining whether the condition in paragraph (1)(a) is met on a policy anniversary of a life insurance policy, each exemption test policy issued in respect of the life insurance policy, or in respect of a coverage under the life insurance policy, is deemed
(7) The portion of subsection 306(5) of the Regulations before paragraph (a) is replaced by the following:
(5) For the purpose of determining the amount of a benefit on death under an exemption test policy,
(8) Paragraph 306(6)(b) of the Regulations is replaced by the following:
(b) the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy at that time exceeds 250% of
(i) in the case where the particular time at which the policy is issued is determined under subsection 148(11) of the Act and the policy’s third preceding policy anniversary is before the particular time, the accumulating fund (computed without regard to any amount payable in respect of a policy loan and as though the policy were issued after 2016) in respect of the policy on that third preceding policy anniversary, and
(ii) in any other case, the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy on its third preceding policy anniversary; and
(9) Subparagraph 306(7)(a)(ii) of the Regulations is replaced by the following:
(ii) the date on which it was deemed by subsection (3) or (10), as the case may be, to be issued (determined immediately before that time); and
(10) Subsection 306(10) of the Regulations is replaced by the following:
(10) Notwithstanding subsections (3) and (4), if a life insurance policy is issued for any purpose at a particular time determined under subsection 148(11) of the Act, then for the purposes of applying this section (other than this subsection and subsection (9)) and section 307 in respect of the life insurance policy at and after the particular time,
(a) in respect of each coverage issued before the particular time under the life insurance policy, a separate exemption test policy is deemed to be issued in respect of a coverage under the life insurance policy
(i) on the date of issue of the life insurance policy, and
(ii) on each policy anniversary that ends before the particular time of the life insurance policy on which
(A) the amount of the benefit on death under the life insurance policy
exceeds
(B) 108% of the amount of the benefit on death under the life insurance policy on the later of the life insurance policy’s date of issue and the date of the life insurance policy’s preceding policy anniversary, if any;
(b) in respect of each coverage issued before the particular time under the life insurance policy, subsection (3) does not apply to deem an exemption test policy to be issued in respect of the policy, or in respect of a coverage under the policy, at any time before the particular time;
(c) in respect of each exemption test policy the date of issuance of which is determined under subparagraph (a)(i), the references in subparagraph (4)(a)(iii) and paragraph (5)(b) to “subparagraph (3)(b)(i)” are to be read as references to “subparagraph (10)(a)(i)”;
(d) in respect of each exemption test policy the date of issuance of which is determined under subparagraph (a)(ii), subparagraph (4)(a)(iv) is to be read as follows:
(iv) if the date on which the exemption test policy is issued is determined by subparagraph (10)(a)(ii) at a time before a particular time, the portion of the amount – that amount being the amount that would be determined, at the time immediately before the particular time, under subparagraph (a)(ii), if the exemption test policy were issued in respect of the policy on the same date as the date determined for it under subparagraph (10)(a)(ii) – that can be reasonably allocated to the coverage in the circumstances (and for these purposes, an allocation is considered not to be reasonable if the total of the amounts determined for A and B in subparagraph (a)(iii) is less than the amount determined for C in that subparagraph in respect of the exemption test policy the date of issuance of which is determined under subparagraph (10)(a)(i) in respect of the coverage), and
and
(e) in applying paragraph (5)(b), the reference in that paragraph to “any time” is to be read as “any time at or after the particular time referred to in subsection (10) in respect of the life insurance policy”.
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