RECOMMENDATION

Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures”.

Short Title

Marginal note:Short title

1 This Act may be cited as the Budget Implementation Act, 2018, No. 1.

PART 1Amendments to the Income Tax Act and to Related Legislation

R.S., c. 1 (5th Supp.)Income Tax Act

• 2 (1) Paragraph 6(1)(f.1) of the Income Tax Act is replaced by the following:

  • Marginal note:Canadian Forces members and veterans amounts

    (f.1) the total of all amounts received by the taxpayer in the year on account of

    • (i) an earnings loss benefit, an income replacement benefit (other than an amount determined under subsection 19.1(1), paragraph 23(1)(b) or subsection 26.1(1) of the Veterans Well-being Act, as modified, where applicable, under Part 5 of that Act), a supplementary retirement benefit or a career impact allowance payable to the taxpayer under Part 2 of the Veterans Well-being Act, or

    • (ii) an amount payable under any of subsections 99(6), 109(1) and 115(5) and sections 124 to 126 of the Veterans Well-being Act;

• (2) Subsection (1) comes into force on April 1, 2019.

• 3 (1) Paragraph 56(1)(a) of the Act is amended by striking out “or” at the end of subparagraph (vi), by adding “or” at the end of subparagraph (vii) and by adding the following after subparagraph (vii):

  • (viii) an income replacement benefit payable to the taxpayer under Part 2 of the Veterans Well-being Act, if the amount is determined under subsection 19.1(1), paragraph 23(1)(b) or subsection 26.1(1) of that Act (as modified, where applicable, under Part 5 of that Act);

• (2) Subsection (1) comes into force on April 1, 2019.

• 4 (1) Subparagraph (c)(i) of the definition eligible pension income in subsection 60.03(1) of the Act is replaced by the following:

  • (i) the total of all amounts received by the individual in the year on account of

    • (A) a retirement income security benefit payable to the individual under Part 2 of the Veterans Well-being Act, or

    • (B) an income replacement benefit payable to the individual under Part 2 of the Veterans Well-being Act, if the amount is determined under subsection 19.1(1), paragraph 23(1)(b) or subsection 26.1(1) of that Act (as modified, where applicable, under Part 5 of that Act), and

• (2) Subsection (1) comes into force on April 1, 2019.

• 5 (1) Paragraph 81(1)(d.1) of the Act is replaced by the following:

  • Marginal note:Canadian Forces members and veterans amounts

    (d.1) the total of all amounts received by the taxpayer in the year on account of

    • (i) a Canadian Forces income support benefit payable to the taxpayer under Part 2 of the Veterans Well-being Act,

    • (ii) pain and suffering compensation, additional pain and suffering compensation or a critical injury benefit, disability award, death benefit, clothing allowance or detention benefit payable to the taxpayer under Part 3 of the Veterans Well-being Act,

    • (iii) a family caregiver relief benefit or caregiver recognition benefit payable to the taxpayer under Part 3.1 of the Veterans Well-being Act, or

    • (iv) an amount payable to the taxpayer under subsection 132(1) of the Veterans Well-being Act;

• (2) Subparagraph 81(1)(d.1)(iii) of the Act, as enacted by subsection (1), is replaced by the following:

  • (iii) a caregiver recognition benefit payable to the taxpayer under Part 3.1 of the Veterans Well-being Act, or

• (3) Subsection 81(1) of the Act is amended by adding the following after paragraph (i):

  • Marginal note:Memorial grant

    (j) an amount received under the Memorial Grant Program for First Responders established under the authority of the Department of Public Safety and Emergency Preparedness Act in respect of individuals who die in the course of, or as a result of, their duties or as a result of an occupational illness or psychological impairment;

• (4) Subsection (1) comes into force on April 1, 2019.

• (5) Subsection (2) applies to the 2020 and subsequent taxation years.

• (6) Subsection (3) applies in respect of amounts received after March 2018.

• 6 (1) Subparagraph 82(1)(b)(i) of the Act is replaced by the following:

  • (i) the product of the amount determined under paragraph (a) in respect of the taxpayer for the taxation year multiplied by

    • (A) for the 2018 taxation year, 16%, and

    • (B) for taxation years after 2018, 15%, and

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 7 (1) Paragraph 87(2)(aa) of the Act is replaced by the following:

  • Marginal note:Refundable dividend tax on hand

    (aa) if the new corporation was a private corporation immediately after the amalgamation, the following rules apply:

    • (i) for the purpose of computing the eligible refundable dividend tax on hand and non-eligible refundable dividend tax on hand (as defined in subsection 129(4)) of the new corporation at the end of its first taxation year there shall be added to the total determined under those definitions in respect of the new corporation for the year

      • (A) in respect of the new corporation’s eligible refundable dividend tax on hand, the total of all amounts each of which is the amount, if any, by which the eligible refundable dividend tax on hand of a predecessor corporation at the end of its last taxation year exceeds the total of all amounts each of which is the portion, if any, of its dividend refund for its last taxation year from its eligible refundable dividend tax on hand determined under subparagraph 129(1)(a)(i) or clause 129(1)(a)(ii)(B), and

      • (B) in respect of the new corporation’s non-eligible refundable dividend tax on hand, the total of all amounts each of which is the amount, if any, by which the non-eligible refundable dividend tax on hand of a predecessor corporation at the end of its last taxation year exceeds the portion, if any, of its dividend refund for its last taxation year from its non-eligible refundable dividend tax on hand determined under clause 129(1)(a)(ii)(A), and

    • (ii) no amount shall be added under this paragraph in respect of a predecessor corporation

      • (A) that was not a private corporation at the end of its last taxation year, or

      • (B) where subsection 129(1.2) would have applied to deem a dividend paid by the predecessor corporation immediately before the amalgamation not to be a taxable dividend for the purpose of subsection 129(1);

• (2) Subject to subsection 20(5), subsection (1) applies to taxation years that begin after 2018.

• 8 (1) The portion of paragraph 104(21.2)(b) of the Act before subparagraph (i) is replaced by the following:

  • (b) the beneficiary is, for the purposes of section 120.4 and for the purposes of sections 3, 74.3 and 111 as they apply for the purposes of section 110.6,

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 9 (1) Clauses 110(1)(f)(v)(A) and (B) of the Act are replaced by the following:

  • (A) the employment income earned by the taxpayer as a member of the Canadian Forces, or as a police officer, while serving on a deployed international operational mission (as determined by the Minister of National Defence or by a person designated by that Minister), and

  • (B) the employment income that would have been so earned by the taxpayer if the taxpayer had been paid at the maximum rate of pay that applied, from time to time during the mission, to a Lieutenant-Colonel (General Service Officers) of the Canadian Forces,

• (2) Subsection 110(1.3) of the Act is repealed.

• (3) Subsections (1) and (2) apply to the 2017 and subsequent taxation years.

• 10 (1) The portion of subsection 117.1(1) of the Act before paragraph (a) is replaced by the following:

  Marginal note:Annual adjustment

  • 117.1 (1) The amount of $1,000 referred to in the formula in paragraph 8(1)(s), each of the amounts expressed in dollars in subparagraph 6(1)(b)(v.1), subsection 117(2), the description of B in subsection 118(1), subsection 118(2), paragraph (a) of the description of B in subsection 118(10), subsection 118.01(2), the descriptions of C and F in subsection 118.2(1) and subsections 118.3(1), 122.5(3) and 122.51(1) and (2), the amount of $400,000 referred to in the formula in paragraph 110.6(2)(a), the amounts of $1,355 and $2,335 referred to in the description of A, and the amounts of $12,820 and $17,025 referred to in the description of B, in the formula in subsection 122.7(2), the amount of $700 referred to in the description of C, and the amounts of $24,111 and $36,483 referred to in the description of D, in the formula in subsection 122.7(3), and each of the amounts expressed in dollars in Part I.2 in relation to tax payable under this Part or Part I.2 for a taxation year shall be adjusted so that the amount to be used under those provisions for the year is the total of

• (2) Subsection (1) applies to the 2019 and subsequent taxation years, except that the adjustment provided for in subsection 117.1(1) of the Act, as amended by subsection (1), does not apply for the 2019 taxation year in respect of the amounts of $1,355, $2,335, $12,820, $17,025, $700, $24,111 and $36,483.

• 11 (1) The description of B in subsection 118(2) of the Act is replaced by the following:

  B

  is 15% of the amount, if any, by which the individual’s income for the year would exceed $25,921 if, in computing that income, no amount were included in respect of a gain from a disposition of property to which section 79 applies and no amount were deductible under paragraph 20(1)(ww).

• (2) Paragraph (b) of the description of B in subsection 118(3) of the Act is amended by striking out “and” at the end of subparagraph (i) and by replacing subparagraph (ii) with the following:

  • (ii) the total of all amounts received by the individual in the year on account of a retirement income security benefit under Part 2 of the Veterans Well-being Act, and

  • (iii) the total of all amounts received by the individual in the year on account of an income replacement benefit payable to the individual under Part 2 of the Veterans Well-being Act, if the amount is determined under subsection 19.1(1), paragraph 23(1)(b) or subsection 26.1(1) of that Act (as modified, where applicable, under Part 5 of that Act).

• (3) Subsection 118(4) of the Act is amended by adding the following after paragraph (a.1):

  • (a.2) a reference to income for a year is to be read as a reference to that income determined as if, in computing that income, no amount were deductible under paragraph 20(1)(ww);

• (4) Subsections (1) and (3) apply to the 2018 and subsequent taxation years.

• (5) Subsection (2) comes into force on April 1, 2019.

• 12 (1) The portion of paragraph 118.2(2)(l) of the Act before subparagraph (ii) is replaced by the following:

  • (l) on behalf of the patient who is blind or profoundly deaf or has severe autism, severe diabetes, severe epilepsy, severe mental impairment or a severe and prolonged impairment that markedly restricts the use of the patient’s arms or legs,

    • (i) for an animal that is

      • (A) specially trained to

        • (I) in the case of severe mental impairment, perform specific tasks (excluding, for greater certainty, the provision of emotional support) that assist the patient in coping with the impairment, and

        • (II) in all other cases, assist the patient in coping with the impairment, and

      • (B) provided by a person or organization one of whose main purposes is such training of animals,

• (2) Subsection (1) applies in respect of expenses incurred after 2017.

• 13 (1) The definitions excluded amount and specified individual in subsection 120.4(1) of the Act are replaced by the following:

  excluded amount

  excluded amount, in respect of an individual for a taxation year, means an amount that is the individual’s income for the year from, or the individual’s taxable capital gain or profit for the year from the disposition of, a property to the extent that the amount

  • (a) if the individual has not attained the age of 24 years before the year, is from a property that was acquired by, or for the benefit of, the individual as a consequence of the death of a person who is

    • (i) a parent of the individual, or

    • (ii) any person, if the individual is

      • (A) enrolled as a full-time student during the year at a post-secondary educational institution (as defined in subsection 146.1(1)), or

      • (B) an individual in respect of whom an amount may be deducted under section 118.3 in computing a taxpayer’s tax payable under this Part for the year;

  • (b) is from a property acquired by the individual under a transfer described in subsection 160(4);

  • (c) is a taxable capital gain that arises because of subsection 70(5);

  • (d) is a taxable capital gain for the year from the disposition by the individual of property that is, at the time of the disposition, qualified farm or fishing property or qualified small business corporation shares (as those terms are defined in subsection 110.6(1)), unless the amount would be deemed to be a dividend under subsection 120.4(4) or (5) if this definition were read without reference to this paragraph;

  • (e) if the individual has attained the age of 17 years before the year, is

    • (i) not derived directly or indirectly from a related business in respect of the individual for the year, or

    • (ii) derived directly or indirectly from an excluded business of the individual for the year;

  • (f) if the individual has attained the age of 17 years but not the age of 24 years before the year, is

    • (i) a safe harbour capital return of the individual, or

    • (ii) a reasonable return in respect of the individual, having regard only to the contributions of arm’s length capital by the individual; or

  • (g) if the individual has attained the age of 24 years before the year, is

    • (i) income from, or a taxable capital gain from the disposition of, excluded shares of the individual, or

    • (ii) a reasonable return in respect of the individual. (montant exclu)

  specified individual

  specified individual, for a taxation year, means an individual (other than a trust) who

  • (a) is resident in Canada

    • (i) in the case where the individual dies in the year, immediately before the death, and

    • (ii) in any other case, at the end of the year; and

  • (b) if the individual has not attained the age of 17 years before the year, has a parent resident in Canada at any time in the year. (particulier déterminé)

• (2) Subparagraph (b)(ii) of the definition split income in subsection 120.4(1) of the Act is replaced by the following:

  • (ii) can reasonably be considered to be income derived directly or indirectly from

    • (A) one or more related businesses in respect of the individual for the year, or

    • (B) the rental of property by a particular partnership or trust, if a person who is related to the individual at any time in the year

      • (I) is actively engaged on a regular basis in the activities of the particular partnership or trust related to the rental of property, or

      • (II) in the case of a particular partnership, has an interest in the particular partnership directly or indirectly through one or more other partnerships,

• (3) Clauses (c)(ii)(C) and (D) of the definition split income in subsection 120.4(1) of the Act are replaced by the following:

  • (C) to be income derived directly or indirectly from one or more related businesses in respect of the individual for the year, or

  • (D) to be income derived from the rental of property by a particular partnership or trust, if a person who is related to the individual at any time in the year is actively engaged on a regular basis in the activities of the particular partnership or trust related to the rental of property,

• (4) The definition split income in subsection 120.4(1) of the Act is amended by adding the following after paragraph (c):

  • (d) an amount included in computing the individual’s income for the year to the extent that the amount is in respect of a debt obligation that

    • (i) is of a corporation (other than a mutual fund corporation or a corporation shares of a class of the capital stock of which are listed on a designated stock exchange), partnership or trust (other than a mutual fund trust), and

    • (ii) is not

      • (A) described in paragraph (a) of the definition fully exempt interest in subsection 212(3),

      • (B) listed or traded on a public market, or

      • (C) a deposit, standing to the credit of the individual,

        • (I) within the meaning assigned by the Canada Deposit Insurance Corporation Act, or

        • (II) with a credit union or a branch in Canada of a bank, and

  • (e) an amount in respect of a property, to the extent that

    • (i) the amount

      • (A) is a taxable capital gain, or a profit, of the individual for the year from the disposition after 2017 of the property, or

      • (B) is included under subsection 104(13) or 105(2) in computing the individual’s income for the year and can reasonably be considered to be attributable to a taxable capital gain, or a profit, of any person or partnership for the year from the disposition after 2017 of the property, and

    • (ii) the property is

      • (A) a share of the capital stock of a corporation (other than a share of a class listed on a designated stock exchange or a share of the capital stock of a mutual fund corporation), or

      • (B) a property in respect of which the following conditions are met:

        • (I) the property is

          1 an interest in a partnership,

          2 an interest as a beneficiary under a trust (other than a mutual fund trust or a trust that is deemed to be in existence by subsection 143(1)), or

          3 a debt obligation (other than a debt obligation described in any of clauses (d)(ii)(A) to (C)), and

        • (II) either

          1 in respect of the property an amount is included in the individual’s split income for the year or an earlier taxation year, or

          2 all or any part of the fair market value of the property, immediately before the disposition referred to in clause (i)(A) or (B), as the case may be, is derived, directly or indirectly, from a share described in clause (A). (revenu fractionné)

• (5) Subsection 120.4(1) of the Act is amended by adding the following in alphabetical order:

  arm’s length capital

  arm’s length capital, of a specified individual, means property of the individual if the property, or property for which it is a substitute, was not

  • (a) acquired as income from, or a taxable capital gain or profit from the disposition of, another property that was derived directly or indirectly from a related business in respect of the specified individual;

  • (b) borrowed by the specified individual under a loan or other indebtedness; or

  • (c) transferred, directly or indirectly by any means whatever, to the specified individual from a person who was related to the specified individual (other than as a consequence of the death of a person). (capital indépendant)

  excluded business

  excluded business, of a specified individual for a taxation year, means a business if the specified individual is actively engaged on a regular, continuous and substantial basis in the activities of the business in either

  • (a) the taxation year, except in respect of an amount described in paragraph (e) of the definition split income; or

  • (b) any five prior taxation years of the specified individual. (entreprise exclue)

  excluded shares

  excluded shares, of a specified individual at any time, means shares of the capital stock of a corporation owned by the specified individual if

  • (a) the following conditions are met:

    • (i) less than 90% of the business income of the corporation for the last taxation year of the corporation that ends at or before that time (or, if no such taxation year exists, for the taxation year of the corporation that includes that time) was from the provision of services, and

    • (ii) the corporation is not a professional corporation;

  • (b) immediately before that time, the specified individual owns shares of the capital stock of the corporation that

    • (i) give the holders thereof 10% or more of the votes that could be cast at an annual meeting of the shareholders of the corporation, and

    • (ii) have a fair market value of 10% or more of the fair market value of all of the issued and outstanding shares of the capital stock of the corporation; and

  • (c) all or substantially all of the income of the corporation for the relevant taxation year in subparagraph (a)(i) is income that is not derived, directly or indirectly, from one or more related businesses in respect of the specified individual other than a business of the corporation. (actions exclues)

  reasonable return

  reasonable return, in respect of a specified individual for a taxation year, means a particular amount derived directly or indirectly from a related business in respect of the specified individual that

  • (a) would, if this subsection were read without reference to subparagraph (f)(ii) or (g)(ii) of the definition excluded amount, be an amount described in the definition split income in respect of the specified individual for the year; and

  • (b) is reasonable having regard to the following factors relating to the relative contributions of the specified individual, and each source individual in respect of the specified individual, in respect of the related business:

    • (i) the work they performed in support of the related business,

    • (ii) the property they contributed, directly or indirectly, in support of the related business,

    • (iii) the risks they assumed in respect of the related business,

    • (iv) the total of all amounts that were paid or that became payable, directly or indirectly, by any person or partnership to, or for the benefit of, them in respect of the related business, and

    • (v) such other factors as may be relevant. (rendement raisonnable)

  related business

  related business, in respect of a specified individual for a taxation year, means

  • (a) a business carried on by

    • (i) a source individual in respect of the specified individual at any time in the year, or

    • (ii) a partnership, corporation or trust if a source individual in respect of the specified individual at any time in the year is actively engaged on a regular basis in the activities of the partnership, corporation or trust related to earning income from the business;

  • (b) a business of a particular partnership, if a source individual in respect of the specified individual at any time in the year has an interest — including directly or indirectly — in the particular partnership; and

  • (c) a business of a corporation, if the following conditions are met at any time in the year:

    • (i) a source individual in respect of the specified individual owns

      • (A) shares of the capital stock of the corporation, or

      • (B) property that derives, directly or indirectly, all or part of its fair market value from shares of the capital stock of the corporation, and

    • (ii) it is the case that

      0.1A ≤ B + C

      where

      A

      is the total fair market value of all of the issued and outstanding shares of the capital stock of the corporation,

      B

      is the total fair market value of property described in clause (i)(A), and

      C

      is the portion of the total fair market value of property described in clause (i)(B) that is derived from shares of the capital stock of the corporation. (entreprise liée)

  safe harbour capital return

  safe harbour capital return, of a specified individual for a taxation year, means an amount that does not exceed the amount determined by the formula

  A × B

  where

  A

  is the rate equal to the highest rate of interest prescribed under paragraph 4301(c) of the Income Tax Regulations in effect for a quarter in the year; and

  B

  is the total of all amounts each of which is determined by the formula

  C × D/E

  where

  C

  is the fair market value of property contributed by the specified individual in support of a related business at the time it was contributed,

  D

  is the number of days in the year that the property (or property substituted for it) is used in support of the related business and has not directly or indirectly, in any manner whatever, been returned to the specified individual, and

  E

  is the number of days in the year. (rendement exonéré)

  source individual

  source individual, in respect of a specified individual for a taxation year, means an individual (other than a trust) who, at any time in the year, is

  • (a) resident in Canada; and

  • (b) related to the specified individual. (particulier source)

• (6) Section 120.4 of the Act is amended by adding the following after subsection (1):

  • Marginal note:Additional rules — specified individual

    (1.1) For the purpose of applying this section in respect of a specified individual in respect of a taxation year,

    • (a) an individual is deemed to be actively engaged on a regular, continuous and substantial basis in the activities of a business in a taxation year of the individual if the individual works in the business at least an average of 20 hours per week during the portion of the year in which the business operates;

    • (b) if an amount would — if this section were read without reference to this paragraph — be split income of a specified individual who has attained the age of 17 years before the year in respect of a property, and that property was acquired by, or for the benefit of, the specified individual as a consequence of the death of another person, then

      • (i) for the purpose of applying paragraph (b) of the definition reasonable return in subsection (1), to the extent that the particular amount referred to in that paragraph is in respect of the property, then the factors referred to in that paragraph in respect of the other person are to be included for the purpose of determining a reasonable return in respect of the individual,

      • (ii) for the purposes of this subparagraph and the definition excluded business in subsection (1), if the other person was actively engaged on a regular, substantial and continuous basis in the activities of a business throughout five previous taxation years, then the individual is deemed to have been actively engaged on a regular, substantial and continuous basis in the business throughout those five years, and

      • (iii) for the purpose of applying paragraph (g) of the definition excluded amount in subsection (1) in respect of that property, the individual is deemed to have attained the age of 24 years before the year if the other person had attained the age of 24 years before the year;

    • (c) an amount that is a specified individual’s income for a taxation year from, or the specified individual’s taxable capital gain or profit for the year from the disposition of, a property is deemed to be an excluded amount in respect of the specified individual for the taxation year if

      • (i) the following conditions are met:

        • (A) the amount would be an excluded amount in respect of the specified individual’s spouse or common-law partner for the year, if the amount were included in computing the spouse or common-law partner’s income for the year, and

        • (B) the spouse or common law partner has attained the age of 64 years before the year, or

      • (ii) the amount would have been an excluded amount in respect of an individual who was, immediately before their death, the specified individual’s spouse or common-law partner, if the amount were included in computing the spouse or common-law partner’s income for their last taxation year (determined as if this section applies in respect of that year);

    • (d) for greater certainty, an amount derived directly or indirectly from a business includes

      • (i) an amount that

        • (A) is derived from the provision of property or services to, or in support of, the business, or

        • (B) arises in connection with the ownership or disposition of an interest in the person or partnership carrying on the business, and

      • (ii) an amount derived from an amount described in this paragraph; and

    • (e) for the purposes of this section, an individual is deemed not to be related to their spouse or common-law partner at any time in a year if, at the end of the year, the individual is living separate and apart from their spouse or common-law partner because of a breakdown of their marriage or common-law partnership.

• (7) Subsections 120.4(3) to (5) of the Act are replaced by the following:

  • Marginal note:Tax payable by a specified individual

    (3) Notwithstanding any other provision of this Act, if an individual is a specified individual for a taxation year, the individual’s tax payable under this Part for the year shall not be less than the amount by which the amount added under subsection (2) to the individual’s tax payable under this Part for the year exceeds the amount determined by the formula

    A + B

    where

    A

    is the amount deducted under section 118.3 in computing the individual’s tax payable under this Part for the year; and

    B

    is the total of all amounts each of which is the amount that

    • (a) may be deducted under section 121 or 126 in computing the individual’s tax payable under this Part for the year, and

    • (b) can reasonably be considered to be in respect of an amount included in computing the individual’s split income for the year.

  • Marginal note:Taxable capital gain

    (4) If a specified individual who has not attained the age of 17 years before a taxation year would have for the taxation year, if this Act were read without reference to this section, a taxable capital gain (other than an excluded amount) from a disposition of shares (other than shares of a class listed on a designated stock exchange or shares of a mutual fund corporation) that are transferred, either directly or indirectly, in any manner whatever, to a person with whom the specified individual does not deal at arm’s length, then the amount of that taxable capital gain is deemed not to be a taxable capital gain and twice the amount is deemed to be received by the specified individual in the year as a taxable dividend that is not an eligible dividend.

  • Marginal note:Taxable capital gain of trust

    (5) If a specified individual who has not attained the age of 17 years before a the taxation year would be, if this Act were read without reference to this section, required under subsection 104(13) or 105(2) to include an amount in computing the specified individual’s income for the taxation year, then to the extent that the amount can reasonably be considered to be attributable to a taxable capital gain (other than an excluded amount) of a trust from a disposition of shares (other than shares of a class listed on a designated stock exchange or shares of a mutual fund corporation) that are transferred, either directly or indirectly, in any manner whatever, to a person with whom the specified individual does not deal at arm’s length, subsections 104(13) and 105(2) do not apply in respect of the amount and twice the amount is deemed to be received by the specified individual in the year as a taxable dividend that is not an eligible dividend.

• (8) Subsections (1) to (7) apply to the 2018 and subsequent taxation years. For the 2018 taxation year, the portion of paragraph (b) of the definition excluded shares in subsection 120.4(1) of the Act before subparagraph (i), as enacted by subsection (5), is to be read as follows:

  • (b) immediately before that time or the end of 2018, the shares

• 14 (1) Paragraph 121(a) of the Act is replaced by the following:

  • (a) the product of the amount, if any, that is required by subparagraph 82(1)(b)(i) to be included in computing the individual’s income for the year multiplied by

    • (i) for the 2018 taxation year, 8/11, and

    • (ii) for taxation years after 2018, 9/13, and

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 15 (1) Paragraph (b) of the definition adjusted income in subsection 122.5(1) of the Act is replaced by the following:

  • (b) deductible under paragraph 20(1)(ww) or 60(y) or (z). (revenu rajusté)

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 16 (1) Paragraph (b) of the definition adjusted income in section 122.6 of the Act is replaced by the following:

  • (b) deductible under paragraph 20(1)(ww) or 60(y) or (z); (revenu modifié)

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

17 The portion of subsection 122.61(5) of the Act before paragraph (a) is replaced by the following:

• 18 (1) The heading of Subdivision A.2 of Division E of Part I of the Act is replaced by the following:

  Canada Workers Benefit

• (2) Subsection (1) comes into force on January 1, 2019.

• 19 (1) Paragraph (c) of the definition adjusted net income in subsection 122.7(1) of the Act is replaced by the following:

  • (c) in computing that income, no amount were deductible under paragraph 20(1)(ww) or 60(y) or (z). (revenu net rajusté)

• (2) The descriptions of A and B in subsection 122.7(2) of the Act are replaced by the following:

  A

  is

  • (a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, the lesser of $1,355 and 26% of the amount, if any, by which the individual’s working income for the taxation year exceeds $3,000, or

  • (b) if the individual had an eligible spouse or an eligible dependant, for the taxation year, the lesser of $2,335 and 26% of the amount, if any, by which the total of the working incomes of the individual and, if applicable, of the eligible spouse, for the taxation year, exceeds $3,000; and

  B

  is

  • (a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, 12% of the amount, if any, by which the adjusted net income of the individual for the taxation year exceeds $12,820, or

  • (b) if the individual had an eligible spouse or an eligible dependant, for the taxation year, 12% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if applicable, of the eligible spouse, for the taxation year, exceeds $17,025.

• (3) The descriptions of C and D in subsection 122.7(3) of the Act are replaced by the following:

  C

  is the lesser of $700 and 26% of the amount, if any, by which the individual’s working income for the taxation year exceeds $1,150; and

  D

  is

  • (a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, 12% of the amount, if any, by which the individual’s adjusted net income for the taxation year exceeds $24,111,

  • (b) if the individual had an eligible spouse for the taxation year who was not entitled to deduct an amount under subsection 118.3(1) for the taxation year, or had an eligible dependant for the taxation year, 12% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if applicable, of the eligible spouse, for the taxation year, exceeds $36,483, or

  • (c) if the individual had an eligible spouse for the taxation year who was entitled to deduct an amount under subsection 118.3(1) for the taxation year, 6% of the amount, if any, by which the total of the adjusted net incomes of the individual and of the eligible spouse, for the taxation year, exceeds $36,483.

• (4) Subsection (1) applies to the 2018 and subsequent taxation years.

• (5) Subsections (2) and (3) come into force on January 1, 2019.

• 20 (1) Paragraphs 125(1.1)(a) and (b) of the Act are replaced by the following:

  • (a) that proportion of 17.5% that the number of days in the taxation year that are before 2018 is of the number of days in the taxation year,

  • (b) that proportion of 18% that the number of days in the taxation year that are in 2018 is of the number of days in the taxation year, and

  • (c) that proportion of 19% that the number of days in the taxation year that are after 2018 is of the number of days in the taxation year.

• (2) Subsection 125(5.1) of the Act is replaced by the following:

  • Marginal note:Business limit reduction

    (5.1) Notwithstanding subsections (2), (3), (4) and (5), a Canadian-controlled private corporation’s business limit for a particular taxation year ending in a calendar year is the amount, if any, by which its business limit otherwise determined for the particular taxation year exceeds the greater of

    • (a) the amount determined by the formula

      A × B/$11,250

      where

      A

      is the amount that would, but for this subsection, be the corporation’s business limit for the particular taxation year, and

      B

      is the amount determined by the formula

      0.225% × (C – $10 million)

      where

      C

      is

      • (i) 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,

      • (ii) 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

      • (iii) 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, and

    • (b) the amount determined by the formula

      D/$500,000 × 5(E − $50,000)

      where

      D

      is the amount determined for A in paragraph (a), and

      E

      is the total of all amounts each of which is the adjusted aggregate investment income of the corporation, or of any corporation with which it is associated at any time in the particular taxation year, for each taxation year of the corporation, or associated corporation, as the case may be, that ended in the preceding calendar year.

  • Marginal note:Anti-avoidance

    (5.2) A particular corporation and another corporation are deemed to be associated with each other at a particular time for the purposes of paragraph (5.1)(b) if

    • (a) the particular corporation lends or transfers property at any time, either directly or indirectly, by means of a trust or by any other means whatever, to the other corporation;

    • (b) the other corporation is, at the particular time, related to the particular corporation but is not associated with it; and

    • (c) it may reasonably be considered that one of the reasons the loan or transfer was made was to reduce the amount determined for E in paragraph (5.1)(b) in respect of the particular corporation, or of any corporation with which it is associated, for a taxation year.

• (3) Subsection 125(7) of the Act is amended by adding the following in alphabetical order:

  active asset

  active asset, of a particular corporation at any time, means property that is

  • (a) used at that time principally in an active business carried on primarily in Canada by the particular corporation or by a Canadian-controlled private corporation that is related to the particular corporation,

  • (b) a share of the capital stock of another corporation if, at that time,

    • (i) the other corporation is connected with the particular corporation (within the meaning assigned by subsection 186(4) on the assumption that the other corporation is at that time a payer corporation within the meaning of that subsection), and

    • (ii) the share would be a qualified small business corporation share (as defined in subsection 110.6(1)) if

      • (A) the references in that definition to an “individual” were references to the particular corporation, and

      • (B) that definition were read without reference to “the individual’s spouse or common law partner”, or

  • (c) an interest in a partnership, if

    • (i) at that time, the fair market value of the particular corporation’s interest in the partnership is equal to or greater than 10% of the total fair market value of all interests in the partnership,

    • (ii) throughout the 24–month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b), and

    • (iii) at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b); (bien actif)

  adjusted aggregate investment income

  adjusted aggregate investment income, of a corporation (other than a corporation that is deemed not to be a private corporation by subsection 136(1) or 137(7) or section 141.1) for a taxation year, means the amount that would be the aggregate investment income (as defined in subsection 129(4)) of the corporation for the year, if

  • (a) paragraph (a) of that definition read as follows:

    • (a) the amount, if any, by which

      • (i) the eligible portion of the corporation’s taxable capital gains (other than taxable capital gains from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year

      exceeds

      • (ii) the eligible portion of its allowable capital losses (other than allowable capital losses from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year, or

  • (b) subparagraph (b)(iii) of that definition read as follows:

    • (iii) a dividend from a corporation connected with it (within the meaning assigned by subsection 186(4) on the assumption that the corporation is at that time a payer corporation within the meaning of that subsection), and

  • (c) paragraph (a) of the definition income or loss in subsection 129(4) read as follows:

    • (a) includes

      • (i) the income or loss from a specified investment business carried on by it, and

      • (ii) amounts in respect of a life insurance policy that are included in computing the corporation’s income for the year, to the extent that the amounts would not otherwise be included in the computation of the corporation’s aggregate investment income, but

  and

  • (d) no amount were deducted under subsection 91(4) by the corporation in computing its income for the year; (revenu de placement total ajusté)

• (4) Subsection (1) applies to the 2018 and subsequent taxation years.

• (5) Subsections (2) and (3) apply to taxation years that begin after 2018. However, subsections (2) and (3), 7(1), 22(1) to (5), 23(1) and (2) and 29(1) also apply to a taxation year of a corporation that begins before 2019 and ends after 2018 if

  • (a) the corporation’s preceding taxation year was, because of a transaction or event or a series of transactions or events, shorter than it would have been in the absence of that transaction, event or series; and

  • (b) one of the reasons for the transaction, event or series was to defer the application of subsections (2) and (3) or 22(1) to (5) to the corporation.

• 21 (1) Paragraph (a) of the definition flow-through mining expenditure in subsection 127(9) of the Act is replaced by the following:

  • (a) that is a Canadian exploration expense incurred by a corporation after March 2018 and before 2020 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2020) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition mineral resource in subsection 248(1),

• (2) Paragraphs (c) and (d) of the definition flow-through mining expenditure in subsection 127(9) of the Act are replaced by the following:

  • (c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2018 and before April 2019, and

  • (d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2018 and before April 2019; (dépense minière déterminée)

• (3) Subsections (1) and (2) apply in respect of expenses renounced under a flow-through share agreement entered into after March 2018.

• 22 (1) Paragraph 129(1)(a) of the Act is replaced by the following:

  • (a) may, on sending the notice of assessment for the year, refund without application an amount (in this Act referred to as its “dividend refund” for the year) in respect of taxable dividends paid by the corporation on shares of its capital stock in the year, and at a time when it was a private corporation, equal to the total of

    • (i) in respect of eligible dividends, an amount equal to the lesser of

      • (A) 38 1/3% of the total of all eligible dividends paid by it in the year, and

      • (B) its eligible refundable dividend tax on hand at the end of the year, and

    • (ii) in respect of taxable dividends (other than eligible dividends), an amount equal to the total of

      • (A) the lesser of

        • (I) 38 1/3% of the total of all taxable dividends (other than eligible dividends) paid by it in the year, and

        • (II) its non-eligible refundable dividend tax on hand at the end of the year, and

      • (B) either

        • (I) if the amount determined under subclause (A)(I) exceeds the amount determined under subclause (A)(II), the lesser of

          1 the amount of the excess, and

          2 the amount by which the corporation’s eligible refundable dividend tax on hand at the end of the year exceeds the amount, if any, determined under subparagraph (i) for the year, and

        • (II) in any other case, nil; and

• (2) The portion of subsection 129(1.1) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Dividends paid to bankrupt controlling corporation

    (1.1) In determining the dividend refund for a taxation year ending after 1977 of a particular corporation, no amount may be included under clause (1)(a)(i)(A), subclause (1)(a)(ii)(A)(I) or sub-subclause (1)(a)(ii)(B)(I)1 in respect of a taxable dividend paid to a shareholder that

• (3) Subsection 129(3) of the Act is repealed.

• (4) Subsection 129(4) of the Act is amended by adding the following in alphabetical order:

  eligible refundable dividend tax on hand

  eligible refundable dividend tax on hand, of a particular corporation at the end of a taxation year, means the amount, if any, by which the total of

  • (a) the total of the taxes payable under Part IV by the particular corporation for the year in respect of

    • (i) eligible dividends received by the particular corporation in the year from corporations other than corporations with which the particular corporation is connected (in this paragraph, within the meaning assigned by subsection 186(4) on the assumption that the other corporation is at that time a payer corporation within the meaning of that subsection), and

    • (ii) taxable dividends received by the particular corporation in the year from corporations that are connected with the particular corporation to the extent that such dividends caused a dividend refund to those corporations from their eligible refundable dividend tax on hand, and

  • (b) where the particular corporation was a private corporation at the end of its preceding taxation year, the particular corporation’s eligible refundable dividend tax on hand at the end of that preceding year

  exceeds

  • (c) the total of all amounts each of which is the portion, if any, of the particular corporation’s dividend refund from its eligible refundable dividend tax on hand determined, for its preceding taxation year, under

    • (i) subparagraph (1)(a)(i), and

    • (ii) clause (1)(a)(ii)(B). (impôt en main remboursable au titre de dividendes déterminés)

  non-eligible refundable dividend tax on hand

  non-eligible refundable dividend tax on hand, of a corporation at the end of a taxation year, means the amount, if any, by which the total of

  • (a) if the corporation was a Canadian-controlled private corporation throughout the year, the least of

    • (i) the amount determined by the formula

      A − B

      where

      A

      is 30 2/3% of the corporation’s aggregate investment income for the year, and

      B

      is the amount, if any, by which

      • (A) the amount deducted under subsection 126(1) from the tax for the year otherwise payable by it under this Part

      exceeds

      • (B) 8% of its foreign investment income for the year,

    • (ii) 30 2/3% of the amount, if any, by which the corporation’s taxable income for the year exceeds the total of

      • (A) the least of the amounts determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the year,

      • (B) 100/(38 2/3) of the total of amounts deducted under subsection 126(1) from its tax for the year otherwise payable under this Part, and

      • (C) the amount determined by multiplying the total of amounts deducted under subsection 126(2) from its tax for the year otherwise payable under this Part, by the relevant factor for the year, and

    • (iii) the corporation’s tax for the year payable under this Part,

  • (b) the total of the taxes payable under Part IV by the corporation for the year less the amount determined under paragraph (a) of the definition eligible refundable dividend tax on hand in respect of the corporation for the year, and

  • (c) if the corporation was a private corporation at the end of its preceding taxation year, the corporation’s non-eligible refundable dividend tax on hand at the end of that preceding year

  exceeds

  • (d) the portion, if any, of the corporation’s dividend refund from its non-eligible refundable dividend tax on hand determined, for its preceding taxation year, under clause (1)(a)(ii)(A). (impôt en main remboursable au titre de dividendes non déterminés)

• (5) Section 129 of the Act is amended by adding the following after subsection (4):

  • Marginal note:2019 transitional RDTOH

    (5) The following rules apply to a corporation’s first taxation year in respect of which the definition eligible refundable dividend tax on hand in subsection (4) applies:

    • (a) if the corporation is a Canadian-controlled private corporation throughout the taxation year and its preceding taxation year and is not a corporation in respect of which an election under subsection 89(11) applies to the taxation year or the preceding taxation year,

      • (i) for the purpose of applying paragraph (b) of the definition eligible refundable dividend tax on hand in respect of the corporation at the end of the taxation year, the corporation’s eligible refundable dividend tax on hand at the end of its preceding taxation year is deemed to be the amount, if any, that is the lesser of

        • (A) the amount determined by the formula

          A − B

          where

          A

          is the corporation’s refundable dividend tax on hand at the end of its preceding taxation year, and

          B

          is the corporation’s dividend refund for its preceding taxation year, and

        • (B) the amount determined by the formula

          (C − D) × E

          where

          C

          is the corporation’s general rate income pool at the end of its preceding taxation year,

          D

          is the amount, if any, by which

          • (I) the total of all amounts each of which is an eligible dividend paid by the corporation in its preceding taxation year

          exceeds

          • (II) the total of all amounts each of which is an excessive eligible dividend designation made by the corporation in its preceding taxation year, and

          E

          is 38 1/3%, and

      • (ii) for the purpose of applying paragraph (c) of the definition non-eligible refundable dividend tax on hand in respect of the corporation at the end of the taxation year, the corporation’s non-eligible refundable dividend tax on hand at the end of its preceding taxation year is deemed to be the amount determined by the formula

        A − B

        where

        A

        is the amount determined under clause (a)(i)(A) in respect of the corporation at the end of the preceding taxation year, and

        B

        is the amount determined under clause (a)(i)(B) in respect of the corporation at the end of the preceding taxation year; and

    • (b) in any other case, for the purpose of applying paragraph (b) of the definition eligible refundable dividend tax on hand in respect of the corporation at the end of the taxation year, the corporation’s eligible refundable dividend tax on hand at the end of its preceding taxation year is deemed to be the amount that would be determined for clause (a)(i)(A) if paragraph (a) applied to the corporation in respect of the taxation year.

  • Marginal note:2019 transitional RDTOH — amalgamations

    (5.1) Subsection (5) applies with such modifications as are necessary for the purpose of applying paragraph 87(2)(aa) in respect of a corporation if

    • (a) the corporation is a predecessor corporation (within the meaning assigned by subsection 87(1)) in respect of an amalgamation (within the meaning assigned by subsection 87(1));

    • (b) the corporation has an amount of refundable dividend tax on hand at the end of its taxation year that ends because of paragraph 87(2)(a); and

    • (c) the first taxation year of the new corporation (within the meaning assigned by subsection 87(1)) in respect of the amalgamation is one to which the definition eligible refundable dividend tax on hand in subsection (4) applies.

• (6) Subject to subsection 20(5), subsections (1) to (5) apply to taxation years that begin after 2018.

• 23 (1) Paragraph 131(5)(a) of the Act is replaced by the following:

  • (a) is deemed for the purposes of paragraph 87(2)(aa) and section 129 to have been a private corporation throughout the year, except that its non-eligible refundable dividend tax on hand (as defined in subsection 129(4)) at the end of the year shall be determined without reference to paragraph (a) of that definition; and

• (2) Paragraph 131(11)(a) of the Act is replaced by the following:

  • (a) for the purposes of subparagraphs (a)(i) and (ii) of the definition non-eligible refundable dividend tax on hand in subsection 129(4), the amount deducted under paragraph 111(1)(b) from the corporation’s income for each taxation year ending after that time shall be deemed to be nil;

• (3) Subject to subsection 20(5), subsections (1) and (2) apply to taxation years that begin after 2018.

24 Clause (a)(ii)(B.1) of the definition disability savings plan in subsection 146.4(1) of the Act is replaced by the following:

• 25 (1) Subparagraph (a)(iv) of the definition qualified donee in subsection 149.1(1) of the Act is replaced by the following:

  • (iv) a university outside Canada, the student body of which ordinarily includes students from Canada, that has applied for registration, or

• (2) Subsection (1) is deemed to have come into force on February 27, 2018, except that

  • (a) if a university has applied for registration prior to February 27, 2018 and is registered by the Minister on or after that day, subsection (1) applies in respect of the university as of the day it applied for registration; and

  • (b) any university named in Schedule VIII to the Income Tax Regulations at the end of February 26, 2018 is deemed to have applied for registration.

• 26 (1) Subsection 160(1.2) of the Act is replaced by the following:

  • Marginal note:Joint and several, or solidary, liability — tax on split income

    (1.2) If an amount is required to be added because of subsection 120.4(2) in computing a specified individual’s tax payable under this Part for a taxation year and the specified individual has not attained the age of 24 years before the start of the year, the following rules apply:

    • (a) subject to paragraph (b), a particular individual is jointly and severally, or solidarily, liable with the specified individual for the amount if

      • (i) where the specified individual has not attained the age of 17 years before the year, the particular individual is a parent of the specified individual, and

      • (ii) where the specified individual has attained the age of 17 years before the year,

        • (A) the particular individual is a source individual in respect of the specified individual,

        • (B) the amount was derived directly or indirectly from a related business (within the meaning of paragraph 120.4(1.1)(d)) in respect of the specified individual, and

        • (C) the particular individual meets the conditions in any of paragraphs (a) to (c) in the definition related business in subsection 120.4(1) in respect of the related business;

    • (b) the particular individual’s liability under paragraph (a) in respect of the specified individual for the year is to be determined as though the only amounts included in the specified individual’s split income for the year are amounts derived from the related business referred to in subparagraph (a)(ii); and

    • (c) nothing in this subsection limits the liability of

      • (i) the specified individual under any other provision of this Act, or

      • (ii) the particular individual for the interest that the particular individual is liable to pay under this Act on an assessment in respect of the amount that the particular individual is liable to pay because of this subsection.

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 27 (1) The portion of subsection 162(6) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Failure to provide identification number

    (6) Every person or partnership who fails to provide on request their business number, their Social Insurance Number, their trust account number or their U.S. federal taxpayer identifying number to a person required under this Act or the Regulations to make an information return requiring the number is liable to a penalty of $100 for each such failure, unless

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 28 (1) Paragraph (b) of the definition adjusted income in subsection 180.2(1) of the Act is replaced by the following:

  • (b) deductible under paragraph 20(1)(ww) or 60(w), (y) or (z); (revenu modifié)

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 29 (1) Subsection 186(5) of the Act is replaced by the following:

  • Marginal note:Deemed private corporation

    (5) A corporation that is at any time in a taxation year a subject corporation shall, for the purposes of paragraph 87(2)(aa) and section 129, be deemed to be a private corporation at that time, except that its non-eligible refundable dividend tax on hand (as defined in subsection 129(4)) at the end of the year shall be determined without reference to paragraph (a) of that definition.

• (2) Subject to subsection 20(5), subsection (1) applies to taxation years that begin after 2018.

• 30 (1) Subsection 188(1.3) of the Act is replaced by the following:

  • Marginal note:Eligible donee

    (1.3) In this Part, an eligible donee in respect of a particular charity is

    • (a) a registered charity

      • (i) of which more than 50% of the members of the board of directors or trustees of the registered charity deal at arm’s length with each member of the board of directors or trustees of the particular charity,

      • (ii) that is not the subject of a suspension under subsection 188.2(1),

      • (iii) that has no unpaid liabilities under this Act or under the Excise Tax Act,

      • (iv) that has filed all information returns required by subsection 149.1(14), and

      • (v) that is not the subject of a certificate under subsection 5(1) of the Charities Registration (Security Information) Act or, if it is the subject of such a certificate, the certificate has been determined under subsection 7(1) of that Act not to be reasonable; or

    • (b) a municipality in Canada that is approved by the Minister in respect of a transfer of property from the particular charity.

• (2) Subsection (1) applies in respect of transfers of property made after February 26, 2018.

• 31 (1) The portion of subsection 189(6.3) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Reduction of liability for penalties

    (6.3) If the Minister has assessed a particular person in respect of the particular person’s liability for penalties under section 188.1 for a taxation year, and that liability exceeds $1,000, that liability is, at any particular time, reduced by the total of all amounts, each of which is an amount, in respect of a property transferred by the particular person after the day on which the Minister first assessed that liability and before the particular time to another person that was at the time of the transfer an eligible donee described in paragraph 188(1.3)(a) in respect of the particular person, equal to the amount, if any, by which the fair market value of the property, when transferred, exceeds the total of

• (2) Subsection (1) applies in respect of transfers of property made on or after February 27, 2018.

• 32 (1) Paragraph 221(1)(d.1) of the Act is replaced by the following:

  • (d.1) requiring any person or partnership to provide any information — including their name, address, business number, Social Insurance Number or trust account number — to any class of persons required to make an information return containing that information;

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 33 (1) Subsections 237(1.1) to (3) of the Act are replaced by the following:

  • Marginal note:Production of number

    (1.1) Every person and partnership shall provide their designated number

    • (a) in any return filed under this Act; and

    • (b) to another person or partnership at the request of the other person or partnership, if the other person or partnership is required to make an information return pursuant to this Act or the Regulations requiring the designated number.

  • Marginal note:Designated number

    (1.2) For the purpose of subsection (1.1), designated number, of a person or partnership, means

    • (a) in the case of an individual (other than a trust), their Social Insurance Number;

    • (b) in the case of a trust, its trust account number; and

    • (c) in any other case, the person’s or partnership’s business number.

  • Marginal note:Number required in information returns

    (2) For the purposes of this Act and the Regulations, a person or partnership required to make an information return requiring a business number, Social Insurance Number or trust account number of another person or partnership

    • (a) shall make a reasonable effort to obtain the number from the other person or partnership; and

    • (b) shall not knowingly use, communicate or allow to be communicated, otherwise than as required or authorized under this Act or a regulation, the number without the written consent of the other person or partnership.

  • Marginal note:Authority to communicate number

    (3) A particular person may communicate, or allow to be communicated, a business number, Social Insurance Number or trust account number to another person related to the particular person where the other person is required, by this Act or the Regulations, to make an information return that requires the number.

• (2) The portion of subsection 237(4) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Authority to communicate number

    (4) An insurance corporation may communicate, or allow to be communicated, to another person the business number, Social Insurance Number or trust account number of a particular person or partnership if

• (3) Paragraph 237(4)(c) of the Act is replaced by the following:

  • (c) the other person is required, by this Act or the Regulations, to make an information return, in respect of the disposition of the share or income from the share, that requires the number.

• (4) Subsections (1) to (3) apply to the 2018 and subsequent taxation years.

• 34 (1) Paragraph 237.1(7)(a) of the Act is replaced by the following:

  • (a) the name, address and the business number, Social Insurance Number or trust account number of each person who so acquires or otherwise invests in the tax shelter in the year,

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 35 (1) Subsection 239(2.3) of the Act is replaced by the following:

  • Marginal note:Offence with respect to an identification number

    (2.3) Every person to whom the business number of a taxpayer or partnership, to whom the Social Insurance Number of an individual or to whom the trust account number of a trust has been provided under this Act or the Regulations, and every officer, employee and agent of such a person, who without written consent of the individual, taxpayer, partnership or trust, as the case may be, knowingly uses, communicates or allows to be communicated the number (otherwise than as required or authorized by law, in the course of duties in connection with the administration or enforcement of this Act or for a purpose for which it was provided by the individual, taxpayer, partnership or trust, as the case may be) is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months, or to both.

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 36 (1) Paragraph 241(4)(j.1) of the Act is replaced by the following:

  • (j.1) provide taxpayer information to an official or a designated person solely for the purpose of permitting the making of an adjustment to a social assistance payment made on the basis of a means, needs or income test if the purpose of the adjustment is to take into account

    • (i) the amount determined in respect of a person for C in subsection 122.61(1), as it read before July 2018, in respect of a base taxation year (as defined in section 122.6) before 2017, or

    • (ii) an amount determined in respect of a person under subsection 122.61(1) or (1.1) in respect of a base taxation year (as defined in section 122.6) after 2014;

• (2) Subsection (1) comes into force or is deemed to have come into force on July 1, 2018.

• 37 (1) The portion of the definition business number in subsection 248(1) of the Act before paragraph (a) is replaced by the following:

  business number

  business number means the number (other than a Social Insurance Number or trust account number) used by the Minister to identify

• (2) Subsection 248(1) of the Act is amended by adding the following in alphabetical order:

  trust account number

  trust account number means the number (other than a business number)

  • (a) used by the Minister to identify a trust, and

  • (b) of which the Minister has notified the trust; (numéro de compte en fiducie)

• (3) Subsections (1) and (2) apply to the 2018 and subsequent taxation years.

Deemed Coming into Force

Marginal note:Definition of eligible individual

38 Subparagraph (e)(v) of the definition eligible individual in section 122.6 of the Act, as enacted by subsection 28(1) of the Budget Implementation Act, 2016, No. 1, is deemed to have come into force on January 1, 2005.

2016, c. 14An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act

39 Section 67 of An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act is repealed.

40 Section 69 of the Act is repealed.

2017, c. 20Budget Implementation Act, 2017, No. 1

• 41 (1) Subsection 6(2) of the Budget Implementation Act, 2017, No. 1 is repealed.

• (2) Subsection 6(5) of the Act is repealed.

C.R.C., c. 945Income Tax Regulations

• 42 (1) Subparagraph 201(1)(b)(ii) of the Income Tax Regulations is replaced by the following:

  • (ii) in respect of

    • (A) money on loan to an association, corporation, institution, organization, partnership or trust,

    • (B) money on deposit with an association, corporation, institution, organization, partnership or trust, or

    • (C) property deposited or placed with an association, corporation, institution, organization, partnership or trust,

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 43 (1) Paragraph 229(1)(b) of the Regulations is replaced by the following:

  • (b) in respect of each member of the partnership who is entitled to a share referred to in paragraph (c) or (d) for the fiscal period, the member’s

    • (i) name,

    • (ii) address, and

    • (iii) business number, Social Insurance Number or trust account number, as the case may be;

• (2) Subsection (1) applies to the 2018 and subsequent taxation years.

• 44 (1) Section 3503 of the Regulations and the heading before it are repealed.

• (2) Subsection (1) is deemed to have come into force on February 27, 2018.

45 The portion of Class 43.2 in Schedule II to the Regulations before paragraph (a) is replaced by the following:

• 46 (1) Schedule VIII to the Regulations is repealed.

• (2) Subsection (1) is deemed to have come into force on February 27, 2018.

PART 2Amendments to the Excise Act, 2001 (Tobacco Taxation) and to Related Legislation

2002, c. 22Excise Act, 2001

• 47 (1) Subsections 43.1(1) and (2) of the Excise Act, 2001 are replaced by the following:

  Marginal note:Definition of inflationary adjusted year

  • 43.1 (1) In this section, inflationary adjusted year means 2019 and every year after that year.

  • Marginal note:Annual adjustments

    (2) Each rate of duty set out in sections 1 to 4 of Schedule 1 and paragraph (a) of Schedule 2 in respect of a tobacco product is to be adjusted on April 1 of an inflationary adjusted year so that the rate is equal to the greater of

    • (a) the rate determined by the formula

      A × B

      where

      A

      is the rate of duty applicable to the tobacco product on March 31 of the inflationary adjusted year, and

      B

      is the amount, rounded to the nearest one-thousandth, or, if the amount is equidistant from two consecutive one-thousandths, rounded to the higher one-thousandth, determined by the formula

      C/D

      where

      C

      is the Consumer Price Index for the 12-month period ending on September 30 of the particular year preceding the inflationary adjusted year, and

      D

      is the Consumer Price Index for the 12-month period ending on September 30 of the year preceding the particular year; and

    • (b) the rate of duty referred to in the description of A in paragraph (a).

• (2) Subsection (1) is deemed to have come into force on February 28, 2018.

• 48 (1) The definition adjustment day in section 58.1 of the Act is amended by striking out “or” at the end of paragraph (a) and by replacing paragraph (b) with the following:

  • (a.1) February 28, 2018; or

  • (b) in the case of an inflationary adjusted year, April 1 of that year. (date d’ajustement)

• (2) The portion of the definition taxed cigarettes in section 58.1 of the Act before paragraph (a) is replaced by the following:

  taxed cigarettes

  taxed cigarettes of a person means cigarettes in respect of which duty has been imposed under section 42 or 53 at the rate applicable on the day before an adjustment day, and that, at the beginning of the adjustment day,

• (3) Subsections (1) and (2) are deemed to have come into force on February 28, 2018.

• 49 (1) Subsection 58.2(2) of the Act is replaced by the following:

  • Marginal note:Imposition of tax — 2018 increase

    (1.1) Subject to section 58.3, every person shall pay to Her Majesty a tax on all taxed cigarettes of the person held at the beginning of February 28, 2018 at the rate of $0.011468 per cigarette.

  • Marginal note:Imposition of tax — inflationary adjusted years

    (2) Subject to section 58.3, every person shall pay to Her Majesty a tax on all taxed cigarettes of the person held at the beginning of April 1 of an inflationary adjusted year at a rate per cigarette equal to

    • (a) in the case of cigarettes in respect of which duty has been imposed under section 42, the amount determined by the formula

      (A – B)/5

      where

      A

      is the rate of duty applicable under section 1 of Schedule 1 for each five cigarettes on April 1 of the inflationary adjusted year, and

      B

      is the rate of duty applicable under section 1 of Schedule 1 for each five cigarettes on March 31 of the inflationary adjusted year; and

    • (b) in the case of cigarettes in respect of which duty has been imposed under section 53, the amount determined by the formula

      C – D

      where

      C

      is the rate of duty applicable under paragraph 1(a) of Schedule 3 per cigarette on April 1 of the inflationary adjusted year, and

      D

      is the rate of duty applicable under paragraph 1(a) of Schedule 3 per cigarette on March 31 of the inflationary adjusted year.

• (2) Subsection (1) is deemed to have come into force on February 28, 2018.

• 50 (1) Subsection 58.5(1) of the Act is amended by striking out “or” at the end of paragraph (a) and by replacing paragraph (b) with the following:

  • (a.1) in the case of the tax imposed under subsection 58.2(1.1), April 30, 2018; or

  • (b) in the case of the tax imposed under subsection 58.2(2) in respect of an inflationary adjusted year, May 31 of the inflationary adjusted year.

• (2) Subsection (1) is deemed to have come into force on February 28, 2018.

• 51 (1) Subsection 58.6(1) of the Act is amended by striking out “or” at the end of paragraph (a) and by replacing paragraph (b) with the following:

  • (a.1) in the case of the tax imposed under subsection 58.2(1.1), April 30, 2018; or

  • (b) in the case of the tax imposed under subsection 58.2(2) in respect of an inflationary adjusted year, May 31 of the inflationary adjusted year.

• (2) Subsection (1) is deemed to have come into force on February 28, 2018.

• 52 (1) Subparagraphs 216(2)(a)(i) to (iv) of the Act are replaced by the following:

  • (i) $0.24 multiplied by the number of cigarettes to which the offence relates,

  • (ii) $0.24 multiplied by the number of tobacco sticks to which the offence relates,

  • (iii) $0.30 multiplied by the number of grams of manufactured tobacco other than cigarettes or tobacco sticks to which the offence relates, and

  • (iv) $0.47 multiplied by the number of cigars to which the offence relates, and

• (2) Subparagraphs 216(3)(a)(i) to (iv) of the Act are replaced by the following:

  • (i) $0.36 multiplied by the number of cigarettes to which the offence relates,

  • (ii) $0.36 multiplied by the number of tobacco sticks to which the offence relates,

  • (iii) $0.45 multiplied by the number of grams of manufactured tobacco other than cigarettes or tobacco sticks to which the offence relates, and

  • (iv) $0.93 multiplied by the number of cigars to which the offence relates, and

53 Paragraphs 240(a) to (c) of the Act are replaced by the following:

• 54 (1) Paragraph 1(a) of Schedule 1 to the Act is replaced by the following:

  • (a) $0.59634; or

• (2) Subsection (1) is deemed to have come into force on February 28, 2018.

• 55 (1) Paragraph 2(a) of Schedule 1 to the Act is replaced by the following:

  • (a) $0.11927; or

• (2) Subsection (1) is deemed to have come into force on February 28, 2018.

• 56 (1) Paragraph 3(a) of Schedule 1 to the Act is replaced by the following:

  • (a) $7.45425; or

• (2) Subsection (1) is deemed to have come into force on February 28, 2018.

• 57 (1) Paragraph 4(a) of Schedule 1 to the Act is replaced by the following:

  • (a) $25.95832; or

• (2) Subsection (1) is deemed to have come into force on February 28, 2018.

• 58 (1) Subparagraph (a)(i) of Schedule 2 to the Act is replaced by the following:

  • (i) $0.09331, or

• (2) Paragraph (b) of Schedule 2 to the Act is replaced by the following:

  • (b) the amount obtained by multiplying the sale price, in the case of cigars manufactured in Canada, or the duty-paid value, in the case of imported cigars, by 88%.

• (3) Subsections (1) and (2) are deemed to have come into force on February 28, 2018.

2014, c. 20Economic Action Plan 2014 Act, No. 1

59 Subsection 76(5) of the Economic Action Plan 2014 Act, No. 1 is replaced by the following:

60 Subsection 78(3) of the Act is replaced by the following:

61 Subsection 79(4) of the Act is replaced by the following:

62 Subsection 80(4) of the Act is replaced by the following:

63 Subsection 81(4) of the Act is replaced by the following:

2014, c. 39Economic Action Plan 2014 Act, No. 2

64 Subsection 100(4) of the Economic Action Plan 2014 Act, No. 2 is replaced by the following:

65 Subsection 101(2) of the Act is replaced by the following:

2017, c. 20Budget Implementation Act, 2017, No. 1

• 66 (1) Subsection 45(3) of the Budget Implementation Act, 2017, No. 1 is repealed.

• (2) Subsection 45(5) of the Act is repealed.

Application

67 For the purposes of applying the provisions of the Customs Act that provide for the payment of, or the liability to pay, interest in respect of any amount, the amount is to be determined and interest is to be computed on it as though paragraphs 1(a), 2(a), 3(a) and 4(a) of Schedule 1 to the Excise Act, 2001, as enacted by sections 54 to 57, and subparagraph (a)(i) and paragraph (b) of Schedule 2 to the Excise Act, 2001, as enacted by section 58, had been assented to on February 28, 2018.

PART 3Amendments to the Excise Act, 2001 (Cannabis Taxation), the Excise Tax Act and Other Related Texts

Coordination with the Cannabis Act

• 68 (1) If Bill C-45, introduced in the 1st session of the 42nd Parliament and entitled the Cannabis Act (referred to in this section and section 118 as the “other Act”), receives royal assent, then for the purposes of this section and sections 117 and 118, commencement day means the day on which subsection 204(1) of the other Act comes into force.

• (2) If the other Act receives royal assent, then sections 69 to 78, subsection 79(1), section 84, subsection 85(2), sections 87, 89 to 106 and 108 to 113 and subsection 115(1) come into force on the first day on which both this Act and the other Act have received royal assent.

• (3) Despite subsection (2), if the other Act receives royal assent, then sections 158.02, 158.09 to 158.12, 158.15 and 158.16 of the Excise Act, 2001, as enacted by section 73, come into force on commencement day.

• (4) If the other Act receives royal assent, then subsection 79(2), sections 80 to 83, subsections 85(1) and (3), sections 86, 88, 107 and 114, subsection 115(2) and section 116 come into force on commencement day.

2002, c. 22Excise Act, 2001

• 69 (1) The definitions container, excise stamp, non-duty-paid, stamped and take for use in section 2 of the Excise Act, 2001 are replaced by the following:

  container

  container, in respect of a tobacco product or a cannabis product, means a wrapper, package, carton, box, crate, bottle, vial or other container that contains the tobacco product or cannabis product. (contenant)

  excise stamp

  excise stamp means a tobacco excise stamp or a cannabis excise stamp. (timbre d’accise)

  non-duty-paid

  non-duty-paid, in respect of packaged alcohol or a cannabis product, means that duty (other than special duty in the case of alcohol) has not been paid on the alcohol or cannabis product. (non acquitté)

  stamped

  stamped means

  • (a) in respect of a tobacco product, that a tobacco excise stamp, and all prescribed information in a prescribed format in respect of the tobacco product, are stamped, impressed, printed or marked on, indented into or affixed to the tobacco product or its container in the prescribed manner to indicate that duty, other than special duty, has been paid on the tobacco product; and

  • (b) in respect of a cannabis product, that a cannabis excise stamp, and all prescribed information in a prescribed format in respect of the cannabis product, are stamped, impressed, printed or marked on, indented into or affixed to the cannabis product or its container in the prescribed manner to indicate that duty has been paid on the cannabis product. (estampillé)

  take for use

  take for use means

  • (a) in respect of alcohol, to consume, analyze or destroy alcohol or to use alcohol for any purpose that results in a product other than alcohol; and

  • (b) in respect of a cannabis product, to consume, analyze or destroy the cannabis product. (utilisation pour soi)

• (2) Paragraph (a) of the definition packaged in section 2 of the Act is replaced by the following:

  • (a) in respect of raw leaf tobacco, a tobacco product or a cannabis product, packaged in a prescribed package; or

• (3) The definition produce in section 2 of the Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):

  • (c) in respect of a cannabis product, has the same meaning as in subsection 2(1) of the Cannabis Act but also includes packaging the cannabis product. (production)

• (4) Section 2 of the Act is amended by adding the following in alphabetical order:

  additional cannabis duty

  additional cannabis duty means a duty imposed under section 158.2 or 158.22. (droit additionnel sur le cannabis)

  cannabis

  cannabis has the same meaning as in subsection 2(1) of the Cannabis Act. (cannabis)

  cannabis duty

  cannabis duty means a duty imposed under section 158.19 or 158.21. (droit sur le cannabis)

  cannabis excise stamp

  cannabis excise stamp means a stamp that is issued by the Minister under subsection 158.03(1) and that has not been cancelled under section 158.07. (timbre d’accise de cannabis)

  cannabis licensee

  cannabis licensee means a person that holds a cannabis licence issued under section 14. (titulaire de licence de cannabis)

  cannabis plant

  cannabis plant has the same meaning as in subsection 2(1) of the Cannabis Act. (plante de cannabis)

  cannabis product

  cannabis product means

  • (a) a product that is cannabis but that is not industrial hemp produced or imported in accordance with the Cannabis Act or the Industrial Hemp Regulations,

  • (b) a product that is an industrial hemp by-product,

  • (c) anything that is made with or contains a product described in paragraph (a) or (b), or

  • (d) a prescribed substance, material or thing,

  but does not include a prescribed substance, material or thing. (produit du cannabis)

  dutiable amount

  dutiable amount, in respect of a cannabis product, means

  • (a) if paragraph (b) does not apply, the amount determined by the formula

    A × [100%/(100% + B + C)]

    where

    A

    is the total of the following amounts that the purchaser is liable to pay to the vendor by reason of, or in respect of, the sale of the cannabis product:

    • (i) the consideration, as determined for the purposes of Part IX of the Excise Tax Act, for the cannabis product,

    • (ii) any additional consideration, as determined for the purposes of that Part, for the container in which the cannabis product is contained, and

    • (iii) any amount of consideration, as determined for the purposes of that Part, that is in addition to the amounts referred to in subparagraphs (i) and (ii), whether payable at the same or any other time, including, but not limited to, any amount charged for or to make provision for advertising, financing, commissions or any other matter,

    B

    is the percentage set out in section 2 of Schedule 7, and

    C

    is

    • (i) if additional cannabis duty in respect of a specified province is imposed on the cannabis product, the prescribed percentage in respect of the specified province, or

    • (ii) in any other case, 0%; and

  • (b) in prescribed circumstances, the amount determined in prescribed manner. (somme passible de droits)

  flowering material

  flowering material means the whole or any part (other than viable seeds) of an inflorescence of a cannabis plant at any stage of development, including the infructescence stage of development. (matière florifère)

  industrial hemp

  industrial hemp means cannabis that is industrial hemp for the purposes of the Cannabis Act or the Industrial Hemp Regulations. (chanvre industriel)

  industrial hemp by-product

  industrial hemp by-product means flowering material (other than viable achenes) or non-flowering material that has been removed or separated from an industrial hemp plant and that has not

  • (a) been disposed of by retting or by otherwise rendering it into a condition such that it cannot be used for any purpose not permitted under the Controlled Drugs and Substances Act; or

  • (b) been disposed of in a similar manner under the Cannabis Act. (sous-produit de chanvre industriel)

  industrial hemp grower

  industrial hemp grower means a person that holds a licence or permit under the Controlled Drugs and Substances Act or the Cannabis Act authorizing the person to produce industrial hemp plants. (producteur de chanvre industriel)

  industrial hemp plant

  industrial hemp plant means a cannabis plant, including a seedling, that is industrial hemp. (plante de chanvre industriel)

  low-THC cannabis product

  low-THC cannabis product means a cannabis product

  • (a) consisting entirely of cannabis of a class referred to in any of items 1 to 3 of Schedule 4 to the Cannabis Act; and

  • (b) any part of which does not have a maximum yield of more than 0.3% THC w/w, taking into account the potential to convert delta-9-tetrahydrocannabinolic acid into THC, as determined in accordance with the Cannabis Act. (produit du cannabis à faible teneur en THC)

  non-flowering material

  non-flowering material means any part of a cannabis plant other than flowering material, viable seeds and a part of the plant referred to in Schedule 2 to the Cannabis Act. (matière non florifère)

  prescription cannabis drug

  prescription cannabis drug means a cannabis product that is a drug that has been assigned a drug identification number under the Food and Drug Regulations, other than

  • (a) a drug or mixture of drugs that may, under the Food and Drugs Act or the Controlled Drugs and Substances Act, be sold to a consumer, as defined in subsection 123(1) of the Excise Tax Act, without a prescription, as defined in section 1 of Part I of Schedule VI to the Excise Tax Act; or

  • (b) a prescribed cannabis product or a cannabis product of a prescribed class. (drogue de cannabis sur ordonnance)

  specified province

  specified province means a prescribed province. (province déterminée)

  THC

  THC means Δ⁹-tetrahydrocannabinol ((6aR, 10aR)-6a, 7,8,10a-tetrahydro-6,6,9-trimethyl-3-pentyl-6H-dibenzo [b,d] pyran-1-ol). (THC)

  tobacco excise stamp

  tobacco excise stamp means a stamp that is issued by the Minister under subsection 25.1(1) and that has not been cancelled under section 25.5. (timbre d’accise de tabac)

  vegetative cannabis plant

  vegetative cannabis plant means a cannabis plant, including a seedling, that has not yet produced reproductive structures, including flowers, fruits or seeds. (plante de cannabis à l’état végétatif)

  viable seed

  viable seed means a viable seed of a cannabis plant that is not an industrial hemp plant. (graine viable)

• 70 (1) Subsection 5(1) of the Act is replaced by the following:

  Marginal note:Constructive possession

  • 5 (1) For the purposes of section 25.2, subsections 25.3(1), 30(1), 32(1) and 32.1(1), section 61, subsections 70(1) and 88(1), section 158.04, subsections 158.05(1) and 158.11(1) and (2), sections 230 and 231 and subsection 238.1(1), if one of two or more persons, with the knowledge and consent of the rest of them, has anything in the person’s possession, it is deemed to be in the custody and possession of each and all of them.

• (2) The portion of subsection 5(2) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Definition of possession

    (2) In this section and in section 25.2, subsections 25.3(1), 30(1), 32(1) and 32.1(1), section 61, subsections 70(1) and 88(1), section 158.04 and subsections 158.05(1), 158.11(1) and (2) and 238.1(1), possession means not only having in one’s own personal possession but also knowingly

71 Section 14 of the Act is amended by adding the following after subsection (1):

• 72 (1) Subsection 23(2.1) of the Act is amended by striking out “or” at the end of paragraph (a) and by adding the following after that paragraph:

  • (a.1) in the case of a cannabis licence, a licence or permit issued to the person under subsection 62(1) of the Cannabis Act is amended, suspended or revoked; or

• (2) Paragraph 23(3)(b) of the Act is replaced by the following:

  • (b) shall, in the case of a spirits licence, a tobacco licence or a cannabis licence, require security in a form satisfactory to the Minister and in an amount determined in accordance with the regulations; and

73 The Act is amended by adding the following after section 158:

• 74 (1) The portion of subsection 159(1) of the Act before paragraph (a) is replaced by the following:

  Marginal note:Determination of fiscal months

  • 159 (1) The fiscal months of a person other than a cannabis licensee shall be determined in accordance with the following rules:

• (2) Section 159 of the Act is amended by adding the following after subsection (1):

  • Marginal note:Fiscal months — cannabis licensee

    (1.01) For the purposes of this Act, the fiscal months of a cannabis licensee are calendar months.

75 Section 180 of the Act is replaced by the following:

76 The Act is amended by adding the following after section 187:

• 77 (1) Paragraph 206(1)(d) of the Act is replaced by the following:

  • (d) every person that transports a tobacco product or cannabis product that is not stamped or non-duty-paid packaged alcohol.

• (2) Section 206 of the Act is amended by adding the following after subsection (2):

  • Marginal note:Keeping records — cannabis licensee

    (2.01) Every cannabis licensee shall keep records that will enable the determination of the amount of cannabis product produced, received, used, packaged, re-worked, sold or disposed of by the licensee.

78 Paragraph 211(6)(e) of the Act is amended by striking out “or” at the end of subparagraph (viii), by adding “or” at the end of subparagraph (ix) and by adding the following after subparagraph (ix):

• 79 (1) The portion of section 214 of the Act before paragraph (a) is replaced by the following:

  Marginal note:Unlawful production, sale, etc.

  214 Every person that contravenes any of sections 25, 25.2 to 25.4, 27 and 29, subsection 32.1(1) and sections 60, 62, 158.04 to 158.06 and 158.08 is guilty of an offence and liable

• (2) The portion of section 214 of the Act before paragraph (a), as enacted by subsection (1), is replaced by the following:

  Marginal note:Unlawful production, sale, etc.

  214 Every person that contravenes any of sections 25, 25.2 to 25.4, 27 and 29, subsection 32.1(1) and sections 60, 62, 158.02, 158.04 to 158.06, 158.08 and 158.1 is guilty of an offence and liable

80 The Act is amended by adding the following after section 218:

81 Paragraph 230(1)(a) of the Act is replaced by the following:

82 Paragraph 231(1)(a) of the Act is replaced by the following:

83 Subsection 232(1) of the Act is replaced by the following:

84 The Act is amended by adding the following after section 233:

• 85 (1) Subsection 234(1) of the Act is replaced by the following:

  Marginal note:Contravention of section 38, 40, 49, 61, 62.1, 99, 149, 151 or 158.15

  • 234 (1) Every person that contravenes section 38, 40, 49, 61, 62.1, 99, 149, 151 or 158.15 is liable to a penalty of not more than $25,000.

• (2) Section 234 of the Act is amended by adding the following after subsection (2):

  • Marginal note:Failure to comply

    (3) Every person that fails to return or destroy stamps as directed by the Minister under paragraph 158.07(b) is liable to a penalty of not more than $25,000.

• (3) Subsection 234(3) of the Act, as enacted by subsection (2), is replaced by the following:

  • Marginal note:Failure to comply

    (3) Every person that fails to return or destroy stamps as directed by the Minister under paragraph 158.07(b), or that fails to re-work or destroy a cannabis product in the manner authorized by the Minister under section 158.16, is liable to a penalty of not more than $25,000.

86 The Act is amended by adding the following after section 234:

• 87 (1) Paragraph 238.1(1)(a) of the Act is replaced by the following:

  • (a) the person can demonstrate that the stamps were affixed to tobacco products, cannabis products or their containers in the manner prescribed for the purposes of the definition stamped in section 2 and that duty, other than special duty, has been paid on the tobacco products or cannabis products; or

• (2) Subsection 238.1(2) of the Act is replaced by the following:

  • Marginal note:Amount of the penalty

    (2) The amount of the penalty for each excise stamp that cannot be accounted for is equal to

    • (a) in the case of a tobacco excise stamp, the duty that would be imposed on a tobacco product for which the stamp was issued under subsection 25.1(1); or

    • (b) in the case of a cannabis excise stamp, five times the total of the following amounts:

      • (i) the dollar amount set out in paragraph 1(a) of Schedule 7,

      • (ii) if the stamp is in respect of a specified province, three times the dollar amount set out in paragraph 1(a) of Schedule 7, and

      • (iii) if the stamp is in respect of a prescribed specified province, $5.00.

• 88 (1) The portion of section 239 of the Act before paragraph (a) is replaced by the following:

  Marginal note:Other diversions

  239 Unless section 237 applies, every person is liable to a penalty equal to 200% of the duty that was imposed on packaged alcohol, a tobacco product or a cannabis product if

• (2) Paragraph 239(a) of the French version of the Act is replaced by the following:

  • a) elle a acquis l’alcool emballé ou le produit et les droits n’étaient pas exigibles en raison du but dans lequel elle les a acquis ou de leur destination;

89 Section 264 of the Act is replaced by the following:

90 Subsection 266(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):

• 91 (1) Subsection 304(1) of the Act is amended by adding the following after paragraph (c):

  • (c.1) respecting the types of security that are acceptable for the purposes of subsection 158.03(3), and the manner by which the amount of the security is to be determined;

• (2) Paragraph 304(1)(f) of the Act is replaced by the following:

  • (f) respecting the information to be provided on tobacco products, packaged alcohol and cannabis products and on containers of tobacco products, packaged alcohol and cannabis products;

• (3) Paragraph 304(1)(n) of the Act is replaced by the following:

  • (n) respecting the sale under section 266 of alcohol, tobacco products, raw leaf tobacco, specially denatured alcohol, restricted formulations or cannabis products seized under section 260;

92 The Act is amended by adding the following after section 304:

93 Schedule 7 to the Act is replaced by the Schedule 7 set out in Schedule 1 to this Act.

94 The Act is amended by replacing “excise stamp” with “tobacco excise stamp”, with any grammatical changes that the circumstances require, in the following provisions:

• (a) subsections 25.1(2) to (5);

• (b) sections 25.2 to 25.4; and

• (c) paragraph 25.5(a).

R.S., c. E-15Excise Tax Act

95 The definition excisable goods in subsection 123(1) of the Excise Tax Act is replaced by the following:

96 The portion of section 4 of Part VI of Schedule V to the Act before paragraph (a) is replaced by the following:

97 Section 1 of Part III of Schedule VI to the Act is amended by adding the following after paragraph (a):

• 98 (1) Section 2 of Part IV of Schedule VI to the French version of the Act is replaced by the following:

  • 2 La fourniture de graines et de semences (autres que les graines viables qui constituent du cannabis au sens du paragraphe 2(1) de la Loi sur le cannabis) à leur état naturel, traitées pour l’ensemencement ou irradiées pour l’entreposage, de foin, de produits d’ensilage ou d’autres produits de fourrage, fournis en quantités plus importantes que celles qui sont habituellement vendues ou offertes pour vente aux consommateurs, et servant habituellement d’aliments pour la consommation humaine ou animale ou à la production de tels aliments, à l’exclusion des graines, des semences et des mélanges de celles-ci emballés, préparés ou vendus pour servir de nourriture aux oiseaux sauvages ou aux animaux domestiques.

• (2) Paragraph 2(a) of Part IV of Schedule VI to the English version of the Act is replaced by the following:

  • (a) grains or seeds (other than viable seeds that are cannabis as defined in subsection 2(1) of the Cannabis Act) in their natural state, treated for seeding purposes or irradiated for storage purposes,

99 Paragraphs 3.1(b) and (c) of Part IV of Schedule VI to the Act are replaced by the following:

100 Paragraphs 12(b) and (c) of Schedule VII to the Act are replaced by the following:

101 Section 6 of Part I of Schedule X to the Act is replaced by the following:

Amendments to Various Regulations

SI/85-181Postal Imports Remission Order

• 102 (1) Paragraph (a) of the definition goods in section 2 of the Postal Imports Remission Order is replaced by the following:

  • (a) alcoholic beverages, cannabis products, cigars, cigarettes and manufactured tobacco;

• (2) Section 2 of the Order is amended by adding the following in alphabetical order:

  cannabis product

  cannabis product has the same meaning as in section 2 of the Excise Act, 2001; (produit du cannabis)

SI/85-182; SI/92-128, s. 2(F)Courier Imports Remission Order

• 103 (1) Paragraph (a) of the definition goods in section 2 of the Courier Imports Remission Order is replaced by the following:

  • (a) alcoholic beverages, cannabis products, cigars, cigarettes and manufactured tobacco;

• (2) Section 2 of the Order is amended by adding the following in alphabetical order:

  cannabis product

  cannabis product has the same meaning as in section 2 of the Excise Act, 2001; (produit du cannabis)

SOR/91-37Public Service Body Rebate (GST/HST) Regulations

104 Paragraph 4(1)(e) of the Public Service Body Rebate (GST/HST) Regulations is replaced by the following:

SOR/2003-115Regulations Respecting Excise Licences and Registrations

• 105 (1) The portion of subsection 5(1) of the Regulations Respecting Excise Licences and Registrations before paragraph (a) is replaced by the following:

  • 5 (1) For the purposes of paragraph 23(3)(b) of the Act, the amount of security to be provided by an applicant for a spirits licence, a tobacco licence or a cannabis licence is an amount of not less than $5,000 and

• (2) Paragraph 5(1)(b) of the Regulations is replaced by the following:

  • (b) in the case of a tobacco licence or a cannabis licence, be sufficient to ensure payment of the amount of duty referred to in paragraph 160(b) of the Act up to a maximum amount of $5 million.

SOR/2003-203Regulations Respecting the Possession of Tobacco Products That Are Not Stamped

106 The title of the Regulations Respecting the Possession of Tobacco Products That Are Not Stamped is replaced by the following:

107 The Regulations are amended by adding the following after section 1:

SOR/2003-288Stamping and Marking of Tobacco Products Regulations

108 The title of the Stamping and Marking of Tobacco Products Regulations is replaced by the following:

109 Section 2 of the Regulations is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):

110 Subsection 4(2) of the Regulations is replaced by the following:

111 Subparagraphs 4.1(1)(a)(i) and (ii) of the Regulations are replaced by the following:

112 The portion of section 4.2 of the Regulations before paragraph (a) is replaced by the following:

SOR/2011-177Tobacco Products Labelling Regulations (Cigarettes and Little Cigars)

113 The Tobacco Products Labelling Regulations (Cigarettes and Little Cigars) are amended by replacing “excise stamp” with “tobacco excise stamp” in the following provisions:

• (a) paragraph 7(a); and

• (b) section 11.

Consequential Amendments

R.S., c. C-46Criminal Code

• 114 (1) Subparagraph (g)(i) of the definition offence in section 183 of the Criminal Code is replaced by the following:

  • (i) section 214 (unlawful production, sale, etc., of tobacco, alcohol or cannabis),

• (2) Paragraph (g) of the definition offence in section 183 of the Act is amended by adding the following after subparagraph (iii):

  • (iii.1) section 218.1 (unlawful possession, sale, etc., of unstamped cannabis),

R.S., c. 1 (2nd Supp.)Customs Act

• 115 (1) The definition excise stamp in subsection 2(1) of the Customs Act is replaced by the following:

  excise stamp

  excise stamp has the same meaning as in section 2 of the Excise Act, 2001; (timbre d’accise)

• (2) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:

  cannabis product

  cannabis product has the same meaning as in section 2 of the Excise Act, 2001; (produit du cannabis)

116 Subsection 109.2(2) of the Act is replaced by the following:

Application

• 117 (1) In applying sections 14 and 23 of the Excise Act, 2001 in respect of a cannabis licence that is issued to a person before commencement day, the following rules apply beginning on the day on which the cannabis licence is issued until commencement day:

  • (a) subsection 14(1.2) of that Act, as enacted by section 71, is to be read as follows:

    • (1.2) A cannabis licence issued to a person shall not have effect before a licence or permit issued to the person under subsection 62(1) of the Cannabis Act or a licence issued to the person under section 35 of the Access to Cannabis for Medical Purposes Regulations comes into effect.

  • (b) paragraph 23(2.1)(a.1) of that Act, as enacted by subsection 72(1), is to be read as follows:

    • (a.1) in the case of a cannabis licence, a licence or permit issued to the person under subsection 62(1) of the Cannabis Act or a licence issued to the person under section 35 of the Access to Cannabis for Medical Purposes Regulations is amended, suspended or revoked; or

• (2) Section 158.13 of the Excise Act, 2001, as enacted by section 73, and section 84 only apply to cannabis products that are entered into the duty-paid market on or after commencement day, including cannabis products that are delivered at any time to a purchaser for sale or distribution on or after commencement day.

• (3) Sections 158.19 and 158.2 of the Excise Act, 2001, as enacted by section 73, only apply to packaged cannabis products that are delivered to a purchaser on or after commencement day.

• (4) Sections 158.21 and 158.22 of the Excise Act, 2001, as enacted by section 73, only apply to cannabis products that are imported into Canada or released (as defined in the Customs Act) on or after commencement day.

• (5) Section 158.25 of the Excise Act, 2001, as enacted by section 73, only applies to cannabis products that are taken for use on or after commencement day.

• (6) Section 158.26 of the Excise Act, 2001, as enacted by section 73, only applies to cannabis products that, on or after commencement day, cannot be accounted for as being in the possession of a cannabis licensee or in the possession of a person in accordance with subsection 158.11(3) or paragraph 158.11(5)(a) of that Act, as enacted by section 73.

Transitional Provision

• 118 (1) In this section, transitional period means the period beginning on the first day on which both this Act and the other Act have received royal assent and ending at the end of the day preceding commencement day.

• (2) If, at any time during the transitional period, provisions of the Excise Act, 2001, as enacted or amended by this Part, rely on or incorporate provisions or concepts found in provisions of the other Act (other than subsection 204(1) of the other Act) that are not in force at that time, those provisions of the other Act are deemed, despite subsection 226(1) of the other Act, to be in force at that time but only for the purposes of applying the Excise Act, 2001.

R.S., c. F-8; 1995, c. 17, s. 45(1)Amendment to the Federal-Provincial Fiscal Arrangements Act

• 119 (1) The definition accord de coordination de la taxation du cannabis in subsection 2(1) of the French version of the Federal-Provincial Fiscal Arrangements Act is replaced by the following:

  coordinated cannabis taxation agreement

  accord de coordination de la taxation du cannabis Accord ou arrangement conclu par le ministre pour le compte du gouvernement du Canada en vertu de la partie III.2, y compris les modifications à l’accord ou à l’arrangement effectuées en vertu de cette partie. (coordinated cannabis taxation agreement)

• (2) Subsection (1) is deemed to have come into force on December 14, 2017.

PART 4Canadian Forces Members and Veterans

R.S., c. P-6Pension Act

120 Subsection 35(1.2) of the Pension Act is replaced by the following:

• 121 (1) The portion of subsection 72(1) of the Act before subparagraph (a)(i) is replaced by the following:

  Marginal note:Amount of allowance

  • 72 (1) In addition to any other allowance, pension or compensation awarded under this Act, a member of the forces shall be awarded an exceptional incapacity allowance at a rate determined by the Minister in accordance with the minimum and maximum rates set out in Schedule III if

    • (a) the member of the forces is in receipt of

• (2) The portion of subparagraph 72(1)(a)(ii) of the Act before clause (A) is replaced by the following:

  • (ii) a pension in a lesser amount than the amount set out in Class 1 of Schedule I as well as compensation paid under this Act or a disability award or pain and suffering compensation paid under the Veterans Well-being Act, if the aggregate of the following percentages is equal to or greater than 98%:

• (3) Subparagraph 72(1)(a)(ii) of the Act is amended by striking out “and” at the end of clause (B) and by adding the following after clause (C):

  • (D) the extent of the disability in respect of which the pain and suffering compensation is paid;

• (4) Paragraph 72(1)(b) of the Act is replaced by the following:

  • (b) the member of the forces is suffering an exceptional incapacity that is a consequence of or caused in whole or in part by the disability for which the member is receiving a pension or a disability award or pain and suffering compensation under that Act;

  • (c) the member of the forces is not in receipt of additional pain and suffering compensation under that Act; and

  • (d) the Minister determines that the member of the forces is not entitled to additional pain and suffering compensation under that Act.

• (5) Subsections 72(1.1) and (2) of the Act are replaced by the following:

  • Marginal note:Deeming

    (1.1) The Minister’s determination under paragraph (1)(d) of whether a member of the forces is entitled to additional pain and suffering compensation is deemed to be a determination made under section 56.6 of the Veterans Well-being Act. If the Minister determines that the member is entitled to additional pain and suffering compensation, the member’s application for an exceptional incapacity allowance is deemed to be an application for additional pain and suffering compensation made under that section.

  • Marginal note:For greater certainty

    (1.2) For greater certainty, a member of the forces who is not released from the Canadian Forces is not entitled to additional pain and suffering compensation for the purposes of paragraph (1)(d).

  • Marginal note:Determination of exceptional incapacity

    (2) Without restricting the generality of paragraph (1)(b), in determining whether the incapacity suffered by a member of the forces is exceptional, account shall be taken of the extent to which the disability for which the member is receiving a pension or a disability award or pain and suffering compensation under the Veterans Well-being Act has left the member in a helpless condition or in continuing pain and discomfort, has resulted in loss of enjoyment of life or has shortened the member’s life expectancy.

122 The Act is amended by adding the following after section 80:

2005, c. 21; 2017, c. 20, s. 270Veterans Well-being Act

• 123 (1) The definitions compensation and rehabilitation services in subsection 2(1) of the Veterans Well-being Act are replaced by the following:

  compensation

  compensation means any of the following benefits under this Act, namely, an education and training benefit, an education and training completion bonus, an income replacement benefit, a Canadian Forces income support benefit, a critical injury benefit, a disability award, pain and suffering compensation, additional pain and suffering compensation, a death benefit, a clothing allowance, a detention benefit or a caregiver recognition benefit. (indemnisation)

  rehabilitation services

  rehabilitation services means all services related to the medical rehabilitation, psycho-social rehabilitation or vocational rehabilitation of a person. (services de réadaptation)

• (2) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:

  disability award

  disability award means a disability award paid under section 45, 47 or 48 of this Act as it read immediately before April 1, 2019. (indemnité d’invalidité)

124 Paragraph 3(3)(c) of the Act is replaced by the following:

125 Section 5.7 of the Act is replaced by the following:

• 126 (1) The portion of subsection 8(2) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Factors Minister may consider

    (2) For the purposes of subsections (1) and 18(1), in deciding whether a veteran has a physical or a mental health problem that is creating a barrier to re-establishment in civilian life, and whether that health problem resulted primarily from service in the Canadian Forces, the Minister may consider any factors that the Minister considers relevant, including

• (2) Subsection 8(3) of the Act is replaced by the following:

  • Marginal note:Presumption

    (3) For the purposes of subsections (1) and 18(1), a veteran’s physical or mental health problem is deemed to have resulted primarily from service in the Canadian Forces if, as a result of the health problem, the veteran suffers from a disability for which a disability award has been granted, pain and suffering compensation has been granted under section 45 or a pension has been granted under the Pension Act.

127 Subsection 9(1) of the Act is replaced by the following:

128 Section 9 of the Act is repealed.

• 129 (1) Subsection 10(1) of the Act is replaced by the following:

  Marginal note:Assessment of needs

  • 10 (1) The Minister shall,

    • (a) on approving an application made under section 8, assess the veteran’s medical rehabilitation, psycho-social rehabilitation and vocational rehabilitation needs; and

    • (b) on approving an application made under section 9, assess the veteran’s medical rehabilitation and psycho-social rehabilitation needs.

• (2) Subsection 10(1) of the Act is replaced by the following:

  Marginal note:Assessment of needs

  • 10 (1) The Minister shall, on approving an application made under section 8, assess the veteran’s medical rehabilitation, psycho-social rehabilitation and vocational rehabilitation needs.

• (3) Paragraphs 10(3)(a) and (b) of the Act are replaced by the following:

  • (a) in the case of a veteran for whom an application made under section 8 was approved, a physical or a mental health problem resulting primarily from service in the Canadian Forces that is creating a barrier to re-establishment in civilian life; or

  • (b) in the case of a veteran for whom an application made under section 9 was approved, the physical or mental health problem for which the veteran was released.

• (4) Subsection 10(3) of the Act is replaced by the following:

  • Marginal note:Limitation

    (3) The only physical or mental health problem that may be addressed in the rehabilitation plan is a physical or a mental health problem resulting primarily from service in the Canadian Forces that is creating a barrier to re-establishment in civilian life.

• (5) Subsections 10(4) and (5) of the Act are replaced by the following:

  • Marginal note:Considerations

    (4) In developing a rehabilitation plan, the Minister shall have regard to any prescribed principles and factors and be guided by current research in the field of rehabilitation.

130 Paragraph 11(1)(a) of the Act is replaced by the following:

131 Section 18 of the Act and the heading before it are replaced by the following:

• 132 (1) The portion of subsection 19(1) of the Act before the formula is replaced by the following:

  Marginal note:Amount of benefit — veteran under age 65

  • 19 (1) Subject to the regulations, the monthly amount of the income replacement benefit that is payable under section 18 to a veteran who is under the age of 65 years — or to a veteran who has attained the age of 65 years, for the month in which the veteran attained that age — shall be determined by the formula

• (2) Paragraphs 19(2)(a) to (d) of the Act are replaced by the following:

  • (a) respecting, for the purposes of subsection (1), the determination of the imputed income in respect of a class of veterans, including the periodic adjustment — including in accordance with a career progression factor — of the monthly military salary used in that determination;

  • (b) providing for a minimum amount of imputed income in respect of a class of veterans and for the periodic adjustment of that minimum amount; and

  • (c) respecting the determination, for the purpose of the description of B in subsection (1), of an amount payable to a class of veterans for a month.

• (3) Section 19 of the Act is amended by adding the following after subsection (2):

  • Marginal note:Career progression factor

    (3) If regulations made under paragraph (2)(a) provide for the periodic adjustment of a veteran’s monthly military salary in accordance with a career progression factor, that periodic adjustment may only be applied if the Minister determines under subsection 18(5) that the veteran has a diminished earning capacity, and it shall not be applied after the earlier of

    • (a) the last day of the prescribed number of years of service of the veteran in the Canadian Forces, and

    • (b) the day before the day on which the veteran attains the age of 60 years.

133 Sections 20 to 22 of the Act are replaced by the following:

• 134 (1) Subsections 23(1) to (3) of the Act are replaced by the following:

  Marginal note:Amount of benefit

  • 23 (1) Subject to the regulations, the monthly amount of the income replacement benefit that is payable under section 22 in respect of a member or a veteran is

    • (a) for the month in which the member or veteran, if alive, would have attained the age of 65 years and any month before that month, 90% of the member’s or veteran’s imputed income for a month; and

    • (b) for any month after the month in which the member or veteran, if alive, would have attained the age of 65 years, 70% of the amount determined by the formula

      A × B

      where

      A

      is 70%; and

      B

      is 90% of the member’s or veteran’s imputed income for a month.

  • Marginal note:Division of benefit

    (2) If the income replacement benefit is payable to a survivor or an orphan, the following rules apply:

    • (a) if there is a survivor but no orphans, the survivor is entitled to 100% of the income replacement benefit;

    • (b) if there is a survivor and one or more orphans,

      • (i) the survivor is entitled to 50% of the income replacement benefit, and

      • (ii) the orphans are entitled, as a class, to 50% of the income replacement benefit, divided equally among them;

    • (c) if there are one or more orphans but no survivor, each of those orphans is entitled to the amount obtained by dividing the income replacement benefit by the number of those orphans.

  • Marginal note:Reduction — survivor

    (3) Subject to the regulations, the monthly amount of the income replacement benefit that is payable to a survivor is to be reduced by an amount that is payable to the survivor for a month — in respect of the member or veteran — from prescribed sources.

• (2) Paragraphs 23(4)(a) to (d) of the Act are replaced by the following:

  • (a) respecting, for the purposes of paragraphs (1)(a) and (b), the determination of the imputed income in respect of a class of members or veterans, including the periodic adjustment — including in accordance with a career progression factor — of the monthly military salary used in that determination;

  • (b) providing for a minimum amount of imputed income in respect of a class of members or veterans and for the periodic adjustment of that minimum amount;

  • (c) providing for the periodic adjustment of the amount of the income replacement benefit calculated in accordance with subsection (1); and

  • (d) respecting the determination, for the purpose of subsection (3), of an amount payable to a class of survivors for a month.

• (3) Section 23 of the Act is amended by adding the following after subsection (4):

  • Marginal note:Career progression factor

    (5) If regulations made under paragraph (4)(a) provide for the periodic adjustment of a member’s or a veteran’s monthly military salary in accordance with a career progression factor, that periodic adjustment shall not be applied after the earlier of

    • (a) the last day of the prescribed number of years of service of the member or veteran in the Canadian Forces, and

    • (b) the day before the day the member or veteran, if alive, would have attained the age of 60 years.

135 Sections 24 to 26 of the Act are replaced by the following:

136 The portion of section 27 of the Act before paragraph (b) is replaced by the following:

137 The heading before section 38 and sections 38 to 40.6 of the Act are repealed.

• 138 (1) Paragraphs 41(a) and (b) of the Act are replaced by the following:

  • (a) providing for the notification of the Minister, by persons who are entitled to an income replacement benefit or a Canadian Forces income support benefit, of any changes in income or benefits, or in an amount payable for a month from a prescribed source for the purposes of subsection 19(1), 19.1(1), 23(3) or 26.1(3), requiring the provision of statements of estimated income, benefits or amounts payable and providing for the effect of those changes on the calculation of the amount of the compensation payable;

  • (b) respecting what constitutes a diminished earning capacity;

  • (b.1) respecting the manner of determining whether a veteran has a diminished earning capacity that is due to a physical or a mental health problem;

  • (b.2) respecting what constitutes a year of service in the Canadian Forces, for the purposes of subsections 19(3) and 23(5);

• (2) Section 41 of the Act is amended by striking out “and” at the end of paragraph (f), by adding “and” at the end of paragraph (e) and by repealing paragraph (g).

139 The heading of Part 3 of the Act is replaced by the following:

140 Section 42 of the Act is replaced by the following:

141 The heading before section 45 of the Act is replaced by the following:

• 142 (1) The portion of subsection 45(1) of the Act before paragraph (a) is replaced by the following:

  Marginal note:Eligibility

  • 45 (1) The Minister may, on application, pay pain and suffering compensation to a member or a veteran who establishes that they are suffering from a disability resulting from

• (2) Subsection 45(2) of the Act is replaced by the following:

  • Marginal note:Compensable fraction

    (2) Pain and suffering compensation may be paid under paragraph (1)(b) only in respect of that fraction of a disability, measured in fifths, that represents the extent to which the injury or disease was aggravated by service.

143 Subsection 46(2) of the Act is replaced by the following:

144 Sections 47 to 56 of the Act are replaced by the following:

• 145 (1) Subsections 60(1) and (2) of the Act are replaced by the following:

  Marginal note:Allowance — amputation

  • 60 (1) The Minister may, on application, pay to a member or a veteran who has received a disability award or pain and suffering compensation on account of an amputation of their leg at or above a Symes’ amputation a clothing allowance in respect of their amputation that causes wear and tear of clothing.

  • Marginal note:Allowance — amputation

    (2) The Minister may, on application, pay to a member or a veteran who has received a disability award or pain and suffering compensation on account of an amputation of the arm at or above the wrist a clothing allowance in respect of their amputation that causes wear and tear of clothing.

• (2) Subsection 60(3) of the English version of the Act is replaced by the following:

  • Marginal note:Allowance — two amputations

    (3) If a member or a veteran has received a disability award or pain and suffering compensation on account of two amputations of a kind described in subsection (1) or (2), the Minister may, on application, in addition to the allowances that may be payable under that subsection, pay a clothing allowance in respect of the second amputation equal to 50% of the allowance payable in respect of that amputation.

• (3) Subsections 60(4) and (5) of the Act are replaced by the following:

  • Marginal note:Allowance — other disabilities

    (4) If a member or a veteran has received a disability award or pain and suffering compensation for a disability other than a disability described in subsection (1) or (2) that causes wear and tear of clothing, the Minister may, on application, pay a clothing allowance.

  • Marginal note:Specially made apparel

    (5) If a member or a veteran has received a disability award or pain and suffering compensation for a disability that requires the wearing of specially made apparel, the Minister may, on application, in addition to any other allowance that may be payable under this section, pay a clothing allowance on account of the purchase of the apparel.

146 Section 63 of the Act is replaced by the following:

• 147 (1) Paragraph 65.1(1)(a) of the Act is replaced by the following:

  • (a) the veteran has had an application for a disability award or pain and suffering compensation approved;

• (2) Paragraph 65.1(1)(b) of the English version of the Act is replaced by the following:

  • (b) as a result of the disability for which the application for a disability award or pain and suffering compensation was approved, the veteran requires ongoing care;

148 Subsection 74(1) of the English version of the Act is replaced by the following:

149 The portion of section 82 of the Act before paragraph (a) is replaced by the following:

• 150 (1) The portion of subsection 88(4) of the English version of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Erroneous payments

    (4) Despite anything in this Act, the Minister may continue the payment of an education and training benefit, an income replacement benefit, a Canadian Forces income support benefit, pain and suffering compensation, additional pain and suffering compensation, a clothing allowance or a caregiver recognition benefit, in whole or in part, to a person who is not entitled to it, or not entitled to a portion of it, if

• (2) Paragraphs 88(4)(c) and (d) of the English version of the Act are replaced by the following:

  • (c) the cancellation or reduction of the benefit, allowance, pain and suffering compensation or additional pain and suffering compensation would, in the opinion of the Minister, cause undue hardship to the person; and

  • (d) the benefit, allowance, pain and suffering compensation or additional pain and suffering compensation has been paid to the person for five years or more or, in the case of an education and training benefit, for three years or more.

• (3) Subsection 88(4) of the French version of the Act is replaced by the following:

  • Marginal note:Indemnisation erronée

    (4) Malgré les autres dispositions de la présente loi, le ministre peut continuer de verser à la personne, bien que celle-ci n’y ait pas droit, tout ou partie de l’allocation pour études et formation, de la prestation de remplacement du revenu, de l’allocation de soutien du revenu, de l’indemnité pour douleur et souffrance, de l’indemnité supplémentaire pour douleur et souffrance, de l’allocation vestimentaire ou de l’allocation de reconnaissance pour aidant dont le montant résulte d’une erreur, d’un retard ou d’un oubli de la part d’un cadre ou fonctionnaire de l’administration publique fédérale et a fait l’objet d’une remise au motif prévu à l’alinéa (3)d), s’il estime que le versement, fait depuis au moins cinq ans, ou depuis au moins trois ans dans le cas de l’allocation pour études et formation, ne résulte pas d’une déclaration trompeuse ou de la dissimulation de faits importants de la part de cette personne et que son annulation ou sa réduction lui causerait un préjudice abusif.