Government of Canada / Gouvernement du Canada
Symbol of the Government of Canada

Search

Budget Implementation Act, 2018, No. 2 (S.C. 2018, c. 27)

Assented to 2018-12-13

PART 1Amendments to the Income Tax Act and to Other Legislation (continued)

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

  •  (1) Section 96 of the Act is amended by adding the following after subsection (2):

    • Marginal note:Tiered partnerships

      (2.01) For the purposes of this section, a taxpayer includes a partnership.

  • (2) Subsection 96(2.1) of the Act is amended by striking out “and” at the end of paragraph (d) and by replacing paragraph (e) with the following:

    • (e) if the taxpayer is not a partnership, be deemed to be the taxpayer’s limited partnership loss in respect of the partnership for the year, and

    • (f) if the taxpayer is a partnership, reduce the taxpayer’s share of any loss of the partnership for a fiscal period of the partnership ending in the taxation year of the taxpayer from a business (other than a farming business) or from property.

  • (3) Section 96 of the Act is amended by adding the following after subsection (2.1):

    • Marginal note:Tiered partnerships — adjustments

      (2.11) The following rules apply to taxation years of a taxpayer that end after February 26, 2018:

      • (a) for the purpose of applying section 111, the taxpayer’s non-capital loss, or limited partnership loss in respect of a partnership, for a preceding taxation year shall be determined as if subsection (2.01) and paragraph (2.1)(f) applied in respect of taxation years that end before February 27, 2018; and

      • (b) in computing the adjusted cost base to the taxpayer of the taxpayer’s interest in a partnership after February 26, 2018, there shall be added an amount equal to the portion of the amount of any reduction because of paragraph (a) in a non-capital loss of the taxpayer that can reasonably be considered to relate to the amount of a loss deducted under subparagraph 53(2)(c)(i) in computing the adjusted cost base of that interest.

  • (4) Subsections (1) and (2) apply to taxation years that end after February 26, 2018.

  •  (1) Clause 110(1)(f)(v)(A) of the Act is 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 operational mission (as determined by the Department of National Defence or the Department of Public Safety and Emergency Preparedness) that is

      • (I) assessed for risk allowance at level 3 or higher (as determined by the Department of National Defence), or

      • (II) assessed at a risk score greater than 1.99 and less than 2.50 (as determined by the Department of National Defence) and designated by the Minister of Finance, and

  • (2) Clause 110(1)(f)(v)(A) of the Act is 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, the Minister of Public Safety and Emergency Preparedness or by a person designated by either Minister), and

  • (3) Subsection (1) applies in respect of missions initiated after September 2012 and in respect of missions initiated before October 2012 that were not prescribed under Part LXXV of the Income Tax Regulations as that Part read on February 28, 2013.

  • (4) Subsection (2) applies to the 2017 and subsequent taxation years.

  •  (1) Paragraph 112(2.31)(b) of the Act is replaced by the following:

    • (b) the taxpayer establishes that, throughout the particular period, no tax-indifferent investor or group of tax-indifferent investors, each member of which is affiliated with every other member, has all or substantially all of the risk of loss and opportunity for gain or profit in respect of the share.

  • (2) Subparagraph 112(2.32)(a)(ii) of the Act is replaced by the following:

    • (ii) all or substantially all of its risk of loss and opportunity for gain or profit in respect of the share during the particular period referred to in subsection (2.31) has not been eliminated and cannot reasonably be expected by it to be eliminated;

  • (3) Clause 112(2.32)(b)(iii)(B) of the Act is replaced by the following:

    • (B) all or substantially all of its risk of loss and opportunity for gain or profit in respect of the share during the particular period referred to in subsection (2.31) has not been eliminated and cannot reasonably be expected by it to be eliminated;

  • (4) Clause 112(2.32)(c)(iii)(B) of the Act is replaced by the following:

    • (B) all or substantially all of its risk of loss and opportunity for gain or profit in respect of the share during the particular period referred to in subsection (2.31) has not been eliminated and cannot reasonably be expected by it to be eliminated; or

  • (5) Subsection 112(2.33) of the Act is replaced by the following:

    • Marginal note:End of particular period

      (2.33) If, at a time during a particular period referred to in subsection (2.31), a counterparty, specified counterparty, affiliated counterparty or affiliated specified counterparty reasonably expects to become a tax-indifferent investor or — if it has provided a representation described by subparagraph (2.32)(a)(ii) or clause (2.32)(b)(iii)(B) or (c)(iii)(B) in respect of a share — that all or substantially all of its risk of loss and opportunity for gain or profit in respect of the share will be eliminated, the particular period for which it has provided a representation in respect of the share is deemed to end at that time.

  • (6) The description of B in subsection 112(5.2) of the Act is replaced by the following:

    B
    is
    • (a) if the taxpayer received a dividend under subsection 84(3) in respect of the share, the total determined under subparagraph (b)(ii), and

    • (b) in any other case, the lesser of

      • (i) the loss, if any, from the disposition of the share that would be determined before the application of this subsection if the cost of the share to any taxpayer were determined without reference to

        • (A) paragraphs 87(2)(e.2) and (e.4), 88(1)(c), 138(11.5)(e) and 142.5(2)(b),

        • (B) subsection 85(1), where the provisions of that subsection are required by paragraph 138(11.5)(e) to be applied, and

        • (C) paragraph 142.6(1)(d), and

      • (ii) the total of all amounts each of which is

        • (A) where the taxpayer is a corporation, a taxable dividend received by the taxpayer on the share, to the extent of the amount that was deductible under this section or subsection 115(1) or 138(6) in computing the taxpayer’s taxable income or taxable income earned in Canada for any taxation year,

        • (B) where the taxpayer is a partnership, a taxable dividend received by the taxpayer on the share, to the extent of the amount that was deductible under this section or subsection 115(1) or 138(6) in computing the taxable income or taxable income earned in Canada for any taxation year of members of the partnership,

        • (C) where the taxpayer is a trust, an amount designated under subsection 104(19) in respect of a taxable dividend on the share, or

        • (D) a dividend (other than a taxable dividend) received by the taxpayer on the share,

  • (7) Paragraph (c) of the description of C in subsection 112(5.2) of the Act is replaced by the following:

    • (c) where the taxpayer is a partnership, a loss of a member of the partnership on a deemed disposition of the share before that time was reduced because of subsection (3.1) or (4), and

  • (8) The portion of subsection 112(5.21) of the Act before paragraph (a) is replaced by the following:

    • Marginal note:Subsection (5.2) — excluded dividends

      (5.21) A dividend, other than a dividend received under subsection 84(3), shall not be included in the total determined under subparagraph (b)(ii) of the description of B in subsection (5.2) unless

  • (9) Section 112 of the Act is amended by adding the following after subsection (9):

    • Marginal note:Exception

      (9.1) Subsection (8) does not apply for the purpose of paragraph (5.21)(b) in respect of a dividend received on a share, referred to in paragraph (a) of the description of B in subsection (5.2), during a synthetic disposition period of a synthetic disposition arrangement in respect of that share.

  • (10) Subsections (1) to (5) apply in respect of dividends that are paid or become payable after February 26, 2018.

  • (11) Subsections (6) to (9) apply in respect of dispositions that occur after February 26, 2018.

 

Date modified: