Budget Implementation Act, 2021, No. 1 (S.C. 2021, c. 23)

• (B) whose income (computed without reference to subsection 104(14)) for the beneficiary’s year does not exceed the amount determined for F in subsection 118(1.1) for the year, and

Marginal note:Definitions

• 110 (0.1) The following definitions apply in this section.

  consolidated financial statements

  consolidated financial statements has the same meaning as in subsection 233.8(1). (états financiers consolidés)

  specified person

  specified person, at any time, means a qualifying person that meets the following conditions:

  • (a) it is not a Canadian-controlled private corporation;

  • (b) if the qualifying person is a member of a group that annually prepares consolidated financial statements, the total consolidated group revenue reflected in the last consolidated financial statements of the group presented to shareholders or unitholders — of the member of the group that would be the ultimate parent entity, as defined in subsection 233.8(1), of the group if the group were a multinational enterprise group, as defined in subsection 233.8(1) — before that time exceeds $500 million; and

  • (c) if paragraph (b) does not apply, it has gross revenue in excess of $500 million based on

    • (i) the amounts reflected in the financial statements of the qualifying person presented to the shareholders or unitholders of the qualifying person for the last fiscal period of the qualifying person that ended before that time,

    • (ii) if subparagraph (i) does not apply, the amounts reflected in the financial statements of the qualifying person presented to the shareholders or unitholders of the qualifying person for the last fiscal period of the qualifying person that ended before the end of the last fiscal period referred to in subparagraph (i), and

    • (iii) if subparagraph (i) does not apply and financial statements were not presented as described in subparagraph (ii), the amounts that would have been reflected in the annual financial statements of the qualifying person for the last fiscal period of the qualifying person that ended before that time, if such statements had been prepared in accordance with generally accepted accounting principles. (personne déterminée)

  vesting year

  vesting year, of a security to be acquired under an agreement, means

  • (a) if the agreement specifies the calendar year in which the taxpayer’s right to acquire the security first becomes exercisable (otherwise than as a consequence of an event that is not reasonably foreseeable at the time the agreement is entered into), that calendar year; and

  • (b) in any other case, the calendar year in which the right to acquire the security would become exercisable if the agreement had specified that all identical rights to acquire securities become exercisable on a pro rata basis over the period that

    • (i) begins on the day that the agreement was entered into, and

    • (ii) ends on the day that is the earlier of

      • (A) the day that is 60 months after the day the agreement is entered into, and

      • (B) the last day that the right to acquire the security could become exercisable under the agreement. (année de dévolution)

• Marginal note:Employee options

  (d) an amount equal to 1/2 of the amount of the benefit deemed by subsection 7(1) to have been received by the taxpayer in the year in respect of a security (other than a security that is a non-qualified security) that a particular qualifying person has agreed after February 15, 1984 to sell or issue under an agreement, in respect of the transfer or other disposition of rights under the agreement or as a result of the death of the taxpayer because the taxpayer immediately before death owned a right to acquire the security under the agreement, if

• Marginal note:Employer deduction — non-qualified securities

  (e) an amount equal to the amount of the benefit in respect of employment with the taxpayer deemed by subsection 7(1) to have been received by an individual in the year in respect of a non-qualified security that the taxpayer (or a qualifying person that does not deal at arm’s length with the taxpayer) has agreed to sell or issue under an agreement with the individual, if

  • (i) the taxpayer is a qualifying person,

  • (ii) at the time the agreement was entered into, the individual was an employee of the taxpayer,

  • (iii) the amount is not claimed as a deduction in computing the taxable income of another qualifying person,

  • (iv) an amount would have been deductible in computing the taxable income of the individual under paragraph (d) if the security were not a non-qualified security,

  • (v) in the case of an individual who is not resident in Canada throughout the year, the benefit deemed by subsection 7(1) to have been received by the individual was included in computing the taxable income earned in Canada of the individual for the year, and

  • (vi) the notification requirements in subsection (1.9) are met in respect of the security;

• Marginal note:Election by particular qualifying person

  (1.1) For the purpose of computing the taxable income of a taxpayer for a taxation year, paragraph (1)(d) shall be read without reference to its subparagraph (i) in respect of a right granted to the taxpayer under an agreement to sell or issue securities referred to in subsection 7(1) if

  • (a) the particular qualifying person elects in prescribed form that neither the particular qualifying person nor any person not dealing at arm’s length with the particular qualifying person will deduct in computing its income for a taxation year any amount (other than a designated amount described in subsection (1.2)) in respect of a payment to or for the benefit of a taxpayer for the taxpayer’s transfer or disposition of that right;

• Marginal note:Designated amount

  (1.2) For the purposes of subsections (1.1) and (1.44), an amount is a designated amount if the following conditions are met:

  • (a) the amount would otherwise be deductible in computing the income of the particular qualifying person in the absence of subsections (1.1) and (1.44);

  • (b) the amount is payable to a person

    • (i) with whom the particular qualifying person deals at arm’s length, and

    • (ii) who is neither an employee of the particular qualifying person nor of any person not dealing at arm’s length with the particular qualifying person; and

  • (c) the amount is payable in respect of an arrangement entered into for the purpose of managing the particular qualifying person’s financial risk associated with a potential increase in value of the securities under the agreement described in subsection (1.1) or (1.44).

• Marginal note:Determination of non-qualified securities

  (1.3) Subsection (1.31) applies to a taxpayer in respect of an agreement if

  • (a) a particular qualifying person agrees to sell or issue securities of the particular qualifying person (or another qualifying person that does not deal at arm’s length with the particular qualifying person) to the taxpayer under the agreement;

  • (b) at the time the agreement is entered into (in this subsection and subsection (1.31) referred to as the “relevant time”), the taxpayer is an employee of the particular qualifying person or of a qualifying person that does not deal at arm’s length with the particular qualifying person; and

  • (c) at the relevant time, any of the following persons is a specified person:

    • (i) the particular qualifying person,

    • (ii) the other qualifying person, if any, referred to in paragraph (a), or

    • (iii) the other qualifying person, if any, referred to in paragraph (b).

• Marginal note:Annual vesting limit

  (1.31) If this subsection applies to a taxpayer in respect of an agreement, the securities to be sold or issued under the agreement, for each vesting year of those securities, are deemed to be non-qualified securities for the purposes of this section in the proportion determined by the formula

  A/B

  where

  A

  is the amount determined by the formula

  C + D − $200,000

  where

  C

  is the total of all amounts each of which is the fair market value at the relevant time of each security under the agreement that has that same vesting year, and

  D

  is the lesser of

  • (a) $200,000, and

  • (b) the total of all amounts each of which is an amount determined for C in respect of securities that have that same vesting year under agreements (other than the agreement) entered into at or before the relevant time with the particular qualifying person referred to in subsection (1.3) (or another qualifying person that does not deal at arm’s length with the particular qualifying person), other than

    • (i) securities designated under subsection (1.4),

    • (ii) old securities (within the meaning of subsection 7(1.4)),

    • (iii) securities where the right to acquire those securities is an old right (within the meaning of subsection (1.7)), and

    • (iv) securities in respect of which

      • (A) the right to acquire those securities has expired, or has been cancelled, before the relevant time, and

      • (B) no amount is deductible under paragraph (1)(d) in computing the taxable income of the taxpayer for any year; and

  B

  is the amount determined for C.

• Marginal note:Non-qualified security designation

  (1.4) If subsection (1.31) applies to a taxpayer in respect of an agreement and the particular qualifying person referred to in paragraph (1.3)(a) designates one or more securities to be sold or issued under the agreement as non-qualified securities, the following rules apply:

  • (a) those securities are deemed to be non-qualified securities for the purposes of this section; and

  • (b) the particular qualifying person may not elect under subsection (1.1) in respect of a right to acquire those securities.

• Marginal note:Ordering of acquisition of securities

  (1.41) If a taxpayer acquires a security under an agreement and the acquired security could be a security that is not a non-qualified security, the security is to be considered a security that is not a non-qualified security for the purposes of this section.

• Marginal note:Ordering of simultaneous agreements — subsection (1.31)

  (1.42) If two or more agreements to sell or issue options are entered into at the same time and the particular qualifying person referred to in subsection (1.3) designates the order of the agreements, then the agreements are deemed to have been entered into in that order for the purposes of paragraph (b) of the description of D in subsection (1.31).

• Marginal note:Application of subsection (1.44)

  (1.43) Subsection (1.44) applies in respect of a taxpayer’s right to acquire a security under an agreement if

  • (a) subsection (1.31) applies to the taxpayer in respect of the agreement;

  • (b) the security is not a non-qualified security; and

  • (c) a payment is made to or for the benefit of the taxpayer for the taxpayer’s transfer or disposition of the right.

• Marginal note:Cash-out — securities not designated as non-qualified

  (1.44) If this subsection applies in respect of a taxpayer’s right to acquire a security under an agreement

  • (a) no qualifying person may deduct, in computing its income for a taxation year, an amount (other than a designated amount described in subsection (1.2)) in respect of the payment referred to in paragraph (1.43)(c); and

  • (b) paragraph (1)(d) shall, in respect of the right, be read without reference to its subparagraph (i).

• Marginal note:Notification — non-qualified security

  (1.9) If a security to be issued or sold under an agreement between an employee and a qualifying person is a non-qualified security, the employer of the employee shall

  • (a) notify the employee in writing that the security is a non-qualified security no later than 30 days after the day that the agreement is entered into; and

  • (b) notify the Minister in prescribed form that the security is a non-qualified security on or before the filing-due date for the taxation year of the qualifying person that includes the time that the agreement is entered into.

• Marginal note:Non-capital losses of employee life and health trusts

  (7.4) For the purposes of computing the taxable income of an employee life and health trust for a taxation year, there may be deducted such portion as the trust may claim of the trust’s non-capital losses for the seven taxation years immediately preceding and the three taxation years immediately following the year.

• (b) an amount deducted under paragraph (1)(b) or section 110.6, or deductible under any of paragraphs 110(1)(d) to (g) and (k), section 112 and subsections 113(1) and 138(6), in computing the taxpayer’s taxable income for the year, or

• (iii.22) the total of all amounts, each of which is an amount included under subparagraph 56(1)(r)(iv.1) in computing the non-resident person’s income for the year,

• (d) the deductions permitted by subsection 111(1) and, to the extent that they relate to amounts included in computing the amount determined under any of paragraphs (a) to (c), the deductions permitted by any of paragraphs 110(1)(d) to (d.2), (e) and (f) and subsection 110.1(1),

Marginal note:Annual adjustment

• 117.1 (1) Each specified amount 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 for the year under the provision for which the amount is relevant is the total of

  • (a) the amount that would, but for subsection (3), be the amount to be used under the relevant provision for the preceding taxation year, and

• Marginal note:Annual adjustment — amounts

  (2) For the purposes of subsection (1), each of the following amounts is a specified amount in relation to tax payable under this Part or Part I.2 for a taxation year:

  • (a) the amount of $300 referred to in subparagraph 6(1)(b)(v.1);

  • (b) the amount of $1,000 referred to in the formula in paragraph 8(1)(s);

  • (c) the amount of $400,000 referred to in the formula in paragraph 110.6(2)(a);

  • (d) each of the amounts expressed in dollars in subsection 117(2);

  • (e) each of the amounts expressed in dollars in the description of B in subsection 118(1);

  • (f) the amount of $12,298 in the description of A in subsection 118(1.1);

  • (g) the amount of $15,000 in paragraph (d) of the description of F in subsection 118(1.1);

  • (h) each of the amounts expressed in dollars in subsection 118(2);

  • (i) the amount of $1,000 referred to in subsection 118(10);

  • (j) the amount of $15,000 referred to in subsection 118.01(2);

  • (k) each of the amounts expressed in dollars in subsection 118.2(1);

  • (l) each of the amounts expressed in dollars in subsection 118.3(1);

  • (m) each of the amounts expressed in dollars in subsection 122.5(3);

  • (n) the amount of $2,500 referred to in subsection 122.51(1);

  • (o) each of the amounts expressed in dollars in subsection 122.51(2);

  • (p) the amount of $14,000 referred to in subsection 122.7(1.3);

  • (q) the amounts of $1,395 and $2,403 in the description of A, and each of the amounts expressed in dollars in the description of B, in subsection 122.7(2);

  • (r) the amount of $720 in the description of C, and each of the amounts expressed in dollars in the description of D, in subsection 122.7(3);

  • (s) the amount of $10,000 in the description of B in subsection 122.91(2); and

  • (t) each of the amounts expressed in dollars in Part I.2.