Budget Implementation Act, 2023, No. 1 (S.C. 2023, c. 26)
Full Document:
- HTMLFull Document: Budget Implementation Act, 2023, No. 1 (Accessibility Buttons available) |
- PDFFull Document: Budget Implementation Act, 2023, No. 1 [3565 KB]
Assented to 2023-06-22
PART 1Amendments to the Income Tax Act and Other Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
71 Paragraph 241(4)(d) of the Act is amended by adding the following after subparagraph (xx):
(xx.1) to an official of
(A) the Department of Employment and Social Development or the Department of Health, solely for the purpose of the administration or enforcement of the Canadian Dental Care Plan established under the authority of the Department of Health Act in respect of dental service for individuals, or
(B) the Department of Health solely for the purpose of the formulation or evaluation of policy for that plan,
72 Subsection 244(14.1) of the Act is replaced by the following:
Marginal note:Date when electronic notice sent
(14.1) If a notice or other communication in respect of an individual, other than a notice or other communication that refers to the business number of a person or partnership, is made available in electronic format such that it can be read or perceived by an individual or a computer system or other similar device, the notice or other communication is presumed to be sent to the individual and received by the individual on the date that an electronic message is sent, to the electronic address most recently provided by the individual to the Minister for the purposes of this subsection, informing the individual that a notice or other communication requiring the individual’s immediate attention is available in the individual’s secure electronic account. A notice or other communication is considered to be made available if it is posted by the Minister in the individual’s secure electronic account and the individual has authorized that notices or other communications may be made available in this manner and has not before that date revoked that authorization in a manner specified by the Minister.
Marginal note:Date when electronic notice sent — My Business Account
(14.2) A notice or other communication that is made available in electronic format such that it can be read or perceived by an individual or a computer system or other similar device, and that refers to the business number of a person or partnership, is presumed to be sent to the person or partnership and received by the person or partnership on the date that it is posted by the Minister in the secure electronic account in respect of a business number of the person or partnership, unless the person or partnership has requested, 30 days prior to that date, in a manner specified by the Minister, that the notice or other communication be sent by mail.
73 (1) The definitions small business bond and small business development bond in subsection 248(1) of the Act are repealed.
(2) Paragraph (c) of the definition dividend rental arrangement in subsection 248(1) of the Act is replaced by the following:
(b.1) any specified hedging transaction, in respect of a DRA share of the person,
(c) any synthetic equity arrangement (other than a specified hedging transaction), in respect of a DRA share of the person, and
(3) Subparagraph (i.1)(ii) of the definition term preferred share in subsection 248(1) of the Act is replaced by the following:
(ii) it may reasonably be considered that the share was issued or acquired as part of a transaction or event or series of transactions or events one of the main purposes of which was to avoid or limit the application of subsection 112(2.1), 138(6) or 258(3),
(4) Subparagraph (j)(ii) of the definition term preferred share in subsection 248(1) of the Act is replaced by the following:
(ii) one of the main purposes for the issue of the particular share or for the modification of its terms or conditions was to avoid a limitation provided by subsection 112(2.1) or 138(6) in respect of a deduction or to avoid or limit the application of subsection 258(3),
(5) Subsection 248(1) of the Act is amended by adding the following in alphabetical order:
- specified hedging transaction
specified hedging transaction, in respect of a DRA share of a person or partnership (referred to in this definition as the “particular person”), means a transaction (in this definition, as defined in subsection 245(1)) or series of transactions that satisfies the following conditions:
(a) it is entered into by
(i) the particular person if the particular person is a registered securities dealer or a partnership each member of which is a registered securities dealer, or
(ii) a registered securities dealer or a partnership each member of which is a registered securities dealer (in either case, referred to in this definition as the “connected dealer”), if the connected dealer does not deal at arm’s length with, or is affiliated with, the particular person,
(b) it has the effect, or would have the effect if the transaction or series were entered into by the particular person, of eliminating all or substantially all of the particular person’s risk of loss and opportunity for gain or profit in respect of the DRA share, determined without regard to any other transaction or series entered into in respect of the DRA share,
(c) if paragraph 260(6)(a) were read without reference to subsection 260(6.2), an amount in respect of the transaction or series would be deductible by the particular person or the connected dealer under paragraph 260(6)(a), and
(d) if the transaction or series is entered into by the connected dealer, it can reasonably be considered that the particular person or connected dealer knew or ought to have known that the effect described in paragraph (b) would result; (opération de couverture déterminée)
(6) Subsections (2) and (5) apply in respect of dividends that are paid or become payable on or after April 7, 2022. However, subsections (2) and (5) do not apply in respect of dividends paid or payable before October 2022, if the specified hedging transaction was entered into before April 7, 2022.
(7) Subsections (3) and (4) apply in respect of amounts received on or after August 9, 2022.
74 The portion of subsection 249.1(1) of the French version of the Act before paragraph (a) is replaced by the following:
Marginal note:Définition de exercice
249.1 (1) Pour l’application de la présente loi, l’exercice d’une entreprise ou d’un bien d’une personne ou d’une société de personnes s’entend de la période pour laquelle les comptes correspondants de la personne ou de la société de personnes sont arrêtés pour l’établissement d’une cotisation en vertu de la présente loi. L’exercice ne peut toutefois se prolonger :
75 (1) The definitions attribute trading restriction and specified provision in subsection 256.1(1) of the Act are replaced by the following:
- attribute trading restriction
attribute trading restriction means a restriction on the use of a tax attribute arising on the application, either alone or in combination with other provisions, of any of this section, subsections 10(10) and 13(24), section 37, subsections 66(11.4) and (11.5), 66.7(10) and (11), 69(11) and 88(1.1) and (1.2), sections 111 and 127, subsections 181.1(7), 190.1(6) and 249(4), section 251.2 and subsection 256(7). (restriction au commerce d’attributs)
- specified provision
specified provision means any of subsections 10(10) and 13(24), paragraph 37(1)(h), subsections 66(11.4) and (11.5), 66.7(10) and (11), 69(11) and 111(4) to (5.3), paragraphs (j) and (k) of the definition investment tax credit in subsection 127(9), subsections 181.1(7) and 190.1(6), section 251.2 and any provision of similar effect. (dispositions déterminées)
(2) Subsection 256.1(6) of the Act is replaced by the following:
Marginal note:Deemed acquisition of control
(6) If, at any time as part of a transaction or event or series of transactions or events, control of a particular corporation is acquired by a person or group of persons and it can reasonably be concluded that one of the main reasons for the transaction or event or any transaction or event in the series of transactions or events is so that a specified provision does not apply to one or more corporations, the attribute trading restrictions are deemed to apply to each of those corporations as if control of each of those corporations were acquired at that time.
(3) Subsections (1) and (2) are deemed to have come into force on August 9, 2022.
76 (1) Paragraph 260(6)(a) of the Act is replaced by the following:
(a) if the taxpayer is a registered securities dealer and the particular amount is deemed by subsection (5.1) to have been received as a taxable dividend, no more than 2/3 of the particular amount (unless, for greater certainty, the particular amount is an amount for which a deduction in computing income may be claimed under subsection (6.1) or (6.2) by the taxpayer); or
(2) Section 260 of the Act is amended by adding the following after subsection (6.1):
Marginal note:Deductible amount for registered securities dealer
(6.2) If a registered securities dealer enters into a specified hedging transaction in respect of a DRA share of the registered securities dealer or a person that does not deal at arm’s length with, or is affiliated with, the registered securities dealer, there may be deducted in computing the income of the registered securities dealer under Part I from a business or property for a taxation year an amount (other than any portion of the amount for which a deduction in computing income may be claimed under subsection (6.1) by the registered securities dealer) equal to the lesser of
(a) the total of all amounts each of which is an amount that the registered securities dealer becomes obligated in the taxation year to pay to another person as compensation for a dividend under the specified hedging transaction that, if paid, would be deemed by subsection (5.1) to have been received by another person as a taxable dividend, and
(b) the amount of the dividends that were received in respect of the DRA share by the registered securities dealer or the person that does not deal at arm’s length with, or is affiliated with, the registered securities dealer (as the case may be, referred to as the “dividend recipient” in this paragraph) and that were identified in the dividend recipient’s return of income under Part I for the year as an amount in respect of which no amount was deductible because of subsection 112(2.3) in computing the dividend recipient’s taxable income or taxable income earned in Canada.
(3) The portion of subsection 260(7) of the Act before paragraph (a) is replaced by the following:
Marginal note:Dividend refund
(7) For the purpose of section 129, if a corporation pays an amount for which no deduction in computing the corporation’s income may be claimed under subsection (6.1) or (6.2) and subsection (5.1) deems the amount to have been received by another person as a taxable dividend,
(4) Paragraphs 260(11)(b) and (c) of the Act are replaced by the following:
(b) for the purpose of applying paragraphs (6.1)(a) and (6.2)(a) in respect of the taxation year, to become obligated to pay its specified proportion, for each fiscal period of the partnership that ends in the taxation year, of the amount the partnership becomes, in that fiscal period, obligated to pay to another person under the arrangement described in that paragraph; and
(c) for the purpose of applying section 129 in respect of the taxation year, to have paid
(i) if the partnership is not a registered securities dealer, the corporation’s specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount paid by the partnership (other than an amount for which a deduction in computing income may be claimed under subsection (6.1) or (6.2) by the corporation), and
(ii) if the partnership is a registered securities dealer, 1/3 of the corporation’s specified proportion, for each fiscal period of the partnership that ends in the taxation year, of each amount paid by the partnership (other than an amount for which a deduction in computing income may be claimed under subsection (6.1) or (6.2) by the corporation).
(5) Subsections (1) to (4) apply in respect of amounts paid or credited on or after April 7, 2022.
77 (1) The definition qualifying currency in subsection 261(1) of the Act is amended by adding the following after paragraph (c):
(c.1) the currency of Japan;
(2) Subparagraph 261(18)(c)(i) of the Act is replaced by the following:
(i) is, or would in the absence of subsections (16) and (17) be, in a functional currency year of the transferor or the transferee and the transferor and the transferee have, or would in the absence of those subsections have, different tax reporting currencies at the transfer time, or
(3) Paragraphs 261(20)(a) to (c) of the Act are replaced by the following:
(a) the specified transaction was entered into, directly or indirectly, at any time by the taxpayer and a person (referred to in this subsection as the “related person”) to which the taxpayer is at that time related;
(b) the taxpayer and the related person had different tax reporting currencies at any time during the period (referred to in this subsection as the “accrual period”) in which the income, gain or loss accrued; and
(c) it would, in the absence of this subsection and subsection (21), be reasonable to consider that a fluctuation at any time in the accrual period in the value of the taxpayer’s tax reporting currency relative to the value of the related person’s tax reporting currency
(i) increased the taxpayer’s loss in respect of the specified transaction,
(ii) reduced the taxpayer’s income or gain in respect of the specified transaction, or
(iii) caused the taxpayer to have a loss, instead of income or a gain, in respect of the specified transaction.
(4) Subsection (1) applies to taxation years that begin after 2019.
(5) Subsection (2) applies in respect of transfers of property that occur on or after August 9, 2022.
(6) Subsection (3) applies in respect of accrual periods (within the meaning assigned by subsection 261(20) of the Act) that begin on or after August 9, 2022.
- Date modified: