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Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Full Document:  

Act current to 2024-02-06 and last amended on 2024-01-22. Previous Versions

PART IIncome Tax (continued)

DIVISION IReturns, Assessments, Payment and Appeals (continued)

Payment of Tax (continued)

Marginal note:Instalment deferral for January, February and March 2002 - definitions

  •  (1) The following definitions apply in this section.

    eligible corporation

    eligible corporation, for a particular taxation year, means a corporation

    • (a) that is resident in Canada throughout the particular taxation year; and

    • (b) of which the taxable capital employed in Canada, within the meaning assigned by Part I.3, for its preceding taxation year did not exceed,

      • (i) if the corporation is not associated with any other corporation in the particular taxation year, $15 million, and

      • (ii) if the corporation is associated with one or more other corporations in the particular taxation year, the amount by which $15 million exceeds the total of the taxable capital employed in Canada, within the meaning assigned by Part I.3, of those other corporations for their last taxation years that ended in the last calendar year that ended before the end of the particular taxation year. (société admissible)

    eligible instalment day

    eligible instalment day of an eligible corporation means a day in January, February or March, 2002, on which an instalment on account of the corporation’s tax payable under this Part for the taxation year that includes that day would become payable

    • (a) if this Act were read without reference to this section; and

    • (b) if, in the case of a corporation that is not required by section 157 to make instalment payments on account of its tax payable under this Part for the taxation year, it were so required. (jour admissible)

  • Marginal note:Deferred balance-due day

    (2) An eligible corporation’s balance-due day for a taxation year that ends after 2001 is deemed to be the later of

    • (a) the day that would otherwise be the corporation’s balance-due day for the taxation year, and

    • (b) the day that is six months after the corporation’s last eligible instalment day in the taxation year.

  • Marginal note:Deferred instalment day

    (3) An amount that would, because of paragraph 157(1)(a), otherwise become payable in respect of a taxation year by an eligible corporation on an eligible instalment day of the corporation does not become payable on that day but becomes payable

    • (a) if the particular day that is six months after the eligible instalment day is in the taxation year, on the particular day; and

    • (b) in any other case, on the day that is deemed by subsection (2) to be the corporation’s balance-due day for the taxation year.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2002, c. 9, s. 42

Marginal note:Payment of remainder

 Where the Minister mails a notice of assessment of any amount payable by a taxpayer, that part of the amount assessed then remaining unpaid is payable forthwith by the taxpayer to the Receiver General.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1970-71-72, c. 63, s. 1“158”
  • 1980-81-82-83, c. 48, s. 115
  • 1985, c. 45, s. 89

Marginal note:Person acting for another

  •  (1) For the purposes of this Act, where a person is a legal representative of a taxpayer at any time,

    • (a) the legal representative is jointly and severally, or solidarily, liable with the taxpayer

      • (i) to pay each amount payable under this Act by the taxpayer at or before that time and that remains unpaid, to the extent that the legal representative is at that time in possession or control, in the capacity of legal representative, of property that belongs or belonged to, or that is or was held for the benefit of, the taxpayer or the taxpayer’s estate, and

      • (ii) to perform any obligation or duty imposed under this Act on the taxpayer at or before that time and that remains outstanding, to the extent that the obligation or duty can reasonably be considered to relate to the responsibilities of the legal representative acting in that capacity; and

    • (b) any action or proceeding in respect of the taxpayer taken under this Act at or after that time by the Minister may be so taken in the name of the legal representative acting in that capacity and, when so taken, has the same effect as if it had been taken directly against the taxpayer and, if the taxpayer no longer exists, as if the taxpayer continued to exist.

  • Marginal note:Certificate before distribution

    (2) Every legal representative (other than a trustee in bankruptcy) of a taxpayer shall, before distributing to one or more persons any property in the possession or control of the legal representative acting in that capacity, obtain a certificate from the Minister, by applying for one in prescribed form, certifying that all amounts

    • (a) for which the taxpayer is or can reasonably be expected to become liable under this Act at or before the time the distribution is made, and

    • (b) for the payment of which the legal representative is or can reasonably be expected to become liable in that capacity

    have been paid or that security for the payment thereof has been accepted by the Minister.

  • Marginal note:Personal liability

    (3) If a legal representative (other than a trustee in bankruptcy) of a taxpayer distributes to one or more persons property in the possession or control of the legal representative, acting in that capacity, without obtaining a certificate under subsection (2) in respect of the amounts referred to in that subsection,

    • (a) the legal representative is personally liable for the payment of those amounts to the extent of the value of the property distributed;

    • (b) the Minister may at any time assess the legal representative in respect of any amount payable because of this subsection; and

    • (c) the provisions of this Division (including, for greater certainty, the provisions in respect of interest payable) apply, with any modifications that the circumstances require, to an assessment made under this subsection as though it had been made under section 152 in respect of taxes payable under this Part.

  • Marginal note:Appropriation of property

    (3.1) For the purposes of subsections 159(2) and 159(3), an appropriation by a legal representative of a taxpayer of property in the possession or control of the legal representative acting in that capacity is deemed to be a distribution of the property to a person.

  • (4) and (4.1) [Repealed, 2001, c. 17, s. 154(1)]

  • Marginal note:Election where certain provisions applicable

    (5) Where subsection 70(2), 70(5) or 70(5.2) of this Act or subsection 70(9.4) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, is applicable in respect of a taxpayer who has died, and the taxpayer’s legal representative so elects and furnishes the Minister with security acceptable to the Minister for payment of any tax the payment of which is deferred by the election, notwithstanding any provision of this Part or the Income Tax Application Rules respecting the time within which payment shall be made of the tax payable under this Part by the taxpayer for the taxation year in which the taxpayer died, all or any portion of such part of that tax as is equal to the amount, if any, by which that tax exceeds the amount that that tax would be, if this Act were read without reference to subsections 70(2), (5) and (5.2) and the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, were read without reference to subsections 70(2), (5), (5.2) and (9.4) of that Act, may be paid in such number (not exceeding 10) of equal consecutive annual instalments as is specified by the legal representative in the election, the first instalment of which shall be paid on or before the day on or before which payment of that tax would, but for the election, have been required to be made and each subsequent instalment of which shall be paid on or before the next following anniversary of that day.

  • Marginal note:Idem

    (5.1) Where, in the taxation year in which a taxpayer dies, an amount is included in computing the taxpayer’s income by virtue of paragraph 23(3)(c) of the Income Tax Application Rules, the provisions of subsection 159(5) apply, with such modifications as the circumstances require, as though the amount were an amount included in computing the taxpayer’s income for the year by virtue of subsection 70(2) or an amount deemed to have been received by the taxpayer by virtue of subsection 70(5).

  • Marginal note:Idem

    (6) For the purposes of subsection 159(5), the tax payable under this Part by a taxpayer for the taxation year in which the taxpayer died includes any tax payable under this Part by virtue of an election in respect of the taxpayer’s death made by the taxpayer’s legal representative under subsection 70(2) or under the provisions of that subsection as they are required to be read by virtue of the Income Tax Application Rules.

  • Marginal note:Election where subsection 104(4) applicable

    (6.1) Where a time determined under paragraph 104(4)(a), (a.1), (a.2), (a.3), (a.4), (b) or (c) in respect of a trust occurs in a taxation year of the trust and the trust so elects and furnishes to the Minister security acceptable to the Minister for payment of any tax the payment of which is deferred by the election, notwithstanding any other provision of this Part respecting the time within which payment shall be made of the tax payable under this Part by the trust for the year, all or any portion of the part of that tax that is equal to the amount, if any, by which that tax exceeds the amount that that tax would be if this Act were read without reference to paragraph 104(4)(a), (a.1), (a.2), (a.3), (a.4), (b) or (c), as the case may be, may be paid in the number (not exceeding 10) of equal consecutive annual instalments that is specified by the trust in the election, the first instalment of which shall be paid on or before the day on or before which payment of that tax would, but for the election, have been required to be made and each subsequent instalment of which shall be paid on or before the next following anniversary of that day.

  • Marginal note:Form and manner of election and interest

    (7) Every election made by a taxpayer under subsection 159(4) or 159(6.1) or by the legal representative of a taxpayer under subsection 159(5) shall be made in prescribed form and on condition that, at the time of payment of any amount payment of which is deferred by the election, the taxpayer shall pay to the Receiver General interest on the amount at the prescribed rate in effect at the time the election was made, computed from the day on or before which the amount would, but for the election, have been required to be paid to the day of payment.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 159
  • 1994, c. 7, Sch. II, s. 131, Sch. VIII, s. 95, c. 21, s. 78
  • 1998, c. 19, s. 185
  • 2001, c. 17, s. 154
  • 2013, c. 34, ss. 140(E), 312

Marginal note:Interpretation

  •  (0.1) In this section and section 160.01, a transaction includes an arrangement or event.

  • Marginal note:Tax liability re property transferred not at arm’s length

    (1) Where a person has, on or after May 1, 1951, transferred property, either directly or indirectly, by means of a trust or by any other means whatever, to

    • (a) the person’s spouse or common-law partner or a person who has since become the person’s spouse or common-law partner,

    • (b) a person who was under 18 years of age, or

    • (c) a person with whom the person was not dealing at arm’s length,

    the following rules apply:

    • (d) the transferee and transferor are jointly and severally, or solidarily, liable to pay a part of the transferor’s tax under this Part for each taxation year equal to the amount by which the tax for the year is greater than it would have been if it were not for the operation of sections 74.1 to 75.1 of this Act and section 74 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in respect of any income from, or gain from the disposition of, the property so transferred or property substituted for it, and

    • (e) the transferee and transferor are jointly and severally, or solidarily, liable to pay under this Act an amount equal to the lesser of

      • (i) the amount, if any, by which the fair market value of the property at the time it was transferred exceeds the fair market value at that time of the consideration given for the property, and

      • (ii) the total of all amounts each of which is an amount that the transferor is liable to pay under this Act (including, for greater certainty, an amount that the transferor is liable to pay under this section, regardless of whether the Minister has made an assessment under subsection (2) for that amount) in or in respect of the taxation year in which the property was transferred or any preceding taxation year,

    but nothing in this subsection limits the liability of the transferor under any other provision of this Act or of the transferee for the interest that the transferee is liable to pay under this Act on an assessment in respect of the amount that the transferee is liable to pay because of this subsection.

  • Marginal note:Joint and several, or solidary, liability — subsection 69(11)

    (1.1) If a particular person or partnership is deemed by subsection 69(11) to have disposed of a property at any time, the person referred to in that subsection to whom a benefit described in that subsection was available in respect of a subsequent disposition of the property or property substituted for the property is jointly and severally, or solidarily, liable with each other taxpayer to pay a part of the other taxpayer’s liabilities under this Act in respect of each taxation year equal to the amount determined by the formula

    A - B

    where

    A
    is the total of amounts payable under this Act by the other taxpayer in respect of the year, and
    B
    is the amount that would, if the particular person or partnership were not deemed by subsection 69(11) to have disposed of the property, be determined for A in respect of the other taxpayer in respect of the year,

    but nothing in this subsection limits the liability of the other taxpayer under any other provision of this Act or of any person for the interest that the person is liable to pay under this Act on an assessment in respect of the amount that the person is liable to pay because of this subsection.

  • 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.

  • Marginal note:Joint liability — tax on split-pension income

    (1.3) Where a pensioner and a pension transferee (as those terms are defined in section 60.03) make a joint election under section 60.03 in respect of a split-pension amount (as defined in that section) for a taxation year, they are jointly and severally, or solidarily, liable for the tax payable by the pension transferee under this Part for the taxation year to the extent that that tax payable is greater than it would have been if no amount were required to be added because of paragraph 56(1)(a.2) in computing the income of the pension transferee under this Part for the taxation year.

  • Marginal note:Joint liability — spousal and similar trusts

    (1.4) If subsection 104(13.4) deems an amount to have become payable in a taxation year of a trust to an individual, the individual and the trust are jointly and severally, or solidarily, liable for the tax payable by the individual under this Part for the individual’s taxation year that includes the day on which the individual dies to the extent that that tax payable is greater than it would have been if the amount were not included in computing the individual’s income under this Part for the taxation year.

  • Marginal note:Assessment

    (2) The Minister may at any time assess a taxpayer in respect of any amount payable because of this section, and the provisions of this Division (including, for greater certainty, the provisions in respect of interest payable) apply, with any modifications that the circumstances require, in respect of an assessment made under this section as though it had been made under section 152 in respect of taxes payable under this Part.

  • Marginal note:Assessment

    (2.1) The Minister may at any time assess a taxpayer in respect of any amount payable because of paragraph 94(3)(d) or (e) or subsection 94(17) and the provisions of this Division (including, for greater certainty, the provisions in respect of interest payable) apply, with any modifications that the circumstances require, in respect of an assessment made under this section as though it had been made under section 152 in respect of taxes payable under this Part.

  • Marginal note:Discharge of liability

    (3) If a particular taxpayer has become jointly and severally, or solidarily, liable with another taxpayer under this section or because of paragraph 94(3)(d) or (e) or subsection 94(17) in respect of part or all of a liability under this Act of the other taxpayer,

    • (a) a payment by the particular taxpayer on account of that taxpayer’s liability shall to the extent of the payment discharge their liability; but

    • (b) a payment by the other taxpayer on account of that taxpayer’s liability discharges the particular taxpayer’s liability only to the extent that the payment operates to reduce that other taxpayer’s liability to an amount less than the amount in respect of which the particular taxpayer is, by this section, made jointly and severally, or solidarily, liable.

  • Marginal note:Fair market value of undivided interest or right

    (3.1) For the purposes of this section and section 160.4, the fair market value at any time of an undivided interest, or for civil law an undivided right, in a property, expressed as a proportionate interest or right in that property, is, subject to subsection (4), deemed to be equal to the same proportion of the fair market value of that property at that time.

  • Marginal note:Special rules re transfer of property to spouse or common-law partner

    (4) Notwithstanding subsection 160(1), where at any time a taxpayer has transferred property to the taxpayer’s spouse or common-law partner pursuant to a decree, order or judgment of a competent tribunal or pursuant to a written separation agreement and, at that time, the taxpayer and the spouse or common-law partner were separated and living apart as a result of the breakdown of their marriage or common-law partnership, the following rules apply:

    • (a) in respect of property so transferred after February 15, 1984,

      • (i) the spouse or common-law partner shall not be liable under subsection 160(1) to pay any amount with respect to any income from, or gain from the disposition of, the property so transferred or property substituted therefor, and

      • (ii) for the purposes of paragraph 160(1)(e), the fair market value of the property at the time it was transferred shall be deemed to be nil, and

    • (b) in respect of property so transferred before February 16, 1984, where the spouse common-law partner would, but for this paragraph, be liable to pay an amount under this Act by virtue of subsection 160(1), the spouse’s or common-law partner’s liability in respect of that amount shall be deemed to have been discharged on February 16, 1984,

    but nothing in this subsection shall operate to reduce the taxpayer’s liability under any other provision of this Act.

  • Marginal note:Anti-avoidance rules

    (5) For the purposes of subsections (1) to (4), if a person (referred to in this section as the “transferor”) has transferred property either directly or indirectly, by means of a trust or by any other means whatever to another person (referred to in this section as the “transferee”) in a transaction or as part of a series of transactions

    • (a) the transferor is deemed to not be dealing at arm’s length with the transferee at all times in the transaction or series of transactions if

      • (i) at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, the transferor and transferee do not deal at arm’s length, and

      • (ii) it is reasonable to conclude that one of the purposes of undertaking or arranging the transaction or series of transactions is to avoid joint and several, or solidary, liability of the transferee and transferor for an amount payable under this Act;

    • (b) an amount that the transferor is liable to pay under this Act (including, for greater certainty, an amount that the transferor is liable to pay under this section, regardless of whether the Minister has made an assessment under subsection (2) for that amount) is deemed to have become payable in the taxation year in which the property was transferred if it is reasonable to conclude that one of the purposes for the transfer of property is to avoid the payment of a future amount payable under this Act by the transferor or transferee; and

    • (c) the amount determined under subparagraph (1)(e)(i) is deemed to be the greater of

      • (i) the amount otherwise determined under that subparagraph without reference to this paragraph, and

      • (ii) the amount determined by the formula

        A − B

        where

        A
        is the fair market value of the property at the time of the transfer, and
        B
        is
        • (A) the lowest fair market value of the consideration (that is held by the transferor) given for the property at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, or

        • (B) if the consideration is in a form that is cancelled or extinguished during the period referred to in clause (A),

          • (I) the amount that is the lowest of the amount determined in clause (A) and the fair market value during the period of any property, other than property that is cancelled or extinguished during the period, that is substituted for the consideration referred to in clause (A), or

          • (II) if there is no property that is substituted for the consideration referred to in clause (A), other than property cancelled or extinguished during the period, nil.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 160
  • 1998, c. 19, s. 186
  • 2000, c. 12, s. 142, c. 19, s. 46, c. 30, s. 170
  • 2007, c. 29, s. 23
  • 2013, c. 34, ss. 16, 141, 313
  • 2014, c. 39, s. 57
  • 2018, c. 12, s. 26
  • 2022, c. 19, s. 38
 

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