Income Tax Act

Definition of fiscal period

• 249.1 (1) For the purposes of this Act, a fiscal period of a business or a property of a person or partnership means the period for which the person’s or partnership’s accounts in respect of the business or property are made up for purposes of assessment under this Act, but no fiscal period may end

  • (a) in the case of a corporation, more than 53 weeks after the period began,

  • (b) in the case of

    • (i) an individual (other than an individual to whom section 149 or 149.1 applies or a trust),

    • (i.1) a trust (other than a mutual fund trust if the fiscal period is one to which paragraph 132.11(1)(c) applies or a graduated rate estate),

    • (ii) a partnership of which

      • (A) an individual (other than an individual to whom section 149 or 149.1 applies or a graduated rate estate),

      • (B) a professional corporation, or

      • (C) a partnership to which this subparagraph applies,

      would, if the fiscal period ended at the end of the calendar year in which the period began, be a member of the partnership in the period, or

    • (iii) a professional corporation that would, if the fiscal period ended at the end of the calendar year in which the period began, be in the period a member of a partnership to which subparagraph 249.1(1)(b)(ii) applies,

    after the end of the calendar year in which the period began unless, in the case of a business, the business is not carried on in Canada,

  • (c) in the case of a partnership (other than a partnership to which subparagraph (b)(ii) or subsection (9) applies) that is a member of a partnership or has a member that is a partnership, after the end of the calendar year in which it began, if at the end of the calendar year

    • (i) a corporation has a significant interest, as defined in section 34.2, in the partnership,

    • (ii) the partnership is a member of another partnership in which a corporation has a significant interest as defined in section 34.2,

    • (iii) a membership interest in the partnership is held directly, or indirectly through one or more partnerships, by a partnership described in subparagraph (i) or (ii), or

    • (iv) the partnership holds directly, or indirectly through one or more partnerships, a membership interest in a partnership described in any of subparagraphs (i) to (iii), or

  • (d) in any other case, more than 12 months after the period began,

  and, for the purpose of this subsection, the activities of a person to whom section 149 or 149.1 applies are deemed to be a business.

• Marginal note:Not a member of a partnership

  (2) For the purpose of subparagraph 249.1(1)(b)(ii) and subsection 249.1(4), a person or partnership that would not have a share of any income or loss of a partnership for a fiscal period of the partnership, if the period ended at the end of the calendar year in which the period began, is deemed not to be a member of the partnership in that fiscal period.

• Marginal note:Subsequent fiscal periods

  (3) Where a fiscal period of a business or a property of a person or partnership ends at any time, the subsequent fiscal period, if any, of the business or property of the person or partnership is deemed to begin immediately after that time.

• Marginal note:Alternative method

  (4) Paragraph 249.1(1)(b) does not apply to a fiscal period of a business carried on, throughout the period of time that began at the beginning of the fiscal period and ended at the end of the calendar year in which the fiscal period began,

  • (a) by an individual (otherwise than as a member of a partnership), or

  • (b) by an individual as a member of a partnership, where throughout that period

    • (i) each member of the partnership is an individual, and

    • (ii) the partnership is not a member of another partnership,

  where

  • (c) in the case of an individual

    • (i) who is referred to in paragraph 249.1(4)(a), or

    • (ii) who is a member of a partnership no member of which is a graduated rate estate,

    an election in prescribed form to have paragraph 249.1(1)(b) not apply is filed with the Minister by the individual on or before the individual’s filing-due date, and with the individual’s return of income under Part I, for the taxation year that includes the first day of the first fiscal period of the business that begins after 1994, and

  • (d) in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, an election in prescribed form to have paragraph (1)(b) not apply is filed with the Minister by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after 1994.

• Marginal note:Alternative method not applicable to tax shelter investments

  (5) Subsection 249.1(4) does not apply to a particular fiscal period of a business where, in a preceding fiscal period or throughout the period of time that began at the beginning of the particular period and ended at the end of the calendar year in which the particular period began, the expenditures made in the course of carrying on the business were primarily the cost or capital cost of tax shelter investments (as defined in subsection 143.2(1)).

• Marginal note:Revocation of election

  (6) Subsection 249.1(4) does not apply to fiscal periods of a business carried on by an individual that begin after the beginning of a particular taxation year of the individual where

  • (a) an election in prescribed form to revoke an election filed under subsection 249.1(4) in respect of the business is filed with the Minister; and

  • (b) the election to revoke is filed

    • (i) in the case of an individual

      • (A) who is not a member of a partnership, or

      • (B) who is a member of a partnership no member of which is a graduated rate estate,

    by the individual on or before the individual’s filing-due date, and with the individual’s return of income under Part I, for the particular taxation year, and

    • (ii) in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after the beginning of the particular year.

• Marginal note:Change of fiscal period

  (7) No change in the time when a fiscal period ends may be made for the purposes of this Act without the concurrence of the Minister.

• Marginal note:Single-tier fiscal period alignment

  (8) The members of a partnership that has a fiscal period that begins before March 22, 2011 and that would, if this Act were read without reference to this subsection and subsection (10), end on a day after March 22, 2011, may elect to end that fiscal period on a particular day that is before the day on which the fiscal period would otherwise end (in this subsection and subsection (10) referred to as a “single-tier alignment election”) if

  • (a) each member of the partnership is, on the particular day, a corporation that is not a professional corporation;

  • (b) the partnership is not, on the particular day, a member of another partnership;

  • (c) at least one member of the partnership is, on the particular day, a corporation that has a significant interest, as defined in section 34.2, in the partnership;

  • (d) at least one member of the partnership referred to in paragraph (c) has a taxation year that ends on a day that differs from the day on which the fiscal period of the partnership would end if this Act were read without reference to this subsection and subsection (10);

  • (e) the particular day is after March 22, 2011 and no later than the latest day that is the last day of the first taxation year that ends after March 22, 2011 of any corporation that has been a member of the partnership continuously since March 21, 2011; and

  • (f) subsection (10) applies to the single-tier alignment election.

• Marginal note:Multi-tier fiscal period alignment — one-time election

  (9) The members of a partnership to which paragraph (1)(c) would apply if it were read without reference to this subsection may elect (in this subsection and subsections (10) and (11) referred to as a “multi-tier alignment election”) to end a fiscal period of the partnership on a particular day if

  • (a) as a consequence of the multi-tier alignment election, the fiscal period of the partnership, and of each other partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), ends on the particular day;

  • (b) the particular day is before March 22, 2012; and

  • (c) subsection (10) applies to the multi-tier alignment election.

• Marginal note:When subsection (9) ceases to apply

  (9.1) If paragraph (1)(c) did not apply to end the fiscal period of a partnership on December 31 of a calendar year (in this subsection referred to as the “preceding year”) because subsection (9) applies to the partnership, and to each other partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), (in this subsection referred to collectively as the “aligned multi-tier partnerships” and each individually as an “aligned multi-tier partnership”),

  • (a) subsection (9) ceases to apply — for the purpose of applying paragraph (1)(c) to each of the aligned multi-tier partnerships — in the calendar year following the preceding year (in this subsection referred to as the “current year”) if another partnership (in this subsection referred to as the “new partnership”) becomes in the current year a member of any of the aligned multi-tier partnerships, or any of the aligned multi-tier partnerships becomes in the current year a member of the new partnership, unless

    • (i) the fiscal period of the new partnership, and each other partnership described in relation to the new partnership by any of subparagraphs (1)(c)(ii) to (iv), ends in the current year on the same day as the fiscal period of each of the aligned multi-tier partnerships, and

    • (ii) each member (other than a partnership) of each aligned multi-tier partnership — or a subsidiary wholly-owned corporation of such a member — has been a member of the aligned multi-tier partnership from the end of the last fiscal period ending in the preceding year until the time at which the new partnership becomes a member of an aligned multi-tier partnership, or any of the aligned multi-tier partnerships becomes a member of the new partnership, as the case may be; and

  • (b) if paragraph (a) does not apply because the conditions in subparagraphs (a)(i) and (ii) are met, the new partnership is deemed — for the purpose of applying paragraph (1)(c) to each of the aligned multi-tier partnerships and the new partnership in the current year and subsequent years — to have made the multi-tier alignment election referred to in subsection (9).

• Marginal note:Conditions to align a partnership fiscal period

  (10) This subsection applies to a single-tier alignment election or a multi-tier alignment election, as the case may be, for a partnership if

  • (a) the election is filed in writing and in prescribed form with the Minister

    • (i) in the case of a single-tier alignment election, by a corporation that is a member of the partnership on or before the day that is the earliest filing-due date of any corporation that is a member of the partnership for its first taxation year ending after March 22, 2011, and

    • (ii) in the case of a multi-tier alignment election,

      • (A) by a corporation that is a member of the partnership, or of a partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), and

      • (B) on or before the day that is the earliest filing-due date of any corporation that is a member of a partnership referred to in clause (A) for the first taxation year of the corporation ending after March 22, 2011;

  • (b) as a consequence of the election, the fiscal period of each partnership to which the election applies is 12 months or less;

  • (c) the election was made by a corporation that has the authority to act for the members of the partnership and each member of any other partnership described in relation to the partnership in subparagraph (1)(c)(ii) to (iv); and

  • (d) no other election is filed with the Minister to end the fiscal period of the partnership, or of any other partnership described in relation to the partnership in subparagraph (1)(c)(ii) to (iv), on a day other than the particular day referred to in subsection (8) or (9), as the case may be.

• Marginal note:Deemed multi-tier alignment election

  (11) For the purposes of this Act, if paragraph (1)(c) applies to end the fiscal period of a partnership on December 31, 2011, a multi-tier alignment election under subsection (9) is deemed to have been made to end the fiscal period of the partnership on December 31, 2011.