Income Tax Act

Marginal note:Capital

190.13 For the purposes of this Part, the capital of a financial institution for a taxation year is,

• (a) in the case of a financial institution, other than an authorized foreign bank or a life insurance corporation, the amount, if any, by which the total at the end of the year of

  • (i) the amount of its long-term debt,

  • (ii) the amount of its capital stock (or, in the case of an institution incorporated without share capital, the amount of its members’ contributions), retained earnings, contributed surplus and any other surpluses, and

  • (iii) the amount of its reserves, except to the extent that they were deducted in computing its income under Part I for the year,

  exceeds the total at the end of the year of

  • (iv) the amount of its deferred tax debit balance, and

  • (v) the amount of any deficit deducted in computing its shareholders’ equity;

• (b) in the case of a life insurance corporation that was resident in Canada at any time in the year, the amount, if any, by which the total at the end of the year of

  • (i) the amount of its long-term debt, and

  • (ii) the amount of its capital stock (or, in the case of an insurance corporation incorporated without share capital, the amount of its members’ contributions), retained earnings, contributed surplus and any other surpluses

  exceeds the total at the end of the year of

  • (iii) the amount of its deferred tax debit balance, and

  • (iv) the amount of any deficit deducted in computing its shareholders’ equity;

• (c) in the case of a life insurance corporation that was non-resident throughout the year, the total at the end of the year of

  • (i) the amount that is the greater of

    • (A) the amount, if any, by which

      • (I) its surplus funds derived from operations (as defined in subsection 138(12)) as of the end of the year, computed as if no tax were payable under Part I.3 or this Part for the year

      exceeds the total of all amounts each of which is

      • (II) an amount on which it was required to pay, or would but for subsection 219(5.2) have been required to pay, tax under Part XIV for a preceding taxation year, except the portion, if any, of the amount on which tax was payable, or would have been payable, because of subparagraph 219(4)(a)(i.1), and

      • (III) an amount on which it was required to pay, or would but for subsection 219(5.2) have been required to pay, tax under subsection 219(5.1) for the year because of the transfer of an insurance business to which subsection 138(11.5) or 138(11.92) has applied, and

    • (B) its attributed surplus for the year,

  • (ii) any other surpluses relating to its insurance businesses carried on in Canada,

  • (iii) the amount of its long-term debt that can reasonably be regarded as relating to its insurance businesses carried on in Canada, and

  • (iv) the amount, if any, by which

    • (A) the amount of its reserves for the year (other than its reserves in respect of amounts payable out of segregated funds) that can reasonably be regarded as having been established in respect of its insurance businesses carried on in Canada

    exceeds the total of

    • (B) all amounts each of which is the amount of a reserve (other than a reserve described in subparagraph 138(3)(a)(i)), to the extent that it is included in the amount determined under clause 190.13(c)(iv)(A) and is deducted in computing its income under Part I for the year,

    • (C) all amounts each of which is the amount of a reserve described in subparagraph 138(3)(a)(i), to the extent that it is included in the amount determined under clause 190.13(c)(iv)(A) and is deductible under subparagraph 138(3)(a)(i) in computing its income under Part I for the year, and

    • (D) all amounts each of which is the amount outstanding (including any interest accrued thereon) at the end of the year in respect of a policy loan (within the meaning assigned by subsection 138(12)) made by the corporation, to the extent that it is deducted in computing the amount determined under clause 190.13(c)(iv)(C); and

• (d) in the case of an authorized foreign bank, the total of

  • (i) 10% of the total of all amounts, each of which is the risk-weighted amount at the end of the year of an on-balance sheet asset or an off-balance sheet exposure of the bank in respect of its Canadian banking business that the bank would be required to report under the OSFI risk-weighting guidelines if those guidelines applied and required a report at that time, and

  • (ii) the total of all amounts, each of which is an amount at the end of the year in respect of the bank’s Canadian banking business that

    • (A) if the bank were a bank listed in Schedule II to the Bank Act, would be required under the risk-based capital adequacy guidelines issued by the Superintendent of Financial Institutions and applicable at that time to be deducted from the bank’s capital in determining the amount of capital available to satisfy the Superintendent’s requirement that capital equal a particular proportion of risk-weighted assets and exposures, and

    • (B) is not an amount in respect of a loss protection facility required to be deducted from capital under the Superintendent’s guidelines respecting asset securitization applicable at that time.