Income Tax Act

Definition of taxation year

• 249 (1) For the purpose of this Act, a taxation year is

  • (a) in the case of a corporation, a fiscal period, and

  • (b) in the case of an individual, a calendar year,

  and when a taxation year is referred to by reference to a calendar year, the reference is to the taxation year or years coinciding with, or ending in, that year.

• Marginal note:References to certain taxation years and fiscal periods

  (2) For the purposes of this Act,

  • (a) a reference to a taxation year ending in another year includes a reference to a taxation year ending coincidentally with that other year; and

  • (b) a reference to a fiscal period ending in a taxation year includes a reference to a fiscal period ending coincidentally with that year.

• Marginal note:Deemed year end where fiscal period exceeds 365 days

  (3) Notwithstanding subsection 249(1), where the fiscal period of a corporation exceeds 365 days and by reason thereof the corporation does not have a taxation year that ends in a particular calendar year, for the purposes of this Act, the corporation’s first taxation year ending in the immediately following calendar year shall be deemed to end on the last day of the particular calendar year.

• Marginal note:Year end on status change

  (3.1) If at any time a corporation becomes or ceases to be a Canadian-controlled private corporation, otherwise than because of an acquisition of control to which subsection (4) would, if this Act were read without reference to this subsection, apply,

  • (a) subject to paragraph (c), the corporation’s taxation year that would, if this Act were read without reference to this subsection, include that time is deemed to end immediately before that time;

  • (b) a new taxation year of the corporation is deemed to begin at that time;

  • (c) notwithstanding subsections (1) and (3), the corporation’s taxation year that would, if this Act were read without reference to this subsection, have been its last taxation year that ended before that time is deemed instead to end immediately before that time if

    • (i) were this Act read without reference to this paragraph, that taxation year would, otherwise than because of paragraph 128(1)(d), section 128.1 and paragraphs 142.6(1)(a) or 149(10)(a), have ended within the 7-day period that ended immediately before that time,

    • (ii) within that 7-day period no person or group of persons acquired control of the corporation, and the corporation did not become or cease to be a Canadian-controlled private corporation, and

    • (iii) the corporation elects, in its return of income under Part I for that taxation year to have this paragraph apply; and

  • (d) for the purpose of determining the corporation’s fiscal period after that time, the corporation is deemed not to have established a fiscal period before that time.

• Marginal note:Year end on change of control

  (4) Where at any time control of a corporation (other than a corporation that is a foreign affiliate of a taxpayer resident in Canada and that did not carry on a business in Canada at any time in its last taxation year beginning before that time) is acquired by a person or group of persons, for the purposes of this Act,

  • (a) subject to paragraph 249(4)(c), the taxation year of the corporation that would, but for this paragraph, have included that time shall be deemed to have ended immediately before that time;

  • (b) a new taxation year of the corporation shall be deemed to have commenced at that time;

  • (c) subject to paragraph 128(1)(d), section 128.1, and paragraphs 142.6(1)(a) and 149(10)(a) , and notwithstanding subsections 249(1) and 249(3), where the taxation year of the corporation that would, but for this subsection, have been its last taxation year that ended before that time would, but for this paragraph, have ended within the 7-day period that ended immediately before that time, that taxation year shall, except where control of the corporation was acquired by a person or group of persons within that period, be deemed to end immediately before that time where the corporation so elects in its return of income under Part I for that taxation year; and

  • (d) for the purpose of determining the corporation’s fiscal period after that time, the corporation shall be deemed not to have established a fiscal period before that time.