5000 (1) Where a taxpayer holds a share of the capital stock of a mutual fund corporation (other than an investment corporation) or an interest in, or a right to acquire an interest in,
(a) a mutual fund trust,
(b) a pooled fund trust,
(c) a trust that would be a mutual fund trust if Part XLVIII were read without reference to paragraph 4801(b) thereof,
(c.1) a resource property trust, or
(c.2) a trust if
(i) the trust would be a mutual fund trust if Part XLVIII were read without reference to section 4801, and
(ii) there has been a lawful distribution in a province to the public of units of the trust and a prospectus, registration statement or similar document was not required under the laws of the province to be filed in respect of the distribution,
that share, interest or right, as the case may be, shall not be foreign property for the purpose of computing the tax payable by the taxpayer under Part XI of the Act in respect of any particular month, if
(d) the corporation or trust, as the case may be, has not acquired any foreign property after June 30, 1971; or
(e) at no time during the relevant period for the particular month did the cost amount to the corporation or to the trust, as the case may be, of all foreign property held by it exceed 30% of the cost amount to it of all property held by it.
(1.1) For the purposes of paragraph (i) of the definition foreign property in subsection 206(1) of the Act, the following interests are hereby prescribed not to be foreign property:
(a) an interest of a limited partner in a small business investment limited partnership (within the meaning assigned by subsection 5102(1));
(b) an interest in a small business investment trust (within the meaning assigned by subsection 5103(1));
(c) [Repealed, SOR/2003-328, s. 3]
(d) an interest in a specified international finance trust; and
(e) an interest of a limited partner in a designated limited partnership.
(1.2) For the purposes of paragraph (i) of the definition foreign property in subsection 206(1) of the Act, a property of a beneficiary that is an interest under a trust described in paragraph 149(1)(o.4) of the Act is prescribed not to be foreign property of the beneficiary at a time where
(a) no other property of the beneficiary is foreign property at that time; or
(b) the trust does not own any foreign property at that time.
(1.3) For the purpose of paragraph (i) of the definition foreign property in subsection 206(1) of the Act, the specified portion of a limited unit in a qualified limited partnership that is held at any time by a specified partner of the partnership is, at that time, not foreign property of the specified partner.
(1.4) For the purpose of subsection (1.3), the specified portion of a limited unit in a qualified limited partnership held at any time by a specified partner is
(a) if the number of limited units in the partnership, each of which is held at that time by the specified partner or by any other specified partner with whom the specified partner does not deal at arm’s length, is less than or equal to 30 per cent of the number of limited units in the partnership held at that time by specified partners, the limited unit; and
(b) in any other case, that proportion of the limited unit that the cost amount to the partnership of all property (other than foreign property) held by the partnership at that time is of the cost amount to the partnership of all property held by the partnership at that time.
(1.5) For the purposes of subsections (1.3) and (1.4), a specified partner of a qualified limited partnership at any time means a person or partnership that holds at that time a limited unit in the partnership and that is at that time neither
(a) the general partner of the partnership; nor
(b) a qualified trust or qualified corporation (as those expressions are defined in subsection 259(5) of the Act) to which subsection 259(1) of the Act applies.
(1.6) For the purposes of subsections (1.4) and (1.5), if a person or partnership (other than a taxpayer described in section 205 of the Act) holds at any time a unit or share in a “qualified trust” or “qualified corporation” (as those expressions are defined in subsection 259(5) of the Act), the person or partnership is deemed to hold at that time any property of the trust or corporation that it would be deemed, by paragraph 259(1)(b) of the Act, to hold at that time if that person or partnership were a taxpayer described in section 205 of the Act.
(2) Where
(a) a share of the capital stock of a corporation referred to in subsection (1) or an interest in, or a right to acquire an interest in, a trust referred to in that subsection would, but for this subsection, be foreign property for the purpose of computing the tax payable by a taxpayer under Part XI of the Act in respect of a particular month,
(b) the relevant period for the particular month in relation to property held by the trust or corporation is its taxation year that includes the end of the particular month, and
(c) at the end of the relevant period for the particular month, the cost amount to the corporation or to the trust, as the case may be, of all foreign property held by it did not exceed 30% of the cost amount to it of all property held by it,
that share, interest or right shall not be foreign property for the purpose of computing the tax payable by the taxpayer under Part XI of the Act in respect of the particular month.
(3) Where a taxpayer holds a share of the capital stock of an investment corporation, subsections (1), (2) and (7) apply in respect of that share as if
(a) the reference in subsection (1) to “mutual fund corporation (other than an investment corporation)” were read as a reference to an “investment corporation”; and
(b) the reference in subsection (1) to “June 30, 1971” were read as a reference to “October 13, 1971”.
(4) Where a taxpayer holds a share of the capital stock of an investment corporation, that share shall not be foreign property for the purpose of computing the tax payable by the taxpayer under Part XI of the Act in respect of a particular month if the share would otherwise be foreign property solely by reason of the acquisition by the corporation of foreign property before October 16, 1971.
(5) Where a mutual fund corporation or a mutual fund trust holds a share of the capital stock of a mutual fund corporation (other than an investment corporation) or an interest in, or a right to acquire an interest in, a mutual fund trust, the share or the interest, as the case may be, shall not be foreign property for the purpose of computing the tax payable by a taxpayer under Part XI of the Act in respect of a particular month if the last-mentioned corporation or trust, as the case may be, complies with
(a) paragraph (1)(d);
(b) paragraph (1)(e) in respect of the particular month; or
(c) paragraphs (2)(b) and (c) in respect of the particular month.
(6) Where a mutual fund corporation or a mutual fund trust holds a share of the capital stock of an investment corporation, the share shall not be foreign property for the purpose of computing the tax payable by a taxpayer under Part XI of the Act in respect of a particular month if the investment corporation
(a) would comply with paragraph (1)(d) if the reference therein to “June 30, 1971” were read as a reference to “October 16, 1971”;
(b) complies with paragraph (1)(e) in respect of the particular month; or
(c) complies with paragraphs (2)(b) and (c) in respect of the particular month.
(7) In this Part,
- designated limited partnership
designated limited partnership means a limited partnership that complies with the following conditions:
(a) the interests of the limited partners are described by reference to a single class of units of the partnership listed on a stock exchange prescribed under section 3200,
(b) that class was listed before 1999 on a stock exchange prescribed under section 3200,
(c) at least 80% of the full-time employees employed by the partnership are employed in Canada,
(d) the total of all amounts each of which is the cost amount to the partnership of a property used in its activities carried on in Canada is not less than 80% of the total of all amounts each of which is the cost amount to the partnership of a property of the partnership,
(e) the principal activity of the partnership is
(i) the production of goods in Canada,
(ii) the sale of goods in Canada,
(iii) the provision of services in Canada, or
(iv) any combination of the activities described in subparagraphs (i) to (iii), and
(f) the revenue from that principal activity is regulated by a public authority governed by the laws of Canada or a province; (société de personnes en commandite désignée)
- foreign property
foreign property has the meaning assigned by section 206 of the Act; (bien étranger)
- limited unit
limited unit in a qualified limited partnership means a unit described in paragraph (d) of the definition qualified limited partnership;
- pooled fund trust
pooled fund trust means, with respect to a particular taxpayer who owns an interest in the trust, a trust the trustee of which is a trust company incorporated under the laws of Canada or a province and that complies with the following conditions:
(a) throughout the taxation year of the trust (in this subsection referred to as the “first relevant year”) in which the taxpayer acquired the interest or the first taxation year of the trust (in this subsection referred to as the “second relevant year”) commencing more than one year after the taxpayer acquired the interest, the total, at any time, of
(i) the cost amount to the trust of
(A) shares,
(B) any property that, under its terms or conditions or any agreement relating to it, is convertible into, is exchangeable for or confers a right to acquire, shares,
(C) bonds, debentures, mortgages, notes and other similar obligations,
(D) marketable securities,
(E) cash,
(F) life insurance policies in Canada (other than annuity contracts), and
(G) annuity contracts issued by persons licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an annuities business, and
(ii) the amount by which the cost amount to the trust of real property that can reasonably be regarded as being held for the purpose of producing income from property exceeds the total of amounts each of which was owing by the trust at that time on account of its acquisition of the real property and was included at that time in the cost amount to the trust of the real property,
was not less than 80 per cent of the amount by which the cost amount to the trust of all property at that time exceeds the total of amounts each of which was owing by it at that time on account of its acquisition of real property and was included at that time in the cost amount to it of real property,
(b) throughout the first relevant year or the second relevant year, the cost amount to the trust at any time of shares, bonds, mortgages and other securities of any one corporation or debtor, other than bonds, mortgages and other securities of or guaranteed by Her Majesty in right of Canada, a province or a Canadian municipality, was not more than 10 per cent of the amount by which the cost amount to the trust of all property at that time exceeds the total of all amounts each of which was owing by the trust at that time on account of the trust’s acquisition of real property and was included at that time in the cost amount to the trust of real property,
(c) throughout the first relevant year or the second relevant year, the amount by which
(i) the cost amount to the trust of any one real property at any time
exceeds
(ii) the total of amounts each of which was owing by the trust at that time on account of its acquisition of the real property and was included at that time in the cost amount to it of the real property
was not more than 10 per cent of the amount by which the cost amount to the trust of all property at that time exceeds the total of amounts each of which was owing by the trust at that time on account of its acquisition of real property and was included at that time in the cost amount to the trust of real property, and
(d) not less than 95 per cent of the income of the trust (determined without reference to subsections 49(2.1) and 104(6) of the Act) for the first relevant year or the second relevant year was derived from, or from the dispositions of, investments described in paragraph (a); (fiducie de fonds mis en commun)
- qualified limited partnership
qualified limited partnership, at a particular time after 1985, means a limited partnership that at all times after it was formed and before the particular time complied with the following conditions:
(a) it had only one general partner,
(b) the share of the general partner, as general partner, in any income of the partnership from any source in any place, for any period, was the same as his share, as general partner, in
(i) the income of the partnership from that source in any other place,
(ii) the income of the partnership from any other source,
(iii) the loss of the partnership from any source,
(iv) any capital gain of the partnership, and
(v) any capital loss of the partnership
for that period, except that the share of the general partner, as general partner, in the income or loss of the partnership from specified properties (within the meaning assigned by subsection 5100(1)) may differ from his share, as general partner, in the income or loss of the partnership from other sources,
(c) the share of the general partner, as general partner, in any income or loss of the partnership for any period was not less than his share, as general partner, in the income or loss of the partnership for any preceding period,
(d) the interests of the limited partners were described by reference to units of the partnership that were identical in all respects,
(e) [Repealed, SOR/2003-328, s. 3]
(f) its only undertaking was the investing of its funds and its investments consisted solely of
(i) shares of the capital stock of corporations (other than shares that were issued to the partnership and that are shares described in section 66.3 of the Act or shares in respect of which amounts have been designated under subsection 192(4) of the Act),
(ii) rights, or warrants that grant the owner thereof rights, to acquire shares of the capital stock of corporations,
(iii) put or call options in respect of shares of the capital stock of corporations,
(iv) debt obligations of corporations,
(v) specified properties (within the meaning assigned by subsection 5100(1)), or
(vi) any combination of the properties described in subparagraphs (i) to (v),
(g) no election has been made under subsection 97(2) of the Act on the acquisition of any property by it,
(h) it has not borrowed money except for the purpose of earning income from its investments and the amount of any such borrowings at any time did not exceed 20 per cent of the partnership capital at that time, and
(i) the cost amount to it of all foreign property held by it
(i) before 1990 and the particular time did not exceed 10 per cent,
(ii) before 1991 and the particular time did not exceed 12 per cent,
(iii) before 1992 and the particular time did not exceed 14 per cent,
(iv) before 1993 and the particular time did not exceed 16 per cent,
(v) before 1994 and the particular time did not exceed 18 per cent,
(vi) before 2000 and the particular time did not exceed 20 per cent,
(vii) before 2001 and the particular time did not exceed 25 per cent, and
(viii) before the particular time did not exceed 30 per cent
of the cost amount to it of all property held by it; (société de personnes en commandite admissible)
- relevant period for the particular month
relevant period for the particular month means, in relation to property held by a particular corporation or particular trust,
(a) its most recent taxation year ending before the end of the particular month, and
(b) its taxation year that includes the end of the particular month, where paragraph (a) does not apply; (période pertinente pour le mois donné)
- resource property trust
resource property trust means a trust the trustee of which is a trust company that is incorporated under the laws of Canada or a province and that complies with the following conditions:
(a) the trust, at all times after the later of November 12, 1981 and the time at which it was created,
(i) has limited its activities to
(A) acquiring Canadian resource properties by purchase or by incurring Canadian exploration expense or Canadian development expense, or
(B) holding, exploring, developing, maintaining, improving, managing, operating or disposing of its Canadian resource properties,
(ii) has made no investments other than
(A) in Canadian resource properties,
(B) in property to be used in connection with Canadian resource properties described in clause (i)(A),
(C) in loans secured by Canadian resource properties for the purpose of carrying out any activity described in subparagraph (i) with respect to Canadian resource properties,
(D) in corporations described in subparagraph 149(1)(o.2)(ii.1) of the Act, or
(E) investments that a pension fund or plan is permitted to make under the Pension Benefits Standards Act or a similar law of a province, and
(iii) has not borrowed money except for the purpose of earning income from Canadian resource properties, and
(b) the beneficiaries of the trust, at all times after the later of November 12, 1981 and the time at which it was created, were
(i) registered pension plans, or
(ii) trusts all the beneficiaries of which were registered pension plans; (fiducie d’avoirs miniers)
- specified international finance trust
specified international finance trust at a particular time means a trust that complies with the following conditions:
(a) the trust was created principally for the purpose of investing in property described in subparagraph (c)(i),
(b) throughout the period that began at the time the trust was created and ends at the particular time, the trust was resident in Canada, and
(c) throughout the period that began 30 days after the time the trust was created and ends at the particular time, the total of all amounts each of which is the cost amount to the trust of the following property was not less than 90% of the total of all amounts each of which is the cost amount to the trust of a property of the trust:
(i) debt issued to
(A) the African Development Bank,
(B) the Asian Development Bank,
(C) the Caribbean Development Bank,
(D) the European Bank for Reconstruction and Development,
(E) Export Development Canada,
(F) the Inter-American Development Bank,
(G) the International Bank for Reconstruction and Development, or
(H) the International Finance Corporation, and
(ii) shares and debt that are not foreign property of the trust. (fiducie financière internationale déterminée)
(8) For the purposes of the definition designated limited partnership in subsection (7) and for the purposes of this subsection, if a particular partnership is a member of another partnership at the end of a fiscal period of the other partnership (in this subsection referred to as the “relevant time”), throughout the period that begins at the relevant time and ends at the earlier of the time that is immediately before the end of the following fiscal period of the other partnership and the time that the other partnership ceases to exist
(a) the particular partnership is deemed to employ an additional number of full-time employees, or full-time employees employed in Canada, as the case may be, equal to the product of
(i) the specified fraction of the particular partnership at the relevant time in respect of the other partnership, and
(ii) the number of full-time employees employed, or employed in Canada, as the case may be, at the relevant time by the other partnership,
(b) each property used, or used in activities carried on in Canada, as the case may be, at the relevant time by the other partnership is deemed to be used, or to be used in activities carried on in Canada, as the case may be, by the particular partnership and is deemed to have a cost amount to the particular partnership equal to the product of
(i) the specified fraction of the particular partnership at the relevant time in respect of the other partnership, and
(ii) the cost amount of the property at the relevant time to the other partnership, and
(c) the particular partnership is, to the degree that can reasonably be considered to reflect the specified fraction of the particular partnership at the relevant time in respect of the other partnership, deemed to carry on each of the activities carried on by the other partnership.
(9) For the purposes of subsection (8), the specified fraction of the particular partnership in respect of the other partnership at the end of a fiscal period of the other partnership is the quotient obtained by dividing the particular partnership’s share of the income or loss of the other partnership for the fiscal period by the income or loss of the other partnership for the fiscal period.
(10) For the purposes of subsection (9), if the income and loss of the other partnership for the fiscal period are nil, the quotient referred to in that subsection shall be calculated as if the other partnership had income for the fiscal period in the amount of $1,000,000.
(11) The definition designated limited partnership in subsection (7) and subsections (8) to (10) shall be read and construed as if each of the assumptions set out in paragraphs 96(1)(a) to (g) of the Act were made.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- SOR/81-725, s. 5
- SOR/85-712, s. 1
- SOR/86-390, s. 4
- SOR/90-606, s. 2
- SOR/92-51, s. 8
- SOR/92-123, s. 1
- SOR/92-681, s. 3(F)
- SOR/94-471, s. 3
- SOR/94-686, ss. 28(F), 52(F), 71(F), 75(F), 78(F), 79(F)
- SOR/97-105, s. 1
- SOR/2000-62, s. 2
- SOR/2000-190, s. 1
- SOR/2001-216, s. 8
- 2001, c. 33, s. 30
- SOR/2003-328, s. 3
- Date modified: