II, s. 1151997, c. 25, s. 40
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 142.11997, c. 25, s. 40
142.2(1)In this section and sections 142.3 to 142.7,excluded propertyexcluded propertyof a taxpayer for a taxation year means property, held at any time in the taxation year by the taxpayer, that is(a)a share of the capital stock of a corporation if, at any time in the taxation year, the taxpayer has a significant interest in the corporation,(b)a property that is, at all times in the taxation year at which the taxpayer held the property, a prescribed payment card corporation share of the taxpayer,(c)if the taxpayer is an investment dealer, a property that is, at all times in the taxation year at which the taxpayer held the property, a prescribed securities exchange investment of the taxpayer,(d)a share of the capital stock of a corporation if(i)control of the corporation is, at any time (referred to in this paragraph as the “acquisition of control time”) that is in the 24-month period that begins immediately after the end of the year, acquired by(A)the taxpayer,(B)one or more persons related to the taxpayer (otherwise than by reason of a right referred to in paragraph 251(5)(b)), or(C)the taxpayer and one or more persons described in clause (B), and(ii)the taxpayer elects in writing to have subparagraph (i) apply and files the election with the Minister on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the acquisition of control time, or(e)a prescribed property; (bien exclu)fair value propertyfair value propertyof a taxpayer for a taxation year means property, held at any time in the taxation year by the taxpayer, that is — or it is reasonable to expect would, if the taxpayer held the property at the end of the taxation year, be — valued (otherwise than solely because its fair value was less than its cost to the taxpayer or, if the property is a specified debt obligation, because of a default of the debtor) in accordance with generally accepted accounting principles, at its fair value (determined in accordance with those principles) in the taxpayer’s balance sheet as at the end of the taxation year; (bien évalué à sa juste valeur)financial institutionfinancial institutionat any time means(a)a corporation that is, at that time,(i)a corporation referred to in any of paragraphs (a) to (e.1) of the definitionrestricted financial institutionin subsection 248(1),(ii)an investment dealer, or(iii)a corporation controlled by one or more persons or partnerships each of which is a financial institution at that time, other than a corporation the control of which was acquired by reason of the default of a debtor where it is reasonable to consider that control is being retained solely for the purpose of minimizing any losses in respect of the debtor’s default, and(b)a trust or partnership more than 50% of the fair market value of all interests in which are held at that time by one or more financial institutions,but does not include(c)a corporation that is, at that time,(i)an investment corporation,(ii)a mortgage investment corporation,(iii)a mutual fund corporation, or(iv)a deposit insurance corporation (as defined in subsection 137.1(5)),(d)a trust that is a mutual fund trust at that time, nor(e)a prescribed person or partnership; (institution financière)investment dealerinvestment dealerat any time means a corporation that is, at that time, a registered securities dealer; (courtier en valeurs mobilières)mark-to-market propertymark-to-market propertyof a taxpayer for a taxation year means property (other than an excluded property) held at any time in the taxation year by the taxpayer that is(a)a share,(b)if the taxpayer is not an investment dealer, a specified debt obligation that is a fair value property of the taxpayer for the taxation year,(c)if the taxpayer is an investment dealer, a specified debt obligation, or(d)a tracking property of the taxpayer that is a fair value property of the taxpayer for the taxation year; (bien évalué à la valeur du marché)specified debt obligationspecified debt obligationof a taxpayer means the interest held by the taxpayer in(a)a loan, bond, debenture, mortgage, hypothecary claim, note, agreement of sale or any other similar indebtedness, or(b)a debt obligation, where the taxpayer purchased the interest,other than an interest in(c)an income bond, an income debenture, a small business development bond, a small business bond or a prescribed property, or(d)an instrument issued by or made with a person to whom the taxpayer is related or with whom the taxpayer does not otherwise deal at arm’s length, or in which the taxpayer has a significant interest. (titre de créance déterminé)tracking propertytracking propertyof a taxpayer means property of the taxpayer the fair market value of which is determined primarily by reference to one or more criteria in respect of property (referred to in this definition as “tracked property”) that, if owned by the taxpayer, would be mark-to-market property of the taxpayer, which criteria are(a)the fair market value of the tracked property,(b)the profits or gains from the disposition of the tracked property,(c)the revenue, income or cash flow from the tracked property, or(d)any other similar criteria in respect of the tracked property; (bien à évaluer)Marginal note:Significant interest(2)For the purposes of the definitionsexcluded propertyandspecified debt obligationin subsection (1) and subsection 142.6(1.6), a taxpayer has a significant interest in a corporation at any time if(a)the taxpayer is related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the corporation at that time; or(b)the taxpayer holds, at that time,(i)shares of the corporation that give the taxpayer 10% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation, and(ii)shares of the corporation having a fair market value of 10% or more of the fair market value of all the issued shares of the corporation.Marginal note:Rules re significant interest(3)For the purpose of determining under subsection 142.2(2) whether a taxpayer has a significant interest in a corporation at any time,(a)the taxpayer shall be deemed to hold each share that is held at that time by a person or partnership to whom the taxpayer is related (otherwise than because of a right referred to in paragraph 251(5)(b));(b)a share of the corporation acquired by the taxpayer by reason of the default of a debtor shall be disregarded where it is reasonable to consider that the share is being retained for the purpose of minimizing any losses in respect of the debtor’s default; and(c)a share of the corporation that is prescribed in respect of the taxpayer shall be disregarded.Extension of meaning ofrelated(4)For the purposes of this subsection and subsections (2) and (3), in determining if, at a particular time, a person or partnership is related to another person or partnership, the rules in section 251 are to be applied as if,(a)a partnership (other than a partnership in respect of which any amount of the income or capital of the partnership that any entity may receive directly from the partnership at any time as a member of the partnership depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power) were a corporation having capital stock of a single class divided into 100 issued shares and each member of the partnership owned, at the particular time, that proportion of the issued shares of that class that(i)the fair market value of the member’s interest in the partnership at the particular timeis of(ii)the fair market value of all interests in the partnership at the particular time; and(b)a trust (other than a trust in respect of which any amount of the income or capital of the trust that any entity may receive directly from the trust at any time as a beneficiary under the trust depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power) were a corporation having capital stock of a single class divided into 100 issued shares and each beneficiary under the trust owned, at the particular time, that proportion of the issued shares of that class that(i)the fair market value of the beneficiary’s beneficial interest in the trust at the particular timeis of(ii)the fair market value at that time of all beneficial interests in the trust.(5)[Repealed, 2009, c. 2, s. 46]
(a)a share of the capital stock of a corporation if, at any time in the taxation year, the taxpayer has a significant interest in the corporation,(b)a property that is, at all times in the taxation year at which the taxpayer held the property, a prescribed payment card corporation share of the taxpayer,(c)if the taxpayer is an investment dealer, a property that is, at all times in the taxation year at which the taxpayer held the property, a prescribed securities exchange investment of the taxpayer,(d)a share of the capital stock of a corporation if(i)control of the corporation is, at any time (referred to in this paragraph as the “acquisition of control time”) that is in the 24-month period that begins immediately after the end of the year, acquired by(A)the taxpayer,(B)one or more persons related to the taxpayer (otherwise than by reason of a right referred to in paragraph 251(5)(b)), or(C)the taxpayer and one or more persons described in clause (B), and(ii)the taxpayer elects in writing to have subparagraph (i) apply and files the election with the Minister on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the acquisition of control time, or(e)a prescribed property; (bien exclu)
(i)control of the corporation is, at any time (referred to in this paragraph as the “acquisition of control time”) that is in the 24-month period that begins immediately after the end of the year, acquired by(A)the taxpayer,(B)one or more persons related to the taxpayer (otherwise than by reason of a right referred to in paragraph 251(5)(b)), or(C)the taxpayer and one or more persons described in clause (B), and(ii)the taxpayer elects in writing to have subparagraph (i) apply and files the election with the Minister on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the acquisition of control time, or
(A)the taxpayer,(B)one or more persons related to the taxpayer (otherwise than by reason of a right referred to in paragraph 251(5)(b)), or(C)the taxpayer and one or more persons described in clause (B), and
(a)a corporation that is, at that time,(i)a corporation referred to in any of paragraphs (a) to (e.1) of the definitionrestricted financial institutionin subsection 248(1),(ii)an investment dealer, or(iii)a corporation controlled by one or more persons or partnerships each of which is a financial institution at that time, other than a corporation the control of which was acquired by reason of the default of a debtor where it is reasonable to consider that control is being retained solely for the purpose of minimizing any losses in respect of the debtor’s default, and(b)a trust or partnership more than 50% of the fair market value of all interests in which are held at that time by one or more financial institutions,
(i)a corporation referred to in any of paragraphs (a) to (e.1) of the definitionrestricted financial institutionin subsection 248(1),(ii)an investment dealer, or(iii)a corporation controlled by one or more persons or partnerships each of which is a financial institution at that time, other than a corporation the control of which was acquired by reason of the default of a debtor where it is reasonable to consider that control is being retained solely for the purpose of minimizing any losses in respect of the debtor’s default, and
(c)a corporation that is, at that time,(i)an investment corporation,(ii)a mortgage investment corporation,(iii)a mutual fund corporation, or(iv)a deposit insurance corporation (as defined in subsection 137.1(5)),(d)a trust that is a mutual fund trust at that time, nor(e)a prescribed person or partnership; (institution financière)
(i)an investment corporation,(ii)a mortgage investment corporation,(iii)a mutual fund corporation, or(iv)a deposit insurance corporation (as defined in subsection 137.1(5)),
(a)a share,(b)if the taxpayer is not an investment dealer, a specified debt obligation that is a fair value property of the taxpayer for the taxation year,(c)if the taxpayer is an investment dealer, a specified debt obligation, or(d)a tracking property of the taxpayer that is a fair value property of the taxpayer for the taxation year; (bien évalué à la valeur du marché)
(a)a loan, bond, debenture, mortgage, hypothecary claim, note, agreement of sale or any other similar indebtedness, or(b)a debt obligation, where the taxpayer purchased the interest,
(c)an income bond, an income debenture, a small business development bond, a small business bond or a prescribed property, or(d)an instrument issued by or made with a person to whom the taxpayer is related or with whom the taxpayer does not otherwise deal at arm’s length, or in which the taxpayer has a significant interest. (titre de créance déterminé)
(a)the fair market value of the tracked property,(b)the profits or gains from the disposition of the tracked property,(c)the revenue, income or cash flow from the tracked property, or(d)any other similar criteria in respect of the tracked property; (bien à évaluer)
(a)the taxpayer is related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the corporation at that time; or(b)the taxpayer holds, at that time,(i)shares of the corporation that give the taxpayer 10% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation, and(ii)shares of the corporation having a fair market value of 10% or more of the fair market value of all the issued shares of the corporation.
(i)shares of the corporation that give the taxpayer 10% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of the corporation, and(ii)shares of the corporation having a fair market value of 10% or more of the fair market value of all the issued shares of the corporation.
(a)the taxpayer shall be deemed to hold each share that is held at that time by a person or partnership to whom the taxpayer is related (otherwise than because of a right referred to in paragraph 251(5)(b));(b)a share of the corporation acquired by the taxpayer by reason of the default of a debtor shall be disregarded where it is reasonable to consider that the share is being retained for the purpose of minimizing any losses in respect of the debtor’s default; and(c)a share of the corporation that is prescribed in respect of the taxpayer shall be disregarded.
(a)a partnership (other than a partnership in respect of which any amount of the income or capital of the partnership that any entity may receive directly from the partnership at any time as a member of the partnership depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power) were a corporation having capital stock of a single class divided into 100 issued shares and each member of the partnership owned, at the particular time, that proportion of the issued shares of that class that(i)the fair market value of the member’s interest in the partnership at the particular timeis of(ii)the fair market value of all interests in the partnership at the particular time; and(b)a trust (other than a trust in respect of which any amount of the income or capital of the trust that any entity may receive directly from the trust at any time as a beneficiary under the trust depends on the exercise by any entity of, or the failure by any entity to exercise, a discretionary power) were a corporation having capital stock of a single class divided into 100 issued shares and each beneficiary under the trust owned, at the particular time, that proportion of the issued shares of that class that(i)the fair market value of the beneficiary’s beneficial interest in the trust at the particular timeis of(ii)the fair market value at that time of all beneficial interests in the trust.
(i)the fair market value of the member’s interest in the partnership at the particular time
(ii)the fair market value of all interests in the partnership at the particular time; and
(i)the fair market value of the beneficiary’s beneficial interest in the trust at the particular time
(ii)the fair market value at that time of all beneficial interests in the trust.
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]1995, c. 21, s. 581998, c. 19, s. 1631999, c. 22, s. 572001, c. 17, ss. 136, 2192009, c. 2, s. 462013, c. 40, s. 63
142.3(1)Subject to subsections 142.3(3) and (4), where a taxpayer that is, in a taxation year, a financial institution holds a specified debt obligation at any time in the year,(a)there shall be included in computing the income of the taxpayer for the year the amount, if any, prescribed in respect of the obligation;(b)there shall be deducted in computing the income of the taxpayer for the year the amount, if any, prescribed in respect of the obligation; and(c)except as provided by this section, paragraphs 12(1)(d) and (i) and 20(1)(l) and (p) and section 142.4, no amount shall be included or deducted in respect of payments under the obligation (other than fees and similar amounts) in computing the income of the taxpayer for the year.Marginal note:Failure to report accrued amounts(2)Subject to subsection 142.3(3), where(a)a taxpayer holds a specified debt obligation at any time in a particular taxation year in which the taxpayer is a financial institution, and(b)all or part of an amount required by paragraph 142.3(1)(a) or subsection 12(3) to be included in respect of the obligation in computing the taxpayer’s income for a preceding taxation year was not so included,that part of the amount shall be included in computing the taxpayer’s income for the particular year, to the extent that it was not included in computing the taxpayer’s income for a preceding taxation year.Marginal note:Exception for certain obligations(3)Subsections 142.3(1) and (2) do not apply for a taxation year in respect of a taxpayer’s specified debt obligation that is(a)a mark-to-market property for the year; or(b)an indexed debt obligation, other than a prescribed obligation.Marginal note:Impaired specified debt obligations(4)Subsection 142.3(1) does not apply to a taxpayer in respect of a specified debt obligation for the part of a taxation year throughout which the obligation is impaired where an amount in respect of the obligation is deductible because of subparagraph 20(1)(l)(ii) in computing the taxpayer’s income for the year.
(a)there shall be included in computing the income of the taxpayer for the year the amount, if any, prescribed in respect of the obligation;(b)there shall be deducted in computing the income of the taxpayer for the year the amount, if any, prescribed in respect of the obligation; and(c)except as provided by this section, paragraphs 12(1)(d) and (i) and 20(1)(l) and (p) and section 142.4, no amount shall be included or deducted in respect of payments under the obligation (other than fees and similar amounts) in computing the income of the taxpayer for the year.
(a)a taxpayer holds a specified debt obligation at any time in a particular taxation year in which the taxpayer is a financial institution, and(b)all or part of an amount required by paragraph 142.3(1)(a) or subsection 12(3) to be included in respect of the obligation in computing the taxpayer’s income for a preceding taxation year was not so included,
(a)a mark-to-market property for the year; or(b)an indexed debt obligation, other than a prescribed obligation.
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]1995, c. 21, s. 581998, c. 19, s. 164
142.4(1)In this section,tax basistax basisof a specified debt obligation at any time to a taxpayer means the amount, if any, by which the total of all amounts each of which is(a)the cost of the obligation to the taxpayer,(b)an amount included under subsection 12(3) or 16(2) or 16(3), paragraph 142.3(1)(a) or subsection 142.3(2) in respect of the obligation in computing the taxpayer’s income for a taxation year that began before that time,(c)subject to subsection 138(13), where the taxpayer acquired the obligation in a taxation year ending before February 23, 1994, the part of the amount, if any, by which(i)the principal amount of the obligation at the time it was acquiredexceeds(ii)the cost to the taxpayer of the obligationthat was included in computing the taxpayer’s income for a taxation year ending before February 23, 1994,(d)subject to subsection 138(13), where the taxpayer is a life insurer, an amount in respect of the obligation that was deemed by paragraph 142(3)(a) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read in its application to the 1977 taxation year, to be a gain for a taxation year ending before 1978,(e)where the obligation is an indexed debt obligation, an amount determined under subparagraph 16(6)(a)(i) in respect of the obligation and included in computing the income of the taxpayer for a taxation year beginning before that time,(f)an amount in respect of the obligation that was included in computing the taxpayer’s income for a taxation year ending at or before that time in respect of changes in the value of the obligation attributable to the fluctuation in the value of a currency of a country other than Canada relative to Canadian currency, other than an amount included under paragraph 142.3(1)(a),(g)an amount in respect of the obligation that was included under paragraph 12(1)(i) in computing the taxpayer’s income for a taxation year beginning before that time, or(h)where the obligation was a capital property of the taxpayer on February 22, 1994, an amount required by paragraph 53(1)(f) or 53(1)(f.1) to be added in computing the adjusted cost base of the obligation to the taxpayer on that dayexceeds the total of all amounts each of which is(i)an amount deducted under paragraph 142.3(1)(b) in respect of the obligation in computing the taxpayer’s income for a taxation year beginning before that time,(j)the amount of a payment received by the taxpayer under the obligation at or before that time, other than(i)a fee or similar payment, and(ii)proceeds of disposition of the obligation,(k)subject to subsection 138(13), where the taxpayer acquired the obligation in a taxation year ending before February 23, 1994, the part of the amount, if any, by which(i)the cost to the taxpayer of the obligationexceeds(ii)the principal amount of the obligation at the time it was acquiredthat was deducted in computing the taxpayer’s income for a taxation year ending before February 23, 1994,(l)subject to subsection 138(13), where the taxpayer is a life insurer, an amount in respect of the obligation that was deemed by paragraph 142(3)(b) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read in its application to the 1977 taxation year, to be a loss for a taxation year ending before 1978,(m)an amount that was deducted under subsection 20(14) in respect of the obligation in computing the taxpayer’s income for a taxation year beginning before that time,(n)where the obligation is an indexed debt obligation, an amount determined under subparagraph 16(6)(a)(ii) in respect of the obligation and deducted in computing the income of the taxpayer for a taxation year beginning before that time,(o)an amount in respect of the obligation that was deducted in computing the taxpayer’s income for a taxation year ending at or before that time in respect of changes in the value of the obligation attributable to the fluctuation in the value of a currency of a country other than Canada relative to Canadian currency, other than an amount deducted under paragraph 142.3(1)(b),(p)an amount in respect of the obligation that was deducted under paragraph 20(1)(p) in computing the taxpayer’s income for a taxation year ending at or before that time, or(q)where the obligation was a capital property of the taxpayer on February 22, 1994, an amount required by paragraph 53(2)(b.2) or 53(2)(g) to be deducted in computing the adjusted cost base of the obligation to the taxpayer on that day; (montant de base)transition amounttransition amountof a taxpayer in respect of the disposition of a specified debt obligation has the meaning assigned by regulation. (montant de transition)Marginal note:Scope of section(2)This section applies to the disposition of a specified debt obligation by a taxpayer that is a financial institution, except that this section does not apply to the disposition of a specified debt obligation that is a mark-to-market property for the taxation year in which the disposition occurs.Marginal note:Rules applicable to disposition(3)Where a taxpayer has disposed of a specified debt obligation after February 22, 1994,(a)except as provided by paragraph 79.1(7)(d) or this section, no amount shall be included or deducted in respect of the disposition in computing the taxpayer’s income; and(b)except where the obligation is an indexed debt obligation (other than a prescribed obligation), paragraph 20(14)(a) shall not apply in respect of the disposition.Marginal note:Inclusions and deductions re disposition(4)Subject to subsection 142.4(5), where after 1994 a taxpayer disposes of a specified debt obligation in a taxation year,(a)where the transition amount in respect of the disposition of the obligation is positive, it shall be included in computing the income of the taxpayer for the year;(b)where the transition amount in respect of the disposition of the obligation is negative, the absolute value of the transition amount shall be deducted in computing the income of the taxpayer for the year;(c)where the taxpayer has a gain from the disposition of the obligation,(i)the current amount of the gain shall be included in computing the income of the taxpayer for the year, and(ii)there shall be included in computing the taxpayer’s income for taxation years that end on or after the day of disposition the amount allocated, in accordance with prescribed rules, to the year in respect of the residual portion of the gain; and(d)where the taxpayer has a loss from the disposition of the obligation,(i)the current amount of the loss shall be deducted in computing the taxpayer’s income for the year, and(ii)there shall be deducted in computing the taxpayer’s income for taxation years that end on or after the day of disposition the amount allocated, in accordance with prescribed rules, to the year in respect of the residual portion of the loss.Marginal note:Gain or loss not amortized(5)Where after February 22, 1994 a taxpayer disposes of a specified debt obligation in a taxation year, and(a)the obligation is(i)an indexed debt obligation (other than a prescribed obligation), or(ii)a debt obligation prescribed in respect of the taxpayer,(b)the disposition occurred(i)before 1995,(ii)after 1994 in connection with the transfer of all or part of a business of the taxpayer to a person or partnership, or(iii)because of paragraph 142.6(1)(c), or(c)in the case of a taxpayer other than a life insurance corporation,(i)the disposition occurred before 1996, and(ii)the taxpayer elects in writing, filed with the Minister before July 1997, to have this paragraph apply,the following rules apply:(d)subsection 142.4(4) does not apply to the disposition,(e)there shall be included in computing the taxpayer’s income for the year the amount, if any, by which the taxpayer’s proceeds of disposition exceed the tax basis of the obligation to the taxpayer immediately before the disposition, and(f)there shall be deducted in computing the taxpayer’s income for the year the amount, if any, by which the tax basis of the obligation to the taxpayer immediately before the disposition exceeds the taxpayer’s proceeds of disposition.Marginal note:Gain or loss from disposition of obligation(6)For the purposes of this section,(a)where the amount determined under paragraph 142.4(6)(c) in respect of the disposition of a specified debt obligation by a taxpayer is positive, that amount is the taxpayer’s gain from the disposition of the obligation;(b)where the amount determined under paragraph 142.4(6)(c) in respect of the disposition of a specified debt obligation by a taxpayer is negative, the absolute value of that amount is the taxpayer’s loss from the disposition of the obligation; and(c)the amount determined under this paragraph in respect of the disposition of a specified debt obligation by a taxpayer is the positive or negative amount determined by the formulaA - (B + C)whereAis the taxpayer’s proceeds of disposition,Bis the tax basis of the obligation to the taxpayer immediately before the time of disposition, andCis the taxpayer’s transition amount in respect of the disposition.Marginal note:Current amount(7)For the purposes of subsections 142.4(4) and 142.4(8), the current amount of a taxpayer’s gain or loss from the disposition of a specified debt obligation is(a)where the taxpayer has a gain from the disposition of the obligation, the part, if any, of the gain that is reasonably attributable to a material increase in the probability, or perceived probability, that the debtor will make all payments as required by the obligation; and(b)where the taxpayer has a loss from the disposition of the obligation, the amount that the taxpayer claims not exceeding the part, if any, of the loss that is reasonably attributable to a default by the debtor or a material decrease in the probability, or perceived probability, that the debtor will make all payments as required by the obligation.Marginal note:Residual portion of gain or loss(8)For the purpose of subsection 142.4(4), the residual portion of a taxpayer’s gain or loss from the disposition of a specified debt obligation is the amount, if any, by which the gain or loss exceeds the current amount of the gain or loss.Marginal note:Disposition of part of obligation(9)Where a taxpayer disposes of part of a specified debt obligation, section 142.3 and this section apply as if the part disposed of and the part retained were separate specified debt obligations.Marginal note:Penalties and bonuses(10)Notwithstanding subsection 18(9.1), where a taxpayer that holds a specified debt obligation receives a penalty or bonus because of the repayment before maturity of all or part of the principal amount of the debt obligation, the payment is deemed to be received by the taxpayer as proceeds of disposition of the specified debt obligation.Marginal note:Payments received on or after disposition(11)For the purposes of this section, where at any time a taxpayer receives a payment (other than proceeds of disposition) under a specified debt obligation on or after the disposition of the obligation, the payment is deemed not to have been so received at that time but to have been so received immediately before the disposition.
(a)the cost of the obligation to the taxpayer,(b)an amount included under subsection 12(3) or 16(2) or 16(3), paragraph 142.3(1)(a) or subsection 142.3(2) in respect of the obligation in computing the taxpayer’s income for a taxation year that began before that time,(c)subject to subsection 138(13), where the taxpayer acquired the obligation in a taxation year ending before February 23, 1994, the part of the amount, if any, by which(i)the principal amount of the obligation at the time it was acquiredexceeds(ii)the cost to the taxpayer of the obligationthat was included in computing the taxpayer’s income for a taxation year ending before February 23, 1994,(d)subject to subsection 138(13), where the taxpayer is a life insurer, an amount in respect of the obligation that was deemed by paragraph 142(3)(a) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read in its application to the 1977 taxation year, to be a gain for a taxation year ending before 1978,(e)where the obligation is an indexed debt obligation, an amount determined under subparagraph 16(6)(a)(i) in respect of the obligation and included in computing the income of the taxpayer for a taxation year beginning before that time,(f)an amount in respect of the obligation that was included in computing the taxpayer’s income for a taxation year ending at or before that time in respect of changes in the value of the obligation attributable to the fluctuation in the value of a currency of a country other than Canada relative to Canadian currency, other than an amount included under paragraph 142.3(1)(a),(g)an amount in respect of the obligation that was included under paragraph 12(1)(i) in computing the taxpayer’s income for a taxation year beginning before that time, or(h)where the obligation was a capital property of the taxpayer on February 22, 1994, an amount required by paragraph 53(1)(f) or 53(1)(f.1) to be added in computing the adjusted cost base of the obligation to the taxpayer on that day
(i)the principal amount of the obligation at the time it was acquired
(ii)the cost to the taxpayer of the obligation
(i)an amount deducted under paragraph 142.3(1)(b) in respect of the obligation in computing the taxpayer’s income for a taxation year beginning before that time,(j)the amount of a payment received by the taxpayer under the obligation at or before that time, other than(i)a fee or similar payment, and(ii)proceeds of disposition of the obligation,(k)subject to subsection 138(13), where the taxpayer acquired the obligation in a taxation year ending before February 23, 1994, the part of the amount, if any, by which(i)the cost to the taxpayer of the obligationexceeds(ii)the principal amount of the obligation at the time it was acquiredthat was deducted in computing the taxpayer’s income for a taxation year ending before February 23, 1994,(l)subject to subsection 138(13), where the taxpayer is a life insurer, an amount in respect of the obligation that was deemed by paragraph 142(3)(b) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read in its application to the 1977 taxation year, to be a loss for a taxation year ending before 1978,(m)an amount that was deducted under subsection 20(14) in respect of the obligation in computing the taxpayer’s income for a taxation year beginning before that time,(n)where the obligation is an indexed debt obligation, an amount determined under subparagraph 16(6)(a)(ii) in respect of the obligation and deducted in computing the income of the taxpayer for a taxation year beginning before that time,(o)an amount in respect of the obligation that was deducted in computing the taxpayer’s income for a taxation year ending at or before that time in respect of changes in the value of the obligation attributable to the fluctuation in the value of a currency of a country other than Canada relative to Canadian currency, other than an amount deducted under paragraph 142.3(1)(b),(p)an amount in respect of the obligation that was deducted under paragraph 20(1)(p) in computing the taxpayer’s income for a taxation year ending at or before that time, or(q)where the obligation was a capital property of the taxpayer on February 22, 1994, an amount required by paragraph 53(2)(b.2) or 53(2)(g) to be deducted in computing the adjusted cost base of the obligation to the taxpayer on that day; (montant de base)
(i)a fee or similar payment, and(ii)proceeds of disposition of the obligation,
(i)the cost to the taxpayer of the obligation
(ii)the principal amount of the obligation at the time it was acquired
(a)except as provided by paragraph 79.1(7)(d) or this section, no amount shall be included or deducted in respect of the disposition in computing the taxpayer’s income; and(b)except where the obligation is an indexed debt obligation (other than a prescribed obligation), paragraph 20(14)(a) shall not apply in respect of the disposition.
(a)where the transition amount in respect of the disposition of the obligation is positive, it shall be included in computing the income of the taxpayer for the year;(b)where the transition amount in respect of the disposition of the obligation is negative, the absolute value of the transition amount shall be deducted in computing the income of the taxpayer for the year;(c)where the taxpayer has a gain from the disposition of the obligation,(i)the current amount of the gain shall be included in computing the income of the taxpayer for the year, and(ii)there shall be included in computing the taxpayer’s income for taxation years that end on or after the day of disposition the amount allocated, in accordance with prescribed rules, to the year in respect of the residual portion of the gain; and(d)where the taxpayer has a loss from the disposition of the obligation,(i)the current amount of the loss shall be deducted in computing the taxpayer’s income for the year, and(ii)there shall be deducted in computing the taxpayer’s income for taxation years that end on or after the day of disposition the amount allocated, in accordance with prescribed rules, to the year in respect of the residual portion of the loss.
(i)the current amount of the gain shall be included in computing the income of the taxpayer for the year, and(ii)there shall be included in computing the taxpayer’s income for taxation years that end on or after the day of disposition the amount allocated, in accordance with prescribed rules, to the year in respect of the residual portion of the gain; and
(i)the current amount of the loss shall be deducted in computing the taxpayer’s income for the year, and(ii)there shall be deducted in computing the taxpayer’s income for taxation years that end on or after the day of disposition the amount allocated, in accordance with prescribed rules, to the year in respect of the residual portion of the loss.
(a)the obligation is(i)an indexed debt obligation (other than a prescribed obligation), or(ii)a debt obligation prescribed in respect of the taxpayer,(b)the disposition occurred(i)before 1995,(ii)after 1994 in connection with the transfer of all or part of a business of the taxpayer to a person or partnership, or(iii)because of paragraph 142.6(1)(c), or(c)in the case of a taxpayer other than a life insurance corporation,(i)the disposition occurred before 1996, and(ii)the taxpayer elects in writing, filed with the Minister before July 1997, to have this paragraph apply,the following rules apply:(d)subsection 142.4(4) does not apply to the disposition,(e)there shall be included in computing the taxpayer’s income for the year the amount, if any, by which the taxpayer’s proceeds of disposition exceed the tax basis of the obligation to the taxpayer immediately before the disposition, and(f)there shall be deducted in computing the taxpayer’s income for the year the amount, if any, by which the tax basis of the obligation to the taxpayer immediately before the disposition exceeds the taxpayer’s proceeds of disposition.
(i)an indexed debt obligation (other than a prescribed obligation), or(ii)a debt obligation prescribed in respect of the taxpayer,
(i)before 1995,(ii)after 1994 in connection with the transfer of all or part of a business of the taxpayer to a person or partnership, or(iii)because of paragraph 142.6(1)(c), or
(i)the disposition occurred before 1996, and(ii)the taxpayer elects in writing, filed with the Minister before July 1997, to have this paragraph apply,
(a)where the amount determined under paragraph 142.4(6)(c) in respect of the disposition of a specified debt obligation by a taxpayer is positive, that amount is the taxpayer’s gain from the disposition of the obligation;(b)where the amount determined under paragraph 142.4(6)(c) in respect of the disposition of a specified debt obligation by a taxpayer is negative, the absolute value of that amount is the taxpayer’s loss from the disposition of the obligation; and(c)the amount determined under this paragraph in respect of the disposition of a specified debt obligation by a taxpayer is the positive or negative amount determined by the formulaA - (B + C)whereAis the taxpayer’s proceeds of disposition,Bis the tax basis of the obligation to the taxpayer immediately before the time of disposition, andCis the taxpayer’s transition amount in respect of the disposition.
(a)where the taxpayer has a gain from the disposition of the obligation, the part, if any, of the gain that is reasonably attributable to a material increase in the probability, or perceived probability, that the debtor will make all payments as required by the obligation; and(b)where the taxpayer has a loss from the disposition of the obligation, the amount that the taxpayer claims not exceeding the part, if any, of the loss that is reasonably attributable to a default by the debtor or a material decrease in the probability, or perceived probability, that the debtor will make all payments as required by the obligation.
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]1995, c. 21, s. 581998, c. 19, s. 165
142.5(1)Where, in a taxation year that begins after October 1994, a taxpayer that is a financial institution in the year disposes of a property that is a mark-to-market property for the year,(a)there shall be included in computing the taxpayer’s income for the year the profit, if any, from the disposition; and(b)there shall be deducted in computing the taxpayer’s income for the year the loss, if any, from the disposition.Marginal note:Mark-to-market requirement(2)Where a taxpayer that is a financial institution in a taxation year holds, at the end of the year, a mark-to-market property for the year, the taxpayer shall be deemed(a)to have disposed of the property immediately before the end of the year for proceeds equal to its fair market value at the time of disposition, and(b)to have reacquired the property at the end of the year at a cost equal to those proceeds.Marginal note:Mark-to-market debt obligation(3)Where a taxpayer is a financial institution in a particular taxation year that begins after October 1994, the following rules apply with respect to a specified debt obligation that is a mark-to-market property of the taxpayer for the particular year:(a)paragraph 12(1)(c) and subsections 12(3) and 20(14) and (21) do not apply to the obligation in computing the taxpayer’s income for the particular year;(b)there shall be included in computing the taxpayer’s income for the particular year an amount received by the taxpayer in the particular year as, on account of, in lieu of payment of, or in satisfaction of, interest on the obligation, to the extent that the interest was not included in computing the taxpayer’s income for a preceding taxation year; and(c)for the purpose of paragraph 142.5(3)(b), where the taxpayer was deemed by subsection 142.5(2) or paragraph 142.6(1)(b) to have disposed of the obligation in a preceding taxation year, no part of an amount included in computing the income of the taxpayer for that preceding year because of the disposition shall be considered to be in respect of interest on the obligation.Marginal note:Proceeds — mark-to-market property(4)For greater certainty, if a taxpayer is a financial institution in a taxation year and disposes of a share that is mark-to-market property of the taxpayer for the year, the taxpayer’s proceeds from the disposition do not include any amount that would otherwise be proceeds from the disposition to the extent that the amount is deemed by subsection 84(2) or (3) to be a dividend received except to the extent the dividend is deemed by subparagraph 88(2)(b)(ii) not to be a dividend.(5) to (7)[Repealed, 2013, c. 34, s. 288]Marginal note:First deemed disposition of debt obligation(8)Where(a)in a particular taxation year that ends after October 30, 1994, a taxpayer disposed of a specified debt obligation that is a mark-to-market property of the taxpayer for the following taxation year, and(b)either(i)the disposition occurred because of subsection 142.5(2) and the particular year includes October 31, 1994, or(ii)the disposition occurred because of paragraph 142.6(1)(b),the following rules apply:(c)subsection 20(21) does not apply to the disposition, and(d)where(i)an amount has been deducted under paragraph 20(1)(p) in respect of the obligation in computing the taxpayer’s income for the particular year or a preceding taxation year, and(ii)section 12.4 does not apply to the disposition,there shall be included in computing the taxpayer’s income for the particular year the amount, if any, by which(iii)the total of all amounts referred to in subparagraph 142.5(8)(d)(i)exceeds(iv)the total of all amounts included under paragraph 12(1)(i) in respect of the obligation in computing the taxpayer’s income for the particular year or a preceding taxation year.Marginal note:Application of subsection (8.2)(8.1)Subsection (8.2) applies to a taxpayer for its transition year if(a)subsection (2) deems the taxpayer to have disposed of a particular specified debt obligation immediately before the end of its transition year (in subsection (8.2) referred to as “the particular disposition”); and(b)the particular specified debt obligation was owned by the taxpayer at the end of its base year and was not a mark-to-market property of the taxpayer for its base year.Marginal note:Rules applicable to first deemed disposition of debt obligation(8.2)If this subsection applies to a taxpayer for its transition year, the following rules apply to the taxpayer in respect of the particular disposition:(a)subsection 20(21) does not apply to the taxpayer in respect of the particular disposition; and(b)if section 12.4 does not apply to the taxpayer in respect of the particular disposition, there shall be included in computing the taxpayer’s income for its transition year the amount, if any, by which(i)the total of all amounts each of which is(A)an amount deducted under paragraph 20(1)(l) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its base year, or(B)an amount deducted under paragraph 20(1)(p) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for a taxation year that preceded its transition year,exceeds(ii)the total of all amounts each of which is(A)an amount included under paragraph 12(1)(d) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year, or(B)an amount included under paragraph 12(1)(i) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year or a preceding taxation year.Marginal note:Transition — property acquired on rollover(9)Where(a)a taxpayer acquired a property before October 31, 1994 at a cost less than the fair market value of the property at the time of acquisition,(b)the property was transferred, directly or indirectly, to the taxpayer by a person that would never have been a financial institution before the transfer if the definitionfinancial institutionin subsection 142.2(1) had always applied,(c)the cost is less than the fair market value because subsection 85(1) applied in respect of the disposition of the property by the person, and(d)subsection 142.5(2) deemed the taxpayer to have disposed of the property in its particular taxation year that includes October 31, 1994,the following rules apply:(e)where the taxpayer would, but for this paragraph, have a taxable capital gain for the particular year from the disposition of the property, the part of the taxable capital gain that can reasonably be considered to have arisen while the property was held by a person described in paragraph 142.5(9)(b) shall be deemed to be a taxable capital gain of the taxpayer from the disposition of the property for the taxation year in which the taxpayer disposes of the property otherwise than because of subsection 142.5(2), and not to be a taxable capital gain for the particular year, and(f)where the taxpayer has a profit (other than a capital gain) from the disposition of the property, the part of the profit that can reasonably be considered to have arisen while the property was held by a person described in paragraph 142.5(9)(b) shall be included in computing the taxpayer’s income for the taxation year in which the taxpayer disposes of the property otherwise than because of subsection 142.5(2), and shall not be included in computing the taxpayer’s income for the particular year.
(a)there shall be included in computing the taxpayer’s income for the year the profit, if any, from the disposition; and(b)there shall be deducted in computing the taxpayer’s income for the year the loss, if any, from the disposition.
(a)to have disposed of the property immediately before the end of the year for proceeds equal to its fair market value at the time of disposition, and(b)to have reacquired the property at the end of the year at a cost equal to those proceeds.
(a)paragraph 12(1)(c) and subsections 12(3) and 20(14) and (21) do not apply to the obligation in computing the taxpayer’s income for the particular year;(b)there shall be included in computing the taxpayer’s income for the particular year an amount received by the taxpayer in the particular year as, on account of, in lieu of payment of, or in satisfaction of, interest on the obligation, to the extent that the interest was not included in computing the taxpayer’s income for a preceding taxation year; and(c)for the purpose of paragraph 142.5(3)(b), where the taxpayer was deemed by subsection 142.5(2) or paragraph 142.6(1)(b) to have disposed of the obligation in a preceding taxation year, no part of an amount included in computing the income of the taxpayer for that preceding year because of the disposition shall be considered to be in respect of interest on the obligation.
(a)in a particular taxation year that ends after October 30, 1994, a taxpayer disposed of a specified debt obligation that is a mark-to-market property of the taxpayer for the following taxation year, and(b)either(i)the disposition occurred because of subsection 142.5(2) and the particular year includes October 31, 1994, or(ii)the disposition occurred because of paragraph 142.6(1)(b),
(i)the disposition occurred because of subsection 142.5(2) and the particular year includes October 31, 1994, or(ii)the disposition occurred because of paragraph 142.6(1)(b),
(c)subsection 20(21) does not apply to the disposition, and(d)where(i)an amount has been deducted under paragraph 20(1)(p) in respect of the obligation in computing the taxpayer’s income for the particular year or a preceding taxation year, and(ii)section 12.4 does not apply to the disposition,there shall be included in computing the taxpayer’s income for the particular year the amount, if any, by which(iii)the total of all amounts referred to in subparagraph 142.5(8)(d)(i)exceeds(iv)the total of all amounts included under paragraph 12(1)(i) in respect of the obligation in computing the taxpayer’s income for the particular year or a preceding taxation year.
(i)an amount has been deducted under paragraph 20(1)(p) in respect of the obligation in computing the taxpayer’s income for the particular year or a preceding taxation year, and(ii)section 12.4 does not apply to the disposition,
(iii)the total of all amounts referred to in subparagraph 142.5(8)(d)(i)
(iv)the total of all amounts included under paragraph 12(1)(i) in respect of the obligation in computing the taxpayer’s income for the particular year or a preceding taxation year.
(a)subsection (2) deems the taxpayer to have disposed of a particular specified debt obligation immediately before the end of its transition year (in subsection (8.2) referred to as “the particular disposition”); and(b)the particular specified debt obligation was owned by the taxpayer at the end of its base year and was not a mark-to-market property of the taxpayer for its base year.
(a)subsection 20(21) does not apply to the taxpayer in respect of the particular disposition; and(b)if section 12.4 does not apply to the taxpayer in respect of the particular disposition, there shall be included in computing the taxpayer’s income for its transition year the amount, if any, by which(i)the total of all amounts each of which is(A)an amount deducted under paragraph 20(1)(l) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its base year, or(B)an amount deducted under paragraph 20(1)(p) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for a taxation year that preceded its transition year,exceeds(ii)the total of all amounts each of which is(A)an amount included under paragraph 12(1)(d) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year, or(B)an amount included under paragraph 12(1)(i) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year or a preceding taxation year.
(i)the total of all amounts each of which is(A)an amount deducted under paragraph 20(1)(l) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its base year, or(B)an amount deducted under paragraph 20(1)(p) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for a taxation year that preceded its transition year,
(A)an amount deducted under paragraph 20(1)(l) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its base year, or(B)an amount deducted under paragraph 20(1)(p) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for a taxation year that preceded its transition year,
(ii)the total of all amounts each of which is(A)an amount included under paragraph 12(1)(d) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year, or(B)an amount included under paragraph 12(1)(i) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year or a preceding taxation year.
(A)an amount included under paragraph 12(1)(d) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year, or(B)an amount included under paragraph 12(1)(i) in respect of the particular specified debt obligation of the taxpayer in computing the taxpayer’s income for its transition year or a preceding taxation year.
(a)a taxpayer acquired a property before October 31, 1994 at a cost less than the fair market value of the property at the time of acquisition,(b)the property was transferred, directly or indirectly, to the taxpayer by a person that would never have been a financial institution before the transfer if the definitionfinancial institutionin subsection 142.2(1) had always applied,(c)the cost is less than the fair market value because subsection 85(1) applied in respect of the disposition of the property by the person, and(d)subsection 142.5(2) deemed the taxpayer to have disposed of the property in its particular taxation year that includes October 31, 1994,
(e)where the taxpayer would, but for this paragraph, have a taxable capital gain for the particular year from the disposition of the property, the part of the taxable capital gain that can reasonably be considered to have arisen while the property was held by a person described in paragraph 142.5(9)(b) shall be deemed to be a taxable capital gain of the taxpayer from the disposition of the property for the taxation year in which the taxpayer disposes of the property otherwise than because of subsection 142.5(2), and not to be a taxable capital gain for the particular year, and(f)where the taxpayer has a profit (other than a capital gain) from the disposition of the property, the part of the profit that can reasonably be considered to have arisen while the property was held by a person described in paragraph 142.5(9)(b) shall be included in computing the taxpayer’s income for the taxation year in which the taxpayer disposes of the property otherwise than because of subsection 142.5(2), and shall not be included in computing the taxpayer’s income for the particular year.
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]1995, c. 21, s. 581998, c. 19, s. 1662009, c. 2, s. 472013, c. 34, s. 2882018, c. 27, s. 16
142.51(1)The following definitions apply for the purposes of this section and subsections 142.5(8.1) and (8.2).base yearbase yearof a taxpayer means the taxpayer’s taxation year that immediately precedes its transition year. (année de base)transition amounttransition amountof a taxpayer for the taxpayer’s transition year is the positive or negative amount determined by the formulaA – BwhereAis the total of all amounts each of which is the fair market value, at the end of the taxpayer’s base year, of a transition property of the taxpayer; andBis the total of all amounts each of which is the cost amount to the taxpayer, at the end of the taxpayer’s base year, of a transition property of the taxpayer. (montant transitoire)transition propertytransition propertyof a taxpayer means a property that(a)was a specified debt obligation held by the taxpayer at the end of the taxpayer’s base year;(b)was not a mark-to-market property of the taxpayer for the taxpayer’s base year, but would have been a mark-to-market property of the taxpayer for the taxpayer’s base year if the property had been carried at the property’s fair market value in the taxpayer’s balance sheet as at the end of each taxation year of the taxpayer that ends after the taxpayer last acquired the property (otherwise than by reason of a reacquisition under subsection 142.5(2)) and before the commencement of the taxpayer’s transition year; and(c)was a mark-to-market property of the taxpayer for the transition year of the taxpayer. (bien transitoire)transition yeartransition yearof a taxpayer means the taxpayer’s first taxation year that begins after 2022. (année transitoire)Marginal note:Transition year income inclusion(2)If a taxpayer is an insurer in its transition year, there shall be included in computing the taxpayer’s income for its transition year the absolute value of the negative amount, if any, of the taxpayer’s transition amount.Marginal note:Transition year income deduction(3)If a taxpayer is an insurer in its transition year, there shall be deducted in computing the taxpayer’s income for its transition year the positive amount, if any, of the taxpayer’s transition amount.Marginal note:Transition year income inclusion reversal(4)If an amount has been included under subsection (2) in computing a taxpayer’s income for its transition year, there shall be deducted in computing the taxpayer’s income for each particular taxation year of the taxpayer that ends after the beginning of the transition year, and in which particular taxation year the taxpayer is an insurer, the amount determined by the formulaA × B/1825whereAis the amount included under subsection (2) in computing the taxpayer’s income for the transition year; andBis the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.Marginal note:Transition year income deduction reversal(5)If an amount has been deducted under subsection (3) in computing a taxpayer’s income for its transition year, there shall be included in computing the taxpayer’s income, for each particular taxation year of the taxpayer ending after the beginning of the transition year, and in which particular taxation year the taxpayer is an insurer, the amount determined by the formulaA × B/1825whereAis the amount deducted under subsection (3) in computing the taxpayer’s income for the transition year; andBis the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.Marginal note:Winding-up(6)If a taxpayer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the “parent”), and immediately after the winding-up the parent is an insurer, in applying subsections (4) and (5) in computing the income of the taxpayer and of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the “start day”) on which assets of the taxpayer were distributed to the parent on the winding-up,(a)the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the taxpayer in respect of(i)any amount included under subsection (2) or deducted under subsection (3) by the taxpayer in computing the taxpayer’s income for its transition year,(ii)any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the start day, and(iii)any amount that would — in the absence of this subsection and if the taxpayer existed and was an insurer on each day that is the start day or a subsequent day and on which the parent is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income for its transition year; and(b)the taxpayer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (4) and (5) without reference to the start day and days after the start day.Marginal note:Amalgamations(7)If there is an amalgamation (within the meaning assigned by subsection 87(1)) of a taxpayer with one or more other corporations to form one corporation (referred to in this subsection as the “new corporation”), and immediately after the amalgamation the new corporation is an insurer, in applying subsections (4) and (5) in computing the income of the new corporation for particular taxation years of the new corporation that begin on or after the day on which the amalgamation occurred, the new corporation is, on and after that day, deemed to be the same corporation as and a continuation of the taxpayer in respect of(a)any amount included under subsection (2) or deducted under subsection (3) in computing the taxpayer’s income for its transition year of the taxpayer;(b)any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the day on which the amalgamation occurred; and(c)any amount that would — in the absence of this subsection and if the taxpayer existed and was an insurer on each day that is the day on which the amalgamation occurred or a subsequent day and on which the new corporation is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income.Marginal note:Application of subsection (9)(8)Subsection (9) applies if, at any time, a taxpayer (referred to in this subsection and subsection (9) as the “transferor”) transfers, to a corporation (referred to in this subsection and subsection (9) as the “transferee”) that is related to the transferor, property in respect of a business carried on by the transferor in Canada (referred to in this subsection and subsection (9) as the “transferred business”) and(a)subsection 138(11.5) or (11.94) applies to the transfer; or(b)subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee is an insurer.Marginal note:Transfer of a business(9)If this subsection applies in respect of the transfer, at any time, of property(a)the transferee is, at and after that time, deemed to be the same corporation as and a continuation of the transferor in respect of(i)any amount included under subsection (2) or deducted under subsection (3) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,(ii)any amount deducted under subsection (4) or included under subsection (5) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business, and(iii)any amount that would — in the absence of this subsection and if the transferor existed and was an insurer on each day that includes that time or is a subsequent day and on which the transferee is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the transferor’s income that can reasonably be attributed to the transferred business; and(b)in determining, in respect of the day that includes that time or any subsequent day, any amount that is required under subsection (4) or (5) to be deducted or included in computing the transferor’s income for each particular taxation year from the transferred business, the description of A in the formulas in those subsections is deemed to be nil.(10)[Repealed, 2022, c. 19, s. 28]Marginal note:Ceasing to carry on a business(11)If at any time, a taxpayer ceases to be an insurer(a)there shall be deducted, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formulaA – BwhereAis the amount included under subsection (2) in computing the taxpayer’s income for its transition year, andBis the total of all amounts each of which is an amount deducted under subsection (4) in computing the income of the taxpayer for a taxation year that began before that time; and(b)there shall be included, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formulaC – DwhereCis the amount deducted under subsection (3) in computing the taxpayer’s income for its transition year, andDis the total of all amounts each of which is an amount included under subsection (5) in computing the taxpayer’s income for a taxation year that began before that time.Marginal note:Ceasing to exist(12)If at any time a taxpayer ceases to exist (otherwise than as a result of a merger to which subsection 87(2) applies or a winding-up to which subsection 88(1) applies), for the purposes of subsection (11), the taxpayer is deemed to have ceased to be an insurer at the earlier of(a)the time (determined without reference to this subsection) at which the taxpayer ceased to be an insurer, and(b)the time that is immediately before the end of the last taxation year of the taxpayer that ended at or before the time at which the taxpayer ceased to exist.Marginal note:Application of subsection (13.1)(13)Subsection (13.1) applies to a taxpayer for a particular taxation year of the taxpayer if(a)the taxpayer holds a transition property in the particular taxation year;(b)the property was a mark-to-market property of the taxpayer for the taxation year preceding the particular taxation year; and(c)the property is not a mark-to-market property of the taxpayer for the particular taxation year.Marginal note:Ceasing to be mark-to-market property(13.1)If this subsection applies to a taxpayer for a particular taxation year of the taxpayer, for purposes of this section(a)the taxpayer is deemed to have ceased to be an insurer at the particular time that is the beginning of the particular taxation year; and(b)the time immediately before the particular time shall be deemed to be the end of the taxation year that ends immediately before the particular taxation year.
(a)was a specified debt obligation held by the taxpayer at the end of the taxpayer’s base year;(b)was not a mark-to-market property of the taxpayer for the taxpayer’s base year, but would have been a mark-to-market property of the taxpayer for the taxpayer’s base year if the property had been carried at the property’s fair market value in the taxpayer’s balance sheet as at the end of each taxation year of the taxpayer that ends after the taxpayer last acquired the property (otherwise than by reason of a reacquisition under subsection 142.5(2)) and before the commencement of the taxpayer’s transition year; and(c)was a mark-to-market property of the taxpayer for the transition year of the taxpayer. (bien transitoire)
(a)the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the taxpayer in respect of(i)any amount included under subsection (2) or deducted under subsection (3) by the taxpayer in computing the taxpayer’s income for its transition year,(ii)any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the start day, and(iii)any amount that would — in the absence of this subsection and if the taxpayer existed and was an insurer on each day that is the start day or a subsequent day and on which the parent is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income for its transition year; and(b)the taxpayer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (4) and (5) without reference to the start day and days after the start day.
(i)any amount included under subsection (2) or deducted under subsection (3) by the taxpayer in computing the taxpayer’s income for its transition year,(ii)any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the start day, and(iii)any amount that would — in the absence of this subsection and if the taxpayer existed and was an insurer on each day that is the start day or a subsequent day and on which the parent is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income for its transition year; and
(a)any amount included under subsection (2) or deducted under subsection (3) in computing the taxpayer’s income for its transition year of the taxpayer;(b)any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the day on which the amalgamation occurred; and(c)any amount that would — in the absence of this subsection and if the taxpayer existed and was an insurer on each day that is the day on which the amalgamation occurred or a subsequent day and on which the new corporation is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income.
(a)subsection 138(11.5) or (11.94) applies to the transfer; or(b)subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee is an insurer.
(a)the transferee is, at and after that time, deemed to be the same corporation as and a continuation of the transferor in respect of(i)any amount included under subsection (2) or deducted under subsection (3) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,(ii)any amount deducted under subsection (4) or included under subsection (5) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business, and(iii)any amount that would — in the absence of this subsection and if the transferor existed and was an insurer on each day that includes that time or is a subsequent day and on which the transferee is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the transferor’s income that can reasonably be attributed to the transferred business; and(b)in determining, in respect of the day that includes that time or any subsequent day, any amount that is required under subsection (4) or (5) to be deducted or included in computing the transferor’s income for each particular taxation year from the transferred business, the description of A in the formulas in those subsections is deemed to be nil.
(i)any amount included under subsection (2) or deducted under subsection (3) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,(ii)any amount deducted under subsection (4) or included under subsection (5) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business, and(iii)any amount that would — in the absence of this subsection and if the transferor existed and was an insurer on each day that includes that time or is a subsequent day and on which the transferee is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the transferor’s income that can reasonably be attributed to the transferred business; and
(a)there shall be deducted, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formulaA – BwhereAis the amount included under subsection (2) in computing the taxpayer’s income for its transition year, andBis the total of all amounts each of which is an amount deducted under subsection (4) in computing the income of the taxpayer for a taxation year that began before that time; and(b)there shall be included, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formulaC – DwhereCis the amount deducted under subsection (3) in computing the taxpayer’s income for its transition year, andDis the total of all amounts each of which is an amount included under subsection (5) in computing the taxpayer’s income for a taxation year that began before that time.
(a)the time (determined without reference to this subsection) at which the taxpayer ceased to be an insurer, and(b)the time that is immediately before the end of the last taxation year of the taxpayer that ended at or before the time at which the taxpayer ceased to exist.
(a)the taxpayer holds a transition property in the particular taxation year;(b)the property was a mark-to-market property of the taxpayer for the taxation year preceding the particular taxation year; and(c)the property is not a mark-to-market property of the taxpayer for the particular taxation year.
(a)the taxpayer is deemed to have ceased to be an insurer at the particular time that is the beginning of the particular taxation year; and(b)the time immediately before the particular time shall be deemed to be the end of the taxation year that ends immediately before the particular taxation year.
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]2009, c. 2, s. 482022, c. 19, s. 28
142.6(1)Where, at a particular time after February 22, 1994, a taxpayer becomes or ceases to be a financial institution,(a)where a taxation year of the taxpayer would not, but for this paragraph, end immediately before the particular time,(i)except for the purpose of subsection 132(6.1), the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before that time and a new taxation year of the taxpayer is deemed to have begun at that time, and(ii)for the purpose of determining the taxpayer’s fiscal period after the particular time, the taxpayer shall be deemed not to have established a fiscal period before that time;(b)if the taxpayer becomes a financial institution, the taxpayer is deemed to have disposed, immediately before the end of its particular taxation year that ends immediately before the particular time, of each of the following properties held by the taxpayer for proceeds equal to the property’s fair market value at the time of that disposition:(i)a specified debt obligation, or(ii)a mark-to-market property of the taxpayer for the particular taxation year or for the taxpayer’s taxation year that includes the particular time;(c)where the taxpayer ceases to be a financial institution, the taxpayer shall be deemed to have disposed, immediately before the end of its taxation year that ends immediately before the particular time, of each property held by the taxpayer that is a specified debt obligation (other than a mark-to-market property of the taxpayer for the year), for proceeds equal to its fair market value at the time of disposition; and(d)the taxpayer is deemed to have reacquired, at the end of its taxation year that ends immediately before the particular time, each property deemed by paragraph (b) or (c) to have been disposed of by the taxpayer, at a cost equal to the proceeds of disposition of the property.Marginal note:Ceasing to use property in Canadian business(1.1)If at a particular time in a taxation year a taxpayer that is a non-resident financial institution (other than a life insurance corporation) ceases to use, in connection with a business or part of a business carried on by the taxpayer in Canada immediately before the particular time, a property that is a mark-to-market property of the taxpayer for the year or a specified debt obligation, but that is not a property that was disposed of by the taxpayer at the particular time,(a)the taxpayer is deemed(i)to have disposed of the property immediately before the time that was immediately before the particular time for proceeds equal to its fair market value at the time of disposition and to have received those proceeds at the time of disposition in the course of carrying on the business or the part of the business, as the case may be, and(ii)to have reacquired the property at the particular time at a cost equal to those proceeds; and(b)in determining the consequences of the disposition in subparagraph (a)(i), subsection 142.4(11) does not apply to any payment received by the taxpayer after the particular time.Marginal note:Beginning to use property in a Canadian business(1.2)If at a particular time a taxpayer that is a non-resident financial institution (other than a life insurance corporation) begins to use, in connection with a business or part of a business carried on by the taxpayer in Canada, a property that is a mark-to-market property of the taxpayer for the year that includes the particular time or a specified debt obligation, but that is not a property that was acquired by the taxpayer at the particular time, the taxpayer is deemed(a)to have disposed of the property immediately before the time that was immediately before the particular time for proceeds equal to its fair market value at the time of disposition; and(b)to have reacquired the property at the particular time at a cost equal to those proceeds.Marginal note:Specified debt obligation marked to market(1.3)In applying subsection (1.1) to a taxpayer in respect of a property in a taxation year,(a)the definitionmark-to-market propertyin subsection 142.2(1) shall be applied as if the year ended immediately before the particular time referred to in subsection (1.1); and(b)if the taxpayer does not have financial statements for the period ending immediately before the particular time referred to in subsection (1.1), references in the definition to financial statements for the year shall be read as references to the financial statements that it is reasonable to expect would have been prepared if the year had ended immediately before the particular time.Marginal note:Change in status — prescribed payment card corporation share(1.4)If, at any particular time in a taxation year of a taxpayer that is a financial institution for the taxation year, a property becomes a mark-to-market property of the taxpayer for the taxation year because it ceased, at the particular time, to be a prescribed payment card corporation share of the taxpayer,(a)the taxpayer is deemed(i)to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and(ii)to have acquired the property, at the particular time, at a cost equal to those proceeds; and(b)subsection 142.5(1) does not apply to the disposition under subparagraph (a)(i).Marginal note:Change in status — prescribed securities exchange investment(1.5)If, at any particular time in a taxation year of a taxpayer that is a financial institution for the taxation year, a property becomes a mark-to-market property of the taxpayer for the taxation year because it ceased, at the particular time, to be a prescribed securities exchange investment of the taxpayer,(a)the taxpayer is deemed(i)to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and(ii)to have acquired the property, at the particular time, at a cost equal to those proceeds; and(b)subsection 142.5(1) does not apply to the disposition under subparagraph (a)(i).Marginal note:Change in status — significant interest(1.6)If, at the end of a particular taxation year of a taxpayer that is a financial institution for the taxation year, the taxpayer holds a share of the capital stock of a corporation, the taxpayer has a significant interest in that corporation at any time in the particular taxation year and the share is mark-to-market property of the taxpayer for the immediately following taxation year, the taxpayer is deemed to have,(a)disposed of the share immediately before the end of the particular taxation year for proceeds of disposition equal to the fair market value, at that time, of the share; and(b)acquired the share at the end of the particular taxation year at a cost equal to those proceeds.Marginal note:Deemed disposition not applicable(2)For the purposes of this Act, the determination of when a taxpayer acquired a share shall be made without regard to a disposition or acquisition that occurred because of subsection 142.5(2) or subsection (1), (1.1), (1.2), (1.4), (1.5) or (1.6).Marginal note:Property not inventory(3)Where a taxpayer is a financial institution in a taxation year, inventory of the taxpayer in the year does not include property that is(a)a specified debt obligation (other than a mark-to-market property for the year); or(b)where the year begins after October 1994, a mark-to-market property for the year.Marginal note:Property that ceases to be inventory(4)Where a taxpayer that was a financial institution in its particular taxation year that includes February 23, 1994 held, on that day, a specified debt obligation (other than a mark-to-market property for the year) that was inventory of the taxpayer at the end of its preceding taxation year,(a)the taxpayer shall be deemed to have disposed of the property at the beginning of the particular year for proceeds equal to(i)where subparagraph 142.6(4)(a)(ii) does not apply, the amount at which the property was valued at the end of the preceding taxation year for the purpose of computing the taxpayer’s income for the year, and(ii)where the taxpayer is a bank and the property is prescribed property for the particular year, the cost of the property to the taxpayer (determined without reference to paragraph 142.6(4)(b));(b)for the purpose of determining the taxpayer’s profit or loss from the disposition, the cost of the property to the taxpayer shall be deemed to be the amount referred to in subparagraph 142.6(4)(a)(i); and(c)the taxpayer shall be deemed to have reacquired the property, immediately after the beginning of the particular year, at a cost equal to the proceeds of disposition of the property.Marginal note:Debt obligations acquired in rollover transactions(5)Where,(a)on February 23, 1994, a financial institution that is a corporation held a specified debt obligation (other than a mark-to-market property for the taxation year that includes that day) that was at any particular time before that day held by another corporation, and(b)between the particular time and February 23, 1994, the only transactions affecting the ownership of the property were rollover transactions,the financial institution shall be deemed, in respect of that obligation, to be the same corporation as, and a continuation of, the other corporation.Definition ofrollover transaction(6)For the purpose of subsection 142.6(5),rollover transactionmeans a transaction to which subsection 87(2), 88(1) or 138(11.5) or 138(11.94) applies, other than a transaction to which paragraph 138(11.5)(e) requires the provisions of subsection 85(1) to be applied.Marginal note:Superficial loss rule not applicable(7)Subsection 18(13) does not apply to the disposition of a property by a taxpayer after October 30, 1994 where(a)the taxpayer is a financial institution when the disposition occurs and the property is a specified debt obligation or a mark-to-market property for the taxation year in which the disposition occurs; or(b)the disposition occurs because of paragraph 142.6(1)(b).Marginal note:Accrued capital gains and losses election(8)Where a taxpayer that is a financial institution in its first taxation year that ends after February 22, 1994 so elects by notifying the Minister in writing before July 1998 or within 90 days after the day on which a notice of assessment of tax payable under this Part for the year, notification that no tax is payable under this Part for the year or notification that an election made by the taxpayer under this subsection is deemed by subsection 142.6(9) or 142.6(10) not to have been made is mailed to the taxpayer,(a)each property of the taxpayer(i)that was a capital property (other than a depreciable property) of the taxpayer at the end of the taxpayer’s last taxation year that ended before February 23, 1994,(ii)that was a mark-to-market property for, or a specified debt obligation in, the taxpayer’s first taxation year that begins after that time,(iii)that had a fair market value at that time greater than its adjusted cost base to the taxpayer at that time, and(iv)that is designated by the taxpayer in the electionis deemed to have been disposed of by the taxpayer at that time for proceeds of disposition equal to, and to have been reacquired by the taxpayer immediately after that time at a cost equal to, the lesser of(v)the fair market value of the property at that time, and(vi)the greater of the adjusted cost base to the taxpayer of the property immediately before that time and the amount designated by the taxpayer in the election in respect of the property;(b)each property of the taxpayer(i)that was a capital property (other than a depreciable property) of the taxpayer at the end of the taxpayer’s last taxation year that ended before February 23, 1994,(ii)that was not a mark-to-market property for, or a specified debt obligation in, the taxpayer’s first taxation year that begins after that time,(iii)that had an adjusted cost base to the taxpayer at that time greater than its fair market value at that time, and(iv)that is designated by the taxpayer in the electionis deemed to have been disposed of by the taxpayer at that time for proceeds of disposition equal to, and to have been reacquired by the taxpayer immediately after that time at a cost equal to, the greater of(v)the fair market value of the property at that time, and(vi)the lesser of the adjusted cost base to the taxpayer of the property immediately before that time and the amount designated by the taxpayer in the election in respect of the property; and(c)notwithstanding subsections 152(4) to 152(5), such assessment of the taxpayer’s tax payable under this Act for the taxpayer’s last taxation year that ended before February 23, 1994 shall be made as is necessary to take the election into account.Marginal note:Accrued capital gains election limit(9)Where a taxpayer has made an election under subsection 142.6(8) in which a property was designated under subparagraph 142.6(8)(a)(iv), the election is deemed not to have been made where(a)the amount that would be the taxpayer’s taxable capital gains from dispositions of property for the taxpayer’s last taxation year that ended before February 23, 1994 if this subsection and subsection 142.6(10) did not applyexceeds the total of(b)the amount that would be the taxpayer’s allowable capital losses for the year from dispositions of property if this subsection and subsection 142.6(10) did not apply,(c)the maximum amount that would have been deductible in computing the taxpayer’s taxable income for the year in respect of the taxpayer’s net capital losses for preceding taxation years if there were sufficient taxable capital gains for the year from dispositions of property, and(d)the amount, if any, by which(i)the amount that would be the taxpayer’s taxable capital gains for the taxpayer’s last taxation year that ended before February 23, 1994 from dispositions of property if no election were made under subsection 142.6(8)exceeds the total of(ii)the amount that would be the taxpayer’s allowable capital losses for the year from dispositions of property if no election were made under subsection 142.6(8), and(iii)the maximum amount that would have been deductible in computing the taxpayer’s taxable income for the year in respect of the taxpayer’s net capital losses for preceding taxation years if no election were made under subsection 142.6(8).Marginal note:Accrued capital losses election limit(10)Where a taxpayer has made an election under subsection 142.6(8) in which a property was designated under subparagraph 142.6(8)(b)(iv), the election is deemed not to have been made where(a)the total of the amounts determined under paragraphs 142.6(9)(b) and 142.6(9)(c) in respect of the taxpayer exceeds the amount determined under paragraph 142.6(9)(a) in respect of the taxpayer; or(b)the total of all amounts each of which would, if this subsection did not apply, be the taxpayer’s allowable capital loss for the taxpayer’s last taxation year that ended before February 23, 1994 from the disposition of a property deemed to have been disposed of under paragraph 142.6(8)(b) exceeds the total of all amounts each of which is the taxpayer’s taxable capital gain for the year from the disposition of a property deemed to have been disposed of under paragraph 142.6(8)(a).
(a)where a taxation year of the taxpayer would not, but for this paragraph, end immediately before the particular time,(i)except for the purpose of subsection 132(6.1), the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before that time and a new taxation year of the taxpayer is deemed to have begun at that time, and(ii)for the purpose of determining the taxpayer’s fiscal period after the particular time, the taxpayer shall be deemed not to have established a fiscal period before that time;(b)if the taxpayer becomes a financial institution, the taxpayer is deemed to have disposed, immediately before the end of its particular taxation year that ends immediately before the particular time, of each of the following properties held by the taxpayer for proceeds equal to the property’s fair market value at the time of that disposition:(i)a specified debt obligation, or(ii)a mark-to-market property of the taxpayer for the particular taxation year or for the taxpayer’s taxation year that includes the particular time;(c)where the taxpayer ceases to be a financial institution, the taxpayer shall be deemed to have disposed, immediately before the end of its taxation year that ends immediately before the particular time, of each property held by the taxpayer that is a specified debt obligation (other than a mark-to-market property of the taxpayer for the year), for proceeds equal to its fair market value at the time of disposition; and(d)the taxpayer is deemed to have reacquired, at the end of its taxation year that ends immediately before the particular time, each property deemed by paragraph (b) or (c) to have been disposed of by the taxpayer, at a cost equal to the proceeds of disposition of the property.
(i)except for the purpose of subsection 132(6.1), the taxpayer’s taxation year that would otherwise have included the particular time is deemed to have ended immediately before that time and a new taxation year of the taxpayer is deemed to have begun at that time, and(ii)for the purpose of determining the taxpayer’s fiscal period after the particular time, the taxpayer shall be deemed not to have established a fiscal period before that time;
(i)a specified debt obligation, or(ii)a mark-to-market property of the taxpayer for the particular taxation year or for the taxpayer’s taxation year that includes the particular time;
(a)the taxpayer is deemed(i)to have disposed of the property immediately before the time that was immediately before the particular time for proceeds equal to its fair market value at the time of disposition and to have received those proceeds at the time of disposition in the course of carrying on the business or the part of the business, as the case may be, and(ii)to have reacquired the property at the particular time at a cost equal to those proceeds; and(b)in determining the consequences of the disposition in subparagraph (a)(i), subsection 142.4(11) does not apply to any payment received by the taxpayer after the particular time.
(i)to have disposed of the property immediately before the time that was immediately before the particular time for proceeds equal to its fair market value at the time of disposition and to have received those proceeds at the time of disposition in the course of carrying on the business or the part of the business, as the case may be, and(ii)to have reacquired the property at the particular time at a cost equal to those proceeds; and
(a)to have disposed of the property immediately before the time that was immediately before the particular time for proceeds equal to its fair market value at the time of disposition; and(b)to have reacquired the property at the particular time at a cost equal to those proceeds.
(a)the definitionmark-to-market propertyin subsection 142.2(1) shall be applied as if the year ended immediately before the particular time referred to in subsection (1.1); and(b)if the taxpayer does not have financial statements for the period ending immediately before the particular time referred to in subsection (1.1), references in the definition to financial statements for the year shall be read as references to the financial statements that it is reasonable to expect would have been prepared if the year had ended immediately before the particular time.
(a)the taxpayer is deemed(i)to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and(ii)to have acquired the property, at the particular time, at a cost equal to those proceeds; and(b)subsection 142.5(1) does not apply to the disposition under subparagraph (a)(i).
(i)to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and(ii)to have acquired the property, at the particular time, at a cost equal to those proceeds; and
(a)the taxpayer is deemed(i)to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and(ii)to have acquired the property, at the particular time, at a cost equal to those proceeds; and(b)subsection 142.5(1) does not apply to the disposition under subparagraph (a)(i).
(i)to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value immediately before the particular time, and(ii)to have acquired the property, at the particular time, at a cost equal to those proceeds; and
(a)disposed of the share immediately before the end of the particular taxation year for proceeds of disposition equal to the fair market value, at that time, of the share; and(b)acquired the share at the end of the particular taxation year at a cost equal to those proceeds.
(a)a specified debt obligation (other than a mark-to-market property for the year); or(b)where the year begins after October 1994, a mark-to-market property for the year.
(a)the taxpayer shall be deemed to have disposed of the property at the beginning of the particular year for proceeds equal to(i)where subparagraph 142.6(4)(a)(ii) does not apply, the amount at which the property was valued at the end of the preceding taxation year for the purpose of computing the taxpayer’s income for the year, and(ii)where the taxpayer is a bank and the property is prescribed property for the particular year, the cost of the property to the taxpayer (determined without reference to paragraph 142.6(4)(b));(b)for the purpose of determining the taxpayer’s profit or loss from the disposition, the cost of the property to the taxpayer shall be deemed to be the amount referred to in subparagraph 142.6(4)(a)(i); and(c)the taxpayer shall be deemed to have reacquired the property, immediately after the beginning of the particular year, at a cost equal to the proceeds of disposition of the property.
(i)where subparagraph 142.6(4)(a)(ii) does not apply, the amount at which the property was valued at the end of the preceding taxation year for the purpose of computing the taxpayer’s income for the year, and(ii)where the taxpayer is a bank and the property is prescribed property for the particular year, the cost of the property to the taxpayer (determined without reference to paragraph 142.6(4)(b));
(a)on February 23, 1994, a financial institution that is a corporation held a specified debt obligation (other than a mark-to-market property for the taxation year that includes that day) that was at any particular time before that day held by another corporation, and(b)between the particular time and February 23, 1994, the only transactions affecting the ownership of the property were rollover transactions,
(a)the taxpayer is a financial institution when the disposition occurs and the property is a specified debt obligation or a mark-to-market property for the taxation year in which the disposition occurs; or(b)the disposition occurs because of paragraph 142.6(1)(b).
(a)each property of the taxpayer(i)that was a capital property (other than a depreciable property) of the taxpayer at the end of the taxpayer’s last taxation year that ended before February 23, 1994,(ii)that was a mark-to-market property for, or a specified debt obligation in, the taxpayer’s first taxation year that begins after that time,(iii)that had a fair market value at that time greater than its adjusted cost base to the taxpayer at that time, and(iv)that is designated by the taxpayer in the electionis deemed to have been disposed of by the taxpayer at that time for proceeds of disposition equal to, and to have been reacquired by the taxpayer immediately after that time at a cost equal to, the lesser of(v)the fair market value of the property at that time, and(vi)the greater of the adjusted cost base to the taxpayer of the property immediately before that time and the amount designated by the taxpayer in the election in respect of the property;(b)each property of the taxpayer(i)that was a capital property (other than a depreciable property) of the taxpayer at the end of the taxpayer’s last taxation year that ended before February 23, 1994,(ii)that was not a mark-to-market property for, or a specified debt obligation in, the taxpayer’s first taxation year that begins after that time,(iii)that had an adjusted cost base to the taxpayer at that time greater than its fair market value at that time, and(iv)that is designated by the taxpayer in the electionis deemed to have been disposed of by the taxpayer at that time for proceeds of disposition equal to, and to have been reacquired by the taxpayer immediately after that time at a cost equal to, the greater of(v)the fair market value of the property at that time, and(vi)the lesser of the adjusted cost base to the taxpayer of the property immediately before that time and the amount designated by the taxpayer in the election in respect of the property; and(c)notwithstanding subsections 152(4) to 152(5), such assessment of the taxpayer’s tax payable under this Act for the taxpayer’s last taxation year that ended before February 23, 1994 shall be made as is necessary to take the election into account.
(i)that was a capital property (other than a depreciable property) of the taxpayer at the end of the taxpayer’s last taxation year that ended before February 23, 1994,(ii)that was a mark-to-market property for, or a specified debt obligation in, the taxpayer’s first taxation year that begins after that time,(iii)that had a fair market value at that time greater than its adjusted cost base to the taxpayer at that time, and(iv)that is designated by the taxpayer in the election
(v)the fair market value of the property at that time, and(vi)the greater of the adjusted cost base to the taxpayer of the property immediately before that time and the amount designated by the taxpayer in the election in respect of the property;
(i)that was a capital property (other than a depreciable property) of the taxpayer at the end of the taxpayer’s last taxation year that ended before February 23, 1994,(ii)that was not a mark-to-market property for, or a specified debt obligation in, the taxpayer’s first taxation year that begins after that time,(iii)that had an adjusted cost base to the taxpayer at that time greater than its fair market value at that time, and(iv)that is designated by the taxpayer in the election
(v)the fair market value of the property at that time, and(vi)the lesser of the adjusted cost base to the taxpayer of the property immediately before that time and the amount designated by the taxpayer in the election in respect of the property; and
(a)the amount that would be the taxpayer’s taxable capital gains from dispositions of property for the taxpayer’s last taxation year that ended before February 23, 1994 if this subsection and subsection 142.6(10) did not apply
(b)the amount that would be the taxpayer’s allowable capital losses for the year from dispositions of property if this subsection and subsection 142.6(10) did not apply,(c)the maximum amount that would have been deductible in computing the taxpayer’s taxable income for the year in respect of the taxpayer’s net capital losses for preceding taxation years if there were sufficient taxable capital gains for the year from dispositions of property, and(d)the amount, if any, by which(i)the amount that would be the taxpayer’s taxable capital gains for the taxpayer’s last taxation year that ended before February 23, 1994 from dispositions of property if no election were made under subsection 142.6(8)exceeds the total of(ii)the amount that would be the taxpayer’s allowable capital losses for the year from dispositions of property if no election were made under subsection 142.6(8), and(iii)the maximum amount that would have been deductible in computing the taxpayer’s taxable income for the year in respect of the taxpayer’s net capital losses for preceding taxation years if no election were made under subsection 142.6(8).
(i)the amount that would be the taxpayer’s taxable capital gains for the taxpayer’s last taxation year that ended before February 23, 1994 from dispositions of property if no election were made under subsection 142.6(8)
(ii)the amount that would be the taxpayer’s allowable capital losses for the year from dispositions of property if no election were made under subsection 142.6(8), and(iii)the maximum amount that would have been deductible in computing the taxpayer’s taxable income for the year in respect of the taxpayer’s net capital losses for preceding taxation years if no election were made under subsection 142.6(8).
(a)the total of the amounts determined under paragraphs 142.6(9)(b) and 142.6(9)(c) in respect of the taxpayer exceeds the amount determined under paragraph 142.6(9)(a) in respect of the taxpayer; or(b)the total of all amounts each of which would, if this subsection did not apply, be the taxpayer’s allowable capital loss for the taxpayer’s last taxation year that ended before February 23, 1994 from the disposition of a property deemed to have been disposed of under paragraph 142.6(8)(b) exceeds the total of all amounts each of which is the taxpayer’s taxable capital gain for the year from the disposition of a property deemed to have been disposed of under paragraph 142.6(8)(a).
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]1995, c. 21, s. 581998, c. 19, s. 1671999, c. 22, s. 582001, c. 17, s. 1372009, c. 2, s. 492013, c. 34, s. 289
142.7(1)The definitions in this subsection apply in this section.Canadian affiliateCanadian affiliateof an entrant bank at any particular time means a Canadian corporation that was, immediately before the particular time, affiliated with the entrant bank and that was, at all times during the period that began on February 11, 1999 and ended immediately before the particular time,(a)affiliated with either(i)the entrant bank, or(ii)a foreign bank (within the meaning assigned by section 2 of theBank Act) that is affiliated with the entrant bank at the particular time; and(b)either(i)a bank,(ii)a corporation authorized under theTrust and Loan Companies Actto carry on the business of offering to the public its services as trustee, or(iii)a corporation of which the principal activity in Canada consists of any of the activities referred to in subparagraphs 518(3)(a)(i) to (v) of theBank Actand in which the entrant bank or a non-resident person affiliated with the entrant bank holds shares under the authority, directly or indirectly, of an order issued by the Minister of Finance or the Governor in Council under subsection 521(1) of that Act. (filiale canadienne)eligible propertyeligible propertyof a Canadian affiliate at any time means a property described in any of paragraphs 85(1.1)(a) to (g.1) that is, immediately before that time, used or held by it in carrying on its business in Canada. (bien admissible)entrant bankentrant bankmeans a non-resident corporation that is, or has applied to the Superintendent of Financial Institutions to become, an authorized foreign bank. (banque entrante)qualifying foreign mergerqualifying foreign mergermeans a merger or combination of two or more corporations that would be aforeign mergerwithin the meaning assigned by subsection 87(8.1) if that subsection were read without reference to the words “and otherwise than as a result of the distribution of property to one corporation on the winding-up of another corporation. (fusion étrangère déterminée)Marginal note:Qualifying foreign merger(2)Where an entrant bank was formed as the result of a qualifying foreign merger, after February 11, 1999, of two or more corporations (referred to in this subsection as “predecessors”), and at the time immediately before the merger, there were one or more Canadian corporations (referred to in this subsection as “predecessor affiliates”), each of which at that time would have been a Canadian affiliate of a predecessor if the predecessor were an entrant bank at that time,(a)for the purpose of the definitionCanadian affiliatein subsection (1),(i)each predecessor affiliate is deemed to have been affiliated with the entrant bank throughout the period that began on February 11, 1999 and ended at the time of the merger,(ii)the expression “entrant bank” in subparagraph (b)(iii) of the definition is deemed to include a predecessor, and(iii)if two or more of the predecessor affiliates are amalgamated or merged at any time after February 11, 1999 to form a new corporation, the new corporation is deemed to have been affiliated with the entrant bank throughout the period that began on February 11, 1999 and ended at the time of the amalgamation or merger of the predecessor affiliates; and(b)if at least one of the predecessors complied with the terms of subsection (11)(a), the entrant bank is deemed to have complied with those terms.Marginal note:Branch-establishment rollover(3)If a Canadian affiliate of an entrant bank transfers an eligible property to the entrant bank, the entrant bank begins immediately after the transfer to use or hold the transferred property in its Canadian banking business and the Canadian affiliate and the entrant bank jointly elect, in accordance with subsection (11), to have this subsection apply in respect of the transfer, subsections 85(1) (other than paragraph (e.2)), (1.1), (1.4) and (5) apply, with any modifications that the circumstances require, in respect of the transfer, except that the portion of subsection 85(1) before paragraph (a) shall be read as follows:“85(1)Where a taxpayer that is a Canadian affiliate of an entrant bank (within the meanings assigned by subsection 142.7(1)) has, in a taxation year, disposed of any of the taxpayer’s property to the entrant bank (referred to in this subsection as the “corporation”), if the taxpayer and the corporation have jointly elected under subsection 142.7(3), the following rules apply:”.Marginal note:Deemed fair market value(4)If a Canadian affiliate of an entrant bank and the entrant bank make an election under subsection (3) in respect of a transfer of property by the Canadian affiliate to the entrant bank, for the purposes of subsections 15(1), 52(2), 69(1), (4) and (5), 246(1) and 247(2) in respect of the transfer, the fair market value of the property is deemed to be the amount agreed by the Canadian affiliate and the entrant bank in their election.Marginal note:Specified debt obligations(5)If a Canadian affiliate of an entrant bank transfers a specified debt obligation to the entrant bank in a transaction in respect of which an election is made under subsection (3), the Canadian affiliate is a financial institution in its taxation year in which the transfer is made, and the amount that the Canadian affiliate and the entrant bank agree on in their election in respect of the obligation is equal to the tax basis of the obligation within the meaning assigned by subsection 142.4(1), the entrant bank is deemed, in respect of the obligation, for the purposes of sections 142.2 to 142.4 and 142.6, to be the same corporation as, and a continuation of, the Canadian affiliate.Marginal note:Mark-to-market property(6)If a Canadian affiliate of an entrant bank described in paragraph (11)(a) transfers at any time within the period described in paragraph (11)(c) to the entrant bank a property that is, for the Canadian affiliate’s taxation year in which the property is transferred, a mark-to-market property of the Canadian affiliate,(a)for the purposes of subsections 112(5) to (5.21) and (5.4), the definitionmark-to-market propertyin subsection 142.2(1) and subsection 142.5(9), the entrant bank is deemed, in respect of the property, to be the same corporation as and a continuation of, the Canadian affiliate; and(b)for the purpose of applying subsection 142.5(2) in respect of the property, the Canadian affiliate’s taxation year in which the property is transferred is deemed to have ended immediately before the time the property was transferred.Marginal note:Reserves(7)If(a)at a particular time,(i)a Canadian affiliate of an entrant bank transfers to the entrant bank property that is a loan or lending asset, or a right to receive an unpaid amount in respect of a disposition before the particular time of property by the affiliate, or(ii)the entrant bank assumes an obligation of the Canadian affiliate that is an instrument or commitment described in paragraph 20(1)(l.1) or an obligation in respect of goods, services, land, or chattels or movable property, described in subparagraph 20(1)(m)(i), (ii) or (iii),(b)the property is transferred or the obligation is assumed for an amount equal to its fair market value at the particular time,(c)the entrant bank begins immediately after the particular time to use or hold the property or owe the obligation in its Canadian banking business, and(d)the Canadian affiliate and the entrant bank jointly elect in accordance with subsection (11) to have this subsection apply in respect of the transfer or assumption,then(e)in applying paragraphs 20(1)(l), (l.1), (m), (n) and (p) in respect of the obligation or property, the taxation year of the affiliate that would, but for this paragraph, include the particular time is deemed to end immediately before the particular time, and(f)in computing the income of the Canadian affiliate and the entrant bank for taxation years that end on or after the particular time,(i)any amount deducted under paragraph 20(1)(l), (l.1), (m) or (n) by the Canadian affiliate in respect of the property or obligation in computing its income for its taxation year that ended immediately before the particular time, or under paragraph 20(1)(p) in computing its income for that year or for a preceding taxation year (to the extent that the amount has not been included in the affiliate’s income under paragraph 12(1)(i)), is deemed to have been so deducted by the entrant bank in computing its income for its last taxation year that ended before the particular time and not to have been deducted by the Canadian affiliate,(ii)in applying paragraph 20(1)(m), an amount in respect of the goods, services, land, chattels or movable property, that was included under paragraph 12(1)(a) in computing the Canadian affiliate’s income from a business is deemed to have been so included in computing the entrant bank’s income from its Canadian banking business for a preceding taxation year,(iii)in applying paragraph 20(1)(n) in respect of a property described in subparagraph (a)(i) and paragraphs (b), (c) and (d) sold by the Canadian affiliate in the course of a business, the property is deemed to have been disposed of by the entrant bank (and not by the Canadian affiliate) at the time it was disposed of by the Canadian affiliate, and the amount in respect of the sale that was included in computing the Canadian affiliate’s income from a business is deemed to have been included in computing the entrant bank’s income from its Canadian banking business for its taxation year that includes the time at which the property was so disposed of, and(iv)in applying paragraph 40(1)(a) or 44(1)(e) in respect of a property described in subparagraph (a)(i) and paragraphs (b), (c) and (d) disposed of by the Canadian affiliate, the property is deemed to have been disposed of by the entrant bank (and not by the Canadian affiliate) at the time it was disposed of by the Canadian affiliate, the amount determined under subparagraph 40(1)(a)(i) or 44(1)(e)(i) in respect of the Canadian affiliate is deemed to be the amount determined under that subparagraph in respect of the entrant bank, and any amount claimed by the Canadian affiliate under subparagraph 40(1)(a)(iii) or 44(1)(e)(iii) in computing its gain from the disposition of the property for its last taxation year that ended before the particular time is deemed to have been so claimed by the entrant bank for its last taxation year that ended before the particular time.Marginal note:Assumption of debt obligation(8)If a Canadian affiliate of an entrant bank described in paragraph (11)(a) transfers at any time within the period described in paragraph (11)(c) property to the entrant bank, and any part of the consideration for the transfer is the assumption by the entrant bank in respect of its Canadian banking business of a debt obligation of the Canadian affiliate,(a)where the Canadian affiliate and the entrant bank jointly elect in accordance with subsection (11) to have this paragraph apply,(i)both(A)the value of that part of the consideration for the transfer of the property, and(B)for the purpose of determining the consequences of the assumption of the obligation and any subsequent settlement or extinguishment of it, the value of the consideration given to the entrant bank for the assumption of the obligation,are deemed to be an amount (in this paragraph referred to as the “assumption amount”) equal to the amount outstanding on account of the principal amount of the obligation at that time, and(ii)the assumption amount shall not be considered a term of the transaction that differs from that which would have been made between persons dealing at arm’s length solely because it is not equal to the fair market value of the obligation at that time;(a.1)[Repealed, 2013, c. 34, s. 290](b)where the obligation is denominated in a foreign currency, and the Canadian affiliate and the entrant bank jointly elect in accordance with subsection (11) to have this paragraph apply,(i)the amount of any income, loss, capital gain or capital loss in respect of the obligation due to the fluctuation in the value of the foreign currency relative to Canadian currency realized by(A)the Canadian affiliate on the assumption of the obligation is deemed to be nil, and(B)the entrant bank on the settlement or extinguishment of the obligation shall be determined based on the amount of the obligation in Canadian currency at the time it became an obligation of the Canadian affiliate, and(ii)for the purpose of an election made in respect of the obligation under paragraph (a), the amount outstanding on account of the principal amount of the obligation at that time is the total of all amounts each of which is an amount that was advanced to the Canadian affiliate on account of principal, that remains outstanding at that time, and that is determined using the exchange rate that applied between the foreign currency and Canadian currency at the time of the advance; and(c)for the purpose of applying paragraphs 20(1)(e) and (f) in respect of the debt obligation, the obligation is deemed not to have been settled or extinguished by virtue of its assumption by the entrant bank and the entrant bank is deemed to be the same corporation as, and a continuation of, the Canadian affiliate.Marginal note:Branch-establishment dividend(9)Notwithstanding any other provision of this Act, the rules in subsection (10) apply if(a)a dividend is paid by a Canadian affiliate of an entrant bank to the entrant bank or to a person that is affiliated with the Canadian affiliate and that is resident in the country in which the entrant bank is resident, or(b)a dividend is deemed to be paid for the purposes of this Part or Part XIII (other than by paragraph 214(3)(a)) as a result of a transfer of property from the Canadian affiliate to such a person,and the Canadian affiliate and the entrant bank jointly elect in accordance with subsection (11) to have subsection (10) apply in respect of the dividend.Marginal note:Treatment of dividend(10)If the conditions in subsection (9) are met,(a)the dividend is deemed (except for the purposes of subsections 112(3) to (7)) not to be a taxable dividend; and(b)there is added to the amount otherwise determined under paragraph 219(1)(g) in respect of the entrant bank for its first taxation year that ends after the time at which the dividend is paid, the amount of the dividend less, where the dividend is paid by means of, or arises as a result of, a transfer of eligible property in respect of which the Canadian affiliate and the entrant bank have jointly elected under subsection (3), the amount by which the fair market value of the property transferred exceeds the amount the Canadian affiliate and the entrant bank have agreed on in their election.Marginal note:Elections(11)An election under subsection (3) or (7), paragraph (8)(a) or (b) or subsection (10), (12) or (14) is valid only if(a)the entrant bank by which the election is made has, on or before the day that is 6 months after the day on which theIncome Tax Amendments Act, 2000receives royal assent, complied with paragraphs 1.1(b) and (c) of the “Guide to Foreign Bank Branching” in respect of the establishment and commencement of business of a foreign bank branch in Canada issued by the Office of the Superintendent of Financial Institutions, as it read on December 31, 2000;(b)the election is made in prescribed form on or before the earlier of the filing-due date of the Canadian affiliate and the filing-due date of the entrant bank, for the taxation year that includes the time at which(i)in the case of an election under subsection (3) or (7), paragraph (8)(a) or (b) or subsection (10), the dividend, transfer or assumption to which the election relates is paid, made or effected, or(ii)in the case of an election under subsection (12), the dissolution order was granted or the winding up commenced; and(c)in the case of an election under subsection (3) or (7), paragraph (8)(a) or (b) or subsection (10), the dividend, transfer or assumption to which the election relates is paid, made or effected within the period that(i)begins on the day on which the Superintendent makes an order in respect of the entrant bank under subsection 534(1) of theBank Act, and(ii)ends on the later of(A)the earlier of(I)the day that is one year after the day referred to subparagraph (i), and(II)the day that is three years after the day on which theIncome Tax Amendments Act, 2000receives royal assent, and(B)the day that is one year after the day on which theIncome Tax Amendments Act, 2000receives royal assent.Marginal note:Winding-up of Canadian affiliate: losses(12)If(a)within the period described in paragraph (11)(c) in respect of the entrant bank,(i)the Minister of Finance has issued letters patent under section 342 of theBank Actor section 347 of theTrust and Loan Companies Actdissolving the Canadian affiliate or an order under section 345 of theBank Actor section 350 of theTrust and Loan Companies Actapproving the Canadian affiliate’s application for dissolution (such letters patent or order being referred to in this subsection as the “dissolution order”), or(ii)the affiliate has been wound up under the terms of the corporate law that governs it,(b)the entrant bank carries on all or part of the business in Canada that was formerly carried on by the Canadian affiliate, and(c)the Canadian affiliate and the entrant bank jointly elect in accordance with subsection (11) to have this section applythen in applying section 111 for the purpose of computing the taxable income earned in Canada of the entrant bank for any taxation year that begins after the date of the dissolution order or the commencement of the winding up, as the case may be,(d)subject to paragraphs (e) and (h), the portion of a non-capital loss of the Canadian affiliate for a taxation year (in this paragraph referred to as the “Canadian affiliate’s loss year”) that can reasonably be regarded as being its loss from carrying on a business in Canada (in this paragraph referred to as the “loss business”) or being in respect of a claim made under section 110.5, to the extent that it(i)was not deducted in computing the taxable income of the Canadian affiliate or any other entrant bank for any taxation year, and(ii)would have been deductible in computing the taxable income of the Canadian affiliate for any taxation year that begins after the date of the dissolution order or the commencement of the winding up, as the case may be, on the assumption that it had such a taxation year and that it had sufficient income for that year,is deemed, for the taxation year of the entrant bank in which the Canadian affiliate’s loss year ended, to be a non-capital loss of the entrant bank from carrying on the loss business (or, in respect of a claim made under section 110.5, to be a non-capital loss of the entrant bank in respect of a claim under subparagraph 115(1)(a)(vii)) that was not deductible by the entrant bank in computing its taxable income earned in Canada for any taxation year that began before the date of the dissolution order or the commencement of the winding up, as the case may be,(e)if at any time control of the Canadian affiliate or entrant bank has been acquired by a person or group of persons, no amount in respect of the Canadian affiliate’s non-capital loss for a taxation year that ends before that time is deductible in computing the taxable income earned in Canada of the entrant bank for a particular taxation year that ends after that time, except that the portion of the loss that can reasonably be regarded as the Canadian affiliate’s loss from carrying on a business in Canada and, where a business was carried on by the Canadian affiliate in Canada in the earlier year, the portion of the loss that can reasonably be regarded as being in respect of an amount deductible under paragraph 110(1)(k) in computing its taxable income for the year are deductible only(i)if that business is carried on by the Canadian affiliate or the entrant bank for profit or with a reasonable expectation of profit throughout the particular year, and(ii)to the extent of the total of the entrant bank’s income for the particular year from that business, and where properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, from any other business substantially all of the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services,and for the purpose of this paragraph, where subsection 88(1.1) applied to the dissolution of another corporation in respect of which the Canadian affiliate was the parent and paragraph 88(1.1)(e) applied in respect of losses of that other corporation, the Canadian affiliate is deemed to be the same corporation as, and a continuation of, that other corporation with respect to those losses,(f)subject to paragraphs (g) and (h), a net capital loss of the Canadian affiliate for a taxation year (in this paragraph referred to as the “Canadian affiliate’s loss year”) is deemed to be a net capital loss of the entrant bank for its taxation year in which the Canadian affiliate’s loss year ended to the extent that the loss(i)was not deducted in computing the taxable income of the Canadian affiliate or any other entrant bank for any taxation year, and(ii)would have been deductible in computing the taxable income of the Canadian affiliate for any taxation year beginning after the date of the dissolution order or the commencement of the winding-up, as the case may be, on the assumption that the Canadian affiliate had such a taxation year and that it had sufficient income and taxable capital gains for that year,(g)if at any time control of the Canadian affiliate or the entrant bank has been acquired by a person or group of persons, no amount in respect of the Canadian affiliate’s net capital loss for a taxation year that ends before that time is deductible in computing the entrant bank’s taxable income earned in Canada for a taxation year that ends after that time, and(h)any loss of the Canadian affiliate that would otherwise be deemed by paragraph (d) or (f) to be a loss of the entrant bank for a particular taxation year that begins after the date of the dissolution order or the commencement of the winding-up, as the case may be, is deemed, for the purpose of computing the entrant bank’s taxable income earned in Canada for taxation years that begin after that date, to be such a loss of the entrant bank for its immediately preceding taxation year and not for the particular year, if the entrant bank so elects in its return of income for the particular year.Marginal note:Winding-up of Canadian affiliate: stop loss(13)If a Canadian affiliate and its entrant bank have at any time made a joint election under either of subsection (3) or (12),(a)in respect of any transfer of property, directly or indirectly, by the Canadian affiliate to the entrant bank or a person with whom the entrant bank does not deal at arm’s length,(i)subparagraph 13(21.2)(e)(iii) shall be read without reference to clause (E) of that subparagraph,(ii)[Repealed, 2016, c. 12, s. 51](iii)paragraph 18(15)(b) shall be read without reference to subparagraph (iv) of that paragraph, and(iv)paragraph 40(3.4)(b) shall be read without reference to subparagraph (v) of that paragraph;(b)in respect of any property of the Canadian affiliate appropriated to or for the benefit of the entrant bank or any person with whom the entrant bank does not deal at arm’s length, section 69(5) shall be read without reference to paragraph (d); and(c)for the purposes of applying subsection 13(21.2), 18(15) and 40(3.4) to any property that was disposed of by the affiliate, after the dissolution or winding-up of the affiliate, the entrant bank is deemed to be the same corporation as, and a continuation of, the affiliate.Marginal note:Winding-up of Canadian affiliate: SDOs(14)If a Canadian affiliate of an entrant bank and the entrant bank meet the conditions set out in paragraphs (12)(a) and (b) and jointly elect in accordance with subsection (11) to have this subsection apply, and the Canadian affiliate has not made an election under this subsection with any other entrant bank, the entrant bank is deemed to be the same corporation as, and a continuation of, the Canadian affiliate for the purposes of paragraphs 142.4(4)(c) and (d) in respect of any specified debt obligation disposed of by the Canadian affiliate.
(a)affiliated with either(i)the entrant bank, or(ii)a foreign bank (within the meaning assigned by section 2 of theBank Act) that is affiliated with the entrant bank at the particular time; and(b)either(i)a bank,(ii)a corporation authorized under theTrust and Loan Companies Actto carry on the business of offering to the public its services as trustee, or(iii)a corporation of which the principal activity in Canada consists of any of the activities referred to in subparagraphs 518(3)(a)(i) to (v) of theBank Actand in which the entrant bank or a non-resident person affiliated with the entrant bank holds shares under the authority, directly or indirectly, of an order issued by the Minister of Finance or the Governor in Council under subsection 521(1) of that Act. (filiale canadienne)
(i)the entrant bank, or(ii)a foreign bank (within the meaning assigned by section 2 of theBank Act) that is affiliated with the entrant bank at the particular time; and
(i)a bank,(ii)a corporation authorized under theTrust and Loan Companies Actto carry on the business of offering to the public its services as trustee, or(iii)a corporation of which the principal activity in Canada consists of any of the activities referred to in subparagraphs 518(3)(a)(i) to (v) of theBank Actand in which the entrant bank or a non-resident person affiliated with the entrant bank holds shares under the authority, directly or indirectly, of an order issued by the Minister of Finance or the Governor in Council under subsection 521(1) of that Act. (filiale canadienne)
(a)for the purpose of the definitionCanadian affiliatein subsection (1),(i)each predecessor affiliate is deemed to have been affiliated with the entrant bank throughout the period that began on February 11, 1999 and ended at the time of the merger,(ii)the expression “entrant bank” in subparagraph (b)(iii) of the definition is deemed to include a predecessor, and(iii)if two or more of the predecessor affiliates are amalgamated or merged at any time after February 11, 1999 to form a new corporation, the new corporation is deemed to have been affiliated with the entrant bank throughout the period that began on February 11, 1999 and ended at the time of the amalgamation or merger of the predecessor affiliates; and(b)if at least one of the predecessors complied with the terms of subsection (11)(a), the entrant bank is deemed to have complied with those terms.
(i)each predecessor affiliate is deemed to have been affiliated with the entrant bank throughout the period that began on February 11, 1999 and ended at the time of the merger,(ii)the expression “entrant bank” in subparagraph (b)(iii) of the definition is deemed to include a predecessor, and(iii)if two or more of the predecessor affiliates are amalgamated or merged at any time after February 11, 1999 to form a new corporation, the new corporation is deemed to have been affiliated with the entrant bank throughout the period that began on February 11, 1999 and ended at the time of the amalgamation or merger of the predecessor affiliates; and
“85(1)Where a taxpayer that is a Canadian affiliate of an entrant bank (within the meanings assigned by subsection 142.7(1)) has, in a taxation year, disposed of any of the taxpayer’s property to the entrant bank (referred to in this subsection as the “corporation”), if the taxpayer and the corporation have jointly elected under subsection 142.7(3), the following rules apply:”.
(a)for the purposes of subsections 112(5) to (5.21) and (5.4), the definitionmark-to-market propertyin subsection 142.2(1) and subsection 142.5(9), the entrant bank is deemed, in respect of the property, to be the same corporation as and a continuation of, the Canadian affiliate; and(b)for the purpose of applying subsection 142.5(2) in respect of the property, the Canadian affiliate’s taxation year in which the property is transferred is deemed to have ended immediately before the time the property was transferred.
(a)at a particular time,(i)a Canadian affiliate of an entrant bank transfers to the entrant bank property that is a loan or lending asset, or a right to receive an unpaid amount in respect of a disposition before the particular time of property by the affiliate, or(ii)the entrant bank assumes an obligation of the Canadian affiliate that is an instrument or commitment described in paragraph 20(1)(l.1) or an obligation in respect of goods, services, land, or chattels or movable property, described in subparagraph 20(1)(m)(i), (ii) or (iii),(b)the property is transferred or the obligation is assumed for an amount equal to its fair market value at the particular time,(c)the entrant bank begins immediately after the particular time to use or hold the property or owe the obligation in its Canadian banking business, and(d)the Canadian affiliate and the entrant bank jointly elect in accordance with subsection (11) to have this subsection apply in respect of the transfer or assumption,
(i)a Canadian affiliate of an entrant bank transfers to the entrant bank property that is a loan or lending asset, or a right to receive an unpaid amount in respect of a disposition before the particular time of property by the affiliate, or(ii)the entrant bank assumes an obligation of the Canadian affiliate that is an instrument or commitment described in paragraph 20(1)(l.1) or an obligation in respect of goods, services, land, or chattels or movable property, described in subparagraph 20(1)(m)(i), (ii) or (iii),
(e)in applying paragraphs 20(1)(l), (l.1), (m), (n) and (p) in respect of the obligation or property, the taxation year of the affiliate that would, but for this paragraph, include the particular time is deemed to end immediately before the particular time, and(f)in computing the income of the Canadian affiliate and the entrant bank for taxation years that end on or after the particular time,(i)any amount deducted under paragraph 20(1)(l), (l.1), (m) or (n) by the Canadian affiliate in respect of the property or obligation in computing its income for its taxation year that ended immediately before the particular time, or under paragraph 20(1)(p) in computing its income for that year or for a preceding taxation year (to the extent that the amount has not been included in the affiliate’s income under paragraph 12(1)(i)), is deemed to have been so deducted by the entrant bank in computing its income for its last taxation year that ended before the particular time and not to have been deducted by the Canadian affiliate,(ii)in applying paragraph 20(1)(m), an amount in respect of the goods, services, land, chattels or movable property, that was included under paragraph 12(1)(a) in computing the Canadian affiliate’s income from a business is deemed to have been so included in computing the entrant bank’s income from its Canadian banking business for a preceding taxation year,(iii)in applying paragraph 20(1)(n) in respect of a property described in subparagraph (a)(i) and paragraphs (b), (c) and (d) sold by the Canadian affiliate in the course of a business, the property is deemed to have been disposed of by the entrant bank (and not by the Canadian affiliate) at the time it was disposed of by the Canadian affiliate, and the amount in respect of the sale that was included in computing the Canadian affiliate’s income from a business is deemed to have been included in computing the entrant bank’s income from its Canadian banking business for its taxation year that includes the time at which the property was so disposed of, and(iv)in applying paragraph 40(1)(a) or 44(1)(e) in respect of a property described in subparagraph (a)(i) and paragraphs (b), (c) and (d) disposed of by the Canadian affiliate, the property is deemed to have been disposed of by the entrant bank (and not by the Canadian affiliate) at the time it was disposed of by the Canadian affiliate, the amount determined under subparagraph 40(1)(a)(i) or 44(1)(e)(i) in respect of the Canadian affiliate is deemed to be the amount determined under that subparagraph in respect of the entrant bank, and any amount claimed by the Canadian affiliate under subparagraph 40(1)(a)(iii) or 44(1)(e)(iii) in computing its gain from the disposition of the property for its last taxation year that ended before the particular time is deemed to have been so claimed by the entrant bank for its last taxation year that ended before the particular time.
(i)any amount deducted under paragraph 20(1)(l), (l.1), (m) or (n) by the Canadian affiliate in respect of the property or obligation in computing its income for its taxation year that ended immediately before the particular time, or under paragraph 20(1)(p) in computing its income for that year or for a preceding taxation year (to the extent that the amount has not been included in the affiliate’s income under paragraph 12(1)(i)), is deemed to have been so deducted by the entrant bank in computing its income for its last taxation year that ended before the particular time and not to have been deducted by the Canadian affiliate,(ii)in applying paragraph 20(1)(m), an amount in respect of the goods, services, land, chattels or movable property, that was included under paragraph 12(1)(a) in computing the Canadian affiliate’s income from a business is deemed to have been so included in computing the entrant bank’s income from its Canadian banking business for a preceding taxation year,(iii)in applying paragraph 20(1)(n) in respect of a property described in subparagraph (a)(i) and paragraphs (b), (c) and (d) sold by the Canadian affiliate in the course of a business, the property is deemed to have been disposed of by the entrant bank (and not by the Canadian affiliate) at the time it was disposed of by the Canadian affiliate, and the amount in respect of the sale that was included in computing the Canadian affiliate’s income from a business is deemed to have been included in computing the entrant bank’s income from its Canadian banking business for its taxation year that includes the time at which the property was so disposed of, and(iv)in applying paragraph 40(1)(a) or 44(1)(e) in respect of a property described in subparagraph (a)(i) and paragraphs (b), (c) and (d) disposed of by the Canadian affiliate, the property is deemed to have been disposed of by the entrant bank (and not by the Canadian affiliate) at the time it was disposed of by the Canadian affiliate, the amount determined under subparagraph 40(1)(a)(i) or 44(1)(e)(i) in respect of the Canadian affiliate is deemed to be the amount determined under that subparagraph in respect of the entrant bank, and any amount claimed by the Canadian affiliate under subparagraph 40(1)(a)(iii) or 44(1)(e)(iii) in computing its gain from the disposition of the property for its last taxation year that ended before the particular time is deemed to have been so claimed by the entrant bank for its last taxation year that ended before the particular time.
(a)where the Canadian affiliate and the entrant bank jointly elect in accordance with subsection (11) to have this paragraph apply,(i)both(A)the value of that part of the consideration for the transfer of the property, and(B)for the purpose of determining the consequences of the assumption of the obligation and any subsequent settlement or extinguishment of it, the value of the consideration given to the entrant bank for the assumption of the obligation,are deemed to be an amount (in this paragraph referred to as the “assumption amount”) equal to the amount outstanding on account of the principal amount of the obligation at that time, and(ii)the assumption amount shall not be considered a term of the transaction that differs from that which would have been made between persons dealing at arm’s length solely because it is not equal to the fair market value of the obligation at that time;(a.1)[Repealed, 2013, c. 34, s. 290](b)where the obligation is denominated in a foreign currency, and the Canadian affiliate and the entrant bank jointly elect in accordance with subsection (11) to have this paragraph apply,(i)the amount of any income, loss, capital gain or capital loss in respect of the obligation due to the fluctuation in the value of the foreign currency relative to Canadian currency realized by(A)the Canadian affiliate on the assumption of the obligation is deemed to be nil, and(B)the entrant bank on the settlement or extinguishment of the obligation shall be determined based on the amount of the obligation in Canadian currency at the time it became an obligation of the Canadian affiliate, and(ii)for the purpose of an election made in respect of the obligation under paragraph (a), the amount outstanding on account of the principal amount of the obligation at that time is the total of all amounts each of which is an amount that was advanced to the Canadian affiliate on account of principal, that remains outstanding at that time, and that is determined using the exchange rate that applied between the foreign currency and Canadian currency at the time of the advance; and(c)for the purpose of applying paragraphs 20(1)(e) and (f) in respect of the debt obligation, the obligation is deemed not to have been settled or extinguished by virtue of its assumption by the entrant bank and the entrant bank is deemed to be the same corporation as, and a continuation of, the Canadian affiliate.
(i)both(A)the value of that part of the consideration for the transfer of the property, and(B)for the purpose of determining the consequences of the assumption of the obligation and any subsequent settlement or extinguishment of it, the value of the consideration given to the entrant bank for the assumption of the obligation,
(A)the value of that part of the consideration for the transfer of the property, and(B)for the purpose of determining the consequences of the assumption of the obligation and any subsequent settlement or extinguishment of it, the value of the consideration given to the entrant bank for the assumption of the obligation,
(ii)the assumption amount shall not be considered a term of the transaction that differs from that which would have been made between persons dealing at arm’s length solely because it is not equal to the fair market value of the obligation at that time;
(i)the amount of any income, loss, capital gain or capital loss in respect of the obligation due to the fluctuation in the value of the foreign currency relative to Canadian currency realized by(A)the Canadian affiliate on the assumption of the obligation is deemed to be nil, and(B)the entrant bank on the settlement or extinguishment of the obligation shall be determined based on the amount of the obligation in Canadian currency at the time it became an obligation of the Canadian affiliate, and(ii)for the purpose of an election made in respect of the obligation under paragraph (a), the amount outstanding on account of the principal amount of the obligation at that time is the total of all amounts each of which is an amount that was advanced to the Canadian affiliate on account of principal, that remains outstanding at that time, and that is determined using the exchange rate that applied between the foreign currency and Canadian currency at the time of the advance; and
(A)the Canadian affiliate on the assumption of the obligation is deemed to be nil, and(B)the entrant bank on the settlement or extinguishment of the obligation shall be determined based on the amount of the obligation in Canadian currency at the time it became an obligation of the Canadian affiliate, and
(a)a dividend is paid by a Canadian affiliate of an entrant bank to the entrant bank or to a person that is affiliated with the Canadian affiliate and that is resident in the country in which the entrant bank is resident, or(b)a dividend is deemed to be paid for the purposes of this Part or Part XIII (other than by paragraph 214(3)(a)) as a result of a transfer of property from the Canadian affiliate to such a person,
(a)the dividend is deemed (except for the purposes of subsections 112(3) to (7)) not to be a taxable dividend; and(b)there is added to the amount otherwise determined under paragraph 219(1)(g) in respect of the entrant bank for its first taxation year that ends after the time at which the dividend is paid, the amount of the dividend less, where the dividend is paid by means of, or arises as a result of, a transfer of eligible property in respect of which the Canadian affiliate and the entrant bank have jointly elected under subsection (3), the amount by which the fair market value of the property transferred exceeds the amount the Canadian affiliate and the entrant bank have agreed on in their election.
(a)the entrant bank by which the election is made has, on or before the day that is 6 months after the day on which theIncome Tax Amendments Act, 2000receives royal assent, complied with paragraphs 1.1(b) and (c) of the “Guide to Foreign Bank Branching” in respect of the establishment and commencement of business of a foreign bank branch in Canada issued by the Office of the Superintendent of Financial Institutions, as it read on December 31, 2000;(b)the election is made in prescribed form on or before the earlier of the filing-due date of the Canadian affiliate and the filing-due date of the entrant bank, for the taxation year that includes the time at which(i)in the case of an election under subsection (3) or (7), paragraph (8)(a) or (b) or subsection (10), the dividend, transfer or assumption to which the election relates is paid, made or effected, or(ii)in the case of an election under subsection (12), the dissolution order was granted or the winding up commenced; and(c)in the case of an election under subsection (3) or (7), paragraph (8)(a) or (b) or subsection (10), the dividend, transfer or assumption to which the election relates is paid, made or effected within the period that(i)begins on the day on which the Superintendent makes an order in respect of the entrant bank under subsection 534(1) of theBank Act, and(ii)ends on the later of(A)the earlier of(I)the day that is one year after the day referred to subparagraph (i), and(II)the day that is three years after the day on which theIncome Tax Amendments Act, 2000receives royal assent, and(B)the day that is one year after the day on which theIncome Tax Amendments Act, 2000receives royal assent.
(i)in the case of an election under subsection (3) or (7), paragraph (8)(a) or (b) or subsection (10), the dividend, transfer or assumption to which the election relates is paid, made or effected, or(ii)in the case of an election under subsection (12), the dissolution order was granted or the winding up commenced; and
(i)begins on the day on which the Superintendent makes an order in respect of the entrant bank under subsection 534(1) of theBank Act, and(ii)ends on the later of(A)the earlier of(I)the day that is one year after the day referred to subparagraph (i), and(II)the day that is three years after the day on which theIncome Tax Amendments Act, 2000receives royal assent, and(B)the day that is one year after the day on which theIncome Tax Amendments Act, 2000receives royal assent.
(A)the earlier of(I)the day that is one year after the day referred to subparagraph (i), and(II)the day that is three years after the day on which theIncome Tax Amendments Act, 2000receives royal assent, and(B)the day that is one year after the day on which theIncome Tax Amendments Act, 2000receives royal assent.
(I)the day that is one year after the day referred to subparagraph (i), and(II)the day that is three years after the day on which theIncome Tax Amendments Act, 2000receives royal assent, and
(a)within the period described in paragraph (11)(c) in respect of the entrant bank,(i)the Minister of Finance has issued letters patent under section 342 of theBank Actor section 347 of theTrust and Loan Companies Actdissolving the Canadian affiliate or an order under section 345 of theBank Actor section 350 of theTrust and Loan Companies Actapproving the Canadian affiliate’s application for dissolution (such letters patent or order being referred to in this subsection as the “dissolution order”), or(ii)the affiliate has been wound up under the terms of the corporate law that governs it,(b)the entrant bank carries on all or part of the business in Canada that was formerly carried on by the Canadian affiliate, and(c)the Canadian affiliate and the entrant bank jointly elect in accordance with subsection (11) to have this section apply
(i)the Minister of Finance has issued letters patent under section 342 of theBank Actor section 347 of theTrust and Loan Companies Actdissolving the Canadian affiliate or an order under section 345 of theBank Actor section 350 of theTrust and Loan Companies Actapproving the Canadian affiliate’s application for dissolution (such letters patent or order being referred to in this subsection as the “dissolution order”), or(ii)the affiliate has been wound up under the terms of the corporate law that governs it,
(d)subject to paragraphs (e) and (h), the portion of a non-capital loss of the Canadian affiliate for a taxation year (in this paragraph referred to as the “Canadian affiliate’s loss year”) that can reasonably be regarded as being its loss from carrying on a business in Canada (in this paragraph referred to as the “loss business”) or being in respect of a claim made under section 110.5, to the extent that it(i)was not deducted in computing the taxable income of the Canadian affiliate or any other entrant bank for any taxation year, and(ii)would have been deductible in computing the taxable income of the Canadian affiliate for any taxation year that begins after the date of the dissolution order or the commencement of the winding up, as the case may be, on the assumption that it had such a taxation year and that it had sufficient income for that year,is deemed, for the taxation year of the entrant bank in which the Canadian affiliate’s loss year ended, to be a non-capital loss of the entrant bank from carrying on the loss business (or, in respect of a claim made under section 110.5, to be a non-capital loss of the entrant bank in respect of a claim under subparagraph 115(1)(a)(vii)) that was not deductible by the entrant bank in computing its taxable income earned in Canada for any taxation year that began before the date of the dissolution order or the commencement of the winding up, as the case may be,(e)if at any time control of the Canadian affiliate or entrant bank has been acquired by a person or group of persons, no amount in respect of the Canadian affiliate’s non-capital loss for a taxation year that ends before that time is deductible in computing the taxable income earned in Canada of the entrant bank for a particular taxation year that ends after that time, except that the portion of the loss that can reasonably be regarded as the Canadian affiliate’s loss from carrying on a business in Canada and, where a business was carried on by the Canadian affiliate in Canada in the earlier year, the portion of the loss that can reasonably be regarded as being in respect of an amount deductible under paragraph 110(1)(k) in computing its taxable income for the year are deductible only(i)if that business is carried on by the Canadian affiliate or the entrant bank for profit or with a reasonable expectation of profit throughout the particular year, and(ii)to the extent of the total of the entrant bank’s income for the particular year from that business, and where properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, from any other business substantially all of the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services,and for the purpose of this paragraph, where subsection 88(1.1) applied to the dissolution of another corporation in respect of which the Canadian affiliate was the parent and paragraph 88(1.1)(e) applied in respect of losses of that other corporation, the Canadian affiliate is deemed to be the same corporation as, and a continuation of, that other corporation with respect to those losses,(f)subject to paragraphs (g) and (h), a net capital loss of the Canadian affiliate for a taxation year (in this paragraph referred to as the “Canadian affiliate’s loss year”) is deemed to be a net capital loss of the entrant bank for its taxation year in which the Canadian affiliate’s loss year ended to the extent that the loss(i)was not deducted in computing the taxable income of the Canadian affiliate or any other entrant bank for any taxation year, and(ii)would have been deductible in computing the taxable income of the Canadian affiliate for any taxation year beginning after the date of the dissolution order or the commencement of the winding-up, as the case may be, on the assumption that the Canadian affiliate had such a taxation year and that it had sufficient income and taxable capital gains for that year,(g)if at any time control of the Canadian affiliate or the entrant bank has been acquired by a person or group of persons, no amount in respect of the Canadian affiliate’s net capital loss for a taxation year that ends before that time is deductible in computing the entrant bank’s taxable income earned in Canada for a taxation year that ends after that time, and(h)any loss of the Canadian affiliate that would otherwise be deemed by paragraph (d) or (f) to be a loss of the entrant bank for a particular taxation year that begins after the date of the dissolution order or the commencement of the winding-up, as the case may be, is deemed, for the purpose of computing the entrant bank’s taxable income earned in Canada for taxation years that begin after that date, to be such a loss of the entrant bank for its immediately preceding taxation year and not for the particular year, if the entrant bank so elects in its return of income for the particular year.
(i)was not deducted in computing the taxable income of the Canadian affiliate or any other entrant bank for any taxation year, and(ii)would have been deductible in computing the taxable income of the Canadian affiliate for any taxation year that begins after the date of the dissolution order or the commencement of the winding up, as the case may be, on the assumption that it had such a taxation year and that it had sufficient income for that year,
(i)if that business is carried on by the Canadian affiliate or the entrant bank for profit or with a reasonable expectation of profit throughout the particular year, and(ii)to the extent of the total of the entrant bank’s income for the particular year from that business, and where properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, from any other business substantially all of the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services,
(i)was not deducted in computing the taxable income of the Canadian affiliate or any other entrant bank for any taxation year, and(ii)would have been deductible in computing the taxable income of the Canadian affiliate for any taxation year beginning after the date of the dissolution order or the commencement of the winding-up, as the case may be, on the assumption that the Canadian affiliate had such a taxation year and that it had sufficient income and taxable capital gains for that year,
(a)in respect of any transfer of property, directly or indirectly, by the Canadian affiliate to the entrant bank or a person with whom the entrant bank does not deal at arm’s length,(i)subparagraph 13(21.2)(e)(iii) shall be read without reference to clause (E) of that subparagraph,(ii)[Repealed, 2016, c. 12, s. 51](iii)paragraph 18(15)(b) shall be read without reference to subparagraph (iv) of that paragraph, and(iv)paragraph 40(3.4)(b) shall be read without reference to subparagraph (v) of that paragraph;(b)in respect of any property of the Canadian affiliate appropriated to or for the benefit of the entrant bank or any person with whom the entrant bank does not deal at arm’s length, section 69(5) shall be read without reference to paragraph (d); and(c)for the purposes of applying subsection 13(21.2), 18(15) and 40(3.4) to any property that was disposed of by the affiliate, after the dissolution or winding-up of the affiliate, the entrant bank is deemed to be the same corporation as, and a continuation of, the affiliate.
(i)subparagraph 13(21.2)(e)(iii) shall be read without reference to clause (E) of that subparagraph,(ii)[Repealed, 2016, c. 12, s. 51](iii)paragraph 18(15)(b) shall be read without reference to subparagraph (iv) of that paragraph, and(iv)paragraph 40(3.4)(b) shall be read without reference to subparagraph (v) of that paragraph;
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]2001, c. 17, s. 1382013, c. 34, ss. 136, 2902016, c. 12, s. 51
143(1)Where a congregation, or one or more business agencies of the congregation, carries on one or more businesses for purposes that include supporting or sustaining the congregation’s members or the members of any other congregation, the following rules apply:(a)a trust is deemed to be created on the day that is the later of(i)December 31, 1976, and(ii)the day the congregation came into existence;(b)the trust is deemed to have been continuously in existence from the day determined under paragraph (a);(c)the property of the congregation is deemed to be the property of the trust;(d)the property of each business agency of the congregation in a calendar year is deemed to be property of the trust throughout the portion of the year throughout which the trust exists;(e)where the congregation is a corporation, the corporation is deemed to be the trustee having control of the trust property;(f)where the congregation is not a corporation, its council, committee of leaders, executive committee, administrative committee, officers or other group charged with its management are deemed to be the trustees having control of the trust property;(g)the congregation is deemed to act and to have always acted as agent for the trust in all matters relating to its businesses and other activities;(h)each business agency of the congregation in a calendar year is deemed to have acted as agent for the trust in all matters in the year relating to its businesses and other activities;(i)the members of the congregation are deemed to be the beneficiaries under the trust;(j)tax under this Part is payable by the trust on its taxable income for each taxation year;(k)in computing the income of the trust for any taxation year,(i)subject to paragraph (l), no deduction may be made in respect of salaries, wages or benefits of any kind provided to the members of the congregation, and(ii)no deduction may be made under subsection 104(6), except to the extent that any portion of the trust’s income (determined without reference to that subsection) is allocated to the members of the congregation in accordance with subsection (2);(l)for the purpose of applying section 20.01 to the trust,(i)each member of the congregation is deemed to be a member of the trust’s household, and(ii)section 20.01 shall be read without reference to paragraphs 20.01(2)(b) and (c) and subsection 20.01(3); and(m)where the congregation or one of the business agencies is a corporation, section 15.1 shall, except for the purposes of paragraphs 15.1(2)(a) and (c) (other than subparagraphs 15.1(2)(c)(i) and (ii)), apply as if this subsection were read without reference to paragraphs (c), (d), (g) and (h).Marginal note:Election in respect of income(2)If the trust referred to in subsection (1) in respect of a congregation so elects in respect of a taxation year in writing filed with the Minister on or before the trust’s filing-due date for the year and all the congregation’s participating members are specified in the election in accordance with subsection (5), the following rules apply:(a)for the purposes of subsections 104(6) and (13), the amount payable in the year to a particular participating member of the congregation out of the income of the trust (determined without reference to subsection 104(6)) is the amount determined by the formula0.8 (A × B/C) + D + (0.2A - E)/FwhereAis the taxable income of the trust for the year (determined without reference to subsection 104(6) and specified future tax consequences for the year),Bis(i)where the particular member is identified in the election as a person to whom this subparagraph applies (in this subsection referred to as a “designated member”), 1, and(ii)in any other case, 0.5,Cis the total of(i)the number of designated members of the congregation, and(ii)1/2 of the number of other participating members of the congregation in respect of the year,Dis the amount, if any, that is specified in the election as an additional allocation under this subsection to the particular member,Eis the total of all amounts each of which is an amount specified in the election as an additional allocation under this subsection to a participating member of the congregation in respect of the year, andFis the number of participating members of the congregation in respect of the year;(b)the designated member of each family at the end of the year is deemed to have supported the other members of the family during the year and the other members of the family are deemed to have been wholly dependent on the designated member for support during the year;(c)the taxable income for the year of each member of the congregation shall be computed without reference to subsection 110(2); and(d)if the trust earns income from a business in the year, then the portion of the amount payable in the year to a particular participating member of the congregation out of the income of the trust under paragraph (a) that can reasonably be considered to relate to that income from a business is deemed to be income from a business carried on by the particular member.Marginal note:Refusal to accept election(3)An election under subsection (2) in respect of a congregation for a particular taxation year is not binding on the Minister unless all taxes, interest and penalties payable under this Part, as a consequence of the application of subsection (2) to the congregation for preceding taxation years, are paid at or before the end of the particular year.Marginal note:Election in respect of gifts(3.1)For the purposes of section 118.1, if the eligible amount of a gift made in a taxation year by a trust referred to in subsection (1) in respect of a congregation would, but for this subsection, be included in the total charitable gifts, total cultural gifts or total ecological gifts of the trust for the year and the trust so elects in its return of income under this Part for the year,(a)the trust is deemed not to have made the gift; and(b)each participating member of the congregation is deemed to have made, in the year, such a gift the eligible amount of which is the amount determined by the formulaA × B/CwhereAis the eligible amount of the gift made by the trust,Bis the amount determined for the year in respect of the member under paragraph(2)(a) as a consequence of an election under subsection (2) by the trust, andCis the total of all amounts each of which is an amount determined for the year in respect of a participating member of the congregation under paragraph (2)(a) as a consequence of an election under subsection (2) by the trust.Marginal note:Definitions(4)For the purposes of this section,adultadultmeans an individual who, before the time at which the term is applied, has attained the age of eighteen years or is married or in a common-law partnership; (adulte)business agencybusiness agency, of a congregation at any time in a particular calendar year, means a corporation, trust or other person, where the congregation owned all the shares of the capital stock of the corporation (except directors’ qualifying shares) or every interest in the trust or other person, as the case may be, throughout the portion of the particular calendar year throughout which both the congregation and the corporation, trust or other person, as the case may be, were in existence; (agence commerciale)congregationcongregationmeans a community, society or body of individuals, whether or not incorporated,(a)the members of which live and work together,(b)that adheres to the practices and beliefs of, and operates according to the principles of, the religious organization of which it is a constituent part,(c)that does not permit any of its members to own any property in their own right, and(d)that requires its members to devote their working lives to the activities of the congregation; (congrégation)familyfamilymeans,(a)in the case of an adult who is unmarried and who is not in a common-law partnership, that person and the person’s children who are not adults, not married and not in a common-law partnership, and(b)in the case of an adult who is married or in a common-law partnership, that person and the person’s spouse or common-law partner and the children of either or both of them who are not adults, not married and not in a common-law partnershipbut does not include an individual who is included in any other family or who is not a member of the congregation in which the family is included; (famille)member of a congregationmember of a congregationmeans(a)an adult, living with the members of the congregation, who conforms to the practices of the religious organization of which the congregation is a constituent part whether or not that person has been formally accepted into the organization, and(b)a child who is unmarried and not in a common-law partnership, other than an adult, of an adult referred to in paragraph (a), if the child lives with the members of the congregation; (membre d’une congrégation)participating memberparticipating member, of a congregation in respect of a taxation year, means an individual who, at the end of the year, is an adult who is a member of the congregation; (membre participant)religious organizationreligious organizationmeans an organization, other than a registered charity, of which a congregation is a constituent part, that adheres to beliefs, evidenced by the religious and philosophical tenets of the organization, that include a belief in the existence of a supreme being. (organisme religieux)total charitable giftstotal charitable giftshas the meaning assigned by subsection 118.1(1); (total des dons de bienfaisance)total Crown giftstotal Crown gifts[Repealed, 2014, c. 39, s. 48]total cultural giftstotal cultural giftshas the meaning assigned by subsection 118.1(1); (total des dons de biens culturels)total ecological giftstotal ecological giftshas the same meaning as in subsection 118.1(1). (total des dons de biens écosensibles)Marginal note:Specification of family members(5)For the purpose of applying subsection (2) to a particular election by the trust referred to in subsection (1) in respect of a congregation for a particular taxation year,(a)subject to paragraph (b), a participating member of the congregation is considered to have been specified in the particular election in accordance with this subsection only if the member is identified in the particular election and(i)where the member’s family includes only one adult at the end of the particular year, the member is identified in the particular election as a person to whom subparagraph (i) of the description of B in subsection (2) (in this subsection referred to as the “relevant subparagraph”) applies, and(ii)in any other case, only one of the adults in the member’s family is identified in the particular election as a person to whom the relevant subparagraph applies; and(b)an individual is considered not to have been specified in the particular election in accordance with this subsection if(i)the individual is one of two individuals who were married to each other, or in a common-law partnership, at the end of a preceding taxation year of the trust and at the end of the particular year,(ii)one of those individuals was(A)where the preceding year ended before 1998, specified in an election under subsection (2) by the trust for the preceding year, and(B)in any other case, identified in an election under subsection (2) by the trust for the preceding year as a person to whom the relevant subparagraph applied, and(iii)the other individual is identified in the particular election as a person to whom the relevant subparagraph applies.
(a)a trust is deemed to be created on the day that is the later of(i)December 31, 1976, and(ii)the day the congregation came into existence;(b)the trust is deemed to have been continuously in existence from the day determined under paragraph (a);(c)the property of the congregation is deemed to be the property of the trust;(d)the property of each business agency of the congregation in a calendar year is deemed to be property of the trust throughout the portion of the year throughout which the trust exists;(e)where the congregation is a corporation, the corporation is deemed to be the trustee having control of the trust property;(f)where the congregation is not a corporation, its council, committee of leaders, executive committee, administrative committee, officers or other group charged with its management are deemed to be the trustees having control of the trust property;(g)the congregation is deemed to act and to have always acted as agent for the trust in all matters relating to its businesses and other activities;(h)each business agency of the congregation in a calendar year is deemed to have acted as agent for the trust in all matters in the year relating to its businesses and other activities;(i)the members of the congregation are deemed to be the beneficiaries under the trust;(j)tax under this Part is payable by the trust on its taxable income for each taxation year;(k)in computing the income of the trust for any taxation year,(i)subject to paragraph (l), no deduction may be made in respect of salaries, wages or benefits of any kind provided to the members of the congregation, and(ii)no deduction may be made under subsection 104(6), except to the extent that any portion of the trust’s income (determined without reference to that subsection) is allocated to the members of the congregation in accordance with subsection (2);(l)for the purpose of applying section 20.01 to the trust,(i)each member of the congregation is deemed to be a member of the trust’s household, and(ii)section 20.01 shall be read without reference to paragraphs 20.01(2)(b) and (c) and subsection 20.01(3); and(m)where the congregation or one of the business agencies is a corporation, section 15.1 shall, except for the purposes of paragraphs 15.1(2)(a) and (c) (other than subparagraphs 15.1(2)(c)(i) and (ii)), apply as if this subsection were read without reference to paragraphs (c), (d), (g) and (h).
(i)December 31, 1976, and(ii)the day the congregation came into existence;
(i)subject to paragraph (l), no deduction may be made in respect of salaries, wages or benefits of any kind provided to the members of the congregation, and(ii)no deduction may be made under subsection 104(6), except to the extent that any portion of the trust’s income (determined without reference to that subsection) is allocated to the members of the congregation in accordance with subsection (2);
(i)each member of the congregation is deemed to be a member of the trust’s household, and(ii)section 20.01 shall be read without reference to paragraphs 20.01(2)(b) and (c) and subsection 20.01(3); and
(a)for the purposes of subsections 104(6) and (13), the amount payable in the year to a particular participating member of the congregation out of the income of the trust (determined without reference to subsection 104(6)) is the amount determined by the formula0.8 (A × B/C) + D + (0.2A - E)/FwhereAis the taxable income of the trust for the year (determined without reference to subsection 104(6) and specified future tax consequences for the year),Bis(i)where the particular member is identified in the election as a person to whom this subparagraph applies (in this subsection referred to as a “designated member”), 1, and(ii)in any other case, 0.5,Cis the total of(i)the number of designated members of the congregation, and(ii)1/2 of the number of other participating members of the congregation in respect of the year,Dis the amount, if any, that is specified in the election as an additional allocation under this subsection to the particular member,Eis the total of all amounts each of which is an amount specified in the election as an additional allocation under this subsection to a participating member of the congregation in respect of the year, andFis the number of participating members of the congregation in respect of the year;(b)the designated member of each family at the end of the year is deemed to have supported the other members of the family during the year and the other members of the family are deemed to have been wholly dependent on the designated member for support during the year;(c)the taxable income for the year of each member of the congregation shall be computed without reference to subsection 110(2); and(d)if the trust earns income from a business in the year, then the portion of the amount payable in the year to a particular participating member of the congregation out of the income of the trust under paragraph (a) that can reasonably be considered to relate to that income from a business is deemed to be income from a business carried on by the particular member.
(i)where the particular member is identified in the election as a person to whom this subparagraph applies (in this subsection referred to as a “designated member”), 1, and(ii)in any other case, 0.5,
(i)the number of designated members of the congregation, and(ii)1/2 of the number of other participating members of the congregation in respect of the year,
(a)the trust is deemed not to have made the gift; and(b)each participating member of the congregation is deemed to have made, in the year, such a gift the eligible amount of which is the amount determined by the formulaA × B/CwhereAis the eligible amount of the gift made by the trust,Bis the amount determined for the year in respect of the member under paragraph(2)(a) as a consequence of an election under subsection (2) by the trust, andCis the total of all amounts each of which is an amount determined for the year in respect of a participating member of the congregation under paragraph (2)(a) as a consequence of an election under subsection (2) by the trust.
(a)the members of which live and work together,(b)that adheres to the practices and beliefs of, and operates according to the principles of, the religious organization of which it is a constituent part,(c)that does not permit any of its members to own any property in their own right, and(d)that requires its members to devote their working lives to the activities of the congregation; (congrégation)
(a)in the case of an adult who is unmarried and who is not in a common-law partnership, that person and the person’s children who are not adults, not married and not in a common-law partnership, and(b)in the case of an adult who is married or in a common-law partnership, that person and the person’s spouse or common-law partner and the children of either or both of them who are not adults, not married and not in a common-law partnership
(a)an adult, living with the members of the congregation, who conforms to the practices of the religious organization of which the congregation is a constituent part whether or not that person has been formally accepted into the organization, and(b)a child who is unmarried and not in a common-law partnership, other than an adult, of an adult referred to in paragraph (a), if the child lives with the members of the congregation; (membre d’une congrégation)
(a)subject to paragraph (b), a participating member of the congregation is considered to have been specified in the particular election in accordance with this subsection only if the member is identified in the particular election and(i)where the member’s family includes only one adult at the end of the particular year, the member is identified in the particular election as a person to whom subparagraph (i) of the description of B in subsection (2) (in this subsection referred to as the “relevant subparagraph”) applies, and(ii)in any other case, only one of the adults in the member’s family is identified in the particular election as a person to whom the relevant subparagraph applies; and(b)an individual is considered not to have been specified in the particular election in accordance with this subsection if(i)the individual is one of two individuals who were married to each other, or in a common-law partnership, at the end of a preceding taxation year of the trust and at the end of the particular year,(ii)one of those individuals was(A)where the preceding year ended before 1998, specified in an election under subsection (2) by the trust for the preceding year, and(B)in any other case, identified in an election under subsection (2) by the trust for the preceding year as a person to whom the relevant subparagraph applied, and(iii)the other individual is identified in the particular election as a person to whom the relevant subparagraph applies.
(i)where the member’s family includes only one adult at the end of the particular year, the member is identified in the particular election as a person to whom subparagraph (i) of the description of B in subsection (2) (in this subsection referred to as the “relevant subparagraph”) applies, and(ii)in any other case, only one of the adults in the member’s family is identified in the particular election as a person to whom the relevant subparagraph applies; and
(i)the individual is one of two individuals who were married to each other, or in a common-law partnership, at the end of a preceding taxation year of the trust and at the end of the particular year,(ii)one of those individuals was(A)where the preceding year ended before 1998, specified in an election under subsection (2) by the trust for the preceding year, and(B)in any other case, identified in an election under subsection (2) by the trust for the preceding year as a person to whom the relevant subparagraph applied, and(iii)the other individual is identified in the particular election as a person to whom the relevant subparagraph applies.
(A)where the preceding year ended before 1998, specified in an election under subsection (2) by the trust for the preceding year, and(B)in any other case, identified in an election under subsection (2) by the trust for the preceding year as a person to whom the relevant subparagraph applied, and
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 1431994, c. 7, Sch