VIII, s. 118(2)]
original acquisitionof a share has the meaning assigned by subsection 127.4(1); (acquisition initiale)
original purchaser[Repealed, 1997, c. 25, s. 55(2)]
registered labour-sponsored venture capital corporation[Repealed, 1997, c. 25, s. 55(1)]
reservemeans
(a)property described in any of paragraphs (a), (b), (c), (f) and (g) of the definitionqualified investmentin section 204, and
(b)deposits with a credit union that is amember institutionin relation to a deposit insurance corporation (within the meaning assigned by subsection 137.1(5)); (réserve)
revoked corporationmeans a corporation the registration of which has been revoked under subsection 204.81(6); (Version anglaise seulement)
specified active business, at any time, means an active business that is carried on in Canada where
(a)at least 50% of the full-time employees employed at that time in respect of the business are employed in Canada, and
(b)at least 50% of the salaries and wages paid to employees employed at that time in respect of the business are reasonably attributable to services rendered in Canada by the employees; (entreprise déterminée exploitée activement)
specified individual, in respect of a share, means an individual (other than a trust) whose labour-sponsored funds tax credit (as defined by subsection 127.4(6)) in respect of the original acquisition of the share is not nil or would not be nil if this Act were read without reference to paragraphs 127.4(6)(b) and 127.4(6)(d). (particulier déterminé)
start-up periodof a corporation means
(a)subject to paragraph (c), in the case of a corporation that first issued Class A shares before February 17, 1999, the corporation’s taxation year in which it first issued those shares and the four following taxation years,
(b)subject to paragraph (c), in the case of a corporation that first issues Class A shares after February 16, 1999, the corporation’s taxation year in which it first issues those shares and the following taxation year, or
(c)where a corporation files an election with its return under this Part for a particular taxation year of the corporation that ends after 1998 and that is referred to in paragraph (a) or (b), the period, if any, consisting of the taxation years referred to in paragraph (a) or (b), as the case may be, other than the particular year and all taxation years following the particular year. (période de démarrage)
terminating corporationin respect of a particular corporation means a predecessor corporation in circumstances where
(a)subsection 204.85(3) applies to a merger of the particular corporation and the predecessor corporation,
(b)Class A shares of the particular corporation have been issued to the predecessor corporation in exchange for property of the predecessor corporation, and
(c)within a reasonable period of time after the exchange, Class A shareholders of the predecessor corporation receive all of the Class A shares of the particular corporation issued to the predecessor corporation in the course of a wind-up of the predecessor corporation. (société sortante)
Marginal note:When venture capital business discontinued
(2)For the purposes of section 127.4, this Part and Part XII.5, a corporation discontinues its venture capital business
(a)at the time its articles cease to comply with paragraph 204.81(1)(c) and would so cease to comply if it had been incorporated after December 5, 1996;
(b)at the time it begins to wind-up, and for the purpose of this paragraph a corporation is not to be considered to have begun to wind up solely because it discontinues its venture capital business under prescribed wind-up rules;
(c)immediately before the time it amalgamates or merges with one or more other corporations to form one corporate entity (other than an entity deemed by paragraph 204.85(3)(d) to have been registered under this Part);
(d)at the time it becomes a revoked corporation, if one of the grounds on which the Minister could revoke its registration for the purposes of this Part is set out in paragraph 204.81(6)(a.1); or
(e)at the first time after the revocation of its registration for the purposes of this Part that it fails to comply with any of the provisions of its articles governing its authorized capital, the management of its business and affairs, the reduction of paid-up capital or the redemption or transfer of its Class A shares.
Marginal note:Date of issue of Class A shares
(3)For the purposes of this Part and subsection 211.8(1), in determining the time of the issue or the original acquisition of Class A shares, identical Class A shares held by a person are deemed to be disposed of by the person in the order in which the shares were issued.
Marginal note:Conditions for registration
204.81(1)The Minister may register a corporation for the purposes of this Part if the corporation’s application for registration was received before March 21, 2013 and if, in the opinion of the Minister, it complies with the following conditions:
(a)the corporation has applied in prescribed form to the Minister for registration;
(b)the corporation was caused to be incorporated under theCanada Business Corporations Actby an eligible labour body; and
(c)the articles of the corporation provide that
(i)the business of the corporation is restricted to assisting the development of eligible business entities and to creating, maintaining and protecting jobs by providing financial and managerial advice to such entities and by investing funds of the corporation in eligible investments and reserves,
(ii)the authorized capital of the corporation shall consist only of
(A)Class A shares that are issuable only to individuals (other than trusts), terminating corporations in respect of the corporation and trusts governed by registered retirement savings plans or by TFSAs and that entitle their holders
(I)to receive notice of and, subject to theCanada Business Corporations Act, to attend and vote at all meetings of the shareholders of the corporation,
(II)to receive dividends at the discretion of the board of directors of the corporation, and
(III)to receive, on dissolution of the corporation, all the assets of the corporation that remain after payment of all amounts payable to the holders of all other classes of shares of the corporation,
(B)Class B shares that are issuable only to and may be held only by eligible labour bodies, that entitle each of those shareholders
(I)to receive notice of and, subject to theCanada Business Corporations Act, to attend and vote at all meetings of the shareholders of the corporation, and
(II)to receive, on dissolution of the corporation, an amount equal to the amount of the consideration received by the corporation on the issue of the Class B shares,
but that do not entitle them to receive dividends, and
(C)any additional classes of shares that are authorized, if the rights, privileges, restrictions and conditions attached to the shares are approved by the Minister of Finance,
(iii)the business and affairs of the corporation shall be managed by a board of directors, at least 1/2 of whom are appointed by the Class B shareholders,
(iv)the corporation shall not reduce its paid-up capital in respect of a class of shares (other than Class B shares) otherwise than by way of
(A)a redemption of shares of the corporation, or
(B)a reduction in its paid-up capital attributable to a class of shares for which no shares have been issued in the eight-year period ending at the time of the reduction,
(v)the corporation shall not redeem a Class A share in respect of which an information return described in paragraph 204.81(6)(c) has been issued unless
(A)if the share is held by the specified individual in respect of the share, a spouse or common-law partner or former spouse or common-law partner of that individual or a trust governed by a registered retirement savings plan, TFSA or registered retirement income fund under which that individual, spouse or common-law partner is the annuitant,
(I)a request in writing to redeem the share is made by the holder to the corporation and the information return referred to in paragraph 204.81(6)(c) has been returned to the corporation, or
(II)[Repealed, 1997, c. 25, s. 56(4)]
(III)the corporation is notified in writing that the specified individual in respect of the share became disabled and permanently unfit for work or terminally ill after the share was issued,
(B)there is no specified individual in respect of the share,
(C)[Repealed, 1997, c. 25, s. 56(5)]
(D)the corporation is notified in writing that the share is held by a person on whom the share has devolved as a consequence of the death of
(I)a holder of the share, or
(II)an annuitant under a trust governed by a registered retirement savings plan, TFSA or registered retirement income fund that was a holder of the share,
(E)the redemption occurs
(I)more than eight years after the day on which the share was issued, or
(II)if the day that is eight years after that issuance is in February or March of a calendar year, in February or on March 1st of that calendar year but not more than 31 days before that day, or
(F)the holder of the share has satisfied such other conditions as are prescribed,
(vi)[Repealed, 1997, c. 25, s. 56(7)]
(vii)the corporation shall not register a transfer of a Class A share by the specified individual in respect of the share, a spouse or common-law partner of the specified individual or a trust governed by a registered retirement savings plan, TFSA or registered retirement income fund under which the specified individual or spouse or common-law partner is the annuitant, unless
(A)no information return has been issued under paragraph 204.81(6)(c) in respect of the share,
(B)the transfer occurs more than eight years after the day on which the share was issued,
(C)the transfer is to the specified individual, a spouse or common-law partner or former spouse or common-law partner of the specified individual or a trust governed by a registered retirement savings plan, TFSA or registered retirement income fund under which the specified individual or the spouse or common-law partner or former spouse or common-law partner of the specified individual is the annuitant,
(D)the corporation is notified in writing that the transfer occurs as a consequence of the death of the specified individual or a spouse or common-law partner of the specified individual,
(E)the corporation is notified in writing that the transfer occurs after the specified individual dies,
(F)[Repealed, 1997, c. 25, s. 56(9)]
(G)the corporation is notified in writing that the specified individual became disabled and permanently unfit for work or terminally ill after the share was issued and before the transfer, or
(H)such other conditions as are prescribed are satisfied.
(viii)the corporation shall not pay any fee or remuneration to a shareholder, director or officer of the corporation unless the payment was approved by a resolution of the directors of the corporation, and
(ix)the corporation shall not make any investment in an eligible business entity with which the corporation or any of the directors of the corporation does not deal at arm’s length unless
(A)the corporation would deal at arm’s length with the eligible business entity but for the corporation’s interest as the holder of eligible investments in such entity, or
(B)the investment was approved by special resolution of the shareholders of the corporation before the investment was made.
Marginal note:Corporations incorporated before March 6, 1996
(1.1)In applying clause (1)(c)(v)(E) in relation to any time before 2004 in respect of a corporation incorporated before March 6, 1996, the references in that clause to “eight” are replaced with references to “five” if, at that time, the relevant statements in the corporation’s articles refer to “five”.
Marginal note:Deemed provisions in articles
(1.2)In applying subsection (1) in relation to any time before 2004, to a corporation incorporated before February 7, 2000, if the articles of the corporation comply with subclause (1)(c)(v)(E)(I) (as modified, where relevant, by subsection (1.1)), those articles are deemed to provide the statement required by subclause (1)(c)(v)(E)(II).
Marginal note:Registration number
(2)On registering a corporation under subsection 204.81(1), the Minister shall assign to it a registration number.
Marginal note:Successive registrations
(3)Where an eligible labour body causes more than one corporation to be registered under this Part, for the purposes of paragraph 204.81(6)(h) and section 204.82, each of those corporations shall be deemed
(a)to have issued a Class A share at the earliest time any such corporation issued a Class A share,
and, where the corporation did not exist at the time referred to in paragraph 204.81(3)(a),
(b)to have been in existence during the particular period beginning immediately before that time and ending immediately after the corporation was incorporated, and
(c)to have had, throughout the particular period, fiscal periods ending on the same calendar day in each year in the particular period as the calendar day on which its first fiscal period after it was incorporated ended.
Marginal note:Determination of cost
(4)For the purposes of this Part, the cost at any time to a corporation of an eligible investment that is a guarantee shall be deemed to be 25% of the amount of the debt obligation subject to the guarantee at that time.
Marginal note:Registration date
(5)Where the Minister registers a corporation for the purposes of this Part, the corporation shall be deemed to have become so registered on the later of
(a)the day the application for registration of the plan is received by the Minister, and
(b)where in the application for registration a day is specified as the day on which the registration is to take effect, that day.
Marginal note:Revocation of registration
(6)The Minister may revoke the registration of a corporation for the purposes of this Part where
(a)the articles of the corporation do not comply with paragraph 204.81(1)(c) and would not comply with that paragraph if the corporation had been incorporated after December 5, 1996;
(a.1)the corporation does not comply with any of the provisions of its articles described in paragraph 204.81(1)(c), except where there would be no failure to comply if the provisions of its articles were consistent with the articles of a corporation that would be permitted to be registered under this Part if it had been incorporated after December 5, 1996;
(b)an individual acquires or irrevocably subscribes and pays for a Class A share of the capital stock of the corporation in the period beginning on the 61st day of a calendar year and ending on the 60th day of the following calendar year and the corporation fails to file with the Minister an information return in prescribed form containing prescribed information before April of that following calendar year;
(c)an individual acquires or irrevocably subscribes and pays for a Class A share of the capital stock of the corporation in the period beginning on the 61st day of a calendar year and ending on the 60th day of the following calendar year and the corporation fails to issue to the individual before April of that following calendar year an information return in prescribed form stating the amount of the consideration paid for the share in that period;
(d)the corporation issues more than one information return described in paragraph 204.81(6)(c) in respect of the same acquisition of or subscription for a Class A share;
(e)the financial statements of the corporation presented to its shareholders are not prepared in accordance with generally accepted accounting principles;
(f)the corporation fails within 6 months after the end of any taxation year to have an independent valuation of its shares made as of the end of that year;
(g)[Repealed, 2000, c. 19, s. 55(1)]
(h)the corporation does not pay the tax or penalty payable under section 204.82 by it on or before the day on or before which that tax or penalty is required to be paid;
(i)tax was payable under subsection 204.82(3) by the corporation for 3 or more taxation years;
(j)the corporation provides a guarantee that is an eligible investment and fails to maintain, at any time during the term of the guarantee, a reserve equal to the cost to the corporation of the guarantee at that time;
(k)the corporation pays a fee or commission in excess of a reasonable amount in respect of the offering for sale, or the sale, of its shares; or
(l)the corporation has a monthly deficiency in 18 or more months in any 36-month period.
Marginal note:Notice of intent to revoke registration
(7)Where the Minister proposes to revoke the registration of a corporation under subsection 204.81(6), the Minister shall, by registered mail, give notice to the corporation of the proposal.
Marginal note:Idem
(8)Where the Minister gives notice under subsection 204.81(7) to a registered labour-sponsored venture capital corporation, the Minister may, after the expiration of 30 days after the day of mailing of the notice, or after the expiration of such extended period after the day of mailing as the Federal Court of Appeal or a judge thereof, on application made at any time before the determination of any appeal under subsection 204.81(9) from the giving of the notice, may fix or allow, publish a copy of the notice in theCanada Gazetteand, on the publication of a copy of the notice, the registration of the corporation is revoked.
Marginal note:Voluntary de-registration
(8.1)Where at any time the Minister receives a certified copy of a resolution of the directors of a corporation seeking the revocation of the corporation’s registration under this Part,
(a)the registration is revoked at that time; and
(b)the Minister shall, with all due dispatch, give notice in theCanada Gazetteof the revocation.
Marginal note:Application of subsection 248(7)
(8.2)Subsection 248(7) does not apply for the purpose of subsection (8.1).
Marginal note:Transitional rules
(8.3)If a registered labour-sponsored venture capital corporation notifies the Minister in writing of its intent to revoke its registration under this Part, the following rules apply:
(a)the corporation shall not, on or after the day the notice is provided to the Minister (referred to in this subsection and subsection (8.4) as the “notification date”), issue any tax credit certificates, other than duplicate certificates to replace certificates issued before that day;
(b)section 204.841 does not apply on the discontinuance of its venture capital business;
(c)subsections 204.82(1) to (4) do not apply to taxation years of the corporation that begin on or after the notification date; and
(d)subsection 204.83(1) does not apply in respect of a period, referred to in that subsection as the “second period”, that ends after the notification date.
Marginal note:Discontinuance of provincial program
(8.4)Subsection (8.3) applies to a corporation only if,
(a)on the notification date, the percentage determined in respect of the corporation by the following formula is less than 20 per cent:
A/(B – C) × 100
where
(b)the corporation has revoked its registration before the third anniversary of the notification date.
Marginal note:Right of appeal
(9)Where the Minister refuses to accept a corporation for registration under subsection 204.81(1) or gives notice of a proposal to revoke the registration of a corporation under subsection 204.81(7), the corporation may appeal to the Federal Court of Appeal from the decision or from the giving of the notice.
Marginal note:Recovery of credit
204.82(1)Where, at any time that is both in a taxation year included in the start-up period of a corporation that was registered under this Part and before its venture capital business is first discontinued,
(a)80% of the amount, if any, by which the total consideration received by it for Class A shares issued by it before that time exceeds the total of all amounts paid by it before that time to its shareholders as a return of capital on such shares
exceeds
(b)the total of all amounts each of which is the cost to the corporation of an eligible investment or reserve of the corporation at that time,
the corporation shall pay a tax under this Part for the year equal to the amount determined by the formula
(A × 20%) - B
where
Marginal note:Liability for tax
(2)Each corporation that has been registered under this Part shall, in respect of each month that ends before its venture capital business is first discontinued and in a particular taxation year of the corporation that begins after the end of the corporation’s start-up period (or, where the corporation has no start-up period, that begins after the time the corporation first issues a Class A share), pay a tax under this Part equal to the amount obtained when the greatest investment shortfall at any time that is in the month and in the particular year (in this section and sections 204.81 and 204.83 referred to as the “monthly deficiency”) is multiplied by 1/60 of the prescribed rate of interest in effect during the month.
Marginal note:Determination of investment shortfall
(2.1)Subject to subsection 204.82(2.2), a corporation’s investment shortfall at any time in a particular taxation year is the amount determined by the formula
A - B - C
where
(a)the amount, if any, by which the amount of the shareholders’ equity in the corporation at the end of the preceding taxation year exceeds the specified adjustment in respect of the shareholders’ equity in the corporation at the end of that year, and
(b)the amount, if any, by which the amount of the shareholders’ equity in the corporation at the end of the particular taxation year exceeds the specified adjustment in respect of the shareholders’ equity in the corporation at the end of the particular year;
(a)the total of all amounts each of which is the adjusted cost to the corporation of an eligible investment of the corporation at that time, and
(b)50% of the total of all amounts each of which is
(i)the adjusted cost to the corporation of an eligible investment of the corporation at the beginning of the particular year, or
(ii)the adjusted cost to the corporation of an eligible investment of the corporation at the end of the particular year; and
(a)the total of all amounts each of which is a tax or penalty under subsection (3) or (4), or a prescribed tax or penalty, paid before that time by the corporation (other than the portion, if any, of that tax or penalty the liability for which resulted in a reduction in the amount of the shareholders’ equity at the end of any preceding taxation year)
exceeds
(b)the total of all amounts each of which is a refund before that time of any portion of the total described in paragraph (a).
Marginal note:Investment shortfall
(2.2)For the purpose of this subsection and for the purpose of computing a corporation’s investment shortfall under subsection (2.1) at any time in a taxation year (in this subsection referred to as the “relevant year”),
(a)unrealized gains and losses in respect of its eligible investments shall not be taken into account in computing the amount of the shareholders’ equity in the corporation;
(b)where
(i)the relevant year ends after 1998, and
(ii)it is expected that a redemption of its Class A shares will occur after the end of a particular taxation year and, as a consequence, the amount of the shareholders’ equity in the corporation at the end of the particular year would otherwise be reduced to take into account the expected redemption,
subject to paragraph 204.82(2.2)(c), the amount (or, where the relevant year ends in 1999, 2000, 2001 or 2002, 20%, 40%, 60% or 80%, respectively of the amount) expected to be redeemed shall not be taken into account in determining the amount of the shareholders’ equity in the corporation at the end of the particular year;
(c)paragraph 204.82(2.2)(b) does not apply to a redemption expected to be made after the end of a taxation year where
(i)the redemption is made within 60 days after the end of the year, and
(ii)either
(A)tax under Part XII.5 became payable as a consequence of the redemption, or
(B)tax under Part XII.5 would not have become payable as a consequence of the redemption if the redemption had occurred at the end of the year;
(c.1)the specified adjustment in respect of shareholders’ equity in the corporation at the end of a taxation year is the amount determined by the formula
(A × (B/C)) - D
where
(i)the fair market value at the end of the year of all Class A shares issued by it before March 6, 1996 and more than five years before the end of the year,
(ii)the fair market value at the end of the year of all Class A shares issued by it after March 5, 1996 and more than eight years before the end of the year,
(iii)the fair market value at the end of the year of all Class A shares issued by it in the last 60 days of the year, and
(iv)if the corporation so elects in writing filed with the Minister not more than six months after the end of the year and is not a revoked corporation at the end of the year, the fair market value at the end of the year of all shares of classes, of the capital stock of the corporation, to which clause 204.81(1)(c)(ii)(C) applies,
(d)the adjusted cost to the corporation of an eligible investment of the corporation at any time is
(i)150% of the cost to the corporation of the eligible investment at that time where the eligible investment is
(A)a property acquired by the corporation after February 18, 1997 (other than a property to which subparagraph (i.1) applies) that would be an eligible investment of the corporation if the reference to “$50,000,000” in paragraph (f) of the definitioneligible investmentin subsection 204.8(1) were read as “$10,000,000”, or
(B)a share of the capital stock of a prescribed corporation,
(i.1)200% of the cost to the corporation of the eligible investment at that time where the eligible investment is a property acquired by the corporation after February 16, 1999 (other than a property described in clause (i)(B)) that would be an eligible investment of the corporation if the reference to “$50,000,000” in paragraph (f) of the definitioneligible investmentin subsection 204.8(1) were read as “$2,500,000”, and
(ii)in any other case, the cost to the corporation of the eligible investment of the corporation at that time.
Marginal note:Recovery of credit
(3)Where a corporation is liable under subsection 204.82(2) to pay a tax in respect of 12 consecutive months (in this subsection referred to as the “particular period”), the corporation shall pay a tax under this Part for a taxation year in respect of each particular period that ends in the year equal to the total of the amounts determined by the formula
(A/12 × 20%) - (B - C)
where
Marginal note:Penalty
(4)Where a corporation is liable under subsection 204.82(3) to pay a tax for a taxation year, the corporation shall pay, in addition to the tax payable under that subsection, a penalty for the year equal to that tax.
Marginal note:Provincially registered LSVCCs
(5)Where
(a)an amount (other than interest on an amount to which this subsection applies or an amount payable under or as a consequence of a prescribed provision of a law of a province) is payable to the government of a province by a corporation,
(b)the amount is payable as a consequence of a failure to acquire sufficient properties of a character described in the law of the province,
(c)the corporation has been prescribed for the purpose of the definitionapproved sharein subsection 127.4(1), and
(d)the corporation is not a registered labour-sponsored venture capital corporation or a revoked corporation,
the corporation shall pay a tax under this Part for the taxation year in which the amount became payable equal to that amount.
Marginal note:Further matching of amounts payable to a province
(6)Where
(a)a particular amount is payable (other than interest on an amount to which this subsection applies) by a registered labour-sponsored venture capital corporation or a revoked corporation to the government of a province as a consequence of a failure of a prescribed corporation to acquire sufficient properties of a character described in a law of the province, and
(b)the particular amount became payable before the corporation first discontinued its venture capital business,
the corporation shall pay a tax under this Part for the taxation year in which the particular amount became payable equal to that amount.
Marginal note:Refunds for federally registered LSVCCs
204.83(1)If a corporation is required, under subsections 204.82(3) and (4), to pay a tax and a penalty under this Part for a taxation year, it has no monthly deficiency throughout any period of 12 consecutive months (in this section referred to as the “second period”) that begins after the 12-month period in respect of which the tax became payable (in this section referred to as the “first period”) and it so requests in an application filed with the Minister in prescribed form, the Minister shall refund to it an amount equal to the total of the amount that was paid under subsection 204.82(3) and 80% of the amount that was paid under subsection 204.82(4) in respect of the first period on or before the later of
(a)the 30th day after receiving the application, and
(b)the 60th day after the end of the second period.
Marginal note:Refunds of amounts payable to provinces
(2)Where
(a)the government of a province refunds, at any time, an amount to a corporation,
(b)the refund is of an amount that had been paid in satisfaction of a particular amount payable in a taxation year of the corporation, and
(c)tax was payable under subsection 204.82(5) or (6) by the corporation for a taxation year because the particular amount became payable,
the corporation is deemed to have paid at that time an amount equal to the refund on account of its tax payable under this Part for the year.
Marginal note:Penalty
204.84Every corporation that for a taxation year issues an information return described in paragraph 204.81(6)(c) in respect of
(a)the issuance of a share when the corporation was a revoked corporation, or
(b)a subscription in respect of a share if the share is not issued on or before the day that is 180 days after the day the information return was issued,
is liable to a penalty for the year equal to the amount of the consideration for which the share was or was to be issued.
Marginal note:Penalty tax where venture capital business discontinued
204.841Where, at a particular time in a taxation year, a particular corporation that is a registered labour-sponsored venture capital corporation or a revoked corporation first discontinues its venture capital business, the particular corporation shall pay a tax under this Part for the year equal to the total of all amounts each of which is the amount in respect of a Class A share of the capital stock of the particular corporation outstanding immediately before the particular time that is determined by the formula
A × B
where
(a)if the original acquisition of the share was before March 6, 1996 and less than five years before the particular time, 4% of the consideration received by the particular corporation for the issue of the share,
(b)if the original acquisition of the share was after March 5, 1996 and less than eight years before the particular time, 1.875% of the consideration received by the particular corporation for the issue of the share, and
(c)in any other case, nil; and
(a)if the original acquisition of the share was before March 6, 1996, the number obtained when the number of whole years throughout which the share was outstanding before the particular time is subtracted from five, and
(b)in any other case, the number obtained when the number of whole years throughout which the share was outstanding is subtracted from eight.
Marginal note:Dissolution of federally registered LSVCCs
204.85(1)A registered labour-sponsored venture capital corporation or a revoked corporation that has issued any Class A shares shall send written notification of any proposed amalgamation, merger, liquidation or dissolution of the corporation to the Minister at least 30 days before the amalgamation, merger, liquidation or dissolution, as the case may be.
Marginal note:Dissolution of other LSVCCs
(2)Where
(a)an amount (other than interest on an amount to which this subsection applies or an amount payable under or as a consequence of a prescribed provision of a law of a province) is payable to the government of a province by a corporation,
(b)the amount is payable as a consequence of the amalgamation or merger of the corporation with another corporation, the winding-up or dissolution of the corporation or the corporation ceasing to be registered under a law of the province,
(c)the corporation has been prescribed for the purpose of the definitionapproved sharein subsection 127.4(1), and
(d)the corporation is not a registered labour-sponsored venture capital corporation or a revoked corporation,
the corporation shall pay a tax under this Part for the taxation year in which the amount became payable equal to that amount.
Marginal note:Amalgamations and mergers
(3)For the purposes of section 127.4, this Part and Part XII.5, where two or more corporations (each of which is referred to in this subsection as a “predecessor corporation”) amalgamate or merge to form one corporate entity (in this subsection referred to as the “new corporation”) and at least one of the predecessor corporations was, immediately before the amalgamation or merger, a registered labour-sponsored venture capital corporation or a revoked corporation,
(a)subject to paragraphs (d) and (e), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;
(b)where a predecessor corporation was authorized to issue a class of shares to which clause 204.81(1)(c)(ii)(C) applies, the new corporation is deemed to have received approval from the Minister of Finance to issue substantially similar shares at the time of the amalgamation or merger;
(c)where a share of a predecessor corporation (in this paragraph referred to as the “predecessor share”) is replaced on the amalgamation or merger by a new share of the new corporation,
(i)the new share
(A)is deemed not to have been issued on the amalgamation or merger, and
(B)is deemed to have been issued by the new corporation at the time the predecessor corporation issued the predecessor share, and
(ii)if the new share was issued to a person who acquired the predecessor share as a consequence of a transfer the registration of which by the predecessor corporation was permitted under paragraph 204.81(1)(c), the issuance of the new share is deemed to be in compliance with the conditions described in paragraph 204.81(1)(c);
(d)the Minister is deemed to have registered the new corporation for the purposes of this Part unless
(i)the new corporation is not governed by theCanada Business Corporations Act,
(ii)one or more of the predecessor corporations was a registered labour-sponsored venture capital corporation the venture capital business of which was discontinued before the amalgamation or merger,
(iii)one or more of the predecessor corporations was, immediately before the amalgamation or merger, a revoked corporation,
(iv)immediately after the amalgamation or merger, the articles of the new corporation do not comply with paragraph 204.81(1)(c),
(v)shares other than Class A shares of the capital stock of the new corporation were issued to any shareholder of the new corporation in satisfaction of any share (other than a share to which clause 204.81(1)(c)(ii)(B) or (C) applied) of a predecessor corporation,
(vi)immediately before the amalgamation or merger, one or more of the predecessor corporations is a corporation that has given notification under subsection 204.81(8.3) and one or more of the predecessor corporations is a registered labour-sponsored venture capital corporation that has not given notification under that subsection;
(e)where paragraph (d) does not apply, the new corporation is deemed to be a revoked corporation;
(f)subsection 204.82(1) does not apply to the new corporation; and
(g)subsection 204.82(2) shall, in its application to the new corporation, be read without reference to the words “that begins after the end of the corporation’s start-up period (or, where the corporation has no start-up period, that begins after the time the corporation first issues a Class A share)”.
Marginal note:Return and payment of tax for federally-registered LSVCCs
204.86(1)Every registered labour-sponsored venture capital corporation and every revoked corporation shall
(a)on or before its filing-due date for a taxation year, file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand therefor;
(b)estimate in the return the amount of tax and penalties, if any, payable under this Part by it for the year; and
(c)on or before its balance-due day for the year, pay to the Receiver General the amount of tax and penalties, if any, payable under this Part by it for the year.
Marginal note:Return and payment of tax for other LSVCCs
(2)Where tax is payable under this Part for a taxation year by a corporation because of subsection 204.82(5) or 204.85(2), the corporation shall
(a)on or before its filing-due date for the year, file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand therefor;
(b)estimate in the return the amount of tax payable under this Part by it for the year; and
(c)on or before its balance-due day for the year, pay to the Receiver General the amount of tax payable under this Part by it for the year.
Marginal note:Provisions applicable to Part
204.87Subsection 150(3), sections 152 and 158, subsections 161(1) and 161(11), sections 162 to 164 and 165 to 167, Division J of Part I and section 227.1 apply to this Part, with such modifications as the circumstances require.
Marginal note:Definitions
204.9(1)The definitions in this subsection apply in this Part.
excess amountfor a year at any time in respect of an individual means
(a)for years before 2007, the amount, if any, by which the total of all contributions made after February 20, 1990 in the year and before that time into all registered education savings plans by or on behalf of all subscribers in respect of the individual exceeds the lesser of
(i)the RESP annual limit for the year, and
(ii)the amount, if any, by which the RESP lifetime limit for the year exceeds the total of all contributions made into registered education savings plans by or on behalf of all subscribers in respect of the individual in all preceding years; and
(b)for years after 2006, the amount, if any, by which the total of all contributions made in the year and before that time into all registered education savings plans by or on behalf of all subscribers in respect of the individual exceeds the amount, if any, by which
(i)the RESP lifetime limit for the year
exceeds
(ii)the total of all contributions made into registered education savings plans by or on behalf of all subscribers in respect of the individual in all preceding years. (excédent)
RESP lifetime limitfor a year means
(a)for 1990 to 1995, $31,500;
(b)for 1996 to 2006, $42,000; and
(c)for 2007 and subsequent years, $50,000. (plafond cumulatif de REEE)
subscriber’s gross cumulative excessat any time in respect of an individual means the total of all amounts each of which is the subscriber’s share of the excess amount for a relevant year at that time in respect of the individual and, for the purpose of this definition, a relevant year at any time is a year that began before that time. (excédent cumulatif brut du souscripteur)
subscriber’s share of the excess amountfor a year at any time in respect of an individual means the amount determined by the formula
(A/B) × C
where
Marginal note:Application of s. 146.1(1)
(1.1)The definitions in subsection 146.1(1) apply to this Part.
Marginal note:Agreements before February 21, 1990
(2)Where a subscriber is required, pursuant to an agreement in writing entered into before February 21, 1990, to make payments of specified amounts on a periodic basis into a registered education savings plan in respect of a beneficiary, and the subscriber makes at least one payment under the agreement before that day,
(a)the excess amount for a year in respect of the beneficiary shall be deemed not to exceed the excess amount for the year that would be determined under subsection 204.9(1) if the total of all such payments made in the year and, where the agreement so provides, amounts paid in the year in satisfaction of the requirement to make such payments under all such agreements by all such subscribers in respect of the beneficiary were equal to the lesser of the amounts described in paragraphs (a) and (b) of the definitionexcess amountin subsection 204.9(1); and
(b)in determining a subscriber’s share of an excess amount for a year, any payment included in the total described in paragraph 204.9(2)(a) in respect of the year shall be excluded in determining the values for A and B in the definitionsubscriber’s share of the excess amountin subsection 204.9(1).
Marginal note:Refunds from unregistered plans
(3)For the purposes of subsection 204.9(1) and section 146.1, where an individual entered into an education savings plan before February 21, 1990, pursuant to a preliminary prospectus issued by a promoter, and the promoter refunds all payments made into the plan and all income accrued thereon to the individual, each payment made by the individual into a registered education savings plan before December 31, 1990 shall be deemed to be a payment made before February 21, 1990, to the extent that the total of all such payments does not exceed the amount so refunded to the individual.
Marginal note:New beneficiary
(4)For the purposes of this Part, if at any particular time an individual (in this subsection referred to as the “new beneficiary”) becomes a beneficiary under a registered education savings plan in place of another individual (in this subsection referred to as the “former beneficiary”) who ceased at or before the particular time to be a beneficiary under the plan,
(a)except as provided by paragraph 204.9(4)(b), each contribution made at an earlier time by or on behalf of a subscriber into the plan in respect of the former beneficiary is deemed also to have been made at that earlier time in respect of the new beneficiary;
(b)except for the purpose of applying this subsection to a replacement of a beneficiary after the particular time, applying subsection (5) to a distribution after the particular time and applying subsection 204.91(3) to events after the particular time, paragraph (a) does not apply as a consequence of the replacement at the particular time of the former beneficiary if
(i)the new beneficiary had not attained 21 years of age before the particular time and a parent of the new beneficiary was a parent of the former beneficiary, or
(ii)both beneficiaries were connected by blood relationship or adoption to an original subscriber under the plan and neither had attained 21 years of age before the particular time; and
(c)except where paragraph 204.9(4)(b) applies, each contribution made by or on behalf of a subscriber under the plan in respect of the former beneficiary under the plan is, without affecting the determination of the amount withdrawn from the plan in respect of the new beneficiary, deemed to have been withdrawn at the particular time from the plan to the extent that it was not withdrawn before the particular time.
Marginal note:Transfers between plans
(5)For the purposes of this Part, if property held by a trust governed by a registered education savings plan (in this subsection referred to as the “transferor plan”) is distributed at a particular time to a trust governed by another registered education savings plan (in this subsection referred to as the “transferee plan”),
(a)except as provided by paragraphs 204.9(5)(b) and 204.9(5)(c), the amount of the distribution is deemed not to have been contributed into the transferee plan;
(b)subject to paragraph 204.9(5)(c), each contribution made at any earlier time by or on behalf of a subscriber into the transferor plan in respect of a beneficiary under the transferor plan is deemed also to have been made at that earlier time by the subscriber in respect of each beneficiary under the transferee plan;
(c)except for the purpose of applying this subsection to a distribution after the particular time, applying subsection 204.9(4) to a replacement of a beneficiary after the particular time and applying subsection 204.91(3) to events after the particular time, paragraph 204.9(5)(b) does not apply as a consequence of the distribution where
(i)any beneficiary under the transferee plan was, immediately before the particular time, a beneficiary under the transferor plan, or
(ii)a parent of a beneficiary under the transferee plan was a parent of an individual who was, immediately before the particular time, a beneficiary under the transferor plan and
(A)the transferee plan is a plan that allows more than one beneficiary under the plan at any one time, or
(B)in any other case, the beneficiary under the transferee plan had not attained 21 years of age at the time the transferee plan was entered into;
(d)where subparagraph 204.9(5)(c)(i) or 204.9(5)(c)(ii) applies in respect of the distribution, the amount of the distribution is deemed not to have been withdrawn from the transferor plan; and
(e)each subscriber under the transferor plan is deemed to be a subscriber under the transferee plan.
Marginal note:Tax payable by subscribers
204.91(1)Every subscriber under a registered education savings plan shall pay a tax under this Part in respect of each month equal to 1% of the amount, if any, by which
(a)the total of all amounts each of which is the subscriber’s gross cumulative excess at the end of the month in respect of an individual
exceeds
(b)the total of all amounts each of which is the portion of such an excess that has been withdrawn from a registered education savings plan before the end of the month.
Marginal note:Waiver of tax
(2)If a subscriber under a registered education savings plan would, but for this subsection, be required to pay a tax in respect of a month under subsection 204.91(1) in respect of an individual, the Minister may waive or cancel all or part of the tax where it is just and equitable to do so having regard to all the circumstances, including
(a)whether the tax arose as a consequence of reasonable error;
(b)whether, as a consequence of one or more transactions or events to which subsection 204.9(4) or 204.9(5) applies, the tax is excessive; and
(c)the extent to which further contributions could be made into registered education savings plans in respect of the individual before the end of the month without causing additional tax to be payable under this Part if this Part were read without reference to this subsection.
Marginal note:Marriage or common-law partnership breakdown
(3)If at any time an individual (in this subsection referred to as the “former subscriber”) ceases to be a subscriber under a registered education savings plan as a consequence of the settlement of rights arising out of, or on the breakdown of, the marriage or common-law partnership of the former subscriber and another individual (in this subsection referred to as the “current subscriber”) who is a subscriber under the plan immediately after that time, for the purpose of determining tax payable under this Part in respect of a month that ends after that time, each contribution made before that time into the plan by or on behalf of the former subscriber is deemed to have been made into the plan by the current subscriber and not by or on behalf of the former subscriber.
Marginal note:Deceased subscribers
(4)For the purpose of applying this section where a subscriber has died, the subscriber’s estate is deemed to be the same person as, and a continuation of, the subscriber for each month that ends after the death.
Marginal note:Return and payment of tax
204.92Every person who is liable to pay tax under this Part in respect of a month in a year shall, within 90 days after the end of the year,
(a)file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand therefor;
(b)estimate in the return the amount of tax, if any, payable under this Part by the person in respect of each month in the year; and
(c)pay to the Receiver General the amount of tax, if any, payable by the person under this Part in respect of each month in the year.
Marginal note:Provisions applicable to Part
204.93Subsections 150(2) and 150(3), sections 152, 158 and 159, subsections 161(1) and 161(11), sections 162 to 167 and Division J of Part I are applicable to this Part, with such modifications as the circumstances require.
Marginal note:Definitions
204.94(1)The definitions in subsection 146.1(1) apply for the purposes of this Part, except that the definitionsubscriberin that subsection shall be read without reference to paragraph (c).
Marginal note:Charging provision
(2)Every person (other than a public primary caregiver that is exempt from tax under Part I) shall pay a tax under this Part for each taxation year equal to the amount determined by the formula
(A + B - C) × D
where
(a)either
(i)under a registered education savings plan under which the person is a subscriber at that time, or
(ii)under a registered education savings plan under which there is no subscriber at that time, where the person has been a spouse or common-law partner of an individual who was a subscriber under the plan, and
(b)included in computing the person’s income under Part I for the year;
(a)not included in the value of A in respect of the person for the year, and
(b)included in computing the person’s income under Part I for the year;
(a)the lesser of the value of A in respect of the person for the year and the total of all amounts each of which is an amount deducted under subsection 146(5) or 146(5.1) in computing the person’s income under Part I for the year, and
(b)the amount, if any, by which $50,000 exceeds the total of all amounts each of which is an amount determined under paragraph (a) in respect of the person for a preceding taxation year; and
(a)where a tax, similar to the tax provided under this Part, is payable by the person for the year under a law of the province of Quebec, 12%, and
(b)in any other case, 20%.
Marginal note:Return and payment of tax
(3)Every person who is liable to pay tax under this Part for a taxation year shall, on or before the person’s filing-due date for the year,
(a)file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand therefor;
(b)estimate in the return the amount of tax payable under this Part by the person for the year; and
(c)pay to the Receiver General the amount of tax payable under this Part by the person for the year.
Marginal note:Administrative rules
(4)Subsections 150(2) and 150(3), sections 152, 155 to 156.1 and 158 to 167 and Division J of Part I apply with any modifications that the circumstances require.
Marginal note:Definitions
205(1)The following definitions apply in this section.
ALDA dollar limit, for a calendar year, means
(a)for 2020, $150,000; and
(b)for each year after 2020, the amount (rounded to the nearest multiple of $10,000, or if that amount is equidistant from two such consecutive multiples, to the higher multiple) that is equal to $150,000 adjusted for each year after 2020 in the manner set out in section 117.1. (plafond de la RVDAA)
cumulative excess amount, of an individual at any particular time in a calendar year, means the amount determined by the formula
A − B
where
(a)the total of all amounts each of which is an excess ALDA transfer of the individual at or before the particular time, and
(b)the amount determined by the formula
C − D
where
excess ALDA transfer, of an individual, means the portion of the amount of a transfer, made from a transferor plan under any of subsections 146(16) and 146.3(14.1) and paragraphs 147(19)(d), 147.3(1)(c) and 147.5(21)(c) to acquire an advanced life deferred annuity on behalf of the individual, determined by the formula
A − B
where
0.25(C + D) − E
where
(a)if the transferor plan is a registered pension plan, property held in connection with
(i)adefined benefit provision(as defined in subsection 147.1(1)) of the transferor plan, or
(ii)a VPLA fund, as described in subsection 8506(13) of theIncome Tax Regulations,
(b)if the transferor plan is a pooled registered pension plan, property held in connection with benefits that would be described in paragraph 147.5(5)(a) if the reference in that paragraph to “8506(1)(e.1) or (e.2)” were read as a reference to “8506(1)(e.2)”,
(c)if the transferor plan is a registered retirement income fund, contracts for annuities held in connection with the fund other than annuities described in paragraph (b.1) of the definitionqualified investmentin subsection 146.3(1), and
(d)if the transferor plan is a registered retirement savings plan, contracts for annuities held in connection with the plan other than annuities described in paragraph (c.1) of the definitionqualified investmentin subsection 146(1),
Marginal note:Tax payable by individuals
(2)If at the end of any month an individual has a cumulative excess amount, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of that cumulative excess amount.
Marginal note:Waiver of tax
(3)If an individual would, but for this subsection, be required to pay a tax under subsection (2) in respect of a month, the Minister may waive or cancel all or part of the tax if the individual establishes to the satisfaction of the Minister that
(a)the cumulative excess amount on which the tax is based arose as a consequence of reasonable error; and
(b)reasonable steps are being taken to eliminate the cumulative excess amount.
Marginal note:Return and payment of tax
206(1)Every person who is liable to pay tax under this Part for all or part of a calendar year shall,
(a)on or before the person’s filing-due date for the year, file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand; and
(b)on or before the person’s balance-due day for the year, pay to the Receiver General the amount of tax payable under this Part by the person for the year.
Marginal note:Provisions applicable to Part
(2)Subsections 150(2) and (3), sections 152 and 158 to 167 and Division J of Part I apply with any modifications that the circumstances require.
206.1[Repealed, 2017, c. 33, s. 66]
206.2[Repealed, 2017, c. 33, s. 66]
206.3[Repealed, 2017, c. 33, s. 66]
206.4[Repealed, 2017, c. 33, s. 66]
207[Repealed, 2017, c. 33, s. 66]
Marginal note:Definitions
207.01(1)The following definitions and the definitions in subsections 146(1) (other than the definitionbenefit), 146.1(1), 146.2(1), 146.3(1), 146.4(1) and 146.6(1) apply in this Part and Part XLIX of theIncome Tax Regulations.
advantage, in relation to a registered plan, means
(a)any benefit, loan or indebtedness that is conditional in any way on the existence of the registered plan, other than
(i)a benefit derived from the provision of administrative or investment services in respect of the registered plan,
(ii)a loan or an indebtedness (including, in the case of a TFSA, the use of the TFSA as security for a loan or an indebtedness) the terms and conditions of which are terms and conditions that persons dealing at arm’s length with each other would have entered into,
(iii)a payment out of or under the registered plan in satisfaction of all or part of a beneficiary’s or controlling individual’s interest in the registered plan,
(iv)the payment or allocation of any amount to the registered plan by the issuer, carrier or promoter,
(iv.1)an amount paid under or because of theCanada Disability Savings Act, theCanada Education Savings Actor under a designated provincial program, and
(v)a benefit provided under an incentive program that is — in a normal commercial or investment context in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly — offered to a broad class of persons, if it is reasonable to conclude that none of the main purposes of the program is to enable a person or partnership to benefit from the exemption from tax under Part I of any amount in respect of the plan;
(b)a benefit that is an increase in the total fair market value of the property held in connection with the registered plan if it is reasonable to consider, having regard to all the circumstances, that the increase is attributable, directly or indirectly, to
(i)a transaction or event or a series of transactions or events that
(A)would not have occurred in a normal commercial or investment context in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly, and
(B)had as one of its main purposes to enable a person or a partnership to benefit from the exemption from tax under Part I of any amount in respect of the registered plan,
(ii)a payment received as, on account or in lieu of, or in satisfaction of, a payment
(A)for services provided by a person who is, or who does not deal at arm’s length with, the controlling individual of the registered plan, or
(B)of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition, in respect of property (other than property held in connection with the registered plan) held by a person who is, or who does not deal at arm’s length with, the controlling individual of the registered plan,
(iii)a swap transaction, or
(iv)specified non-qualified investment income that has not been paid from the registered plan to its controlling individual within 90 days of receipt by the controlling individual of a notice issued by the Minister under subsection 207.06(4);
(c)a benefit that is income (determined without reference to paragraph 82(1)(b)), or a capital gain, that is reasonably attributable, directly or indirectly, to
(i)a prohibited investment in respect of the registered plan or any other registered plan of the controlling individual,
(ii)in the case of a registered plan that is not a TFSA, an amount received by the controlling individual of the registered plan, or by a person who does not deal at arm’s length with the controlling individual (if it is reasonable to consider, having regard to all the circumstances, that the amount was paid in relation to, or would not have been paid but for, property held in connection with the registered plan) and the amount was paid as, on account or in lieu of, or in satisfaction of, a payment
(A)for services provided by a person who is, or who does not deal at arm’s length with, the controlling individual of the registered plan, or
(B)of interest, of a dividend, of rent, of a royalty or of any other return on investment, or of proceeds of disposition, or
(iii)a deliberate over-contribution;
(d)a registered plan strip in respect of the registered plan; and
(e)a prescribed benefit. (avantage)
allowable refundof a person for a calendar year means the total of all amounts each of which is a refund, for the year, to which the person is entitled under subsection 207.04(4). (remboursement admissible)
controlling individual, of a registered plan, means
(a)the holder of a TFSA;
(b)a holder of a RDSP;
(c)a subscriber of a RESP;
(d)the annuitant of a RRIF or RRSP; or
(e)the holder of a FHSA. (particulier contrôlant)
deliberate over-contributionof an individual means a contribution made under a TFSA by the individual that results in, or increases, an excess TFSA amount, unless it is reasonable to conclude that the individual neither knew nor ought to have known that the contribution could result in liability for a penalty, tax or similar consequence under this Act. (cotisation excédentaire intentionnelle)
designated amountof an individual means an amount, not exceeding the excess FHSA amount of the individual, designated by the individual in the prescribed form and manner that is
(a)a transfer in accordance with subparagraph 146.6(7)(b)(ii) to a FHSA under which the individual is the holder, to the extent that it does not exceed the total of all amounts transferred under paragraph 146(16)(a.2) on or before the date of the designation less the total of all amounts previously designated under this paragraph; or
(b)a withdrawal from a FHSA under which the individual is the holder, to the extent that it does not exceed the total of all amounts contributed to a FHSA under which the individual is the holder on or before the date of the designation less the total of all amounts previously designated under this paragraph. (montant désigné)
equity, of a corporation, trust or partnership, means
(a)in the case of a corporation, a share of the capital stock of the corporation;
(b)in the case of a trust, an income or capital interest in the trust; and
(c)in the case of a partnership, an interest as a member of the partnership. (droit sur l’actif)
excess FHSA amountof an individual at a particular time in a taxation year means the amount determined by the formula
A + B − C − D − E
where
(a)$40,000, and
(b)the amount determined by the formula
$8,000 + F + G + H − I
where
excess TFSA amountof an individual at a particular time in a calendar year means the amount, if any, determined by the formula
A - B - C - D - E
where
(a)a qualifying transfer, or
(b)an exempt contribution;
(a)a qualifying transfer, or
(b)a specified distribution;
(a)the TFSA dollar limit for the calendar year if, at any time in the calendar year, the individual is resident in Canada, and
(b)nil, in any other case; and
(a)nil, if the distribution is a qualifying transfer or a specified distribution, and
(b)in any other case, the lesser of
(i)the amount of the distribution, and
(ii)the amount that would be the individual’s excess TFSA amount at the time of the distribution if the amount of the distribution were nil. (excédent CÉLI)
excluded property, at any time for a trust governed by a registered plan, means
(a)property described in paragraph 4900(1)(j.1) of theIncome Tax Regulations;
(b)an equity of a mutual fund corporation, mutual fund trust or registered investment if
(i)either
(A)the equity is equity of a mutual fund corporation or mutual fund trust that derives all or substantially all its value from one or more mutual funds that are subject to, and substantially comply with, the requirements ofNational Instrument 81–102 Mutual Funds, as amended from time to time, of the Canadian Securities Administrators, or
(B)the corporation, trust or registered investment follows a reasonable policy of investment diversification,
(ii)the time is
(A)during the 24-month period that begins on the day on which the first taxation year of the corporation, trust or registered investment begins,
(B)during the 24-month period that ends on the day on which the last taxation year of the corporation, trust or registered investment ends, or
(C)where the equity is a share of the capital stock of a mutual fund corporation and the share derives all or substantially all its value from a particular mutual fund,
(I)during the 24-month period that begins on the day on which the particular mutual fund is established, or
(II)during the 24-month period that ends on the day on which the particular mutual fund is terminated,
(iii)it is reasonable to conclude that none of the main purposes of the structure of the corporation, trust or registered investment, or of the terms and conditions of the equity, is to accommodate transactions or events that could affect the fair market value of the property held by the trust governed by the registered plan in a manner that would not occur in a normal commercial or investment context in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly, and
(iv)it is reasonable to conclude that none of the main purposes of the incorporation, establishment or operation of the corporation, trust or registered investment, or of the particular mutual fund, is to benefit from this paragraph; or
(c)equity of a corporation, partnership or trust (in this paragraph referred to as the “investment entity”) if at that time
(i)the fair market value of the equity (in this paragraph referred to as the “arm’s length equity”) of the investment entity that is owned by persons who deal at arm’s length with the controlling individual of the registered plan is at least 90% of the fair market value of all the equity of the investment entity,
(ii)the total fair market value of the arm’s length equity and the debt of the investment entity that is owned by persons who deal at arm’s length with the controlling individual is at least 90% of the total fair market value of all the equity and debt of the investment entity,
(iii)the controlling individual, either alone or together with persons with whom the controlling individual does not deal at arm’s length, does not have the right to cast at least 10% of the votes, if any, that could be cast regarding the governance of the investment entity,
(iv)the specific terms and conditions of each share or unit of equity of the investment entity held by the trust governed by the registered plan are the same as, or substantially similar to, the terms and conditions of particular equity that is included in the arm’s length equity,
(v)the fair market value of the particular equity referred to in subparagraph (iv) is equal to at least 10% of the total fair market value of all equity of the investment entity having the specific terms and conditions referred to in subparagraph (iv) or terms and conditions that are substantially similar to those terms and conditions,
(vi)the controlling individual deals at arm’s length with the investment entity, and
(vii)it is reasonable to conclude that none of the main purposes of the structure of the investment entity, or of the terms and conditions of the equity, is to accommodate transactions or events that could affect the fair market value of the property held by the trust governed by the registered plan in a manner that would not occur in a normal commercial or investment context in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly. (bien exclu)
exempt contributionmeans a contribution made in a calendar year under a TFSA by the survivor of an individual if
(a)the contribution is made during the period (in this definition referred to as the “rollover period”) that begins when the individual dies and that ends at the end of the first calendar year that begins after the individual dies (or at any later time that is acceptable to the Minister);
(b)a payment (in this definition referred to as the “survivor payment”) was made to the survivor during the rollover period, as a consequence of the individual’s death, directly or indirectly out of or under an arrangement that ceased, because of the individual’s death, to be a TFSA;
(c)the survivor designates, in prescribed form filed in prescribed manner within 30 days after the day on which the contribution is made (or at any later time that is acceptable to the Minister), the contribution in relation to the survivor payment; and
(d)the amount of the contribution does not exceed the least of
(i)the amount, if any, by which
(A)the amount of the survivor payment
exceeds
(B)the total of all other contributions designated by the survivor in relation to the survivor payment,
(ii)the amount, if any, by which
(A)the total proceeds of disposition that would, if section 146.2 were read without reference to subsection 146.2(9), be determined in respect of the arrangement under paragraph 146.2(8)(a), (10)(a) or (11)(a), as the case may be,
exceeds
(B)the total of all other exempt contributions in respect of the arrangement made by the survivor at or before the time of the contribution, and
(iii)if the individual had, immediately before the individual’s death, an excess TFSA amount or if payments described in paragraph (b) are made to more than one survivor of the individual, nil or the greater amount, if any, allowed by the Minister in respect of the contribution. (cotisation exclue)
non-qualified investmentfor a trust governed by a registered plan means property that is not a qualified investment for the trust. (placement non admissible)
prohibited investment, at any time for a trust governed by a registered plan, means property (other than excluded property for the trust) that is at that time
(a)a debt of the controlling individual of the registered plan;
(b)a share of the capital stock of, an interest in, or a debt of
(i)a corporation, partnership or trust in which the controlling individual has a significant interest, or
(ii)a person or partnership that does not deal at arm’s length with the controlling individual;
(c)an interest (or, for civil law, a right) in, or a right to acquire, a share, interest or debt described in paragraph (a) or (b); or
(d)prescribed property. (placement interdit)
qualified investmentfor a trust governed by a FHSA or TFSA means
(a)an investment that would be described by any of paragraphs (a) to (d), (f) and (g) of the definitionqualified investmentin section 204 if the reference in that definition to “a trust governed by a deferred profit sharing plan or revoked plan” were read as a reference to “a trust governed by a FHSA or TFSA” and if that definition were read without reference to the words “with the exception of excluded property in relation to the trust”;
(b)a contract for an annuity issued by a licensed annuities provider if
(i)the trust is the only person who, disregarding any subsequent transfer of the contract by the trust, is or may become entitled to any annuity payments under the contract, and
(ii)the holder of the contract has a right to surrender the contract at any time for an amount that would, if reasonable sales and administration charges were ignored, approximate the value of funds that could otherwise be applied to fund future periodic payments under the contract; and
(c)a prescribed investment. (placement admissible)
qualifying transfermeans the transfer of an amount from a TFSA of which a particular individual is the holder if
(a)the amount is transferred directly to another TFSA, the holder of which is the particular individual; or
(b)the amount is transferred directly to another TFSA, the holder of which is a spouse or common-law partner or former spouse or common-law partner of the particular individual, and the following conditions are satisfied:
(i)the individuals are living separate and apart at the time of the transfer, and
(ii)the transfer is made under a decree, order or judgment of a competent tribunal, or under a written separation agreement, relating to a division of property between the individuals in settlement of rights arising out of, or on the breakdown of, their marriage or common-law partnership. (transfert admissible)
registered planmeans a FHSA, RDSP, RESP, RRIF, RRSP or TFSA. (régime enregistré)
registered plan strip, in respect of a registered plan that is not a TFSA, means the amount of a reduction in the fair market value of property held in connection with the registered plan, if the value is reduced as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable the controlling individual of the registered plan, or a person who does not deal at arm’s length with the controlling individual, to obtain a benefit in respect of property held in connection with the registered plan or to obtain a benefit as a result of the reduction, but does not include an amount that is
(a)included in the income of a person under section 146, 146.1, 146.3, 146.4 or 146.6;
(b)an excluded withdrawal under section 146.01 or 146.02;
(b.1)a qualifying withdrawal under section 146.6;
(b.2)a designated amount;
(c)described in subsection 146(16), 146.3(14.2) or 146.4(8);
(d)a distribution to a trust governed by a RESP under circumstances to which subparagraph 204.9(5)(c)(i) or (ii) applies;
(e)an accumulated income payment made to a RDSP under circumstances to which subsection 146.1(1.2) applies;
(f)a refund of payments under a RESP; or
(g)the non-taxable portion of a disability assistance payment made from a RDSP. (somme découlant d’un dépouillement de régime enregistré)
restricted property[Repealed, 2009, c. 2, s. 68]
RRSP strip[Repealed, 2017, c. 33, s. 68]
specified distributionmeans
(a)a distribution made under a TFSA to the extent that it is, or is reasonably attributable to, an amount that is
(i)an advantage in respect of the TFSA or any other TFSA of the holder,
(ii)specified non-qualified investment income,
(iii)an amount in respect of which tax was payable under Part I by a trust governed by the TFSA or any other TFSA of the holder, or
(iv)an amount described in subparagraph 207.06(1)(b)(ii); or
(b)a prescribed distribution. (distribution déterminée)
specified non-qualified investment income, in respect of a registered plan and its controlling individual, means income (determined without reference to paragraph 82(1)(b)), or a capital gain, that is reasonably attributable, directly or indirectly, to an amount in respect of which tax was payable under Part I by a trust governed by the registered plan or by any other registered plan of the controlling individual. (revenu de placement non admissible déterminé)
swap transaction, in respect of a registered plan, means a transfer of property between the registered plan and its controlling individual or a person with whom the controlling individual does not deal at arm’s length, but does not include
(a)a payment out of or under the registered plan in satisfaction of all or part of the controlling individual’s interest in the registered plan;
(b)a payment into the registered plan that is
(i)a contribution, a premium or an amount transferred in accordance with paragraph 146.3(2)(f),
(ii)described in paragraph (a) or (b) of the definitioncontributionin subsection 146.1(1), or
(iii)described in any of paragraphs (a) to (d) of the definitioncontributionin subsection 146.4(1);
(c)a transfer of a prohibited investment or a non-qualified investment from the registered plan for consideration, in circumstances where the controlling individual is entitled to a refund under subsection 207.04(4) on the transfer;
(d)a transfer of property from one registered plan of a controlling individual to another registered plan of the controlling individual if
(i)both registered plans are RRIFs, RRSPs or FHSAs,
(ii)both registered plans are TFSAs,
(iii)both registered plans are RDSPs, or
(iv)both registered plans are RESPs;
(e)a transfer of a prohibited investment from the registered plan for consideration, if subsection (13) applies in respect of all or part of the consideration received by the registered plan;
(f)a transfer of property from the registered plan in consideration for the issuance of a debt obligation that is an excluded property for the trust governed by the registered plan; or
(g)a payment into the registered plan that is a payment of, or in satisfaction of, the principal amount of, or interest on, a debt obligation that is an excluded property for the trust governed by the registered plan. (opération de swap)
TFSA dollar limitfor a calendar year means,
(a)for 2009 to 2012, $5,000;
(b)for 2013 and 2014, $5,500;
(c)for 2015, $10,000; and
(d)for each year after 2015, the amount (rounded to the nearest multiple of $500, or if that amount is equidistant from two such consecutive multiples, to the higher multiple) that is equal to $5,000 adjusted for each year after 2009 in the manner set out in section 117.1. (plafond CÉLI)
transitional prohibited investment benefit, of a controlling individual for a taxation year, means the amount determined by the formula
A – B
where
(a)is reasonably attributable, directly or indirectly, to a property that is a prohibited investment, and a transitional prohibited property, for the trust, and
(b)in the case of income, is earned after March 22, 2011 and, in the case of a capital gain, accrues after March 22, 2011; and
(a)is reasonably attributable, directly or indirectly, to a property that is a prohibited investment, and a transitional prohibited property, for the trust, and
(b)accrues after March 22, 2011. (bénéfice transitoire provenant d’un placement interdit)
transitional prohibited property, at any time for a particular trust governed by a registered plan (other than a TFSA) of a controlling individual, means a property that is held by the particular trust at that time, that was held
(a)on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual and that was a prohibited investment for that trust on March 23, 2011; or
(b)on March 22, 2017 by a trust governed by a RDSP or RESP of the controlling individual and that was a prohibited investment for that trust on March 23, 2017. (bien interdit transitoire)
unused TFSA contribution roomof an individual at the end of a calendar year means,
(a)if the year is before 2009, nil;
(a.1)in circumstances where the Minister has, in accordance with section 207.06, waived or cancelled all or part of the liability imposed on the individual, the amount determined by the Minister; and
(b)in any other case, the positive or negative amount determined by the formula
A + B + C - D
where
(i)a qualifying transfer, or
(ii)a specified distribution,
(i)the TFSA dollar limit for the calendar year, if at any time in the calendar year the individual is 18 years of age or older and resident in Canada, and
(ii)nil, in any other case, and
(i)a qualifying transfer, or
(ii)an exempt contribution. (droits inutilisés de cotisation à un CÉLI)
(2)[Repealed, 2009, c. 2, s. 68]
Marginal note:Survivor as successor holder
(3)If an individual’s survivor becomes the holder of a TFSA as a consequence of the individual’s death and, immediately before the individual’s death, the individual had an excess TFSA amount, the survivor is deemed (other than for the purposes of the definitionexempt contribution) to have made, at the beginning of the month following the individual’s death, a contribution under a TFSA equal to the amount, if any, by which
(a)that excess TFSA amount
exceeds
(b)the total fair market value immediately before the individual’s death of all property held in connection with arrangements that ceased, because of the individual’s death, to be TFSAs.
Marginal note:Significant interest
(4)An individual has a significant interest in a corporation, partnership or trust at any time if
(a)in the case of a corporation, the individual would, at that time, be a specified shareholder of the corporation if the references in the portion of the definitionspecified shareholderin subsection 248(1) before paragraph (a) to “in a taxation year” and “at any time in the year” were read as “at any time” and “at that time”, respectively;
(b)in the case of a partnership, the individual, or the individual together with persons and partnerships with which the individual does not deal at arm’s length, holds at that time interests as a member of the partnership that have a fair market value of 10% or more of the fair market value of the interests of all members in the partnership; and
(c)in the case of a trust, the individual, or the individual together with persons and partnerships with which the individual does not deal at arm’s length, holds at that time interests as a beneficiary (in this paragraph, as defined in subsection 108(1)) under the trust that have a fair market value of 10% or more of the fair market value of the interests of all beneficiaries under the trust.
Marginal note:Obligation of issuer
(5)The issuer, carrier or promoter of a registered plan shall exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a trust governed by the registered plan holds a non-qualified investment.
Marginal note:Deemed disposition and reacquisition of investments
(6)If, at any time, a property held by a trust governed by a registered plan becomes, or ceases to be, a prohibited investment or non-qualified investment for the trust, the trust is deemed to have disposed of the property immediately before that time for proceeds of disposition equal to the fair market value of the property at that time and to have reacquired the property at that time at a cost equal to that fair market value.
Marginal note:Adjusted cost base
(7)For the purpose of computing the adjusted cost base to a trust governed by a registered plan (other than a TFSA) of a property that is a transitional prohibited property for the trust, the cost to the trust of the property until the property is disposed of by the trust is deemed to be equal to the fair market value of the property,
(a)in the case of a RRIF or RRSP, at the end of March 22, 2011; and
(b)in the case of a RDSP or RESP, at the end of March 22, 2017.
Marginal note:Prohibited investment status
(8)Subsection (9) applies in respect of a property if
(a)the property would, in the absence of subsection (9), have ceased at any time (in this subsection and subsection (9) referred to as the “relevant time”) to be a prohibited investment for a trust governed by a registered plan (other than a TFSA) of a controlling individual;
(b)the property is a transitional prohibited property for the trust immediately before the relevant time;
(c)in the case of a property held under a RRIF or RRSP, the controlling individual elected under subsection 207.05(4); and
(d)the controlling individual elects in prescribed form that subsection (9) apply in respect of the property and the election is filed with the Minister on or before the day that is 90 days after the end of the taxation year of the controlling individual that includes the relevant time.
Marginal note:Prohibited investment status
(9)If this subsection applies in respect of a property, the property is deemed to be a prohibited investment at and after the relevant time for every trust governed by a registered plan (other than a TFSA) of the controlling individual referred to in paragraph (8)(a).
Marginal note:Breakdown of marriage or common-law partnership
(10)Subsection (11) applies in respect of a property if
(a)the property is transferred at any time (in this subsection and subsection (11) referred to as the “transfer time”) by a trust (in this subsection and subsection (11) referred to as the “transferor trust”) governed by a RRIF or RRSP of a controlling individual (in this subsection and subsection (11) referred to as the “transferor”) under paragraph 146(16)(b) or subsection 146.3(14) to a trust (in subsection (11) referred to as the “recipient trust”) governed by a RRIF or RRSP of which the spouse or common-law partner or former spouse or common-law partner (in this subsection and subsection (11) referred to as the “recipient”) of the transferor is the controlling individual;
(b)the property is a prohibited investment, and a transitional prohibited property, for the transferor trust immediately before the transfer time;
(c)the transferor elected under subsection 207.05(4); and
(d)the transferor and the recipient jointly elect in prescribed form that subsection (11) apply in respect of the property and the election
(i)is filed with the Minister on or before the day that is 90 days after the end of the taxation year of the transferor that includes the transfer time; and
(ii)designates an amount (in subsection (11) referred to as the “designated amount”) in respect of the property that
(A)is not less than the adjusted cost base to the transferor trust of the property immediately before the transfer time, and
(B)does not exceed the greater of the amount determined under clause (A) and the fair market value of the property at the transfer time.
Marginal note:Breakdown of marriage or common-law partnership
(11)If this subsection applies in respect of a property,
(a)the property is deemed to be, at and after the transfer time, a property that was held on March 22, 2011 by a trust governed by a RRIF or RRSP of the recipient and that was a prohibited investment for the trust on March 23, 2011;
(b)where the property would, in the absence of this paragraph, not be a prohibited investment for the recipient trust immediately after the transfer time, the property is deemed to be a prohibited investment at and after the transfer time for every trust governed by a RRIF or RRSP of the recipient;
(c)the recipient is deemed to have elected under subsection 207.05(4); and
(d)notwithstanding any other provision of this Act, the designated amount is deemed to be
(i)the proceeds of disposition to the transferor trust from the transfer described in paragraph (10)(a), and
(ii)the cost of the property to a trust governed by a RRIF or RRSP of the recipient until the property is disposed of by the trust.
Marginal note:Exchange of property
(12)Subsection (13) applies in respect of a property other than money if
(a)the property is acquired at any time (in this subsection and subsection (13) referred to as the “exchange time”) by a trust (in this section and subsection (13) referred to as the “exchanging trust”) governed by a registered plan (other than a TFSA) of a controlling individual in exchange for another property (in this subsection referred to as the “exchanged property”) in a transaction to which any of section 51, subsection 85(1) and sections 85.1, 86 and 87 apply;
(b)the exchanged property is a prohibited investment, and a transitional prohibited property, for the exchanging trust immediately before the exchange time;
(c)the property is, or would be, if subsection 4900(14) of theIncome Tax Regulationswere read without reference to its paragraph (b), a qualified investment for the exchanging trust immediately after the exchange time; and
(d)in the case of a property held under a RRIF or RRSP, the controlling individual elected under subsection 207.05(4).
Marginal note:Exchange of property
(13)If this subsection applies in respect of a property,
(a)other than for the purposes of subsection (7), the property is deemed to be, at and after the exchange time, a property,
(i)in the case of a trust governed by a RRIF or RRSP, that was
(A)held on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual referred to in subsection (12), and
(B)a prohibited investment for the trust on March 23, 2011, and
(ii)in the case of a trust governed by a RDSP or RESP, that was
(A)held on March 22, 2017 by a trust governed by a RDSP or RESP of the controlling individual referred to in subsection (12), and
(B)a prohibited investment for the trust on March 23, 2017; and
(b)if the property would, in the absence of this paragraph, not be a prohibited investment for the exchanging trust immediately after the exchange time, the property is deemed to be a prohibited investment at and after the exchange time for every trust governed by a registered plan (other than a TFSA) of the controlling individual.
Marginal note:Tax payable on excess TFSA amount
207.02If, at any time in a calendar month, an individual has an excess TFSA amount, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of the highest such amount in that month.
Marginal note:Tax payable on excess FHSA amount
207.021If, at any time in a calendar month, an individual has an excess FHSA amount, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of the highest such amount in that month.
Marginal note:Survivor as successor holder
207.022If an individual’s survivor becomes the holder of a FHSA as a consequence of the individual’s death and, immediately before the individual’s death, the individual had an excess FHSA amount, the survivor is deemed to have made, at the beginning of the month following the individual’s death, a contribution under a FHSA equal to the amount, if any, by which
(a)that excess FHSA amount
exceeds
(b)the total fair market value immediately before the individual’s death of all property held under the FHSAs of the individual (other than a FHSA in respect of which the survivor became the successor holder as a consequence of the individual’s death).
Marginal note:Tax payable on non-resident contributions
207.03If, at a particular time, a non-resident individual makes a contribution under a TFSA (other than a contribution that is a qualifying transfer or an exempt contribution), the individual shall pay a tax under this Part equal to 1% of the amount of the contribution in respect of each month that ends after the particular time and before the earlier of
(a)the first time after the particular time at which the amount of the contribution is equalled or exceeded by the total of all amounts each of which is a distribution
(i)that is made after the particular time under a TFSA of which the individual is the holder, and
(ii)that the individual designates in prescribed manner to be a distribution in connection with the contribution and not in connection with any other contribution, and
(b)the time at which the individual becomes resident in Canada.
Marginal note:Tax payable on prohibited or non-qualified investment
207.04(1)The controlling individual of a registered plan that governs a trust shall pay a tax under this Part for a calendar year if, at any time in the year, the trust acquires property that is a prohibited investment, or a non-qualified investment, for the trust.
Marginal note:Amount of tax payable
(2)The amount of tax payable in respect of each property described in subsection (1) is 50% of the fair market value of the property at the time referred to in that subsection.
Marginal note:Both prohibited and non-qualified investment
(3)For the purposes of this section and subsections 146(10.1), 146.1(5), 146.2(6), 146.3(9), 146.4(5) and 207.01(6), if a trust governed by a registered plan holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.
Marginal note:Refund of tax on disposition of investment
(4)If in a calendar year a trust governed by a registered plan disposes of a property in respect of which a tax is imposed under subsection (1) on the controlling individual of the registered plan, the controlling individual is entitled to a refund for the year of an amount equal to
(a)except where paragraph (b) applies, the amount of the tax so imposed; or
(b)nil,
(i)if it is reasonable to consider that the controlling individual knew, or ought to have known, at the time the property was acquired by the trust, that it was, or would become, a property described in subsection (1), or
(ii)if the property is not disposed of by the trust before the end of the calendar year following the calendar year in which the tax arose, or any later time that the Minister considers reasonable in the circumstances.
Marginal note:Apportionment of refund
(5)If more than one person is entitled to a refund under subsection (4) for a calendar year in respect of the disposition of a property, the total of all amounts so refundable shall not exceed the amount that would be so refundable for the year to any one of those persons in respect of that disposition if that person were the only person entitled to a refund for the year under that subsection in respect of the disposition