Eastern Standard Time, March 4, 2010, in respect of the particular securities; and
(b)the taxpayer has, in the year and before 2015, disposed of the particular securities; and
(c)the election under this subsection is filed
(i)if the taxpayer has disposed of the particular securities before 2010, on or before the taxpayer’s filing-due date for 2010, and
(ii)in any other case, on or before the taxpayer’s filing-due date for the year of disposition of the particular securities.
Marginal note:Effect of election
(2)If a taxpayer makes an election under subsection (1) for a taxation year in respect of particular securities, the following rules apply:
(a)paragraph 110(1)(d) shall be read without reference to the phrase “1/2 of” in respect of the amount of the benefit deemed by subsection 7(1) to have been received by the taxpayer in the year in respect of the particular securities;
(b)the taxpayer is deemed to have realized a capital gain for the year equal to the lesser of
(i)the amount that is deductible by the taxpayer under paragraph 110(1)(d), as modified by paragraph (a), and
(ii)the taxpayer’s capital loss in respect of the disposition of the particular securities;
(c)the taxpayer is liable to pay a tax for the year equal to
(i)in the case of a taxpayer resident in the Province of Quebec at the end of the year, 2/3 of the taxpayer’s proceeds of disposition (as defined in section 54, but determined without reference to subsection 73(1)) of the particular securities, and
(ii)in any other case, the taxpayer’s proceeds of disposition (as defined in section 54, but determined without reference to subsection 73(1)) of the particular securities;
(d)to the extent that the taxation year is outside the normal reassessment period (as defined in subsection 152(3.1)), the election is deemed to be an application for reassessment under subsection 152(4.2);
(e)notwithstanding subsection 152(4) and as the circumstances require, the Minister shall re-determine the taxpayer’snet capital loss(as defined in subsection 111(8)) for the taxation year and reassess any taxation year in which an amount has been deducted under paragraph 111(1)(b).
(f)subparagraph 127.52(1)(h)(ii) is to be read as “the amount deducted under paragraph 110(1)(d)” for the year in respect of the particular securities; and
(g)notwithstanding subsection 152(4) and as the circumstances require, the Minister shall re-determine the taxpayer’s additional tax under subsection 120.2(3) for the taxation year and reassess any taxation year in which an amount has been deducted under subsection 120.2(1).
Marginal note:Non-application for employment insurance purposes
(3)An amount included under subsection (2)(b) in computing a person’s income under Part I of this Act for a taxation year shall not be included in determining the income of the person for the year under Part VII of theEmployment Insurance Act.
Marginal note:Provisions applicable to this Part
(4)Subsection 150(3), sections 150.1 to 152, 155 to 156.1 and 158 to 167 and Division J of Part I apply to this Part with any modifications that the circumstances require.
180.1[Repealed, 2001, c. 17, s. 161(1)]
Marginal note:Definitions
180.2(1)The definitions in this subsection apply in this Part.
adjusted incomeof an individual for a taxation year means the amount that would be the individual’s income under Part I for the year if in computing that income no amount were
(a)included
(i)under paragraph 56(1)(q.1) or subsection 56(6),
(ii)in respect of a gain from a disposition of property to which section 79 applies, or
(iii)in respect of a gain described in subsection 40(3.21), or
(b)deductible under paragraph 20(1)(ww) or 60(w), (y) or (z). (revenu modifié)
base taxation yearin relation to a month, means
(a)where the month is any of the first 6 months of a calendar year, the taxation year that ended on December 31 of the second preceding calendar year, and
(b)where the month is any of the last 6 months of a calendar year, the taxation year that ended on December 31 of the preceding calendar year. (année de base)
return of incomein respect of an individual for a taxation year means
(a)where the individual was resident in Canada throughout the year, the individual’s return of income (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) that is filed or required to be filed under Part I for the year, and
(b)in any other case, a prescribed form containing prescribed information. (déclaration de revenu)
Marginal note:Tax payable
(2)Every individual shall pay a tax under this Part for each taxation year equal to the amount determined by the formula
A(1 - B)
where
(a)the amount, if any, by which
(i)the total of all amounts each of which is the amount of any pension, supplement or spouse’s or commmon-law partner’s allowance under theOld Age Security Actincluded in computing the individual’s income under Part I for the year
exceeds
(ii)the amount of any deduction allowed under subparagraph 60(n)(i) in computing the individual’s income under Part I for the year, and
(b)15% of the amount, if any, by which the individual’s adjusted income for the year exceeds $50,000; and
Marginal note:Withholding
(3)Where at any time Her Majesty pays an amount described in paragraph (a) of the description of A in subsection 180.2(2) in respect of a month to an individual, there shall be deducted or withheld from that amount on account of the individual’s tax payable under this Part for the year the amount determined under subsection 180.2(4) in respect of that amount.
Marginal note:Determination of amount to be withheld
(4)The amount determined in respect of a particular amount described in subsection 180.2(3) is
(a)where the individual has filed a return of income for the base taxation year in relation to the month in which the particular amount is paid, the lesser of
(i)the amount by which the particular amount exceeds the amount of tax payable under Part XIII by the individual on the particular amount, and
(ii)the amount determined by the formula
(0.0125A - $665)(1 - B)
where
(b)where the individual has not filed a return of income for the base taxation year in relation to the month and
(i)the Minister has demanded under subsection 150(2) that the individual file the return, or
(ii)the individual was non-resident at any time in the base taxation year,
the amount by which the particular amount exceeds the amount of tax payable under Part XIII by the individual on the particular amount; and
(c)in any other case, nil.
Marginal note:Return
(5)Every individual liable to pay tax under this Part for a taxation year shall
(a)file with the Minister, without notice or demand therefor,
(i)where the individual is resident in Canada throughout the taxation year, a return for the year under this Part in prescribed form and containing prescribed information on or before the individual’s filing-due date for the year, and
(ii)in any other case, a return of income for the year on or before the individual’s balance-due day for the year; and
(b)pay the individual’s tax payable under this Part for the year on or before the individual’s balance-due day for the year.
Marginal note:Provisions applicable to this Part
(6)Subsection 150(3), sections 150.1, 151 and 152, subsections 153(1.1), 153(1.2) and 153(3), sections 155 to 156.1 and 158 to 167 and Division J of Part I apply to this Part with any modifications that the circumstances require.
Marginal note:Definitions
181(1)For the purposes of this Part,
financial institution, in respect of a taxation year, means a corporation that at any time in the year is
(a)a bank or credit union,
(b)an insurance corporation that carries on business in Canada,
(c)authorized under the laws of Canada or a province to carry on the business of offering its services as a trustee to the public,
(d)authorized under the laws of Canada or a province to accept deposits from the public and carries on the business of lending money on the security of real property or immovables or investing in indebtedness on the security of mortgages on real property or of hypothecs on immovables,
(e)a registered securities dealer,
(f)a mortgage investment corporation, or
(g)a corporation
(i)listed in the schedule, or
(ii)all or substantially all of the assets of which are shares or indebtedness of financial institutions to which the corporation is related; (institution financière)
long-term debtmeans
(a)in the case of a bank, its subordinated indebtedness (within the meaning assigned by section 2 of theBank Act) evidenced by obligations issued for a term of not less than 5 years,
(b)in the case of an insurance corporation, its subordinated indebtedness (within the meaning assigned by section 2 of theInsurance Companies Act) evidenced by obligations issued for a term of not less than 5 years, and
(c)in the case of any other corporation, its subordinated indebtedness (within the meaning that would be assigned by section 2 of theBank Actif the definition of that expression in that section were applied with such modifications as the circumstances require) evidenced by obligations issued for a term of not less than 5 years,
but does not include, where the corporation is a prescribed federal Crown corporation for the purpose of section 27, any indebtedness evidenced by obligations issued to and held by Her Majesty in right of Canada; (passif à long terme)
reserves, in respect of a corporation for a taxation year, means the amount at the end of the year of all of the corporation’s reserves, provisions and allowances (other than allowances in respect of depreciation or depletion) and, for greater certainty, includes any provision in respect of deferred taxes. (réserves)
Marginal note:Prescribed expressions
(2)For the purposes of this Part, the expressionsattributed surplus,Canadian assets,Canadian premiums,Canadian reserve liabilities,contractual service margin,group of insurance contracts,group of reinsurance contracts,permanent establishment,policyholders’ liabilities,reinsurance contract held amount,total assets,total premiumsandtotal reserve liabilitieshave such meanings as may be prescribed.
Marginal note:Determining values and amounts
(3)For the purposes of determining the carrying value of a corporation’s assets or any other amount under this Part in respect of a corporation’s capital, investment allowance, taxable capital or taxable capital employed in Canada for a taxation year or in respect of a partnership in which a corporation has an interest,
(a)the equity and consolidation methods of accounting shall not be used; and
(b)subject to paragraph 181(3)(a) and except as otherwise provided in this Part, the amounts reflected in the balance sheet
(i)presented to the shareholders of the corporation (in the case of a corporation that is neither an insurance corporation to which subparagraph 181(3)(b)(ii) applies nor a bank) or the members of the partnership, as the case may be, or, where such a balance sheet was not prepared in accordance with generally accepted accounting principles or no such balance sheet was prepared, the amounts that would be reflected if such a balance sheet had been prepared in accordance with generally accepted accounting principles, or
(ii)accepted by the Superintendent of Financial Institutions, in the case of a bank or an insurance corporation that is required by law to report to the Superintendent, or the superintendent of insurance or other similar officer or authority of the province under whose laws the corporation is incorporated, in the case of an insurance corporation that is required by law to report to that officer or authority,
shall be used.
Marginal note:Limitations respecting inclusions and deductions
(4)Unless a contrary intention is evident, no provision of this Part shall be read or construed to require the inclusion or to permit the deduction, in computing the amount of a corporation’s capital, investment allowance, taxable capital or taxable capital employed in Canada for a taxation year, of any amount to the extent that that amount has been included or deducted, as the case may be, in computing the first-mentioned amount under, in accordance with or by reason of any other provision of this Part.
Marginal note:Tax payable
181.1(1)Every corporation shall pay a tax under this Part for each taxation year equal to the amount obtained by multiplying the corporation’s specified percentage for the taxation year by the amount, if any, by which
(a)its taxable capital employed in Canada for the year
exceeds
(b)its capital deduction for the year.
Marginal note:Specified percentage
(1.1)For the purpose of subsection (1), the specified percentage of a corporation for a taxation year that ends after 2003 is the total of
(a)that proportion of 0.225% that the number of days in the taxation year that are before 2004 is of the number of days in the taxation year,
(b)that proportion of 0.200% that the number of days in the taxation year that are in 2004 is of the number of days in the taxation year, and
(c)that proportion of 0.175% that the number of days in the taxation year that are in 2005 is of the number of days in the taxation year.
(d) and (e)[Repealed, 2006, c. 4, s. 82]
Marginal note:Exceptions
(1.2)Notwithstanding subsection (1.1), for the purposes of applying subsection 125(5.1) and the definitionsunused surtax creditin subsections (6) and 190.1(5), the amount of tax in respect of a corporation under subsection (1) for a taxation year is to be determined as if the specified percentage of the corporation for the taxation year were 0.225%.
Marginal note:Short taxation years
(2)Where a taxation year of a corporation is less than 51 weeks, the amount determined under subsection 181.1(1) for the year in respect of the corporation shall be reduced to that proportion of that amount that the number of days in the year is of 365.
Marginal note:Where tax not payable
(3)No tax is payable under this Part for a taxation year by a corporation
(a)that was a non-resident-owned investment corporation throughout the year;
(b)that was a bankrupt at the end of the year;
(c)that was throughout the year exempt from tax under section 149 on all of its taxable income;
(d)that neither was resident in Canada nor carried on business through a permanent establishment in Canada at any time in the year;
(e)that was throughout the year a deposit insurance corporation (within the meaning assigned by subsection 137.1(5)) or a corporation deemed by subsection 137.1(5.1) to be a deposit insurance corporation; or
(f)that was throughout the year a corporation described in subsection 136(2) the principal business of which was marketing (including processing incidental to or connected therewith) natural products belonging to or acquired from its members or customers.
Marginal note:Deduction
(4)There may be deducted from a corporation’s tax otherwise payable under this Part for a taxation year an amount equal to the total of
(a)its Canadian surtax payable for the year, and
(b)such part as the corporation claims of its unused surtax credits for its 7 immediately preceding and 3 immediately following taxation years,
to the extent that that total does not exceed the amount by which
(c)the amount that would, but for this subsection, be its tax payable under this Part for the year
exceeds
(d)the total of all amounts each of which is the amount deducted under subsection 125.3(1) in computing the corporation’s tax payable under Part I for a taxation year ending before 1992 in respect of its unused Part I.3 tax credit (within the meaning assigned by section 125.3) for the year.
Marginal note:Idem
(5)For the purposes of this subsection and subsections 181.1(4), 181.1(6) and 181.1(7),
(a)an amount may not be claimed under subsection 181.1(4) in computing a corporation’s tax payable under this Part for a particular taxation year in respect of its unused surtax credit for another taxation year until its unused surtax credits, if any, for taxation years preceding the other year that may be claimed under this Part for the particular year have been claimed; and
(b)an amount in respect of a corporation’s unused surtax credit for a taxation year may be claimed under subsection 181.1(4) in computing its tax payable under this Part for another taxation year only to the extent that it exceeds the total of all amounts each of which is an amount claimed in respect of that unused surtax credit in computing its tax payable under this Part or Part VI for a taxation year preceding that other year.
Marginal note:Definitions
(6)For the purposes of this subsection and subsections 181.1(4), 181.1(5) and 181.1(7),
Canadian surtax payableof a corporation for a taxation year has the meaning assigned by subsection 125.3(4); (surtaxe canadienne payable)
unused surtax creditfor a taxation year ending after 1991
(a)of a corporation (other than a corporation that was throughout the year a financial institution, within the meaning assigned by section 190) means the amount, if any, by which
(i)its Canadian surtax payable for the year
exceeds the total of
(ii)the amount that would, but for subsection 181.1(4), be its tax payable under this Part for the year, and
(iii)the amount, if any, deducted under section 125.3 in computing the corporation’s tax payable under Part I for the year, and
(b)of a corporation that was throughout the year a financial institution (within the meaning assigned by section 190) means the lesser of
(i)the amount, if any, by which
(A)its Canadian surtax payable for the year
exceeds the total of
(B)the amount that would, but for subsection 181.1(4), be its tax payable under this Part for the year, and
(C)the amount, if any, deducted under section 125.3 in computing the corporation’s tax payable under Part I for the year, and
(ii)the amount, if any, by which its tax payable under Part I for the year exceeds the amount that would, but for subsection 181.1(4) and subsection 190.1(3), be the total of its taxes payable under Parts I.3 and VI for the year. (crédit de surtaxe inutilisé)
Marginal note:Acquisition of control
(7)Where at any time control of a corporation has been acquired by a person or group of persons, no amount in respect of its unused surtax credit for a taxation year ending before that time is deductible by the corporation for a taxation year ending after that time and no amount in respect of its unused surtax credit for a taxation year ending after that time is deductible by the corporation for a taxation year ending before that time, except that
(a)the corporation’s unused surtax credit for a particular taxation year that ended before that time is deductible by the corporation for a taxation year that ends after that time (in this paragraph referred to as the “subsequent year”) to the extent of that proportion of the corporation’s Canadian surtax payable for the particular year that
(i)the amount, if any, by which
(A)the total of all amounts each of which is
(I)its income under Part I for the particular year from a business that was carried on by the corporation throughout the subsequent year for profit or with a reasonable expectation of profit, or
(II)where properties were sold, leased, rented or developed or services were rendered in the course of carrying on that business before that time, its income under Part I for the particular year from any other business all or substantially all of the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services
exceeds
(B)the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or 111(1)(d) in computing its taxable income for the particular year in respect of a non-capital loss or a farm loss, as the case may be, for taxation year in respect of any business referred to in clause 181.1(7)(a)(i)(A)
is of the greater of
(ii)the amount determined under subparagraph 181.1(7)(a)(i), and
(iii)the corporation’s taxable income for the particular year; and
(b)the corporation’s unused surtax credit for a particular taxation year that ends after that time is deductible by the corporation for a taxation year that ended before that time (in this paragraph referred to as the “preceding year”) to the extent of that proportion of the corporation’s Canadian surtax payable for the particular year that
(i)the amount, if any, by which
(A)the total of all amounts each of which is
(I)its income under Part I for the particular year from a business that was carried on by the corporation in the preceding year and throughout the particular year for profit or with a reasonable expectation of profit, or
(II)where properties were sold, leased, rented or developed or services were rendered in the course of carrying on that business before that time, the corporation’s income under Part I for the particular year from any other business all or substantially all of the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services
exceeds
(B)the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or 111(1)(d) in computing the corporation’s taxable income for the particular year in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of any business referred to in clause 181.1(7)(b)(i)(A)
is of the greater of
(ii)the amount determined under subparagraph 181.1(7)(b)(i), and
(iii)the corporation’s taxable income for the particular year.
Marginal note:Taxable capital employed in Canada
181.2(1)The taxable capital employed in Canada of a corporation for a taxation year (other than a financial institution or a corporation that was throughout the year not resident in Canada) is the prescribed proportion of the corporation’s taxable capital for the year.
Marginal note:Taxable capital
(2)The taxable capital of a corporation (other than a financial institution) for a taxation year is the amount, if any, by which its capital for the year exceeds its investment allowance for the year.
Marginal note:Capital
(3)The capital of a corporation (other than a financial institution) for a taxation year is the amount, if any, by which the total of
(a)the amount of its capital stock (or, in the case of a corporation incorporated without share capital, the amount of its members’ contributions), retained earnings, contributed surplus and any other surpluses at the end of the year,
(b)the amount of its reserves for the year, except to the extent that they were deducted in computing its income for the year under Part I,
(b.1)the amount of its deferred unrealized foreign exchange gains at the end of the year,
(c)the amount of all loans and advances to the corporation at the end of the year,
(d)the amount of all indebtedness of the corporation at the end of the year represented by bonds, debentures, notes, mortgages, hypothecary claims, banker’s acceptances or similar obligations,
(e)the amount of any dividends declared but not paid by the corporation before the end of the year,
(f)the amount of all other indebtedness (other than any indebtedness in respect of a lease) of the corporation at the end of the year that has been outstanding for more than 365 days before the end of the year, and
(g)the total of all amounts, each of which is the amount, if any, in respect of a partnership in which the corporation held a membership interest at the end of the year, either directly or indirectly through another partnership, determined by the formula
(A – B) × C/D
where
(a)those paragraphs applied to partnerships in the same manner that they apply to corporations, and
(b)those amounts were computed without reference to amounts owing by the partnership
(i)to any corporation that held a membership interest in the partnership either directly or indirectly through another partnership, or
(ii)to any partnership in which a corporation described in subparagraph (i) held a membership interest either directly or indirectly through another partnership,
exceeds the total of
(h)the amount of its deferred tax debit balance at the end of the year,
(i)the amount of any deficit deducted in computing its shareholders’ equity (including, for this purpose, the amount of any provision for the redemption of preferred shares) at the end of the year,
(j)any amount deducted under subsection 135(1) in computing its income under Part I for the year, to the extent that the amount can reasonably be regarded as being included in the amount determined under any of paragraphs 181.2(3)(a) to 181.2(3)(g) in respect of the corporation for the year, and
(k)the amount of its deferred unrealized foreign exchange losses at the end of the year.
Marginal note:Investment allowance
(4)The investment allowance of a corporation (other than a financial institution) for a taxation year is the total of all amounts each of which is the carrying value at the end of the year of an asset of the corporation that is
(a)a share of another corporation,
(b)a loan or advance to another corporation (other than a financial institution),
(c)a bond, debenture, note, mortgage, hypothecary claim or similar obligation of another corporation (other than a financial institution),
(d)long-term debt of a financial institution,
(d.1)a loan or advance to, or a bond, debenture, note, mortgage, hypothecary claim or similar obligation of, a partnership each member of which was, throughout the year,
(i)another corporation (other than a financial institution) that was not exempt from tax under this Part (otherwise than because of paragraph 181.1(3)(d)), or
(ii)another partnership described in this paragraph,
(e)an interest in a partnership, or
(f)a dividend payable to the corporation at the end of the year on a share of the capital stock of another corporation,
other than a share of the capital stock of, a dividend payable by, or indebtedness of, a corporation that is exempt from tax under this Part (otherwise than because of paragraph 181.1(3)(d)).
Marginal note:Value of interest in partnership
(5)For the purposes of subsection (4) and this subsection, the carrying value at the end of a taxation year of an interest of a corporation or of a partnership (each of which is referred to in this subsection as the “member”) in a particular partnership is deemed to be the member’s specified proportion, for the particular partnership’s last fiscal period that ends at or before the end of the taxation year, of the amount that would, if the particular partnership were a corporation, be the particular partnership’s investment allowance at the end of that fiscal period.
Marginal note:Loan
(6)For the purpose of subsection 181.2(4), where a corporation made a particular loan to a trust that neither
(a)made any loans or advances to nor received any loans or advances from, nor
(b)acquired any bond, debenture, note, mortgage, hypothecary claim or similar obligation of nor issued any bond, debenture, note, mortgage, hypothecary claim or similar obligation to
a person not related to the corporation, as part of a series of transactions in which the trust made a loan to another corporation (other than a financial institution) to which the corporation is related, the least of
(c)the amount of the particular loan,
(d)the amount of the loan from the trust to the other corporation, and
(e)the amount, if any, by which
(i)the total of all amounts each of which is the amount of a loan from the trust to any corporation
exceeds
(ii)the total of all amounts each of which is the amount of a loan (other than the particular loan) from any corporation to the trust
at any time shall be deemed to be the amount of a loan from the corporation to the other corporation at that time.
Marginal note:Taxable capital employed in Canada of financial institution
181.3(1)The taxable capital employed in Canada of a financial institution for a taxation year is the total of
(a)the total of all amounts each of which is the carrying value at the end of the year of an asset of the financial institution (other than property held by the institution primarily for the purpose of resale that was acquired by the financial institution, in the year or the preceding taxation year, as a consequence of another person’s default, or anticipated default, in respect of a debt owed to the institution) that is tangible, or for civil law corporeal, property used in Canada and, in the case of a financial institution that is an insurance corporation, that is non-segregated property, within the meaning assigned by subsection 138(12),
(b)the total of all amounts each of which is an amount in respect of a partnership in which the financial institution has an interest at the end of the year equal to that proportion of
(i)the total of all amounts each of which is the carrying value of an asset of the partnership, at the end of its last fiscal period ending at or before the end of the year, that is tangible, or for civil law corporeal, property used in Canada
that
(ii)the financial institution’s share of the partnership’s income or loss for that period
is of
(iii)the partnership’s income or loss for that period, and
(c)an amount that is equal to
(i)in the case of a financial institution other than an insurance corporation, that proportion of its taxable capital for the year that its Canadian assets at the end of the year is of its total assets at the end of the year,
(ii)in the case of an insurance corporation that was resident in Canada at any time during the year and carried on a life insurance business at any time in the year, the total of
(A)that proportion of the amount, if any, by which the total of
(I)its taxable capital for the year, and
(II)the amount prescribed for the year in respect of the corporation
exceeds
(III)the amount prescribed for the year in respect of the corporation
that its Canadian reserve liabilities as at the end of the year is of the total of
(IV)its total reserve liabilities as at the end of the year, and
(V)the amount prescribed for the year in respect of the corporation, and
(B)[Repealed, 2009, c. 2, s. 61]
(iii)in the case of an insurance corporation that was resident in Canada at any time in the year and throughout the year did not carry on a life insurance business, that proportion of its taxable capital for the year that the total amount of its Canadian premiums for the year is of its total premiums for the year, and
(iv)in the case of an insurance corporation that was throughout the year not resident in Canada and carried on an insurance business in Canada at any time in the year, its taxable capital for the year.
Marginal note:Taxable capital of financial institution
(2)The taxable capital of a financial institution for a taxation year is the amount, if any, by which its capital for the year exceeds its investment allowance for the year.
Marginal note:Capital of financial institution
(3)The capital of a financial institution for a taxation year is
(a)in the case of a financial institution, other than an authorized foreign bank or an insurance corporation, the amount, if any, by which the total at the end of the year of
(i)the amount of its long-term debt,
(ii)the amount of its capital stock (or, in the case of an institution incorporated without share capital, the amount of its members’ contributions), retained earnings, contributed surplus and any other surpluses, and
(iii)the amount of its reserves for the year, except to the extent that they were deducted in computing its income under Part I for the year,
exceeds the total of
(iv)the amount of its deferred tax debit balance at the end of the year,
(v)the amount of any deficit deducted in computing its shareholders’ equity (including, for this purpose, the amount of any provision for the redemption of preferred shares) at the end of the year, and
(vi)any amount deducted under subsection 130.1(1) or 137(2) in computing its income under Part I for the year, to the extent that the amount can reasonably be regarded as being included in the amount determined under subparagraph 181.3(3)(a)(i), 181.3(3)(a)(ii) or 181.3(3)(a)(iii) in respect of the institution for the year;
(b)in the case of an insurance corporation that was resident in Canada at any time in the year and carried on a life insurance business at any time in the year, the amount determined by the formula
A + B + (0.9 × C) − (0.9 × D) − E
where
(i)capital stock (or, in the case of an insurance corporation incorporated without share capital, the amount of its members’ contributions),
(ii)retained earnings,
(iii)accumulated other comprehensive income,
(iv)policyholders’ liabilities,
(v)contributed surplus, and
(vi)any other surpluses,
(i)if no portion of the contractual service margin for the group is in respect of a risk under a segregated fund policy, the contractual service margin for the group, and
(ii)in any other case, the amount that would be the contractual service margin for the group if the contractual service margin were determined excluding any portion of the contractual service margin that is in respect of the reinsurance of risks under segregated fund policies, and
(c)in the case of an insurance corporation that was resident in Canada at any time in the year and throughout the year did not carry on a life insurance business, the amount determined by the formula
A + B + (0.9 × C) − (0.9 × D) + E − F − G
where
(i)capital stock (or, in the case of an insurance corporation incorporated without share capital, the amount of its members’ contributions),
(ii)retained earnings,
(iii)accumulated other comprehensive income,
(iv)policyholders’ liabilities,
(v)contributed surplus, and
(vi)any other surpluses,
(i)non-cancellable or guaranteed renewable accident and sickness policiesin respect ofaccident and sickness insurance(as defined in subsection 1408(1) of theIncome Tax Regulations),
(ii)mortgage insurance(as defined in subsection 1408(1) of theIncome Tax Regulations), or
(iii)title insurance(as defined in subsection 1408(1) of theIncome Tax Regulations),
(i)the contractual service margin for the group, if no portion of the contractual service margin is in respect of a risk under an insurance policy other than an insurance policy that is in respect of
(A)non-cancellable or guaranteed renewable accident and sickness policiesin respect ofaccident and sickness insurance(as defined in subsection 1408(1) of theIncome Tax Regulations),
(B)mortgage insurance(as defined in subsection 1408(1) of theIncome Tax Regulations), or
(C)title insurance(as defined in subsection 1408(1) of theIncome Tax Regulations), and
(ii)in any other case, the amount that would be the contractual service margin for the group if the contractual service margin were determined excluding any portion that is in respect of the reinsurance of risks under policies other than those described in any of clauses (i)(A) to (C),
(i)were deducted in computing its income under Part I for the year, or
(ii)are reserves in respect of the contractual service margin for a group of insurance contracts of the corporation at the end of the year,
(d)in the case of an insurance corporation that was throughout the year not resident in Canada and carried on an insurance business in Canada at any time in the year, the total at the end of the year of
(i)the amount that is the greater of
(A)the amount, if any, by which
(I)the corporation’s surplus funds derived from operations (as defined in subsection 138(12)) as of the end of the year, computed as if no tax were payable under this Part or Part VI for the year
exceeds the total of all amounts each of which is
(II)an amount on which the corporation was required to pay, or would but for subsection 219(5.2) have been required to pay, tax under Part XIV for a preceding taxation year, except the portion, if any, of the amount on which tax was payable, or would have been payable, because of subparagraph 219(4)(a)(i.1), and
(III)an amount on which the corporation was required to pay, or would but for subsection 219(5.2) have been required to pay, tax under subsection 219(5.1) for the year because of the transfer of an insurance business to which subsection 138(11.5) or 138(11.92) has applied, and
(B)the corporation’s attributed surplus for the year,
(ii)any other surpluses relating to its insurance businesses carried on in Canada,
(iii)the amount of its long-term debt that may reasonably be regarded as relating to its insurance businesses carried on in Canada, and
(iv)the amount, if any, by which
(A)the amount of its reserves for the year (other than its reserves in respect of amounts payable out of segregated funds) that may reasonably be regarded as having been established in respect of its insurance businesses carried on in Canada
exceeds the total of
(B)the total of all amounts each of which is the amount of a reserve (other than a reserve described in subparagraph 138(3)(a)(i)) to the extent that it was included in the amount determined under clause 181.3(3)(d)(iv)(A) and was deducted in computing its income under Part I for the year,
(C)the total of all amounts each of which is the amount of a reserve described in subparagraph 138(3)(a)(i) to the extent that it was included in the amount determined under clause 181.3(3)(d)(iv)(A) and was deductible under subparagraph 138(3)(a)(i) in computing its income under Part I for the year, and
(D)[Repealed, 2022, c. 19, s. 44]
(E)[Repealed, 2022, c. 19, s. 44]
(F)the total of all amounts each of which is the reinsurance contract held amount for a group of reinsurance contracts held by the corporation at the end of the year, to the extent the amount can be reasonably regarded as being included in the amount determined under clause (A); and
(e)in the case of an authorized foreign bank, the total of
(i)10% of the total of all amounts, each of which is the risk-weighted amount at the end of the year of an on-balance sheet asset or an off-balance sheet exposure of the bank in respect of its Canadian banking business that the bank would be required to report under the OSFI risk-weighting guidelines if those guidelines applied and required a report at that time, and
(ii)the total of all amounts, each of which is an amount at the end of the year in respect of the bank’s Canadian banking business that
(A)if the bank were a bank listed in Schedule II to theBank Act, would be required under the risk-based capital adequacy guidelines issued by the Superintendent of Financial Institutions and applicable at that time to be deducted from the bank’s capital in determining the amount of capital available to satisfy the Superintendent’s requirement that capital equal a particular proportion of risk-weighted assets and exposures, and
(B)is not an amount in respect of a loss protection facility required to be deducted from capital under the Superintendent’s guidelines respecting asset securitization applicable at that time.
Marginal note:Investment allowance of financial institution
(4)The investment allowance for a taxation year of a corporation that is a financial institution is
(a)in the case of a corporation that was resident in Canada at any time in the year, the total of all amounts each of which is the carrying value at the end of the year of an eligible investment of the corporation;
(b)in the case of an insurance corporation that was throughout the year not resident in Canada, the total of all amounts each of which is the carrying value at the end of the year of an eligible investment of the corporation that was used or held by it in the year in the course of carrying on an insurance business in Canada;
(c)in the case of an authorized foreign bank, the total of all amounts each of which is the amount at the end of the year, before the application of risk weights, that the bank would be required to report under the OSFI risk-weighting guidelines if those guidelines applied and required a report at that time, of an eligible investment used or held by the bank in the year in the course of carrying on its Canadian banking business; and
(d)in any other case, nil.
Marginal note:Interpretation
(5)For the purpose of subsection (4),
(a)an eligible investment of a corporation is a share of the capital stock or long-term debt (and, where the corporation is an insurance corporation, is non-segregated property within the meaning assigned by subsection 138(12)) of a financial institution that at the end of the year
(i)is related to the corporation,
(ii)is not exempt from tax under this Part, and
(iii)is resident in Canada or can reasonably be regarded as using the proceeds of the share or debt in a business carried on by the institution through a permanent establishment (as defined by regulation) in Canada; and
(b)a credit union and another credit union of which the credit union is a shareholder or member are deemed to be related to each other.
Marginal note:Taxable capital employed in Canada of non-resident
181.4The taxable capital employed in Canada for a taxation year of a corporation (other than a financial institution) that was throughout the year not resident in Canada is the amount, if any, by which
(a)the total of all amounts each of which is the carrying value at the end of the year of an asset of the corporation used by it in the year in, or held by it in the year in the course of, carrying on any business carried on by it during the year through a permanent establishment in Canada
exceeds the total of
(b)the amount of the corporation’s indebtedness at the end of the year (other than indebtedness described in any of paragraphs 181.2(3)(c) to 181.2(3)(f)) that may reasonably be regarded as relating to a business carried on by it during the year through a permanent establishment in Canada,
(c)the total of all amounts each of which is the carrying value at the end of the year of an asset described in subsection 181.2(4) of the corporation that was used by it in the year in, or held by it in the year in the course of, carrying on any business carried on by it during the year through a permanent establishment in Canada, and
(d)the total of all amounts each of which is the carrying value at the end of the year of an asset of the corporation that
(i)is a ship or aircraft operated by the corporation in international traffic or is personal or movable property used in its business of transporting passengers or goods by ship or aircraft in international traffic, and
(ii)was used by the corporation in the year in, or held by it in the year in the course of, carrying on any business during the year through a permanent establishment in Canada,
if the country in which the corporation is resident imposed neither a capital tax for the year on similar assets nor a tax for the year on the income from the operation of a ship or aircraft in international traffic, of any corporation resident in Canada during the year.
Marginal note:Capital deduction
181.5(1)Subject to subsection (1.1), the capital deduction of a corporation for a taxation year is $50 million unless the corporation is related to another corporation at any time in the taxation year, in which case, subject to subsection (4), its capital deduction for the year is nil.
Marginal note:Exceptions
(1.1)For the purposes of applying subsection 125(5.1), the definitionsunused surtax creditin subsections 181.1(6) and 190.1(5), and subsection 225.1(8), the amount of tax in respect of a corporation under subsection 181.1(1) for a taxation year is to be determined as if the reference to “$50 million” in subsection (1) were a reference to “$10 million”.
Marginal note:Related corporations
(2)Subject to subsection (4.1), a corporation that is related to any other corporation at any time in a taxation year of the corporation that ends in a calendar year may file with the Minister in prescribed form an agreement on behalf of the related group of which the corporation is a member under which an amount that does not exceed $50 million is allocated among all corporations that are members of the related group for each taxation year of each such corporation ending in the calendar year and at a time when it was a member of the related group.
Marginal note:Allocation by Minister
(3)Subject to subsection (4.1), the Minister may request a corporation that is related to any other corporation at the end of a taxation year to file with the Minister an agreement referred to in subsection (2) and, if the corporation does not file such an agreement within 30 days after receiving the request, the Minister may allocate an amount among the members of the related group of which the corporation is a member for the taxation year not exceeding $50 million.
Marginal note:Idem
(4)The least amount allocated for a taxation year to a member of a related group under an agreement described in subsection 181.5(2) or by the Minister pursuant to subsection 181.5(3) is the capital deduction of that member for that taxation year.
Marginal note:Exceptions
(4.1)For the purposes of applying subsection 125(5.1), the definitionsunused surtax creditin subsections 181.1(6) and 190.1(5), and subsection 225.1(8), subsections (2) to (4) are to be read as if the amount determined under subsection (2) or (3), as the case may be, in respect of the corporation for the taxation year were that proportion of $10 million that the amount otherwise determined in respect of the corporation for the taxation year under that subsection is of $50 million.
Marginal note:Idem
(5)Where a corporation (in this subsection referred to as the “first corporation”) has more than one taxation year ending in the same calendar year and is related in 2 or more of those taxation years to another corporation that has a taxation year ending in that calendar year, the capital deduction of the first corporation for each such taxation year at the end of which it is related to the other corporation is an amount equal to its capital deduction for the first such taxation year.
Marginal note:Idem
(6)Two corporations that would, but for this subsection, be related to each other by reason only of
(a)the control of any corporation by Her Majesty in right of Canada or a province, or
(b)a right referred to in paragraph 251(5)(b),
are, for the purposes of this section and subsection 181.3(4), deemed not to be related to each other except that, where at any time a taxpayer has a right referred to in paragraph 251(5)(b) with respect to shares and it can reasonably be considered that one of the main purposes for the acquisition of the right was to avoid any limitation on the amount of a corporation’s capital deduction for a taxation year, for the purpose of determining whether a corporation is related to any other corporation, the corporations are, for the purposes of this section, deemed to be in the same position in relation to each other as if the right were immediate and absolute and as if the taxpayer had exercised the right at that time.
Marginal note:Related corporations that are not associated
(7)For the purposes of subsection 181.3(4) and this section, a Canadian-controlled private corporation and another corporation to which it would, but for this subsection, be related at any time shall be deemed not to be related to each other at that time where the corporations are not associated with each other at that time.
Marginal note:Return
181.6Every corporation that is or would, but for subsection 181.1(4), be liable to pay tax under this Part for a taxation year shall file with the Minister, not later than the day on or before which the corporation is required by section 150 to file its return of income for the year under Part I, a return of capital for the year in prescribed form containing an estimate of the tax payable under this Part by it for the year.
Marginal note:Provisions applicable to Part
181.7Sections 152, 158 and 159, subsection 161(11), sections 162 to 167 and Division J of Part I apply to this Part with such modifications as the circumstances require and, for the purpose of this section, paragraph 152(6)(a) shall be read as follows:
“(a)a deduction under section 181.1(4) in respect of any unused surtax credit (within the meaning assigned by subsection 181.1(6)) for a subsequent taxation year.”
Marginal note:Provisions applicable — Crown corporations
181.71Section 27 applies to this Part with any modifications that the circumstances require.
181.8[Repealed, 1994, c. 7, Sch