VIII, s. 20(2)]
Marginal note:Repayment of support payments
(c.2)an amount paid by the taxpayer in the year or one of the 2 preceding taxation years under a decree, order or judgment of a competent tribunal as a repayment of an amount included under paragraph 56(1)(b) or 56(1)(c), or under paragraph 56(1)(c.1) (as it applies, in computing the taxpayer’s income for the year or a preceding taxation year, to decrees, orders and judgments made before 1993) to the extent that it was not so deducted for a preceding taxation year;
Marginal note:Interest on death duties
(d)an amount equal to annual interest accruing within the taxation year in respect of succession duties, inheritance taxes or estate taxes;
Marginal note:CPP/QPP contributions on self-employed earnings
(e)the total of
(i)1/2 of the lesser of
(A)the total of all amounts each of which is an amount payable by the taxpayer in respect of self-employed earnings for the year as a contribution under subsection 10(1) of theCanada Pension Planor as a like contribution under aprovincial pension plan, as defined in section 3 of that Act, and
(B)the maximum amount of such contributions payable by the taxpayer for the year under the plan, and
(ii)the lesser of
(A)the total of all amounts each of which is an amount payable by the taxpayer in respect of self-employed earnings for the year as a contribution under subsection 10(1.‍1) or (1.‍2) of theCanada Pension Planor as a like contribution under aprovincial pension plan, as defined in section 3 of that Act, and
(B)the maximum amount of such contributions payable by the taxpayer for the year under the plan;
Marginal note:Enhanced CPP contributions
(e.1)the lesser of
(i)the total of all amounts each of which is an amount payable by the taxpayer for the year as an employee’s contribution under subsection 8(1.‍1) or (1.‍2) of theCanada Pension Planor as a like contribution under aprovincial pension plan, as defined in section 3 of that Act, and
(ii)the maximum amount of such contributions payable by the taxpayer for the year under the plan;
Marginal note:Restrictive covenant — bad debt
(f)all debts owing to a taxpayer that are established by the taxpayer to have become bad debts in the taxation year and that are in respect of an amount included because of the operation of subsection 6(3.1) or 56.4(2) in computing the taxpayer’s income in a preceding taxation year;
Marginal note:Quebec parental insurance plan — self-employed premiums
(g)the amount determined by the formula
A – B
where
Marginal note:Premium or payment — FHSA, RRSP or RRIF
(i)any amount that is deductible under section 146, 146.3 or 146.6 or subsection 147.3(13.1) in computing the income of the taxpayer for the year;
Marginal note:Transfer of superannuation benefits
(j)such part of the total of all amounts each of which is
(i)a superannuation or pension benefit (other than any amount in respect of the benefit that is deducted in computing the taxable income of the taxpayer for a taxation year because of subparagraph 110(1)(f)(i) or a benefit that is part of a series of periodic payments) payable out of or under a pension plan that is not a registered pension plan, attributable to services rendered by the taxpayer or a spouse or common-law partner or former spouse or common-law partner of the taxpayer in a period throughout which that person was not resident in Canada, and included in computing the income of the taxpayer for the year because of subparagraph 56(1)(a)(i), or
(ii)an eligible amount in respect of the taxpayer for the year under section 60.01, subsection 104(27) or 104(27.1) or paragraph 147(10.2)(d),
as
(iii)is designated by the taxpayer in the taxpayer’s return of income under this Part for the year, and
(iv)does not exceed the total of all amounts each of which is an amount paid by the taxpayer in the year or within 60 days after the end of the year
(A)as a contribution to or under a registered pension plan for the taxpayer’s benefit, other than the portion thereof deductible under paragraph 8(1)(m) in computing the taxpayer’s income for the year, or
(B)as a premium (within the meaning assigned by subsection 146(1)) under a registered retirement savings plan under which the taxpayer is the annuitant (within the meaning assigned by subsection 146(1)), other than the portion thereof designated for a taxation year for the purposes of paragraph 60(l,
to the extent that the amount was not deducted in computing the taxpayer’s income for a preceding taxation year;
Marginal note:Transfer of surplus
(j.01)such part of the total of all amounts each of which is an amount received by the taxpayer before March 28, 1988 that can reasonably be considered to be a payment in respect of the actuarial surplus under a defined benefit provision (within the meaning assigned by subsection 147.1(1)) of a registered pension plan and that is included in computing the income of the taxpayer for the year by virtue of subparagraph 56(1)(a)(i) (other than any portion thereof deducted by the taxpayer under subsection 60.2(1) in computing the taxpayer’s income for the year) as
(i)is designated by the taxpayer in the taxpayer’s return of income under this Part for the year, and
(ii)does not exceed the total of all amounts each of which as an amount paid by the taxpayer in the year or within 60 days after the end of the year
(A)as a contribution to or under a registered pension plan for the taxpayer’s benefit, other than the portion thereof deductible under paragraph 60(j) or 60(j.1) or 8(1)(m) of this Act or paragraph 8(1)(m.1) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in computing the taxpayer’s income for the year, or
(B)as a premium (within the meaning assigned by subsection 146(1)) under a registered retirement savings plan under which the taxpayer is the annuitant (within the meaning assigned by subsection 146(1)), other than the portion thereof that has been designated for the purposes of paragraph 60(j), 60(j.1) or 60(l,
to the extent that it was not deducted in computing the taxpayer’s income for a preceding taxation year;
Marginal note:Payment to registered pension plan
(j.02)an amount equal to the lesser of
(i)the total of
(A)all contributions made in the year by the taxpayer to registered pension plans in respect of eligible service of the taxpayer before 1990 under the plans, where the taxpayer was obliged under the terms of an agreement in writing entered into before March 28, 1988 to make the contributions, and
(B)all amounts each of which is an amount paid in the year by the taxpayer to a registered pension plan as
(I)a repayment under a prescribed statutory provision of an amount received from the plan that was included under subsection 56(1) in computing the taxpayer’s income for a taxation year ending before 1990, where the taxpayer was obliged as a consequence of a written election made before March 28, 1988 to make the repayment, or
(II)interest in respect of a repayment referred to in subclause 60(j.02)(i)(B)(I),
other than the portion of that total that is deductible under paragraph 8(1)(m) or paragraph 60(j.03) in computing the taxpayer’s income for the year, and
(ii)the total of all amounts each of which is an amount paid out of or under a registered pension plan as part of a series of periodic payments and included under subsection 56(1) in computing the taxpayer’s income for the year, other than the portion of that total that can reasonably be considered to have been designated by the taxpayer for the purpose of paragraph 60(j.2);
Marginal note:Repayments of pre-1990 pension benefits
(j.03)an amount equal to the lesser of
(i)the total of all amounts each of which is an amount paid in the year or a preceding taxation year by the taxpayer to a registered pension plan that was not deductible in computing the taxpayer’s income for a preceding taxation year and that was paid as
(A)a repayment under a prescribed statutory provision of an amount received from the plan that was included under subsection 56(1) in computing the taxpayer’s income for a taxation year ending before 1990, or
(B)interest in respect of a repayment referred to in clause 60(j.03)(i)(A), and
(ii)the amount, if any, by which $3,500 exceeds the amount deducted under paragraph 8(1)(m) in computing the taxpayer’s income for the year;
Marginal note:Repayments of post-1989 pension benefits
(j.04)the total of all amounts each of which is an amount paid in the year by the taxpayer to a registered pension plan as
(i)a repayment under a prescribed statutory provision of an amount received from the plan that
(A)was included under subsection 56(1) in computing the taxpayer’s income for a taxation year ending after 1989, and
(B)can reasonably be considered not to have been designated by the taxpayer for the purpose of paragraph 60(j.2), or
(ii)interest in respect of a repayment referred to in subparagraph 60(j.04)(i),
except to the extent that the total was deductible under paragraph 8(1)(m) in computing the taxpayer’s income for the year;
Marginal note:Transfer of retiring allowances
(j.1)such part of the total of all amounts each of which is an amount paid to the taxpayer by an employer, or under a retirement compensation arrangement to which the employer has contributed, as a retiring allowance and included in computing the taxpayer’s income for the year by virtue of subparagraph 56(1)(a)(ii) or paragraph 56(1)(x) as
(i)is designated by the taxpayer in the taxpayer’s return of income under this Part for the year,
(ii)does not exceed the amount, if any, by which the total of
(A)$2,000 multiplied by the number of years before 1996 during which the employee or former employee in respect of whom the payment was made (in this paragraph referred to as the “retiree”) was employed by the employer or a person related to the employer, and
(B)$1,500 multiplied by the number by which the number of years before 1989 described in clause 60(j.1)(ii)(A) exceeds the number that can reasonably be regarded as the equivalent number of years before 1989 in respect of which employer contributions under either a pension plan or a deferred profit sharing plan of the employer or a person related to the employer had vested in the retiree at the time of the payment
exceeds the total of
(C)all amounts deducted under this paragraph in respect of amounts paid before the year in respect of the retiree
(I)by the employer or a person related to the employer, or
(II)under a retirement compensation arrangement to which the employer or a person related to the employer has contributed,
(C.1)all other amounts deducted under this paragraph for the year in respect of amounts paid in the year in respect of the retiree
(I)by a person related to the employer, or
(II)under a retirement compensation arrangement to which a person related to the employer has contributed, and
(D)all amounts deducted under paragraph 60(t) in computing the retiree’s income for the year in respect of a retirement compensation arrangement to which the employer or a person related to the employer has contributed, and
(iii)does not exceed the total of all amounts each of which is an amount paid by the taxpayer in the year or within 60 days after the end of the year in respect of the amount so designated
(A)as a contribution to or under a registered pension plan, other than the portion thereof deductible under paragraph 60(j) or 8(1)(m) in computing the taxpayer’s income for the year, or
(B)as a premium (within the meaning assigned by section 146) under a registered retirement savings plan under which the taxpayer is the annuitant (within the meaning assigned by section 146), other than the portion thereof that has been designated for the purposes of paragraph 60(j) or 60(l,
to the extent that it was not deducted in computing the taxpayer’s income for a preceding taxation year
and for the purposes of this paragraph,person related to the employerincludes
(iv)any person whose business was acquired or continued by the employer, and
(v)a previous employer of the retiree whose service therewith is recognized in determining the retiree’s pension benefits;
Marginal note:Transfer to spousal RRSP
(j.2)for taxation years ending after 1988 and before 1995, such part of the total of all amounts (other than amounts paid out of or under a registered retirement savings plan or a registered retirement income fund that by reason of section 254 are considered to be amounts paid out of or under a registered pension plan) paid on a periodic basis out of or under a registered pension plan or a deferred profit sharing plan and included, by reason of subsection 56(1), in computing the taxpayer’s income for the year as
(i)is designated by the taxpayer in the taxpayer’s return of income under this Part for the year, and
(ii)does not exceed the least of
(A)$6,000,
(B)the amount, if any, by which that total exceeds the part of that total designated for the year for the purposes of paragraph 60(j) of this Act or deducted under paragraph 60(k) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in computing the taxpayer’s income for the year, and
(C)the total of all amounts each of which is paid by the taxpayer in the year or within 60 days after the end of the year as a premium (within the meaning assigned by subsection 146(1)) under a registered retirement savings plan under which the taxpayer’s spouse or common-law partner (or, where the taxpayer died in the year or within 60 days after the end of the year, an individual who was the taxpayer’s spouse or common-law partner immediately before the death) is the annuitant (within the meaning assigned by subsection 146(1)), to the extent that the amount was not deducted in computing the taxpayer’s income for a preceding taxation year;
Marginal note:Transfer of refund of premiums under RRSP
(l)the total of all amounts each of which is an amount paid by or on behalf of the taxpayer in the year or within 60 days after the end of the year (or within such longer period after the end of the year as is acceptable to the Minister)
(i)as a premium under a registered retirement savings plan under which the taxpayer is the annuitant,
(ii)to acquire, from a person licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an annuities business, an annuity
(A)under which the taxpayer is the annuitant
(I)for the taxpayer’s life, or for the lives jointly of the taxpayer and the taxpayer’s spouse or common-law partner either without a guaranteed period, or with a guaranteed period that is not greater than 90 years minus the lesser of the age in whole years of the taxpayer and the age in whole years of the taxpayer’s spouse or common-law partner at the time the annuity was acquired, or
(II)for a term equal to 90 years minus the age in whole years of the taxpayer or the age in whole years of the taxpayer’s spouse or common-law partner, at the time the annuity was acquired, or
(B)under which the taxpayer is the annuitant for a term not exceeding 18 years minus the age in whole years of the taxpayer at the time the annuity was acquired
that does not provide for any payment thereunder except
(C)the single payment by or on behalf of the taxpayer,
(D)annual or more frequent periodic payments
(I)beginning not later than one year after the date of the payment referred to in clause 60(l(ii)(C), and
(II)each of which is equal to all other such payments or not equal to all other such payments solely because of an adjustment that would, if the annuity were an annuity under a retirement savings plan, be in accordance with subparagraphs 146(3)(b)(iii) to 146(3)(b)(v), and
(E)payments in full or partial commutation of the annuity and, where the commutation is partial,
(I)equal annual or more frequent periodic payments thereafter, or
(II)annual or more frequent periodic payments thereafter that are not equal solely because of an adjustment that would, if the annuity were an annuity under a retirement savings plan, be in accordance with subparagraphs 146(3)(b)(iii) to 146(3)(b)(v);
or
(iii)to a carrier as consideration for a registered retirement income fund under which the taxpayer is the annuitant
where that total
(iv)is designated by the taxpayer in the taxpayer’s return of income under this Part for the year,
(v)does not exceed the total of
(A)the amount included in computing the taxpayer’s income for the year as a refund of premiums out of or under a registered retirement savings plan under which the taxpayer’s spouse or common-law partner was the annuitant,
(A.1)the amount included in computing the taxpayer’s income for the year as a payment (other than a payment that is part of a series of periodic payments) received by the taxpayer out of or under a pooled registered pension plan as a consequence of the death of an individual who was, immediately before the death, a spouse or common-law partner of the taxpayer,
(A.2)the amount included by subsection 146.5(3) in computing the taxpayer’s income for the year as a payment received by the taxpayer as a consequence of the death of an individual who was
(I)immediately before the death, the spouse or common-law partner of the taxpayer, or
(II)a parent or grandparent of the taxpayer, if, immediately before the death, the taxpayer was financially dependent on the individual for support because of mental or physical infirmity,
(B)the amount included in computing the taxpayer’s income for the year as a refund of premiums out of or under a registered retirement savings plan where the taxpayer was dependent by reason of physical or mental infirmity on the annuitant under the plan,
(B.01)the amount included in computing the taxpayer’s income for the year as a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) received by the taxpayer out of or under a pooled registered pension plan, a registered pension plan or a specified pension plan as a consequence of the death of an individual of whom the taxpayer was a child or grandchild, if the taxpayer was, immediately before the death, financially dependent on the individual for support because of mental or physical infirmity,
(B.1)the least of
(I)the amount paid by or on behalf of the taxpayer to acquire an annuity that would be described in subparagraph 60(l(ii) if that subparagraph were read without reference to clause (A) thereof,
(II)the amount (other than any portion of it that is included in the amount determined under clause (B), (B.01) or (B.2)) that is included in computing the taxpayer’s income for the year as
1a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) received by the taxpayer out of or under a pooled registered pension plan, a registered pension plan or a specified pension plan,
2a refund of premiums out of or under a registered retirement savings plan, or
3a designated benefit in respect of a registered retirement income fund (in this clause having the meaning assigned by subsection 146.3(1))
as a consequence of the death of an individual of whom the taxpayer is a child or grandchild, and
(III)the amount, if any, by which the amount determined for the year under subclause 60(1)(v)(B.1)(II) in respect of the taxpayer exceeds the amount, if any, by which
1the total of all designated benefits of the taxpayer for the year in respect of registered retirement income funds
exceeds
2the total of all amounts that would be eligible amounts of the taxpayer for the year in respect of those funds (within the meaning that would be assigned by subsection 146.3(6.11) if the taxpayer were described in paragraph (b) thereof), and
(B.2)all eligible amounts of the taxpayer for the year in respect of registered retirement income funds (within the meaning assigned by subsection 146.3(6.11)),
and where the amount is paid by a direct transfer from the issuer of a registered retirement savings plan or a carrier of a registered retirement income fund,
(C)the amount included in computing the taxpayer’s income for the year as a consequence of a payment described in subparagraph 146(2)(b)(ii), and
(D)the amount, if any, by which
(I)the amount received by the taxpayer out of or under a registered retirement income fund under which the taxpayer is the annuitant and included because of subsection 146.3(5) in computing the taxpayer’s income for the year
exceeds
(II)the amount, if any, by which the minimum amount (within the meaning assigned by subsection 146.3(1)) under the fund for the year exceeds the total of all amounts received out of or under the fund in the year by an individual who was an annuitant under the fund before the taxpayer became the annuitant under the fund and that were included because of subsection 146.3(5) in computing that individual’s income for the year, and
(vi)was not deducted in computing the taxpayer’s income for a preceding taxation year;
(m)such amount in respect of payments to a registered disability savings plan as is permitted under section 60.02;
Marginal note:Succession duties applicable to certain property
(m.1)that proportion of any superannuation or pension benefit, death benefit, benefit under a registered retirement savings plan, benefit under a deferred profit sharing plan or benefit that is a payment under an income-averaging annuity contract, received by the taxpayer in the year, on or after the death of a predecessor, in payment of or on account of property to which the taxpayer is the successor, that
(i)such part of any succession duties payable under a law of a province in respect of the death of the predecessor as may reasonably be regarded as attributable to the property in payment of or on account of which the benefit was so received,
is of
(ii)the value of the property in payment of or on account of which the benefit was so received, as computed for the purposes of the law referred to in subparagraph 60(m.1)(i);
Marginal note:Repayment of pension or benefits
(n)any amount paid by the taxpayer in the year as a repayment (otherwise than because of Part VII of theUnemployment Insurance Act, chapter U-1 of the Revised Statutes of Canada, 1985, Part VII of theEmployment Insurance Actor section 8 of theCanada Recovery Benefits Act) of any of the following amounts to the extent that the amount was included in computing the taxpayer’s income, and not deducted in computing the taxpayer’s taxable income, for the year or for a preceding taxation year, namely,
(i)a pension described in clause 56(1)(a)(i)(A),
(ii)a benefit described in clause 56(1)(a)(i)(B),
(iii)an amount described in subparagraph 56(1)(a)(ii),
(iv)a benefit described in subparagraph 56(1)(a)(iv),
(v)a benefit described in subparagraph 56(1)(a)(vi),
(v.1)a benefit described in subparagraph 56(1)(a)(vii), and
(vi)an amount described in paragraph 56(1)(r);
Marginal note:Repayment of pension benefits
(n.1)an amount paid by the taxpayer in the year to a pooled registered pension plan or registered pension plan if
(i)the taxpayer is an individual,
(ii)the amount is paid as
(A)a repayment of an amount received from the plan that was included in computing the taxpayer’s income for the year or a preceding year, if
(I)it is reasonable to consider that the amount was paid under the plan as a consequence of an error and not as an entitlement to benefits, or
(II)it was subsequently determined that, as a consequence of a settlement of a dispute in respect of the taxpayer’s employment, the taxpayer was not entitled to the amount, or
(B)interest in respect of a repayment described in clause (A), and
(iii)no portion of the amount is deductible under any of paragraph 8(1)(m) and subsections 146(5) to (5.2) in computing the taxpayer’s income for the year;
Marginal note:Legal Expenses
(o)amounts paid by the taxpayer in the year in respect of fees or expenses incurred in preparing, instituting or prosecuting an objection to, or an appeal in relation to,
(i)an assessment of tax, interest or penalties under this Act or an Act of a province that imposes a tax similar to the tax imposed under this Act,
(ii)a decision of the Canada Employment Insurance Commission under theEmployment Insurance Actor to an appeal of such a decision to the Social Security Tribunal,
(iii)an assessment of any income tax deductible by the taxpayer under section 126 or any interest or penalty with respect thereto, or
(iv)an assessment or a decision made under theCanada Pension Planor a provincial pension plan as defined in section 3 of that Act;
Marginal note:Idem
(o.1)the amount, if any, by which the lesser of
(i)the total of all legal expenses (other than those relating to a division or settlement of property arising out of, or on a breakdown of, a marriage or common-law partnership) paid by the taxpayer in the year or in any of the 7 preceding taxation years to collect or establish a right to an amount of
(A)a benefit under a pension fund or plan (other than a benefit under theCanada Pension Planor a provincial pension plan as defined in section 3 of that Act) in respect of the employment of the taxpayer or a deceased individual of whom the taxpayer was a dependant, relation or legal representative, or
(B)a retiring allowance of the taxpayer or a deceased individual of whom the taxpayer was a dependant, relation or legal representative, and
(ii)the amount, if any, by which the total of all amounts each of which is
(A)an amount described in clause 60(o.1)(i)(A) or 60(o.1)(i)(B)
(I)that is received after 1985,
(II)in respect of which legal expenses described in subparagraph 60(o.1)(i) were paid, and
(III)that is included in computing the income of the taxpayer for the year or a preceding taxation year, or
(B)an amount included in computing the income of the taxpayer under paragraph 56(1)(l.1) for the year or a preceding taxation year,
exceeds the total of all amounts each of which is an amount deducted under paragraph 60(j), 60(j.01), 60(j.1) or 60(j.2) in computing the income of the taxpayer for the year or a preceding taxation year, to the extent that the amount may reasonably be considered to have been deductible as a consequence of the receipt of an amount referred to in clause 60(o.1)(ii)(A),
exceeds
(iii)the portion of the total described in subparagraph 60(o.1)(i) in respect of the taxpayer that may reasonably be considered to have been deductible under this paragraph in computing the income of the taxpayer for a preceding taxation year;
Marginal note:Repayment of apprenticeship grants
(p)the total of all amounts each of which is an amount paid in the taxation year as a repayment under the Apprenticeship Incentive Grant program or the Apprenticeship Completion Grant program of an amount that was included under paragraph 56(1)(n.1) in computing the taxpayer’s income for the taxation year or a preceding taxation year;
Marginal note:Refund of income payments
(q)where the taxpayer is an individual, an amount paid by the taxpayer in the year to a person with whom the taxpayer was dealing at arm’s length (in this paragraph referred to as the “payer”) if
(i)the amount has been included in computing the income of the taxpayer for the year or a preceding taxation year as an amount described in subparagraph 56(1)(n)(i) or paragraph 56(1)(o) paid to the taxpayer by the payer,
(ii)at the time the amount was paid by the payer to the taxpayer a condition was stipulated for the taxpayer to fulfil,
(iii)as a result of the failure of the taxpayer to fulfil the condition referred to in subparagraph 60(q(ii) the taxpayer was required to repay the amount to the payer,
(iv)during the period for which the amount referred to in subparagraph 60(q(i) was paid the taxpayer did not provide other than occasional services to the payer as an officer or under a contract of employment, and
(v)the amount was paid to the taxpayer for the purpose of enabling the taxpayer to further the taxpayer’s education;
Marginal note:Amounts included under s. 146.2(6)
(r)where an amount has been included in computing the income of the taxpayer by virtue of subsection 146.2(6) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952 (as it read in its application to the 1985 taxation year) for any of the taxpayer’s three immediately preceding taxation years, the taxpayer may deduct the lesser of
(i)the amount that had been so included in computing the taxpayer’s income, and
(ii)the total of all amounts used by the taxpayer to acquire in the year the taxpayer’s owner-occupied home (within the meaning assigned by paragraph 146.2(1)(f) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read in its application to the 1985 taxation year),
except that no amount may be deducted by the taxpayer for the year under this paragraph if an amount has been deducted
(iii)under subsection 146.2(6.1) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952 (as it read in its application to taxation years before 1986) in computing the taxpayer’s income for any taxation year ending before 1986, or
(iv)under this paragraph for any preceding taxation year ending after 1985;
Marginal note:Repayment of policy loan
(s)the total of all repayments made by the taxpayer in the year in respect of a policy loan (within the meaning assigned by subsection 148(9)) made under a life insurance policy, not exceeding the amount, if any, by which
(i)the total of all amounts required by subsection 148(1) to be included in computing the taxpayer’s income for the year or a preceding taxation year from a disposition described in paragraph (b) of the definitiondispositionin subsection 148(9) in respect of that policy
exceeds
(ii)the total of all repayments made by the taxpayer in respect of the policy loan that were deductible in computing the taxpayer’s income for a preceding taxation year;
Marginal note:RCA distributions
(t)where an amount in respect of a particular retirement compensation arrangement is required by paragraph 56(1)(x) or 56(1)(z) or subsection 70(2) to be included in computing the taxpayer’s income for the year, an amount equal to the lesser of
(i)the total of all amounts in respect of the particular arrangement so required to be included in computing the taxpayer’s income for the year, and
(ii)the amount, if any, by which the total of all amounts each of which is
(A)an amount (other than an amount deductible under paragraph 8(1)(m.2) or transferred to the particular arrangement under circumstances in which subsection 207.6(7) applies) contributed under the particular arrangement by the taxpayer while it was a retirement compensation arrangement and before the end of the year,
(A.1)an amount transferred in respect of the taxpayer before the end of the year to the particular arrangement from another retirement compensation arrangement under circumstances in which subsection 207.6(7) applies, to the extent that the amount would have been deductible under this paragraph in respect of the other arrangement in computing the taxpayer’s income if it had been received by the taxpayer out of the other arrangement,
(B)an amount paid by the taxpayer before the end of the year and at a time when the taxpayer was resident in Canada to acquire an interest in the particular arrangement, or
(C)an amount that was received or became receivable by the taxpayer before the end of the year and at a time when the taxpayer was resident in Canada as proceeds from the disposition of an interest in the particular arrangement,
exceeds the total of all amounts each of which is
(D)an amount deducted under this paragraph or paragraph 60(u) in respect of the particular arrangement in computing the taxpayer’s income for a preceding taxation year, or
(E)an amount transferred in respect of the taxpayer before the end of the year from the particular arrangement to another retirement compensation arrangement under circumstances in which subsection 207.6(7) applies, to the extent that the amount would have been deductible under this paragraph in respect of the particular arrangement in computing the taxpayer’s income if it had been received by the taxpayer out of the particular arrangement;
Marginal note:RCA dispositions
(u)where an amount in respect of a particular retirement compensation arrangement is required by paragraph 56(1)(y) to be included in computing the taxpayer’s income for the year, an amount equal to the lesser of
(i)the total of all amounts in respect of the particular arrangement so required to be included in computing the taxpayer’s income for the year, and
(ii)the amount, if any, by which the total of all amounts each of which is
(A)an amount (other than an amount deductible under paragraph 8(1)(m.2) or transferred to the particular arrangement under circumstances in which subsection 207.6(7) applies) contributed under the particular arrangement by the taxpayer while it was a retirement compensation arrangement and before the end of the year,
(A.1)an amount transferred in respect of the taxpayer before the end of the year to the particular arrangement from another retirement compensation arrangement under circumstances in which subsection 207.6(7) applies, to the extent that the amount would have been deductible under paragraph 60(t) in respect of the other arrangement in computing the taxpayer’s income if it had been received by the taxpayer out of the other arrangement, or
(B)an amount paid by the taxpayer before the end of the year and at a time when the taxpayer was resident in Canada to acquire an interest in the particular arrangement
exceeds the total of all amounts each of which is
(C)an amount deducted under paragraph 60(t) in respect of the particular arrangement in computing the taxpayer’s income for the year or a preceding taxation year,
(D)an amount deducted under this paragraph in respect of the particular arrangement in computing the taxpayer’s income for a preceding taxation year, or
(E)an amount transferred in respect of the taxpayer before the end of the year from the particular arrangement to another retirement compensation arrangement under circumstances in which subsection 207.6(7) applies, to the extent that the amount would have been deductible under paragraph 60(t) in respect of the particular arrangement in computing the taxpayer’s income if it had been received by the taxpayer out of the particular arrangement;
Marginal note:Repayment — parents of victims of crime
(v)the total of all amounts each of which is an amount paid in the year as a repayment of a benefit that was included because of paragraph 56(1)(a.3) in computing the taxpayer’s income for the year or a preceding taxation year;
Marginal note:UI and EI benefit repayment
(v.1)any benefit repayment payable by the taxpayer under Part VII of theUnemployment Insurance Actor Part VII of theEmployment Insurance Acton or before April 30 of the following year, to the extent that the amount was not deductible in computing the taxpayer’s income for any preceding taxation year;
Marginal note:Canada Recovery Benefit Repayment
(v.2)any benefit repayment payable by the taxpayer under section 8 of theCanada Recovery Benefits Acton or before the taxpayer’s balance-due day for the taxation year, to the extent that the amount was not deductible in computing the taxpayer’s income for any preceding taxation year;
Marginal note:COVID-19 – other benefit repayments
(v.3)any benefit repaid by the taxpayer before 2023 to the extent that the amount of the benefit was included in computing the taxpayer’s income for the year under any of clauses 56(1)(r)(iv.1)(A) to (D), except to the extent that the amount is
(i)deducted in computing the taxpayer’s income for any year under paragraph (n), or
(ii)deductible in computing the taxpayer’s income for any year under paragraph (v.2);
Marginal note:Tax under Part I.2
(w)the amount of the taxpayer’s tax payable under Part I.2 for the year;
Marginal note:Repayment underCanada Education Savings Act
(x)the total of all amounts each of which is an amount paid by the taxpayer in the year as a repayment, under theCanada Education Savings Actor under a designated provincial program (as defined in subsection 146.1(1)), of an amount that was included because of subsection 146.1(7) in computing the taxpayer’s income for the year or a preceding taxation year;
Marginal note:Repayment of UCCB
(y)the total of all amounts each of which is an amount paid in the taxation year as a repayment, under theUniversal Child Care Benefit Act, of a benefit that was included because of subsection 56(6) in computing the taxpayer’s income for the taxation year or a preceding taxation year;
Marginal note:Repayment under theCanada Disability Savings Act
(z)the total of all amounts each of which is an amount paid in the taxation year as a repayment, under or because of theCanada Disability Savings Actor a designated provincial program as defined in subsection 146.4(1), of an amount that was included because of section 146.4 in computing the taxpayer’s income for the taxation year or a preceding taxation year; and
Marginal note:Tax informant program
(z.1)the total of all amounts each of which is an amount paid in the year as a repayment of an amount that was included, because of paragraph 56(1)(z.4), in computing the taxpayer’s income for the year or a preceding taxation year.
60.001[Repealed, 2013, c. 40, s. 27]
Marginal note:Eligible amount
60.01For the purpose of paragraph 60(j), the amount, if any, by which
(a)the amount of any payment received by a taxpayer in a taxation year out of or under a foreign retirement arrangement and included in computing the taxpayer’s income because of clause 56(1)(a)(i)(C.1) (other than any portion thereof that is included in respect of the taxpayer for the year under subparagraph 60(j(i) or that is part of a series of periodic payments)
exceeds
(b)the portion, if any, of the payment included under paragraph 60.01(a) that can reasonably be considered to derive from contributions to the foreign retirement arrangement made by a person other than the taxpayer or the taxpayer’s spouse or common-law partner or former spouse or common-law partner,
is an eligible amount in respect of the taxpayer for the year.
Meaning oflifetime benefit trust
60.011(1)For the purpose of subsection (2), a trust is at any particular time a lifetime benefit trust with respect to a taxpayer and the estate of a deceased individual if
(a)immediately before the death of the deceased individual, the taxpayer
(i)was both a spouse or common-law partner of the deceased individual and mentally infirm, or
(ii)was both a child or grandchild of the deceased individual and dependent on the deceased individual for support because of mental infirmity; and
(b)the trust is, at the particular time, a personal trust under which
(i)no person other than the taxpayer may receive or otherwise obtain the use of, during the taxpayer’s lifetime, any of the income or capital of the trust, and
(ii)the trustees
(A)are empowered to pay amounts from the trust to the taxpayer, and
(B)are required — in determining whether to pay, or not to pay, an amount to the taxpayer — to consider the needs of the taxpayer including, without limiting the generality of the foregoing, the comfort, care and maintenance of the taxpayer.
Meaning ofqualifying trust annuity
(2)Each of the following is a qualifying trust annuity with respect to a taxpayer:
(a)an annuity that meets the following conditions:
(i)it is acquired after 2005,
(ii)the annuitant under it is a trust that is, at the time the annuity is acquired, a lifetime benefit trust with respect to the taxpayer and the estate of a deceased individual,
(iii)it is for the life of the taxpayer (with or without a guaranteed period), or for a fixed term equal to 90 years minus the age in whole years of the taxpayer at the time it is acquired, and
(iv)if it is with a guaranteed period or for a fixed term, it requires that, in the event of the death of the taxpayer during the guaranteed period or fixed term, any amounts that would otherwise be payable after the death of the taxpayer be commuted into a single payment;
(b)an annuity that meets the following conditions:
(i)it is acquired after 1988,
(ii)the annuitant under it is a trust under which the taxpayer is the sole person beneficially interested (determined without regard to any right of a person to receive an amount from the trust only on or after the death of the taxpayer) in amounts payable under the annuity,
(iii)it is for a fixed term not exceeding 18 years minus the age in whole years of the taxpayer at the time it is acquired, and
(iv)if it is acquired after 2005, it requires that, in the event of the death of the taxpayer during the fixed term, any amounts that would otherwise be payable after the death of the taxpayer be commuted into a single payment; and
(c)an annuity that meets the following conditions:
(i)it is acquired
(A)after 2000 and before 2005 at a time at which the taxpayer was mentally or physically infirm, or
(B)in 2005 at a time at which the taxpayer was mentally infirm,
(ii)the annuitant under it is a trust under which the taxpayer is the sole person beneficially interested (determined without regard to any right of a person to receive an amount from the trust only on or after the death of the taxpayer) in amounts payable under the annuity, and
(iii)it is for the life of the taxpayer (with or without a guaranteed period), or for a fixed term equal to 90 years minus the age in whole years of the taxpayer at the time it is acquired.
Application of paragraph 60(l) toqualifying trust annuity
(3)For the purpose of paragraph 60(l),
(a)in determining if a qualifying trust annuity with respect to a taxpayer is an annuity described in subparagraph 60(l)(ii), clauses 60(l)(ii)(A) and (B) are to be read without regard to their requirement that the taxpayer be the annuitant under the annuity; and
(b)if an amount paid to acquire a qualifying trust annuity with respect to a taxpayer would, if this Act were read without reference to this subsection, not be considered to have been paid by or on behalf of the taxpayer, the amount is deemed to have been paid on behalf of the taxpayer where
(i)it is paid
(A)by the estate of a deceased individual who was, immediately before death,
(I)a spouse or common-law partner of the taxpayer, or
(II)a parent or grandparent of the taxpayer on whom the taxpayer was dependent for support, or
(B)by the trust that is the annuitant under the qualifying trust annuity, and
(ii)it would, if it had been paid by the taxpayer, be deductible under paragraph 60(l) in computing the taxpayer’s income for a taxation year and the taxpayer elects, in the taxpayer’s return of income under this Part for that taxation year, to have this paragraph apply to the amount.
Marginal note:Definitions
60.02(1)The definitions in this subsection apply in this section and section 146.4,
eligible individualmeans a child or grandchild of a deceased annuitant under a registered retirement savings plan or a registered retirement income fund, or of a deceased member of a pooled registered pension plan, a registered pension plan or a specified pension plan, who was financially dependent on the deceased for support, at the time of the deceased’s death, by reason of mental or physical infirmity. (particulier admissible)
eligible proceedsmeans an amount (other than an amount that was deducted under paragraph 60(l) in computing the eligible individual’s income) received by an eligible individual as a consequence of the death after March 3, 2010 of a parent or grandparent of the eligible individual that is
(a)a refund of premiums (as defined in subsection 146(1));
(b)an eligible amount under subsection 146.3(6.11); or
(c)a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) out of or under a pooled registered pension plan, a registered pension plan or a specified pension plan. (produit admissible)
specified RDSP paymentin respect of an eligible individual means a payment that
(a)is made to a registered disability savings plan under which the eligible individual is the beneficiary;
(b)complies with the conditions set out in paragraphs 146.4(4)(f) to (h);
(c)is made after June 2011;
(d)has been designated in prescribed form for a taxation year by the holder of the plan and the eligible individual at the time that the payment is made; and
(e)if the eligible individual is not aDTC-eligible individual(as defined in subsection 146.4(1)), is made not later than the end of the fourth taxation year following the first taxation year throughout which the beneficiary is not a DTC-eligible individual. (paiement de REEI déterminé)
transitional eligible proceedsof a taxpayer means
(a)any amount (other than an amount that is eligible proceeds or an amount that was deducted under paragraph 60(l) in computing the taxpayer’s income) that is received by the taxpayer as a consequence of the death of an individual after 2007 and before 2011 out of or under
(i)a registered retirement savings plan or registered retirement income fund, or
(ii)a registered pension plan (other than an amount that is received as part of a series of periodic payments or that relates to an actuarial surplus); or
(b)an amount withdrawn from the taxpayer’s registered retirement savings plan or a registered retirement income fund (in this subsection referred to as the “RRSP withdrawal”) if
(i)the taxpayer previously deducted an amount under paragraph 60(l) in respect of an amount that would be described by paragraph (a) if it were read without reference to “other than an amount that is eligible proceeds or an amount that was deducted under paragraph 60(l) in computing the taxpayer’s income”,
(ii)the RRSP withdrawal is included in computing the taxpayer’s income for the year of the withdrawal, and
(iii)the RRSP withdrawal does not exceed the amount deducted under subparagraph (i). (produit admissible transitoire)
Marginal note:Rollover to RDSP on death
(2)There may be deducted in computing the income for a taxation year of a taxpayer who is an eligible individual an amount that
(a)does not exceed the lesser of
(i)the total specified RDSP payments made in the year or within 60 days after the end of the year (or within any longer period after the end of the year that is acceptable to the Minister) in respect of the taxpayer; and
(ii)the total amount of eligible proceeds that is included in computing the taxpayer’s income in the year; and
(b)was not deducted in computing the taxpayer’s income for a preceding taxation year.
Marginal note:Application of subsections (4) and (5)
(3)Subsections (4) and (5) do not apply unless
(a)a taxpayer who was the annuitant under a registered retirement savings plan or a registered retirement income fund or was a member of a registered pension plan died after 2007 and before 2011;
(b)the taxpayer was, immediately before the taxpayer’s death, the parent or grandparent of an eligible individual;
(c)transitional eligible proceeds were received from the plan or fund by
(i)an eligible individual in respect of the taxpayer,
(ii)a person who was the spouse or common-law partner of the taxpayer immediately before the taxpayer’s death, or
(iii)a person who is a beneficiary of the taxpayer’s estate or who directly received transitional eligible proceeds as a consequence of the death of the taxpayer; and
(d)the transitional eligible proceeds were included in computing the income of a person for a taxation year.
Marginal note:Transitional rule
(4)There may be deducted in computing the income of a taxpayer described in paragraph (3)(c) for a taxation year an amount approved by the Minister that does not exceed the lesser of
(a)the total specified RDSP payments made by the taxpayer before 2012, and
(b)the amount of transitional eligible proceeds included in computing the taxpayer’s income for the year.
Marginal note:Transitional rule — deceased taxpayer
(5)There may be deducted in computing the income of a taxpayer for the taxation year in which the taxpayer died an amount approved by the Minister that does not exceed the lesser of
(a)the total specified RDSP payments made before 2012 by an individual described in subparagraph (3)(c)(iii), and
(b)the amount by which the total of all amounts that were included in computing the taxpayer’s income for the year under subsection 146(8.8) or 146.3(6) exceeds the total of all amounts, if any, that were deducted in computing the taxpayer’s income for the year under subsection 146(8.92) or 146.3(6.3).
Marginal note:Limitation
(6)The total amounts that may be deducted under subsections (4) and (5) in respect of transitional eligible proceeds received in respect of the death of a taxpayer shall not exceed the total transitional eligible proceeds received in respect of the deceased taxpayer.
Marginal note:Additions to clause 60(l)(v)(B.2) for 2008
60.021(1)In determining the amount that may be deducted because of paragraph 60(l) in computing a taxpayer’s income for the 2008 taxation year, clause 60(l)(v)(B.2) shall be read as follows:
(B.2)the total of all amounts each of which is
(I)the taxpayer’s eligible amount (within the meaning assigned by subsection 146.3(6.11)) for the year in respect of a registered retirement income fund,
(II)the taxpayer’s eligible RRIF withdrawal amount (within the meaning assigned by subsection 60.021(2)) for the year in respect of a registered retirement income fund, or
(III)the taxpayer’s eligible variable benefit withdrawal amount (within the meaning assigned by subsection 60.021(3)) for the year in respect of an account of the taxpayer under a money purchase provision of a registered pension plan,
Marginal note:Meaning of eligible RRIF withdrawal amount
(2)A taxpayer’s eligible RRIF withdrawal amount for a taxation year in respect of a registered retirement income fund under which the taxpayer is the annuitant at the beginning of the taxation year is
(a)except where paragraph (b) applies, the amount determined by the formula
A – B
where
(i)the total of all amounts included, because of subsection 146.3(5), in computing the income of the taxpayer for the taxation year in respect of amounts received out of or under the fund (other than an amount paid by direct transfer from the fund to another fund or to a registered retirement savings plan), and
(ii)the amount that would, in the absence of subsection 146.3(1.1), be the minimum amount under the fund for the taxation year, and
(b)if the taxpayer attained 70 years of age in 2007, nil.
Marginal note:Meaning of eligible variable benefit withdrawal amount
(3)A taxpayer’s eligible variable benefit withdrawal amount for a taxation year in respect of an account of the taxpayer under a money purchase provision of a registered pension plan is the amount determined by the formula
A – B – C
where
(a)the total of all amounts each of which is the amount of a retirement benefit (other than a retirement benefit permissible under any of paragraphs 8506(1)(a) to (e) of the Regulations) paid from the plan in the taxation year in respect of the account and included, because of paragraph 56(1)(a), in computing the taxpayer’s income for the taxation year, and
(b)the amount that would, in the absence of paragraph 8506(7)(b) of the Regulations, be the minimum amount for the account for the taxation year;
Marginal note:Expressions used in this section
(4)For the purposes of this section,
(a)the term “money purchase provision” has the meaning assigned by subsection 147.1(1);
(b)the term “retirement benefit” has the meaning assigned by subsection 8500(1) of the Regulations; and
(c)the minimum amount for an account of a taxpayer under a money purchase provision of a registered pension plan is the amount determined in accordance with subsection 8506(5) of the Regulations.
Marginal note:Additions to clause 60(l)(v)(B.2) for 2015
60.022(1)In determining the amount that may be deducted because of paragraph 60(l) in computing a taxpayer’s income for the 2015 taxation year, clause 60(l)(v)(B.2) is to be read as follows:
(B.2)the total of all amounts each of which is
(I)the taxpayer’s eligible amount (within the meaning of subsection 146.3(6.11)) for the year in respect of a registered retirement income fund,
(II)the taxpayer’s eligible RRIF withdrawal amount (within the meaning of subsection 60.022(2)) for the year in respect of a RRIF,
(III)the taxpayer’s eligible variable benefit withdrawal amount (within the meaning of subsection 60.022(3)) for the year in respect of an account of the taxpayer under a money purchase provision of a registered pension plan, or
(IV)the taxpayer’s eligible PRPP withdrawal amount (within the meaning of subsection 60.022(4)) for the year in respect of an account of the taxpayer under a PRPP,
Marginal note:Eligible RRIF withdrawal amount
(2)A taxpayer’s eligible RRIF withdrawal amount for the taxation year in respect of a RRIF under which the taxpayer is the annuitant at the beginning of the taxation year is the amount determined by the formula
A – B
where
(a)the total of all amounts included, because of subsection 146.3(5), in computing the taxpayer’s income for the taxation year in respect of amounts received out of or under the fund (other than an amount paid by direct transfer from the fund to another fund or to a registered retirement savings plan), and
(b)the amount that would be the minimum amount under the fund for the 2015 taxation year if it were determined using the prescribed factors under subsection 7308(3) or (4), as the case may be, of theIncome Tax Regulationsas they read on December 31, 2014; and
Marginal note:Eligible variable benefit withdrawal amount
(3)A taxpayer’s eligible variable benefit withdrawal amount for a taxation year in respect of an account of the taxpayer under a money purchase provision of a registered pension plan is the amount determined by the formula
A – B – C
where
(a)the total of all amounts each of which is the amount of a retirement benefit (other than a retirement benefit permissible under any of paragraphs 8506(1)(a) to (e) of theIncome Tax Regulations) paid from the plan in the taxation year in respect of the account and included, because of paragraph 56(1)(a), in computing the taxpayer’s income for the taxation year, and
(b)the amount that would be the minimum amount for the account for the 2015 taxation year if it were determined using the factor designated under subsection 7308(4) of theIncome Tax Regulationsas they read on December 31, 2014;
Marginal note:Eligible PRPP withdrawal amount
(4)A taxpayer’s eligible PRPP withdrawal amount for a taxation year in respect of an account of the taxpayer under a PRPP is the amount determined by the formula
A – B
where
(a)the total of all amounts each of which is the amount of a distribution made from the account in the taxation year and included, because of subsection 147.5(13), in computing the taxpayer’s income for the taxation year, and
(b)the amount that would be the minimum amount for the account for the 2015 taxation year if it were determined using the factor designated under subsection 7308(4) of theIncome Tax Regulationsas they read on December 31, 2014, and
Marginal note:Expressions used in this section
(5)For the purposes of this section,
(a)money purchase provisionhas the same meaning as in subsection 147.1(1);
(b)retirement benefitshas the same meaning as in subsection 8500(1) of theIncome Tax Regulations;
(c)the minimum amount for an account of a taxpayer under a money purchase provision of a registered pension plan is the amount determined under subsection 8506(5) of theIncome Tax Regulations; and
(d)the minimum amount for an account of a taxpayer under a PRPP is the amount that would be the minimum amount for the calendar year under subsection 8506(5) of theIncome Tax Regulationsif the taxpayer’s account were an account under a money purchase provision of a registered pension plan.
Marginal note:Definitions
60.03(1)The following definitions apply in this section.
eligible pension income, of an individual for a taxation year, means the total of
(a)the eligible pension income (as defined in subsection 118(7)) of the individual for the year,
(b)if the individual has attained the age of 65 years before the end of the year, the lesser of
(i)the total of all amounts each of which is a payment made in the year to the individual
(A)out of or under a retirement compensation arrangement that provides benefits that supplement the benefits provided under a registered pension plan (other than an individual pension plan for the purposes of Part LXXXIII of theIncome Tax Regulations), and
(B)in respect of a life annuity that is attributable to periods of employment for which benefits are also provided to the individual under the registered pension plan,
(ii)the amount, if any, by which the defined benefit limit (as defined in subsection 8500(1) of theIncome Tax Regulations) for the year multiplied by 35 exceeds the amount determined under paragraph (a), and
(c)the lesser of
(i)the total of all amounts received by the individual in the year on account of
(A)a retirement income security benefit payable to the individual under Part 2 of theVeterans Well-being Act, or
(B)an income replacement benefit payable to the individual under Part 2 of theVeterans Well-being Act, if the amount is determined under subsection 19.1(1), paragraph 23(1)(b) or subsection 26.1(1) of that Act (as modified, where applicable, under Part 5 of that Act), and
(ii)the amount, if any, by which thedefined benefit limit(as defined in subsection 8500(1) of theIncome Tax Regulations) for the year multiplied by 35 exceeds the total of the amounts determined under paragraphs (a) and (b). (revenu de pension déterminé)
joint electionin respect of a pensioner and a pension transferee for a taxation year means an election made jointly in prescribed form by the pensioner and the pension transferee and filed with the Minister with both the pensioner’s and the pension transferee’s returns of income for the taxation year in respect of which the election is made, on or before their respective filing-due dates for the taxation year. (choix conjoint)
pensionerfor a taxation year means an individual who
(a)receives eligible pension income in the taxation year; and
(b)is resident in Canada,
(i)if the individual dies in the taxation year, at the time that is immediately before the individual’s death, or
(ii)in any other case, at the end of the calendar year in which the taxation year ends. (pensionné)
pension incomehas the meaning assigned by section 118. (revenu de pension)
pension transfereefor a taxation year means an individual who
(a)is resident in Canada,
(i)if the individual dies in the taxation year, at the time that is immediately before the individual’s death, or
(ii)in any other case, at the end of the calendar year in which the taxation year ends; and
(b)at any time in the taxation year is married to, or in a common-law partnership with, a pensioner and is not, by reason of the breakdown of their marriage or common-law partnership, living separate and apart from the pensioner at the end of the taxation year and for a period of at least 90 days commencing in the taxation year. (cessionnaire)
qualified pension incomehas the meaning assigned by section 118. (revenu de pension admissible)
split-pension amountfor a taxation year is the amount elected by a pensioner and a pension transferee in a joint election for the taxation year not exceeding the amount determined by the formula
0.5A × B/C
where
Marginal note:Effect of pension income split
(2)For the purpose of subsection 118(3), if a pensioner and a pension transferee have made a joint election in a taxation year,
(a)the pensioner is deemed not to have received the portion of the pensioner’s pension income or qualified pension income, as the case may be, for the taxation year that is equal to the amount of the pensioner’s split-pension amount for that taxation year; and
(b)the pension transferee is deemed to have received the split-pension amount
(i)as pension income, to the extent that the split-pension amount was pension income to the pensioner, and
(ii)as qualified pension income, to the extent that the split-pension amount was qualified pension income to the pensioner.
Marginal note:Limitation
(3)A pensioner may file only one joint election for a particular taxation year.
Marginal note:False declaration
(4)A joint election is invalid if the Minister establishes that a pensioner or a pension transferee has knowingly or under circumstances amounting to gross negligence made a false declaration in the joint election.
Marginal note:Support
60.1(1)For the purposes of paragraph 60(b) and subsection 118(5), where an order or agreement, or any variation thereof, provides for the payment of an amount by a taxpayer to a person or for the benefit of the person, children in the person’s custody or both the person and those children, the amount or any part thereof
(a)when payable, is deemed to be payable to and receivable by that person; and
(b)when paid, is deemed to have been paid to and received by that person.
Marginal note:Agreement
(2)For the purposes of section 60, this section and subsection 118(5), the amount determined by the formula
A - B
where
(a)the taxpayer’s spouse or common-law partner or former spouse or common-law partner, or
(b)where the amount became payable under an order made by a competent tribunal in accordance with the laws of a province, an individual who is a parent of a child of whom the taxpayer is a legal parent,
and
(a)the total of all amounts each of which is an amount included in the total determined for A in respect of the acquisition or improvement of a self-contained domestic establishment in which that person resides, including any payment of principal or interest in respect of a loan made or indebtedness incurred to finance, in any manner whatever, such acquisition or improvement
exceeds
(b)the total of all amounts each of which is an amount equal to 1/5 of the original principal amount of a loan or indebtedness described in paragraph (a),
is, where the order or written agreement, as the case may be, provides that this subsection and subsection 56.1(2) shall apply to any amount paid or payable thereunder, deemed to be an amount payable by the taxpayer to that person and receivable by that person as an allowance on a periodic basis, and that person is deemed to have discretion as to the use of that amount.
Marginal note:Prior payments
(3)For the purposes of this section and section 60, where a written agreement or order of a competent tribunal made at any time in a taxation year provides that an amount paid before that time and in the year or the preceding taxation year is to be considered to have been paid and received thereunder,
(a)the amount is deemed to have been paid thereunder; and
(b)the agreement or order is deemed, except for the purpose of this subsection, to have been made on the day on which the first such amount was paid, except that, where the agreement or order is made after April 1997 and varies a child support amount payable to the recipient from the last such amount paid to the recipient before May 1997, each varied amount of child support paid under the agreement or order is deemed to have been payable under an agreement or order the commencement day of which is the day on which the first payment of the varied amount is required to be made.
Marginal note:Definitions
(4)The definitions in subsection 56.1(4) apply in this section and section 60.
60.11[Repealed, 2013, c. 40, s. 29]
Marginal note:Refund of undeducted past service AVCs
60.2(1)There may be deducted in computing a taxpayer’s income for a taxation year an amount equal to the total of
(a)where the taxation year ends before 1991, the total of all amounts each of which is that portion of an amount paid to the taxpayer before 1991 and included by reason of subparagraph 56(1)(a)(i) or paragraph 56(1)(h) or 56(1)(t) in computing the taxpayer’s income for the year or a preceding taxation year that can reasonably be considered to be a refund of additional voluntary contributions made by the taxpayer before October 9, 1986 to a registered pension plan for the taxpayer’s benefit in respect of services rendered by the taxpayer before the year in which the contributions were made, to the extent that the contributions were not deducted in computing the taxpayer’s income for any taxation year; and
(b)the least of
(i)$3,500,
(ii)the total of all amounts each of which is an amount included after 1986 by reason of subparagraph 56(1)(a)(i) or paragraph 56(1)(d.2), 56(1)(h) or 56(1)(t) in computing the taxpayer’s income for the year, and
(iii)the balance of the annuitized voluntary contributions of the taxpayer at the end of the year.
Definition ofbalance of the annuitized voluntary contributions
(2)For the purposes of subsection 60.2(1),balance of the annuitized voluntary contributionsof a taxpayer at the end of a taxation year means the amount, if any, by which
(a)such part of the total of all amounts each of which is an additional voluntary contribution made by the taxpayer to a registered pension plan before October 9, 1986 in respect of services rendered by the taxpayer before the year in which the contribution was made, to the extent that the contribution was not deducted in computing the taxpayer’s income for any taxation year, as may reasonably be considered as having been
(i)used before October 9, 1986 to acquire or provide an annuity for the taxpayer’s benefit under a registered pension plan or registered retirement savings plan, or
(ii)transferred before October 9, 1986 to a registered retirement income fund under which the taxpayer was the annuitant (within the meaning assigned by subsection 146.3(1)) at the time of the transfer
exceeds
(b)the total of all amounts each of which is
(i)an amount deducted under paragraph 60.2(1)(b) in computing the taxpayer’s income for a preceding taxation year, or
(ii)an amount deducted under paragraph 60.2(1)(a) in computing the taxpayer’s income for the year or a preceding taxation year, to the extent that the amount can reasonably be considered to be in respect of a refund of additional voluntary contributions included in determining the total under paragraph 60.2(2)(a).
Marginal note:Payment made as consideration for income-averaging annuity
61(1)In computing the income for a taxation year of an individual resident in Canada, there may be deducted an amount equal to the lesser of
(a)such amount as the individual may claim, not exceeding the total of amounts each of which is a single payment
(i)made by the individual in the year or within 60 days after the end of the year as consideration for an income-averaging annuity contract of the individual, and
(ii)in respect of which no amount has been deducted in computing the individual’s income for the immediately preceding taxation year, and
(b)the amount, if any, by which the total of
(i)the remainder obtained when the total of the amounts deductible in computing the individual’s income for the year by reason of paragraphs 60(j) and 60(l) of this Act and paragraph 60(k) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, is deducted from the total of amounts described in subsection 61(2) in respect of the individual for the year,
(ii)the amount, if any, by which the amount determined under paragraph 3(b) in respect of the individual for the year exceeds the total of amounts each of which is an allowable business investment loss of the individual for the year,
(iii)the individual’s income for the year from the production of a literary, dramatic, musical or artistic work,
(iv)the individual’s income for the year from the individual’s activities as an athlete, a musician or a public entertainer such as a theatre, motion picture, radio or television artist, and
(iv.1)the amount, if any, by which the amount included in computing the income of the individual for the year by virtue of section 59 exceeds the total of amounts deducted in computing the individual’s income for the year under sections 64, 66, 66.1, 66.2 and 66.4 and under section 29 of theIncome Tax Application Rules,
exceeds
(v)the total of amounts each of which is the annual annuity amount of the individual in respect of an income-averaging annuity contract in respect of the consideration for which any amount has been deducted under this subsection in computing the individual’s income for the year.
Marginal note:Idem
(2)For the purposes of subsection 61(1), an amount described in this subsection in respect of an individual for a taxation year is any following amount:
(a)any single payment received by the individual in the year
(i)out of or under a superannuation or pension fund or plan
(A)on the death, withdrawal or retirement from employment of an employee or former employee,
(B)on the winding-up of the fund or plan in full satisfaction of all rights of the payee in or under the fund or plan, or
(C)to which the payee is entitled by virtue of an amendment to the plan although the payee continues to be an employee to whom the plan is applicable,
(ii)on retirement as an employee in recognition of long service and not made out of or under a superannuation fund or plan,
(iii)pursuant to an employees profit sharing plan in full satisfaction of all the individual’s rights in or under the plan, to the extent that the amount thereof is required to be included in computing the individual’s income for the year in which the payment was received, or
(iv)pursuant to a deferred profit sharing plan on the death, withdrawal or retirement from employment of an employee or former employee, to the extent that the amount thereof is required to be included in computing the individual’s income for the year;
(b)a payment or payments made by an employer to the individual as an employee or former employee on or after retirement in respect of loss of office or employment, if made in the year of retirement or within one year after that year;
(c)a payment or payments paid to the individual as a death benefit, if paid in the year of death or within one year after that year;
(d)any amount included in computing the individual’s income for the year by virtue of subsection 146(8), to the extent that the amount is a refund of premiums, as defined by section 146, under a registered retirement savings plan received by the individual under the plan on or after the death of the person who was, immediately before the person’s death, the annuitant thereunder;
(e)any amount included in computing the individual’s income for the year by virtue of section 13, 14 or 23, subsection 28(4) or 28(5) or paragraph 106(2)(a) of this Act or subparagraph 56(1)(a)(viii) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952;
(f)any amount deemed by section 7 to be a benefit received by the individual in the year by virtue of the individual’s employment;
(g)the amount, if any, by which any amount received by the individual in the year as or on account of a prize for achievement in a field of endeavour ordinarily carried on by the individual exceeds $500;
(h)any amount included in computing the individual’s income for the year by virtue of subsection 146.2(6) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952;
(i)a payment made in the year to an individual by virtue of paragraph 51(2)(b) of theJudges Act;
(j)except where the individual claimed a deduction under paragraph 23(3)(a) of theIncome Tax Application Rulesin computing the individual’s income for the year, any amount included in computing that income by virtue of paragraph 23(3)(c) of that Act; and
(k)where the individual ceased to be a member of a partnership in the year or the preceding year and paragraph 34(a) applied in computing the individual’s income therefrom in the preceding year, the amount included in the individual’s income for the year by virtue of paragraph 3(a) to the extent that, having regard to all the circumstances including the proportion in which the members of the partnership have agreed to share the profits of the partnership, it can reasonably be considered to be in respect of the individual’s share of the work in progress of the partnership at the time the individual ceased to be a member thereof, if, during the remainder of the year in which the individual ceased to be a member and in the following year, the individual did not
(i)become employed in the business that had been carried on by the partnership,
(ii)carry on a business that is a profession, or
(iii)become a member of a partnership that carries on a business that is a profession.
Marginal note:Definitions
(4)In this section,
annual annuity amountof an individual in respect of an income-averaging annuity contract means the total of the equal payments described in paragraph (c) of the definitionincome-averaging annuity contractin this subsection that, under the contract, are receivable by the individual in the twelve month period commencing on the day that the first such payment under the contract becomes receivable by the individual; (montant annuel de la rente)
income-averaging annuity contractof an individual means a contract between the individual and a person licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an annuities business or a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee, under which
(a)in consideration of a qualifying payment as consideration under the contract, that person agrees to pay to the individual, commencing at a time not later than 10 months after the individual has made the qualifying payment,
(i)an annuity to the individual for the individual’s life, with or without a guaranteed term not exceeding the number of years that is the lesser of
(A)15, and
(B)85 minus the age of the individual at the time the annuity payments commence, or
(ii)an annuity to the individual for a guaranteed term described in subparagraph (i), or
(b)in consideration of a single payment in respect of the individual’s 1981 taxation year, other than a qualifying payment, made by the individual as consideration under the contract, that person makes all payments provided for under the contract to the individual before 1983
and under which no payments are provided except the single payment by the individual and,
(c)in respect of a contract referred to in paragraph (a), equal annuity payments that are to be made annually or at more frequent periodic intervals, or
(d)in respect of a contract referred to in paragraph (b), payments described therein to the individual; (contrat de rente à versements invariables)
qualifying paymentmeans a single payment made before November 13, 1981 (or made on or after November 13, 1981 pursuant to an agreement in writing entered into before that date to make such a payment in respect of the individual’s 1981 taxation year, or pursuant to an arrangement in writing made before that date to have funds withheld before 1982 from any of the individual’s remuneration described in paragraph 61(1)(b) earned or received before November 13, 1981 and paid by or on behalf of the individual). (paiement admissible)
Marginal note:Where income-averaging annuity contract ceases to be such
61.1(1)Where a contract that was at any time an income-averaging annuity contract of an individual has, at a subsequent time, ceased to be an income-averaging annuity contract otherwise than by virtue of the surrender, cancellation, redemption, sale or the disposition thereof, the individual shall be deemed to have received at that subsequent time as proceeds of the disposition of an income-averaging annuity contract an amount equal to the fair market value of the contract at that subsequent time and to have acquired the contract, as another contract not being an income-averaging annuity contract, immediately thereafter at a cost to the individual equal to that fair market value.
Marginal note:Where annuitant dies and payments continued
(2)Where an individual who was an annuitant under an income-averaging annuity contract has died and payments are subsequently made under that contract, the payments shall be deemed to be payments under an income-averaging annuity contract.
Marginal note:Reserve for debt forgiveness for resident individuals
61.2There may be deducted in computing the income for a taxation year of an individual (other than a trust) resident in Canada throughout the year such amount as the individual claims not exceeding the amount determined by the formula
A + B - 0.2(C - $40,000)
where
(a)the total of all amounts each of which is an amount that, because of the application of section 80 to an obligation payable by the individual (or a partnership of which the individual was a member) was included under subsection 80(13) in computing the income of the individual for the year or the income of the partnership for a fiscal period that ends in the year (to the extent that, where the amount was included in computing income of a partnership, it relates to the individual’s share of that income)
exceeds
(b)the total of all amounts deducted because of paragraph 80(15)(a) in computing the individual’s income for the year,
Marginal note:Deduction for insolvency with respect to resident corporations
61.3(1)There shall be deducted in computing the income for a taxation year of a corporation resident in Canada throughout the year that is not exempt from tax under this Part on its taxable income, the lesser of
(a)the amount, if any, by which
(i)the total of all amounts each of which is an amount that, because of the application of section 80 to a commercial obligation (in this section having the meaning assigned by subsection 80(1)) issued by the corporation (or a partnership of which the corporation was a member) was included under subsection 80(13) in computing the income of the corporation for the year or the income of the partnership for a fiscal period that ends in the year (to the extent that the amount, where it was included in computing income of a partnership, relates to the corporation’s share of that income)
exceeds
(ii)the total of all amounts deducted because of paragraph 80(15)(a) in computing the corporation’s income for the year, and
(b)the amount determined by the formula
A - 2(B - C - D - E)
where
(i)the fair market value of the assets of the corporation at the end of the year,
(ii)the amounts paid before the end of the year on account of the corporation’s tax payable under this Part or any of Parts I.3, II, VI and XIV for the year or on account of a similar tax payable for the year under an Act of a province, and
(iii)all amounts paid by the corporation in the 12-month period preceding the end of the year to a person with whom the corporation does not deal at arm’s length
(A)as a dividend (other than a stock dividend),
(B)on a reduction of paid-up capital in respect of any class of shares of its capital stock,
(C)on a redemption, acquisition or cancellation of its shares, or
(D)as a distribution or appropriation in any manner whatever to or for the benefit of the shareholders of any class of its capital stock, to the extent that the distribution or appropriation cannot reasonably be considered to have resulted in a reduction in the amount otherwise determined for C in respect of the corporation for the year,
(i)the equity and consolidation methods of accounting shall not be used, and
(ii)subject to subparagraph 61.3(1)(b)(i) and except as otherwise provided in this description, the total liabilities of the corporation shall
(A)where the corporation is not an insurance corporation, a federal credit union or a bank to which clause (B) or (C) applies and the balance sheet as of the end of the year was presented to the shareholders of the corporation and was prepared in accordance with generally accepted accounting principles, be considered to be the total liabilities shown on the balance sheet,
(B)where the corporation is a bank, a federal credit union or an insurance corporation that is required to report to the Superintendent of Financial Institutions and the balance sheet as of the end of the year was accepted by the Superintendent, be considered to be the total liabilities shown on that balance sheet,
(C)where the corporation is an insurance corporation that is required to report to the superintendent of insurance or other similar officer or authority of the province under whose laws the corporation is incorporated and the balance sheet as of the end of the year was accepted by that officer or authority, be considered to be the total liabilities shown on that balance sheet, and
(D)in any other case, be considered to be the amount that would be shown as total liabilities of the corporation at the end of the year on a balance sheet prepared in accordance with generally accepted accounting principles,
(i)the amount that would be the corporation’s income for the year if that amount were determined without reference to this section and section 61.4
exceeds
(ii)the amount determined under paragraph 61.3(1)(a) in respect of the corporation for the year.
Marginal note:Reserve for insolvency with respect to non-resident corporations
(2)There shall be deducted in computing the income for a taxation year of a corporation that is non-resident at any time in the year, the lesser of
(a)the amount, if any, by which
(i)the total of all amounts each of which is an amount that, because of the application of section 80 to a commercial obligation issued by the corporation (or a partnership of which the corporation was a member) was included under subsection 80(13) in computing the corporation’s taxable income or taxable income earned in Canada for the year or the income of the partnership for a fiscal period that ends in the year (to the extent that, where the amount was included in computing income of a partnership, it relates to the corporation’s share of the partnership’s income added in computing the corporation’s taxable income or taxable income earned in Canada for the year)
exceeds
(ii)the total of all amounts deducted because of paragraph 80(15)(a) in computing the corporation’s taxable income or taxable income earned in Canada for the year, and
(b)the amount determined by the formula
A - 2(B - C - D - E)
where
(i)the fair market value of the assets of the corporation at the end of the year,
(ii)the amounts paid before the end of the year on account of the corporation’s tax payable under this Part or any of Parts I.3, II, VI and XIV for the year or on account of a similar tax payable for the year under an Act of a province, and
(iii)all amounts paid in the 12-month period preceding the end of the year by the corporation to a person with whom the corporation does not deal at arm’s length
(A)as a dividend (other than a stock dividend),
(B)on a reduction of paid-up capital in respect of any class of shares of its capital stock,
(C)on a redemption, acquisition or cancellation of its shares, or
(D)as a distribution or appropriation in any manner whatever to or for the benefit of the shareholders of any class of its capital stock, to the extent that the distribution or appropriation cannot reasonably be considered to have resulted in a reduction of the amount otherwise determined for C in respect of the corporation for the year,
(i)the amount that would be the corporation’s taxable income or taxable income earned in Canada for the year if that amount were determined without reference to this section and section 61.4
exceeds
(ii)the amount determined under paragraph 61.3(2)(a) in respect of the corporation for the year.
Marginal note:Anti-avoidance
(3)Subsections 61.3(1) and 61.3(2) do not apply to a corporation for a taxation year where property was transferred in the 12-month period preceding the end of the year or the corporation became indebted in that period and it can reasonably be considered that one of the reasons for the transfer or the indebtedness was to increase the amount that the corporation would, but for this subsection, be entitled to deduct under subsection 61.3(1) or 61.3(2).
Marginal note:Reserve for debt forgiveness for corporations and others
61.4There may be deducted as a reserve in computing the income for a taxation year of a taxpayer that is a corporation or trust resident in Canada throughout the year or a non-resident person who carried on business through a fixed place of business in Canada at the end of the year such amount as the taxpayer claims not exceeding the least of
(a)the amount determined by the formula
A - B
where
(i)the total of all amounts each of which is an amount that, because of the application of section 80 to a commercial obligation (within the meaning assigned by subsection 80(1)) issued by the taxpayer (or a partnership of which the taxpayer was a member) was included under subsection 80(13) in computing the income of the taxpayer for the year or a preceding taxation year or of the partnership for a fiscal period that ends in that year or preceding year (to the extent that, where the amount was included in computing income of a partnership, it relates to the taxpayer’s share of that income)
exceeds the total of
(ii)all amounts each of which is an amount deducted under paragraph 80(15)(a) in computing the taxpayer’s income for the year or a preceding taxation year, and
(iii)all amounts deducted under section 61.3 in computing the taxpayer’s income for the year or a preceding taxation year, and
(i)the amount that would be determined for A in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for any preceding taxation year, and
(ii)the amount, if any, included under section 56.3 in computing the taxpayer’s income for the year,
(b)the total of
(i)4/5 of the amount that would be determined for A in paragraph 61.4(a) in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for any preceding taxation year,
(ii)3/5 of the amount that would be determined for A in paragraph 61.4(a) in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for the year or any preceding taxation year (other than the last preceding taxation year),
(iii)2/5 of the amount that would be determined for A in paragraph 61.4(a) in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for the year or any preceding taxation year (other than the second last preceding taxation year), and
(iv)1/5 of the amount that would be determined for A in paragraph 61.4(a) in respect of the taxpayer for the year if that value did not take into account amounts included or deducted in computing the taxpayer’s income for the year or any preceding taxation year (other than the third last preceding taxation year), and
(c)where the taxpayer is a corporation that commences to wind up in the year (otherwise than in circumstances to which the rules in subsection 88(1) apply), nil.
Marginal note:Moving expenses
62(1)There may be deducted in computing a taxpayer’s income for a taxation year amounts paid by the taxpayer as or on account of moving expenses incurred in respect of an eligible relocation, to the extent that
(a)they were not paid on the taxpayer’s behalf in respect of, in the course of or because of, the taxpayer’s office or employment;
(b)they were not deductible because of this section in computing the taxpayer’s income for the preceding taxation year;
(c)the total of those amounts does not exceed
(i)in any case described in subparagraph (a)(i) of the definitioneligible relocationin subsection 248(1), the total of all amounts, each of which is an amount included in computing the taxpayer’s income for the taxation year from the taxpayer’s employment at a new work location or from carrying on the business at the new work location, or because of subparagraph 56(1)(r)(v) in respect of the taxpayer’s employment at the new work location, and
(ii)in any case described in subparagraph (a)(ii) of the definitioneligible relocationin subsection 248(1), the total of amounts included in computing the taxpayer’s income for the year because of paragraphs 56(1)(n) and (o); and
(d)all reimbursements and allowances received by the taxpayer in respect of those expenses are included in computing the taxpayer’s income.
Marginal note:Moving expenses of students
(2)There may be deducted in computing a taxpayer’s income for a taxation year the amount, if any, that the taxpayer would be entitled to deduct under subsection (1) if the definitioneligible relocationin subsection 248(1) were read without reference to subparagraph (a)(i) of that definition and if the word “both” in paragraph (c) of that definition were read as “either or both”.
Definition ofmoving expenses
(3)In subsection 62(1),moving expensesincludes any expense incurred as or on account of
(a)travel costs (including a reasonable amount expended for meals and lodging), in the course of moving the taxpayer and members of the taxpayer’s household from the old residence to the new residence,
(b)the cost to the taxpayer of transporting or storing household effects in the course of moving from the old residence to the new residence,
(c)the cost to the taxpayer of meals and lodging near the old residence or the new residence for the taxpayer and members of the taxpayer’s household for a period not exceeding 15 days,
(d)the cost to the taxpayer of cancelling the lease by virtue of which the taxpayer was the lessee of the old residence,
(e)the taxpayer’s selling costs in respect of the sale of the old residence,
(f)where the old residence is sold by the taxpayer or the taxpayer’s spouse or common-law partner as a result of the move, the cost to the taxpayer of legal services in respect of the purchase of the new residence and of any tax, fee or duty (other than any goods and services tax or value-added tax) imposed on the transfer or registration of title to the new residence,
(g)interest, property taxes, insurance premiums and the cost of heating and utilities in respect of the old residence, to the extent of the lesser of $5,000 and the total of such expenses of the taxpayer for the period
(i)throughout which the old residence is neither ordinarily occupied by the taxpayer or by any other person who ordinarily resided with the taxpayer at the old residence immediately before the move nor rented by the taxpayer to any other person, and
(ii)in which reasonable efforts are made to sell the old residence, and
(h)the cost of revising legal documents to reflect the address of the taxpayer’s new residence, of replacing drivers’ licenses and non-commercial vehicle permits (excluding any cost for vehicle insurance) and of connecting or disconnecting utilities,
but, for greater certainty, does not include costs (other than costs referred to in paragraph 62(3)(f)) incurred by the taxpayer in respect of the acquisition of the new residence.
Marginal note:Child care expenses
63(1)Subject to subsection 63(2), where a prescribed form containing prescribed information is filed with a taxpayer’s return of income (other than a return filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) under this Part for a taxation year, there may be deducted in computing the taxpayer’s income for the year such amount as the taxpayer claims not exceeding the total of all amounts each of which is an amount paid, as or on account of child care expenses incurred for services rendered in the year in respect of an eligible child of the taxpayer,
(a)by the taxpayer, where the taxpayer is described in subsection (2) and the supporting person of the child for the year is a person described in clause (i)(D) of the description of C in the formula in that subsection, or
(b)by the taxpayer or a supporting person of the child for the year, in any other case,
to the extent that
(c)the amount is not included in computing the amount deductible under this subsection by an individual (other than the taxpayer), and
(d)the amount is not an amount (other than an amount that is included in computing a taxpayer’s income and that is not deductible in computing the taxpayer’s taxable income) in respect of which any taxpayer is or was entitled to a reimbursement or any other form of assistance,
and the payment of which is proven by filing with the Minister one or more receipts each of which was issued by the payee and contains, where the payee is an individual, that individual’s Social Insurance Number, but not exceeding the amount, if any, by which
(e)the lesser of
(i)2/3 of the taxpayer’s earned income for the year, and
(ii)the total of all amounts each of which is the annual child care expense amount in respect of an eligible child of the taxpayer for the year
exceeds
(f)the total of all amounts each of which is an amount that is deducted, in respect of the taxpayer’s eligible children for the year, under this section in computing the income for the year of an individual (other than the taxpayer) to whom subsection 63(2) applies for the year.
Marginal note:Income exceeding income of supporting person
(2)Where the income for a taxation year of a taxpayer who has an eligible child for the year exceeds the income for that year of a supporting person of that child (on the assumption that both incomes are computed without reference to this section and paragraphs 60(v.1) and 60(w), the amount that may be deducted by the taxpayer under subsection 63(1) for the year as or on account of child care expenses shall not exceed the lesser of
(a)the amount that would, but for this subsection, be deductible by the taxpayer for the year under subsection 63(1), and
(b)the amount determined by the formula
A × C
where
(i)the number of weeks in the year during which the child care expenses were incurred and throughout which the supporting person was
(A)a student in attendance at a designated educational institution or a secondary school and enrolled in a program of the institution or school of not less than 3 consecutive weeks duration that provides that each student in the program spend not less than 10 hours per week on courses or work in the program,
(B)a person certified in writing by a medical doctor or a nurse practitioner to be a person who
(I)was incapable of caring for children because of the person’s mental or physical infirmity and confinement throughout a period of not less than 2 weeks in the year to bed, to a wheelchair or as a patient in a hospital, an asylum or other similar institution, or
(II)was in the year, and is likely to be for a long, continuous and indefinite period, incapable of caring for children, because of the person’s mental or physical infirmity,
(C)a person confined to a prison or similar institution throughout a period of not less than 2 weeks in the year, or
(D)a person who, because of a breakdown of the person’s marriage or common-law partnership, was living separate and apart from the taxpayer at the end of the year and for a period of at least 90 days that began in the year, and
(ii)the number of months in the year (other than a month that includes all or part of a week included in the number of weeks referred to in subparagraph (i)), each of which is a month during which the child care expenses were incurred and the supporting person was a student in attendance at a designated educational institution or a secondary school and enrolled in a program of the institution or school that is not less than 3 consecutive weeks duration and that provides that each student in the program spend not less than 12 hours in the month on courses in the program.
Marginal note:Taxpayer and supporting person with equal incomes
(2.1)For the purposes of this section, where in any taxation year the income of a taxpayer who has an eligible child for the year and the income of a supporting person of the child are equal (on the assumption that both incomes are computed without reference to this section and paragraphs 60(v.1) and 60(w), no deduction shall be allowed under this section to the taxpayer and the supporting person in respect of the child unless they jointly elect to treat the income of one of them as exceeding the income of the other for the year.
Marginal note:Expenses while at school
(2.2)There may be deducted in computing a taxpayer’s income for a taxation year such part of the amount determined under subsection 63(2.3) as the taxpayer claims, where
(a)the taxpayer is, at any time in the year, a student in attendance at a designated educational institution or a secondary school and enrolled in a program of the institution or school of not less than 3 consecutive weeks duration that provides that each student in the program spend not less than
(i)10 hours per week on courses or work in the program, or
(ii)12 hours per month on courses in the program;
(b)there is no supporting person of an eligible child of the taxpayer for the year or the income of the taxpayer for the year exceeds the income for the year of a supporting person of the child (on the assumption that both incomes are computed without reference to this section and paragraphs 60(v.1) and 60(w); and
(c)a prescribed form containing prescribed information is filed with the taxpayer’s return of income (other than a return filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) for the year.
Marginal note:Amount deductible
(2.3)For the purpose of subsection 63(2.2), the amount determined in respect of a taxpayer for a taxation year is the least of
(a)the amount by which the total of all amounts, each of which is an amount paid as or on account of child care expenses incurred for services rendered in the year in respect of an eligible child of the taxpayer, exceeds the amount that is deductible under subsection 63(1) in computing the taxpayer’s income for the year,
(b)2/3 of the taxpayer’s income for the year computed without reference to this section and paragraphs 60(v.1) and 60(w,
(c)the amount determined by the formula
A × C
where
(i)if there is a supporting person of an eligible child of the taxpayer for the year,
(A)the number of weeks, in the year, in which both the taxpayer and the supporting person were students who would be described in paragraph (2.2)(a) if that paragraph were read without reference to subparagraph (ii), and
(B)the number of months in the year (other than a month that includes all or part of a week included in the number of weeks referred to in clause (A)), in which both the taxpayer and the supporting person were students described in paragraph (2.2)(a), and
(ii)in any other case,
(A)the number of weeks, in the year, in which the taxpayer was a student who would be described in paragraph (2.2)(a) if that paragraph were read without reference to subparagraph (ii), and
(B)the number of months in the year (other than a month that includes all or part of a week included in the number of weeks referred to in clause (A)), in which the taxpayer was a student described in paragraph (2.2)(a),
(d)the amount by which the total calculated under subparagraph 63(1)(e)(ii) in respect of eligible children of the taxpayer for the year exceeds the amount that is deductible under subsection 63(1) in computing the taxpayer’s income for the year, and
(e)where there is a supporting person of an eligible child of the taxpayer for the year, the amount by which the amount calculated under paragraph 63(2)(b) for the year in respect of the taxpayer exceeds 2/3 of the taxpayer’s earned income for the year.
Marginal note:Definitions
(3)In this section,
annual child care expense amount, in respect of an eligible child of a taxpayer for a taxation year, means
(a)$11,000, if the child is a person in respect of whom an amount may be deducted under section 118.3 in computing a taxpayer’s tax payable under this Part for the year, and
(b)if the child is not a person referred to in paragraph (a),
(i)$8,000, if the child is under 7 years of age at the end of the year, and
(ii)$5,000, in any other case; (montant annuel de frais de garde d’enfants)
child care expensemeans an expense incurred in a taxation year for the purpose of providing in Canada, for an eligible child of a taxpayer, child care services including baby sitting services, day nursery services or services provided at a boarding school or camp if the services were provided
(a)to enable the taxpayer, or the supporting person of the child for the year, who resided with the child at the time the expense was incurred,
(i)to perform the duties of an office or employment,
(ii)to carry on a business either alone or as a partner actively engaged in the business,
(iii)[Repealed, 1996, c. 23, s. 173]
(iv)to carry on research or any similar work in respect of which the taxpayer or supporting person received a grant, or
(v)to attend a designated educational institution or a secondary school, where the taxpayer is enrolled in a program of the institution or school of not less than three consecutive weeks duration that provides that each student in the program spend not less than
(A)10 hours per week on courses or work in the program, or
(B)12 hours per month on courses in the program, and
(b)by a resident of Canada other than a person
(i)who is the father or the mother of the child,
(ii)who is a supporting person of the child or is under 18 years of age and related to the taxpayer, or
(iii)in respect of whom an amount is deducted under section 118 in computing the tax payable under this Part for the year by the taxpayer or by a supporting person of the child,
except that
(c)any such expenses paid in the year for a child’s attendance at a boarding school or camp to the extent that the total of those expenses exceeds the product obtained when the periodic child care expense amount in respect of the child for the year is multiplied by the number of weeks in the year during which the child attended the school or camp, and
(d)for greater certainty, any expenses described in subsection 118.2(2) and any other expenses that are paid for medical or hospital care, clothing, transportation or education or for board and lodging, except as otherwise expressly provided in this definition,
are not child care expenses; (frais de garde d’enfants)
earned incomeof a taxpayer means the total of
(a)all salaries, wages and other remuneration, including gratuities, received by the taxpayer in respect of in the course of, or because of, offices and employments,
(b)all amounts that are included, or that would, but for paragraph 81(1)(a) or subsection 81(4), be included, because of section 6 or 7 or paragraph 56(1) (n), (n.1), (o) or (r), in computing the taxpayer’s income,
(c)all the taxpayer’s incomes or the amounts that would, but for paragraph 81(1)(a), be the taxpayer’s incomes from all businesses carried on either alone or as a partner actively engaged in the business, and
(d)all amounts received by the taxpayer as, on account of, in lieu of payment of or in satisfaction of, a disability pension under theCanada Pension Planor a provincial pension plan as defined in section 3 of that Act; (revenu gagné)
eligible childof a taxpayer for a taxation year means
(a)a child of the taxpayer or of the taxpayer’s spouse or common-law partner, or
(b)a child dependent on the taxpayer or the taxpayer’s spouse or common-law partner for support and whose income for the year does not exceed the amount determined for F in subsection 118(1.1) for the year
if at any time during the year, the child
(c)is under 16 years of age, or
(d)is dependent on the taxpayer or on the taxpayer’s spouse or common-law partner and has a mental or physical infirmity; (enfant admissible)
periodic child care expense amount, in respect of an eligible child of a taxpayer for a taxation year, means 1/40 of the annual child care expense amount in respect of the child for the year; (montant périodique de frais de garde d’enfants)
supporting personof an eligible child of a taxpayer for a taxation year means a person, other than the taxpayer, who is
(a)a parent of the child,
(b)the taxpayer’s spouse or common-law partner, or
(c)an individual who deducted an amount under section 118 for the year in respect of the child
if the parent, spouse or common-law partner or individual, as the case may be, resided with the taxpayer at any time during the year and at any time within 60 days after the end of the year. (personne assumant les frais d’entretien)
Marginal note:COVID-19 – child care expenses
(3.1)For the purpose of applying this section in respect of a taxpayer for the 2020 or 2021 taxation year,
(a)the definitionchild care expensein subsection (3) is to be read without reference to its paragraph (a) if at any time in the year the taxpayer was entitled to an amount referred to in subparagraph 56(1)(a)(iv) or (vii) or paragraph 56(1)(r), in respect of the year; and
(b)paragraph (b) of the definitionearned incomein subsection (3) is to be read as follows:
(b)all amounts that are included, or that would, but for paragraph 81(1)(a) or subsection 81(4), be included, because of section 6 or 7, subparagraph 56(1)(a)(iv) or (vii) or paragraph 56(1)(n), (n.1), (o) or (r), in computing the taxpayer’s income,
Marginal note:Commuter’s child care expense
(4)Where in a taxation year a person resides in Canada near the boundary between Canada and the United States and while so resident incurs expenses for child care services that would be child care expenses if
(a)the definitionchild care expensein subsection 248(1) were read without reference to the words “in Canada”, and
(b)the reference in paragraph (b) of the definitionchild care expensein subsection 248(1) to “resident of Canada” were read as “person”,
those expenses (other than expenses paid for a child’s attendance at a boarding school or camp outside Canada) shall be deemed to be child care expenses for the purpose of this section if the child care services are provided at a place that is closer to the person’s principal place of residence by a reasonably accessible route, having regard to the circumstances, than any place in Canada where such child care services are available and, in respect of those expenses, subsection 63(1) shall be read without reference to the words “and contains, where the payee is an individual, that individual’s Social Insurance Number”.
Marginal note:Disability supports deduction
64If a taxpayer files with the taxpayer’s return of income (other than a return of income filed under subsection 70(2), paragraph 104(23)(d) or 128(2)(e) or subsection 150(4)) for the taxation year a prescribed form containing prescribed information, there may be deducted in computing the taxpayer’s income for the year the lesser of
(a)the amount determined by the formula
A - B
where
(i)was paid to enable the taxpayer
(A)to perform the duties of an office or employment,
(B)to carry on a business either alone or as a partner actively engaged in the business,
(C)to attend a designated educational institution or a secondary school at which the taxpayer is enrolled in an educational program, or
(D)to carry on research or any similar work in respect of which the taxpayer received a grant,
(ii)was paid
(A)where the taxpayer has a speech or hearing impairment, for the cost of sign-language interpretation services or real time captioning services and to a person engaged in the business of providing such services,
(B)where the taxpayer is deaf or mute, for the cost of a teletypewriter or similar device, including a telephone ringing indicator, prescribed by a medical practitioner, to enable the taxpayer to make and receive telephone calls,
(C)where the taxpayer is blind, for the cost of a device or equipment, including synthetic speech systems, Braille printers, and large-print on-screen devices, prescribed by a medical practitioner, and designed to be used by blind individuals in the operation of a computer,
(D)where the taxpayer is blind, for the cost of an optical scanner or similar device, prescribed by a medical practitioner, and designed to be used by blind individuals to enable them to read print,
(E)where the taxpayer is mute, for the cost of an electronic speech synthesizer, prescribed by a medical practitioner, and designed to be used by mute individuals to enable them to communicate by use of a portable keyboard,
(F)where the taxpayer has an impairment in physical or mental functions, for the cost of note-taking services and to a person engaged in the business of providing such services, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires such services,
(G)where the taxpayer has an impairment in physical functions, for the cost of voice recognition software, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires that software,
(H)where the taxpayer has a learning disability or an impairment in mental functions, for the cost of tutoring services that are rendered to, and supplementary to the primary education of, the taxpayer and to a person ordinarily engaged in the business of providing such services to individuals who are not related to the person, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that disability or impairment, requires those services,
(I)where the taxpayer has a perceptual disability, for the cost of talking textbooks used by the taxpayer in connection with the taxpayer’s enrolment at a secondary school in Canada or at a designated educational institution, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that disability, requires those textbooks,
(J)where the taxpayer has an impairment in physical or mental functions, for the cost of attendant care services provided in Canada and to a person who is neither the taxpayer’s spouse or common-law partner nor under 18 years of age, if the taxpayer is a taxpayer in respect of whom an amount may be deducted because of section 118.3, or if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment is, and is likely to be indefinitely, dependent on others for their personal needs and care and who as a result requires a full-time attendant,
(K)where the taxpayer has a severe and prolonged impairment in physical or mental functions, for the cost of job coaching services (not including job placement or career counselling serv­ices) and to a person engaged in the business of providing such services if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires such services,
(L)where the taxpayer is blind or has a severe learning disability, for the cost of reading services and to a person engaged in the business of providing such services, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment or disability, requires those services,
(M)where the taxpayer is blind and profoundly deaf, for the cost of deaf-blind intervening services and to a person engaged in the business of providing such services,
(N)where the taxpayer has a speech impairment, for the cost of a device that is a Bliss symbol board, or a similar device, that is prescribed by a medical practitioner to help the taxpayer communicate by selecting the symbols or spelling out words,
(O)where the taxpayer is blind, for the cost of a device that is a Braille note-taker, prescribed by a medical practitioner, to allow the taxpayer to take notes (that can, by the device, be read back to them or printed or displayed in Braille) with the help of a keyboard,
(P)where the taxpayer has a severe and prolonged impairment in physical functions that markedly restricts their ability to use their arms or hands, for the cost of a device that is a page turner prescribed by a medical practitioner to help the taxpayer to turn the pages of a book or other bound document, and
(Q)where the taxpayer is blind, or has a severe learning disability, for the cost of a device or software that is prescribed by a medical practitioner and designed to enable the taxpayer to read print,
(iii)is evidenced by one or more receipts filed with the Minister each of which was issued by the payee and contains, where the payee is an individual who is a person referred to in clause (ii)(J), that individual’s Social Insurance Number, and
(iv)is not included in computing a deduction under section 118.2 for any taxpayer for any taxation year, and
(b)the total of
(i)the total of all amounts each of which is
(A)an amount included under section 5, 6 or 7 or paragraph 56(1)(n), (o) or (r) in computing the taxpayer’s income for the year, or
(B)the taxpayer’s income for the year from a business carried on either alone or as a partner actively engaged in the business, and
(ii)where the taxpayer is in attendance at a designated educational institution or a secondary school at which the taxpayer is enrolled in an educational program, the least of
(A)$15,000,
(B)$375 times the number of weeks in the year during which the taxpayer is in attendance at the institution or school, and
(C)the amount, if any, by which the amount that would, if this Act were read without reference to this section, be the taxpayer’s income for the year exceeds the total determined under subparagraph (i) in respect of the taxpayer for the year.
Marginal note:COVID-19 – disability supports deduction
64.01For the purpose of applying section 64 in respect of a taxpayer for the 2020 or 2021 taxation year,
(a)the description of A in paragraph 64(a) is to be read without reference to its subparagraph (i) if at any time in the year the taxpayer was entitled to an amount referred to in subparagraph 56(1)(a)(iv) or (vii) or paragraph 56(1)(r), in respect of the year; and
(b)clause 64(b)(i)(A) is to be read as follows:
(A)an amount included under section 5, 6 or 7, subparagraph 56(1)(a)(iv) or (vii) or paragraph 56(1)(n), (o) or (r) in computing the taxpayer’s income for the year, or
Marginal note:Individuals absent from Canada
64.1In applying sections 63 and 64 in respect of a taxpayer who is, throughout all or part of a taxation year, absent from but resident in Canada, the following rules apply for the year or that part of the year, as the case may be:
(a)the definitionchild care expensein subsection 63(3), and section 64, shall be read without reference to the words “in Canada”;
(b)subsection 63(1) and section 64 shall be read without reference to the words “and contains, where the payee is an individual, that individual’s Social Insurance Number”, if the payment referred to in that subsection or section, as the case may be, is made to a person who is not resident in Canada; and
(c)paragraph (b) of the definitionchild care expensein subsection 63(3) shall be read as if the word “person” were substituted for the words “resident of Canada” where they appear therein.
Marginal note:Allowance for oil or gas well, mine or timber limit
65(1)There may be deducted in computing a taxpayer’s income for a taxation year such amount as an allowance, if any, in respect of
(a)a natural accumulation of petroleum or natural gas, oil or gas well, mineral resource or timber limit,
(b)the processing of ore (other than iron ore or tar sands) from a mineral resource to any stage that is not beyond the prime metal stage or its equivalent,
(c)the processing of iron ore from a mineral resource to any stage that is not beyond the pellet stage or its equivalent, or
(d)the processing of tar sands from a mineral resource to any stage that is not beyond the crude oil stage or its equivalent
as is allowed to the taxpayer by regulation.
Marginal note:Regulations
(2)For greater certainty it is hereby declared that, in the case of a regulation made under subsection 65(1) allowing to a taxpayer an amount in respect of a natural accumulation of petroleum or natural gas, an oil or gas well or a mineral resource or in respect of the processing of ore,
(a)there may be allowed to the taxpayer by that regulation an amount in respect of any or all
(i)natural accumulations of petroleum or natural gas, oil or gas wells or mineral resources in which the taxpayer has any interest or, for civil law, right, or
(ii)processing operations described in any of paragraphs 65(1)(b), (c) and (d) that are carried on by the taxpayer; and
(b)notwithstanding any other provision contained in this Act, the Governor in Council may prescribe the formula by which the amount that may be allowed to the taxpayer by that regulation shall be determined.
Marginal note:Lessee’s share of allowance
(3)Where a deduction is allowed under subsection 65(1) in respect of a coal mine operated by a lessee, the lessor and lessee may agree as to what portion of the allowance each may deduct and, in the event that they cannot agree, the Minister may fix the portions.
Marginal note:Exploration and development expenses of principal-business corporations
66(1)A principal-business corporation may deduct, in computing its income for a taxation year, the lesser of
(a)the total of such of its Canadian exploration and development expenses as were incurred by it before the end of the taxation year, to the extent that they were not deductible in computing income for a previous taxation year, and
(b)of that total, an amount equal to its income for the taxation year if no deduction were allowed under this subsection, section 65 or subsection 66.1(2), minus the deductions allowed for the year by sections 112 and 113.
Marginal note:Expenses of special product corporations
(2)A corporation (other than a principal-business corporation the principal business of which is described in paragraph (a) or (b) of the definitionprincipal-business corporationin subsection 66(15)), whose principal business is the production or marketing of sodium chloride or potash or whose business includes manufacturing products the manufacturing of which involves processing sodium chloride or potash, may deduct, in computing its income for a taxation year, the drilling and exploration expenses incurred by it in the year and before May 7, 1974 on or in respect of exploring or drilling for halite or sylvite.
Marginal note:Expenses of other taxpayers
(3)A taxpayer other than a principal-business corporation may deduct, in computing the taxpayer’s income for a taxation year, the total of the taxpayer’s Canadian exploration and development expenses to the extent that they were not deducted in computing the taxpayer’s income for a preceding taxation year.
Marginal note:Foreign exploration and development expenses
(4)A taxpayer who is resident throughout a taxation year in Canada may deduct, in computing the taxpayer’s income for that taxation year, the lesser of
(a)the amount, if any, by which
(i)the total of the foreign exploration and development expenses incurred by the taxpayer
(A)before the end of the year,
(B)at a time at which the taxpayer was resident in Canada, and
(C)where the taxpayer became resident in Canada before the end of the year, after the last time (before the end of the year) that the taxpayer became resident in Canada,
exceeds the total of
(ii)such of the expenses described in subparagraph 66(4)(a)(i) as were deductible in computing the taxpayer’s income for a preceding taxation year, and
(iii)all amounts by which the amount described in this paragraph in respect of the taxpayer is required because of subsection 80(8) to be reduced at or before the end of the year, and
(b)of that total, the greater of
(i)the amount, if any, claimed by the taxpayer not exceeding 10% of the amount determined under paragraph (a) in respect of the taxpayer for the year, and
(ii)the total of
(A)the part of the taxpayer’s income for the year, determined without reference to this subsection and subsection 66.21(4), that can reasonably be regarded as attributable to
(I)the production of petroleum or natural gas from natural accumulations outside Canada or from oil or gas wells outside Canada, or
(II)the production of minerals from mines outside Canada,
(B)the taxpayer’s income for the year from royalties in respect of a natural accumulation of petroleum or natural gas outside Canada, an oil or gas well outside Canada or a mine outside Canada, determined without reference to this subsection and subsection 66.21(4), and
(C)all amounts each of which is an amount, in respect of a foreign resource property that has been disposed of by the taxpayer, equal to the amount, if any, by which
(I)the amount included in computing the taxpayer’s income for the year by reason of subsection 59(1) in respect of the disposition
exceeds
(II)the total of all amounts each of which is that portion of an amount deducted under subsection 66.7(2) in computing the taxpayer’s income for the year that
1can reasonably be considered to be in respect of the foreign resource property, and
2cannot reasonably be considered to have reduced the amount otherwise determined under clause (A) or (B) in respect of the taxpayer for the year.
Marginal note:Country-by-country FEDE allocations
(4.1)For greater certainty, the portion of an amount deducted under subsection (4) in computing a taxpayer’s income for a taxation year that can reasonably be considered to be in respect of specified foreign exploration and development expenses of the taxpayer in respect of a country is considered to apply to a source in that country.
Marginal note:Method of allocation
(4.2)For the purpose of subsection (4.1), where a taxpayer has incurred specified foreign exploration and development expenses in respect of two or more countries, an allocation to each of those countries for a taxation year shall be determined in a manner that is
(a)reasonable having regard to all the circumstances, including the level and timing of
(i)the taxpayer’s specified foreign exploration and development expenses in respect of the country, and
(ii)the profits or gains to which those expenses relate; and
(b)not inconsistent with the allocation made under subsection (4.1) for the preceding taxation year.
Marginal note:FEDE deductions where change of individual’s residence
(4.3)Where at any time in a taxation year an individual becomes or ceases to be resident in Canada,
(a)subsection (4) applies to the individual as if the year were the period or periods in the year throughout which the individual was resident in Canada; and
(b)for the purpose of applying subsection (4), subsection (13.1) does not apply to the individual for the year.
Marginal note:Dealers
(5)Subsections (3) and (4) and sections 59, 64, 66.1, 66.2, 66.21, 66.4 and 66.7 do not apply in computing the income for a taxation year of a taxpayer (other than a principal-business corporation) whose business includes trading or dealing in rights, licences or privileges to explore for, drill for or take minerals, petroleum, natural gas or other related hydrocarbons.
(10) to (10.3)[Repealed, 1997, c. 25, s. 13(1)]
Marginal note:Idem
(10.4)Where a taxpayer has, after April 19, 1983, made a payment or loan described in paragraph (a) of the definitionagreed portionin subsection 66(15) to a joint exploration corporation in respect of which the corporation has at any time renounced in favour of the taxpayer any Canadian exploration expenses, Canadian development expenses or Canadian oil and gas property expenses (in this subsection referred to as “resource expenses”) under subsection 66(10.1), 66(10.2) or 66(10.3), the following rules apply:
(a)where the taxpayer receives as consideration for the payment or loan property that is capital property to the taxpayer,
(i)there shall be deducted in computing the adjusted cost base to the taxpayer of the property at any time the amount of any resource expenses renounced by the corporation in the taxpayer’s favour in respect of the loan or payment at or before that time,
(ii)there shall be deducted in computing the adjusted cost base to the taxpayer at any time of any property for which the property, or any property substituted therefor, was exchanged the amount of any resource expenses renounced by the corporation in the taxpayer’s favour in respect of the loan or payment at or before that time (except to the extent such amount has been deducted under subparagraph 66(10.4)(a)(i)), and
(iii)the amount of any resource expenses renounced by the corporation in favour of the taxpayer in respect of the loan or payment at any time, except to the extent that the renunciation of those expenses results in a deduction under subparagraph 66(10.4)(a)(i) or 66(10.4)(a)(ii), shall, for the purposes of this Act, be deemed to be a capital gain of the taxpayer from the disposition by the taxpayer of property at that time;
(b)where the taxpayer receives as consideration for the payment or loan property that is not capital property to the taxpayer,
(i)there shall be deducted in computing the cost to the taxpayer of the property at any time the amount of any resource expenses renounced by the corporation in the taxpayer’s favour in respect of the loan or payment at or before that time, and
(ii)there shall be included in computing the amount referred to in paragraph 59(3.2)(d) for a taxation year the amount of any resource expenses renounced by the corporation in the taxpayer’s favour in respect of the loan or payment at any time in the year, except to the extent that the amount has been deducted under subparagraph 66(10.4)(b)(i); and
(c)where the taxpayer does not receive any property as consideration for the payment, there shall be included in computing the amount referred to in paragraph 59(3.2)(e) for a taxation year the amount of any resource expenses renounced by the corporation in the taxpayer’s favour in respect of the payment in the year, except to the extent that the amount has been deducted from the adjusted cost base to the taxpayer of shares of the corporation under paragraph 53(2)(f.1) in respect of the payment.
Marginal note:Acquisition of control
(11)Where after March 31, 1977 and before November 13, 1981 control of a corporation has been acquired by a person or persons who did not control the corporation at the time when it last ceased to carry on active business,
(a)the amount by which the Canadian exploration and development expenses incurred by the corporation before it last ceased to carry on active business exceeds the total of all amounts otherwise deductible by the corporation in respect of Canadian exploration and development expenses in computing its income for taxation years ending before control was so acquired, shall be deemed to have been deductible under this section by the corporation in computing its income for taxation years ending before control was so acquired;
(b)the amount by which the cumulative Canadian exploration expense of the corporation at the time it last ceased to carry on active business exceeds the total of amounts otherwise deducted under section 66.1 in computing its income for taxation years ending after that time and before control was so acquired, shall be deemed to have been deducted under that section by the corporation in computing its income for taxation years ending before control was so acquired;
(c)the amount by which the cumulative Canadian development expense of the corporation at the time it last ceased to carry on active business exceeds the total of amounts otherwise deducted under section 66.2 in computing its income for taxation years ending after that time and before control was so acquired, shall be deemed to have been deducted under that section by the corporation in computing its income for taxation years ending before control was so acquired;
(d)the amount by which the cumulative Canadian oil and gas property expense of the corporation at the time it last ceased to carry on active business exceeds the total of amounts otherwise deducted under section 66.4 in computing its income for taxation years ending after that time and before control was so acquired, shall be deemed to have been deducted under that section by the corporation in computing its income for taxation years ending before control was so acquired; and
(e)the amount by which the foreign exploration and development expenses incurred by the corporation before it last ceased to carry on active business exceeds the total of all amounts otherwise deductible by the corporation in respect of foreign exploration and development expenses in computing its income for taxation years ending before control was so acquired, shall be deemed to have been deductible under this section by the corporation in computing its income for taxation years ending before control was so acquired.
Marginal note:Control
(11.3)For the purposes of subsections 66(11) and 66.7(10), where a corporation acquired control of another corporation after November 12, 1981 and before 1983 by reason of the acquisition of shares of the other corporation pursuant to an agreement in writing concluded on or before November 12, 1981, it shall be deemed to have acquired that control on or before November 12, 1981.
Marginal note:Loss restriction event
(11.4)If
(a)at any time a taxpayer is subject to a loss restriction event,
(b)within the 12-month period that ended immediately before that time, the taxpayer, a partnership of which the taxpayer was a majority-interest partner or a trust of which the taxpayer was a majority-interest beneficiary (as defined in subsection 251.1(3)) acquired a Canadian resource property or a foreign resource property (other than a property that was held, by the taxpayer, partnership or trust or by a person that would be affiliated with the taxpayer if section 251.1 were read without reference to the definitioncontrolledin subsection 251.1(3), throughout the period that began immediately before the 12-month period began and ended at the time the property was acquired by the taxpayer, partnership or trust), and
(c)immediately before the 12-month period began the taxpayer, partnership or trust was not, or would not be if it were a corporation, a principal-business corporation,
for the purposes of subsection (4) and sections 66.2, 66.21 and 66.4, except as those provisions apply for the purposes of section 66.7, the property is deemed not to have been acquired by the taxpayer, partnership or trust, as the case may be, before that time, except that if the property has been disposed of by it before that time and not reacquired by it before that time, the property is deemed to have been acquired by the taxpayer, partnership or trust, as the case may be, immediately before it disposed of the property.
Marginal note:Affiliation  — subsection (11.4)
(11.5)For the purposes of subsection (11.4), if the taxpayer referred to in that subsection was formed or created in the 12-month period referred to in that subsection, the taxpayer is deemed to have been, throughout the period that began immediately before the 12-month period and ended immediately after it was formed or created,
(a)in existence; and
(b)affiliated with every person with whom it was affiliated (otherwise than because of a right referred to in paragraph 251(5)(b)) throughout the period that began when it was formed or created and that ended immediately before the time at which the taxpayer was subject to the loss restriction event referred to in that subsection.
Marginal note:Trust loss restriction event  — successor
(11.6)If at any time a trust is subject to a loss restriction event,
(a)for the purposes of the provisions of this Act relating to deductions in respect of drilling and exploration expenses, prospecting, exploration and development expenses, Canadian exploration and development expenses, foreign resource pool expenses, Canadian exploration expenses, Canadian development expenses and Canadian oil and gas property expenses (in this subsection referred to as “resource expenses”) incurred by the trust before that time, the following rules apply:
(i)the trust is (other than for purposes of this subsection and subsections (11.4), (11.5) and 66.7(10) to (11)) deemed to be a corporation that
(A)after that time is a successor (within the meaning assigned by any of subsections 66.7(1), (2) and (2.3) to (5)), and
(B)at that time, acquired all the properties held by the trust immediately before that time from an original owner of those properties,
(ii)if the trust did not hold a foreign resource property immediately before that time, the trust is deemed to have owned a foreign resource property immediately before that time,
(iii)a joint election is deemed to have been filed in accordance with subsections 66.7(7) and (8) in respect of the acquisition described in clause (i)(B),
(iv)the resource expenses incurred by the trust before that time are deemed to have been incurred by an original owner of the properties and not by the trust,
(v)the original owner is deemed to have been resident in Canada at every time before that time at which the trust was resident in Canada,
(vi)if at that time the trust is a member of a partnership and the property of the partnership includes a Canadian resource property or a foreign resource property,
(A)for the purposes of clause (i)(B), the trust is deemed to have held immediately before that time that portion of the partnership’s property at that time that is equal to the trust’s percentage share of the total of amounts that would be paid to all members of the partnership if it were wound up at that time, and
(B)for the purposes of clauses 66.7(1)(b)(i)(C) and (2)(b)(i)(B), subparagraph 66.7(2.3)(b)(i) and clauses 66.7(3)(b)(i)(C), (4)(b)(i)(B) and (5)(b)(i)(B) for a taxation year that ends after that time, the lesser of the following amounts is deemed to be income of the trust for the year that can reasonably be regarded as attributable to production from the property:
(I)the trust’s share of the part of the income of the partnership for the fiscal period of the partnership that ends in the year that can reasonably be regarded as attributable to the production from the property, and
(II)an amount that would be determined under subclause (I) for the year if the trust’s share of the income of the partnership for the fiscal period of the partnership that ends in the year were determined on the basis of the percentage share referred to in clause (A), and
(vii)if after that time the trust disposes of property that was at that time held by the trust to another person, subsections 66.7(1) to (5) do not apply in respect of the acquisition by the other person of the property; and
(b)if before that time, the trust or a partnership of which the trust was a member acquired a property that is a Canadian resource property, a foreign resource property or an interest in a partnership and it can reasonably be considered that one of the main purposes of the acquisition is to avoid any limitation provided in any of subsections 66.7(1) to (5) on the deduction in respect of any expenses incurred by the trust, then the trust or the partnership, as the case may be, is deemed, for the purposes of applying those subsections to or in respect of the trust, not to have acquired the property.
Marginal note:Computation of exploration and development expenses
(12)In computing a taxpayer’s Canadian exploration and development expenses,
(a)there shall be deducted any amount paid to the taxpayer before May 7, 1974
(i)and after 1971 under theNorthern Mineral Exploration Assistance Regulationsmade under an appropriation Act that provides for payments in respect of the Northern Mineral Grants Program, or
(ii)pursuant to any agreement entered into between the taxpayer and Her Majesty in right of Canada under the Northern Mineral Grants Program or the Development Program of the Department of Indian Affairs and Northern Development, to the extent that the amount has been expended by the taxpayer as or on account of Canadian exploration and development expenses incurred by the taxpayer; and
(b)there shall be included any amount, except an amount in respect of interest, paid by the taxpayer after 1971 and before May 7, 1974 under the Regulations referred to in subparagraph 66(12)(a)(i) to Her Majesty in right of Canada.
Marginal note:Limitations of Canadian exploration and development expenses
(12.1)Except as expressly otherwise provided in this Act,
(a)if as a result of a transaction occurring after May 6, 1974 an amount has become receivable by a taxpayer at a particular time in a taxation year and the consideration given by the taxpayer therefor was property (other than a share or a Canadian resource property, or an interest in or a right to — or, for civil law, a right in or to — the share or the property) or services, the original cost of which to the taxpayer may reasonably be regarded as having been primarily Canadian exploration and development expenses of the taxpayer (or would have been so regarded if they had been incurred by the taxpayer after 1971 and before May 7, 1974) or a Canadian exploration expense, there shall at that time be included in the amount determined for G in the definitioncumulative Canadian exploration expensein subsection 66.1(6) in respect of the taxpayer the amount that became receivable by the taxpayer at that time; and
(b)if as a result of a transaction occurring after May 6, 1974 an amount has become receivable by a taxpayer at a particular time in a taxation year and the consideration given by the taxpayer therefor was property (other than a share or a Canadian resource property, or an interest in or a right to — or, for civil law, a right in or to — the share or the property) or services, the original cost of which to the taxpayer may reasonably be regarded as having been primarily a Canadian development expense, there shall at that time be included in the amount determined for G in the definitioncumulative Canadian development expensein subsection 66.2(5) in respect of the taxpayer the amount that became receivable by the taxpayer at that time.
Marginal note:Unitized oil or gas field in Canada
(12.2)Where, pursuant to an agreement between a taxpayer and another person to unitize an oil or gas field in Canada, an amount has become receivable by the taxpayer at a particular time after May 6, 1974 from that other person in respect of Canadian exploration expense incurred by the taxpayer or Canadian exploration and development expenses incurred by the taxpayer (or expenses that would have been Canadian exploration and development expenses if they had been incurred by the taxpayer after 1971 and before May 7, 1974) in respect of that field or any part thereof, the following rules apply:
(a)there shall, at that time, be included by the taxpayer in the amount determined for G in the definitioncumulative Canadian exploration expensein subsection 66.1(6) the amount that became receivable by the taxpayer; and
(b)there shall, at that time, be included by the other person in the amount referred to in paragraph (c) of the definitionCanadian exploration expensein subsection 66.1(6) the amount that became payable by that person.
Marginal note:Idem
(12.3)Where, pursuant to an agreement between a taxpayer and another person to unitize an oil or gas field in Canada, an amount has become receivable by the taxpayer at a particular time after May 6, 1974 from that other person in respect of Canadian development expense incurred by the taxpayer in respect of that field or any part thereof, the following rules apply:
(a)there shall, at that time, be included by the taxpayer in the amount determined for G in the definitioncumulative Canadian development expensein subsection 66.2(5) the amount that became receivable by the taxpayer; and
(b)there shall, at that time, be included by the other person in the amount referred to in paragraph (a) of the definitionCanadian development expensein subsection 66.2(5) the amount that became payable by that person.
Marginal note:Limitation of FEDE
(12.4)Where, as a result of a transaction that occurs after May 6, 1974, an amount becomes receivable by a taxpayer at a particular time in a taxation year and the consideration given by the taxpayer for the amount receivable is property (other than a foreign resource property) or services, the original cost of which to the taxpayer can reasonably be regarded as having been primarily foreign exploration and development expenses of the taxpayer (or would have been so regarded if they had been incurred by the taxpayer after 1971 and the definitionforeign exploration and development expensesin subsection (15) were read without reference to paragraph (k) of that definition), the following rules apply:
(a)in computing the taxpayer’s foreign exploration and development expenses at that time, there shall be deducted the amount receivable by the taxpayer;
(b)where the amount receivable exceeds the total of the taxpayer’s foreign exploration and development expenses incurred before that time to the extent that those expenses were not deducted or deductible, as the case may be, in computing the taxpayer’s income for a preceding taxation year, there shall be included in the amount referred to in paragraph 59(3.2)(a) the amount, if any, by which the amount receivable exceeds the total of
(i)the taxpayer’s foreign exploration and development expenses incurred before that time to the extent that those expenses were not deducted or deductible, as the case may be, in computing the taxpayer’s income for a preceding taxation year, and
(ii)the amount, designated by the taxpayer in prescribed form filed with the taxpayer’s return of income for the year, not exceeding the portion of the amount receivable for which the consideration given by the taxpayer was property (other than a foreign resource property) or services, the original cost of which to the taxpayer can reasonably be regarded as having been primarily
(A)specified foreign exploration and development expenses in respect of a country, or
(B)foreign resource expenses in respect of a country; and
(c)where an amount is included in the amount referred to in paragraph 59(3.2)(a) by virtue of paragraph 66(12.4)(b), the total of the taxpayer’s foreign exploration and development expenses at that time shall be deemed to be nil.
Marginal note:Limitations of foreign resource expenses
(12.41)Where a particular amount described in subsection (12.4) becomes receivable by a taxpayer at a particular time, there shall at that time be included in the value determined for G in the definitioncumulative foreign resource expensein subsection 66.21(1) in respect of the taxpayer and a country the amount designated under subparagraph (12.4)(b)(ii) by the taxpayer in respect of the particular amount and the country.
Marginal note:Partnerships
(12.42)For the purposes of subsections (12.4) and (12.41), where a person or partnership is a member of a particular partnership and a particular amount described in subsection (12.4) becomes receivable by the particular partnership in a fiscal period of the particular partnership,
(a)the member’s share of the particular amount is deemed to be an amount that became receivable by the member at the end of the fiscal period; and
(b)the amount deemed by paragraph (a) to be an amount receivable by the member is deemed to be an amount
(i)that is described in subsection (12.4) in respect of the member, and
(ii)that has the same attributes for the member as it did for the particular partnership.
Marginal note:Unitized oil or gas field in Canada
(12.5)Where, pursuant to an agreement between a taxpayer and another person to unitize an oil or gas field in Canada, an amount has become receivable by the taxpayer at a particular time from that other person in respect of Canadian oil and gas property expense incurred by the taxpayer in respect of that field or any part thereof, the following rules apply:
(a)there shall, at that time, be included by the taxpayer in the amount determined for G in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5) the amount that became receivable by the taxpayer; and
(b)there shall, at that time, be included by the other person in the amount referred to in paragraph (a) of the definitionCanadian oil and gas property expensein subsection 66.4(5) the amount that became payable by that person.
Marginal note:Canadian exploration expenses to flow-through shareholder
(12.6)If a person gave consideration under an agreement to a corporation for the issue of a flow-through share of the corporation and, in the period that begins on the day on which the agreement was made and ends 24 months after the end of the month that includes that day, the corporation incurred Canadian exploration expenses (other than an expense deemed by subsection 66.1(9) to be a Canadian exploration expense of the corporation), the corporation may, after it complies with subsection (12.68) in respect of the share and before March of the first calendar year that begins after the period, renounce, effective on the day on which the renunciation is made or on an earlier day set out in the form prescribed for the purpose of subsection (12.7), to the person in respect of the share the amount, if any, by which the portion of those expenses that was incurred on or before the effective date of the renunciation (which portion is in this subsection referred to as the “specified expenses”) exceeds the total of
(a)the assistance that the corporation has received, is entitled to receive or can reasonably be expected to receive at any time, and that can reasonably be related to the specified expenses or to Canadian exploration activities to which the specified expenses relate (other than assistance that can reasonably be related to expenses referred to in any of paragraphs (b) to (b.2)),
(b)all specified expenses that are prescribed Canadian exploration and development overhead expenses of the corporation,
(b.1)all specified expenses each of which is a cost of, or for the use of, seismic data
(i)that had been acquired (otherwise than as a consequence of performing work that resulted in the creation of the data) by any other person before the cost was incurred,
(ii)in respect of which a right to use had been acquired by any other person before the cost was incurred, or
(iii)all or substantially all of which resulted from work performed more than one year before the cost was incurred,
(b.2)if the agreement is made after March 2023, all specified expenses that are not described in paragraph (b) or (b.1) and that would be Canadian exploration expenses if
(i)the definitionCanadian exploration expensein subsection 66.1(6) were read without reference to its paragraph (g.1), and
(ii)the definitionmineral resourcein subsection 248(1) were read without reference to its paragraphs (a) and (d), and
(c)the total of amounts that are renounced on or before the date on which the renunciation is made by any other renunciation under this subsection in respect of those expenses,
but not in any case
(d)exceeding the amount, if any, by which the consideration for the share exceeds the total of other amounts renounced under this subsection or subsection 66(12.601) or 66(12.62) in respect of the share on or before the day on which the renunciation is made, or
(e)exceeding the amount, if any, by which the cumulative Canadian exploration expense of the corporation on the effective date of the renunciation computed before taking into account any amounts renounced under this subsection on the date on which the renunciation is made, exceeds the total of all amounts renounced under this subsection in respect of any other share
(i)on the date on which the renunciation is made, and
(ii)effective on or before the effective date of the renunciation.
Marginal note:COVID-19 – time extension to 36 months
(12.6001)The references to “24 months” in subsections (12.6) and (12.62) are to be read as references to “36 months” in respect of agreements entered into after February 2018 and before 2021.
Marginal note:Flow-through share rules for first $1 million of Canadian development expenses
(12.601)Where
(a)a person gave consideration under an agreement to a corporation for the issue of a flow-through share of the corporation,
(a.1)the corporation’s taxable capital amount at the time the consideration was given was not more than $15,000,000, and
(b)during the period beginning on the particular day the agreement was entered into and ending on the earlier of December 31, 2018 and the day that is 24 months after the end of the month that included that particular day, the corporation incurred Canadian development expenses (excluding expenses that are deemed by subsection (12.66) to have been incurred on December 31, 2018) described in paragraph (a) or (b) of the definitionCanadian development expensein subsection 66.2(5) or that would be described in paragraph (f) of that definition if the words “paragraphs (a) to (e)” in that paragraph were read as “paragraphs (a) and (b)”,
the corporation may, after it complies with subsection 66(12.68) in respect of the share and before March of the first calendar year that begins after that period, renounce, effective on the day on which the renunciation is made or on an earlier day set out in the form prescribed for the purposes of subsection 66(12.7), to the person in respect of the share the amount, if any, by which the part of those expenses that was incurred on or before the effective date of the renunciation (which part is in this subsection referred to as the “specified expenses”) exceeds the total of
(c)the assistance that the corporation has received, is entitled to receive, or can reasonably be expected to receive at any time, and that can reasonably be related to the specified expenses or Canadian development activities to which the specified expenses relate (other than assistance that can reasonably be related to expenses referred to in paragraph 66(12.601)(d)),
(d)all specified expenses that are prescribed Canadian exploration and development overhead expenses of the corporation, and
(e)all amounts that are renounced on or before the day on which the renunciation is made by any other renunciation under this subsection or subsection 66(12.62) in respect of those expenses.
Marginal note:Taxable capital amount
(12.6011)For the purpose of subsection 66(12.601), a particular corporation’s taxable capital amount at any time is the total of
(a)its taxable capital employed in Canada for its last taxation year that ended more than 30 days before that time, and
(b)the total of all amounts each of which is the taxable capital employed in Canada of another corporation associated at that time with the particular corporation for the other corporation’s last taxation year that ended more than 30 days before that time.
Marginal note:Taxable capital employed in Canada
(12.6012)For the purpose of determining a corporation’s taxable capital amount at a particular time under subsection 66(12.6011) and for the purpose of subsection 66(12.6013), a particular corporation’s taxable capital employed in Canada for a taxation year is the amount that would be its taxable capital employed in Canada for the year, determined in accordance with subsection 181.2(1) and without reference to the portion of its investment allowance (as determined under subsection 181.2(4)) that is attributable to shares of the capital stock of, dividends payable by, or indebtedness of, another corporation that
(a)was not associated with the particular corporation at the particular time; and
(b)was associated with the particular corporation at the end of the particular corporation’s last taxation year that ended more than 30 days before that time.
Marginal note:Amalgamations and mergers
(12.6013)For the purpose of determining the taxable capital amount at a particular time under subsection 66(12.6011) of any corporation and for the purpose of this subsection, a particular corporation that was created as a consequence of an amalgamation or merger of other corporations (each of which is in this subsection referred to as a “predecessor corporation”), and that does not have a taxation year that ended more than 30 days before the particular time, is deemed to have taxable capital employed in Canada for a taxation year that ended more than 30 days before the particular time equal to the total of all amounts each of which is the taxable capital employed in Canada of a predecessor corporation for its last taxation year that ended more than 30 days before the particular time.
Marginal note:Idem
(12.602)A corporation shall be deemed not to have renounced any particular amount under subsection 66(12.601) in respect of a share where
(a)the particular amount exceeds the amount, if any, by which the consideration for the share exceeds the total of other amounts renounced in respect of the share under subsection 66(12.6), 66(12.601) or 66(12.62) on or before the day on which the renunciation is made;
(b)the particular amount exceeds the amount, if any, by which
(i)the cumulative Canadian development expense of the corporation on the effective date of the renunciation, computed before taking into account any amounts renounced under subsection 66(12.601) on the day on which the renunciation is made,
exceeds
(ii)the total of all amounts renounced under subsection 66(12.601) by the corporation in respect of any other share
(A)on the day on which the renunciation is made, and
(B)effective on or before the effective date of the renunciation; or
(c)the particular amount relates Canadian development expenses incurred by the corporation in a calendar year and the total amounts renounced, on or before the day on which the renunciation is made, under subsection 66(12.601) in respect of
(i)Canadian development expenses incurred by the corporation in that calendar year, or
(ii)Canadian development expenses incurred in that calendar year by another corporation associated with the corporation at the time the other corporation incurred such expenses
exceeds $1,000,000.
Marginal note:Effect of renunciation
(12.61)Subject to subsections 66(12.69) to 66(12.702), where under subsection 66(12.6) or 66(12.601) a corporation renounces an amount to a person,
(a)the Canadian exploration expenses or Canadian development expenses to which the amount relates shall be deemed to be Canadian exploration expenses incurred in that amount by the person on the effective date of the renunciation; and
(b)the Canadian exploration expenses or Canadian development expenses to which the amount relates shall, except for the purposes of that renunciation, be deemed on and after the effective date of the renunciation never to have been Canadian exploration expenses or Canadian development expenses incurred by the corporation.
Marginal note:Canadian development expenses to flow-through shareholder
(12.62)Where a person gave consideration under an agreement to a corporation for the issue of a flow-through share of the corporation and, in the period that begins on the day the agreement was made and ends 24 months after the end of the month that includes that day, the corporation incurred Canadian development expenses, the corporation may, after it complies with subsection 66(12.68) in respect of the share and before March of the first calendar year that begins after the period, renounce, effective on the day on which the renunciation is made or on an earlier day set out in the form prescribed for the purposes of subsection 66(12.7), to the person in respect of the share the amount, if any, by which the part of those expenses that was incurred on or before the effective date of the renunciation (which part is in this subsection referred to as the “specified expenses”) exceeds the total of
(a)the assistance that the corporation has received, is entitled to receive, or can reasonably be expected to receive at any time, and that can reasonably be related to the specified expenses or to Canadian development activities to which the specified expenses relate (other than assistance that can reasonably be related to expenses referred to in any of paragraphs (b) to (b.2)),
(b)all specified expenses that are prescribed Canadian exploration and development overhead expenses of the corporation,
(b.1)all specified expenses that are described in paragraph (e) of the definitionCanadian development expensein subsection 66.2(5) or that are described in paragraph (f) of that definition because of the reference in the latter paragraph to paragraph 66(12.62)(e),
(b.2)if the agreement is made after March 2023, all specified expenses that are not described in paragraph (b) or (b.1) and that would be Canadian development expenses if the definitionmineral resourcein subsection 248(1) were read without reference to its paragraphs (a) and (d), and
(c)the total of amounts that are renounced on or before the day on which the renunciation is made by any other renunciation under this subsection or subsection 66(12.601) in respect of those expenses,
but not in any case
(d)exceeding the amount, if any, by which the consideration for the share exceeds the total of other amounts renounced in respect of the share under this subsection or subsection 66(12.6) or 66(12.601) on or before the day on which the renunciation is made, or
(e)exceeding the amount, if any, by which the cumulative Canadian development expense of the corporation on the effective date of the renunciation computed before taking into account any amounts renounced under this subsection on the date on which the renunciation is made, exceeds the total of all amounts renounced under this subsection in respect of any other share
(i)on the date on which the renunciation is made, and
(ii)effective on or before the effective date of the renunciation.
Marginal note:Effect of renunciation
(12.63)Subject to subsections (12.69) to (12.702), if under subsection (12.62) a corporation renounces an amount to a person,
(a)the Canadian development expenses to which the amount relates shall be deemed to be Canadian development expenses incurred in that amount by the person on the effective date of the renunciation; and
(b)the Canadian development expenses to which the amount relates shall, except for the purposes of that renunciation, be deemed on and after the effective date of the renunciation never to have been Canadian development expenses incurred by the corporation.
(12.64) and (12.65)[Repealed, 1997, c. 25, s. 13(15)]
Marginal note:Expenses in the first 60 days of year
(12.66)Where
(a)a corporation that issues a flow-through share to a person under an agreement incurs, in a particular calendar year, Canadian exploration expenses or Canadian development expenses,
(a.1)the agreement was made in the preceding calendar year,
(b)the expenses
(i)are described in paragraph (a), (d), (f) or (g.1) of the definitionCanadian exploration expensein subsection 66.1(6) or paragraph (a) or (b) of the definitionCanadian development expensein subsection 66.2(5),
(ii)would be described in paragraph (h) of the definitionCanadian exploration expensein subsection 66.1(6) if the reference to “paragraphs (a) to (d) and (f) to (g.4)” in that paragraph were read as “paragraphs (a), (d), (f) and (g.1)”, or
(iii)would be described in paragraph (f) of the definitionCanadian development expensein subsection 66.2(5) if the words “any of paragraphs 66(12.66)(a) to (e)” were read as “paragraph 66(12.66)(a) or (b)”,
(c)before the end of that preceding year the person paid the consideration in money for the share to be issued,
(d)the corporation and the person deal with each other at arm’s length throughout the particular year, and
(e)in January, February or March of the particular year, the corporation renounces an amount in respect of the expenses to the person in respect of the share in accordance with subsection 66(12.6) or 66(12.601) and the effective date of the renunciation is the last day of that preceding year,
the corporation is, for the purpose of subsection (12.6), or of subsection (12.601) and paragraph (12.602)(b), as the case may be, deemed to have incurred the expenses on the last day of that preceding year.
Marginal note:Restrictions on renunciation
(12.67)A corporation shall be deemed
(a)not to have renounced under any of subsections 66(12.6), 66(12.601) and 66(12.62) any expenses that are deemed to have been incurred by it because of a renunciation under this section by another corporation that is not related to it;
(b)not to have renounced under subsection 66(12.601) to a trust, corporation or partnership any Canadian development expenses (other than expenses renounced to another corporation that renounces under subsection 66(12.6) any Canadian exploration expense deemed to have been incurred by it because of the renunciation under subsection 66(12.601)) if, in respect of the renunciation under subsection 66(12.601), it has a prohibited relationship with the trust, corporation or partnership;
(c)not to have renounced under subsection 66(12.601) any Canadian development expenses deemed to have been incurred by it because of a renunciation under subsection 66(12.62); and
(d)not to have renounced under subsection 66(12.6) to a particular trust, corporation or partnership any Canadian exploration expenses (other than expenses ultimately renounced by another corporation under subsection 66(12.6) to an individual (other than a trust) or to a trust, corporation or partnership with which that other corporation does not have, in respect of that ultimate renunciation, a prohibited relationship) deemed to be incurred by it because of a renunciation under subsection 66(12.601) if, in respect of the renunciation under subsection 66(12.6), it has a prohibited relationship with the particular trust, corporation or partnership.
Marginal note:Prohibited relationship
(12.671)For the purposes of subsection 66(12.67), where a trust, corporation (in paragraph 66(12.671)(b) referred to as the “shareholder corporation”) or partnership, as the case may be, gave consideration under a particular agreement for the issue of a flow-through share of a particular corporation, the particular corporation has, in respect of a renunciation under subsection 66(12.6) or 66(12.601) in respect of the share, a prohibited relationship
(a)with the trust if, at any time after the particular agreement was entered into and before the share is issued to the trust, the particular corporation or any corporation related to the particular corporation is beneficially interested in the trust;
(b)with the shareholder corporation if, immediately before the particular agreement was entered into, the shareholder corporation was related to the particular corporation; or
(c)with the partnership if any part of the amount renounced would, but for subsection 66(12.7001), be included, because of paragraph (h) of the definitionCanadian exploration expensein subsection 66.1(6), in the Canadian exploration expense of
(i)the particular corporation, or
(ii)any other corporation that, at any time
(A)after the particular agreement was entered into, and
(B)before that part of the amount renounced would, but for this paragraph, be incurred,
would, if flow-through shares issued by the particular corporation under agreements entered into at the same time as or after the time the particular agreement was entered into were disregarded, be related to the particular corporation.
Marginal note:Filing selling instruments
(12.68)A corporation that agrees to issue or prepares a selling instrument in respect of flow-through shares shall file with the Minister a prescribed form together with a copy of the selling instrument or agreement to issue the shares on or before the last day of the month following the earlier of
(a)the month in which the agreement to issue the shares is entered into, and
(b)the month in which the selling instrument is first delivered to a potential investor,
and the Minister shall thereupon assign an identification number to the form and notify the corporation of the number.
Marginal note:Filing re partners
(12.69)Where, in a fiscal period of a partnership, an expense is incurred by the partnership as a consequence of a renunciation of an amount under subsection 66(12.6), 66(12.601) or 66(12.62), the partnership shall, before the end of the third month that begins after the end of the period, file with the Minister a prescribed form identifying the share of the expense attributable to each member of the partnership at the end of the period.
Marginal note:Consequences of failure to file
(12.6901)Where a partnership fails to file a prescribed form as required under subsection 66(12.69) in respect of an expense, except for the purpose of subsection 66(12.69) the partnership is deemed not to have incurred the expense.
Marginal note:Filing re assistance
(12.691)Where a partnership receives or becomes entitled to receive assistance as an agent for its members or former members at a particular time in respect of any Canadian exploration expense or Canadian development expense that is or, but for paragraph 66(12.61)(b) or 66(12.63)(b), would be incurred by a corporation, the following rules apply:
(a)where the entitlement of any such member or former member to any part of the assistance is known by the partnership as of the end of the partnership’s first fiscal period ending after the particular time and that part of the assistance was not required to be reported under paragraph 66(12.691)(b) in respect of a calendar year ending before the end of that fiscal period, the partnership shall, on or before the last day of the third month following the end of that fiscal period, file with the Minister a prescribed form indicating the share of that part of the assistance paid to each of those members or former members before the end of that fiscal period or to which each of those members or former members is entitled at the end of that fiscal period;
(b)where the entitlement of any of those members or former members to any part of the assistance is known by the partnership as of the end of a calendar year that ends after the particular time and that part of the assistance was not required to be reported under paragraph 66(12.691)(a) in respect of a fiscal period ending at or before the end of that calendar year, or under this paragraph in respect of a preceding calendar year, the partnership shall, on or before the last day of the third month following the end of that calendar year, file with the Minister a prescribed form indicating the share of that part of the assistance paid to each of those members or former members before the end of that fiscal period or to which each of those members or former members is entitled at the end of that calendar year; and
(c)where a prescribed form required to be filed under paragraph 66(12.691)(a) or 66(12.691)(b) is not so filed, the part of that expense relating to the assistance required to be reported in the prescribed form shall be deemed not to have been incurred by the partnership.
Marginal note:Filing re renunciation
(12.7)Where a corporation renounces an amount in respect of Canadian exploration expenses or Canadian development expenses under subsection 66(12.6), 66(12.601) or 66(12.62), the corporation shall file a prescribed form in respect of the renunciation with the Minister before the end of the first month after the month in which the renunciation is made.
Marginal note:Consequences of failure to file
(12.7001)Where a corporation fails to file a prescribed form as required under subsection 66(12.7) in respect of a renunciation of an amount, subsections 66(12.61) and 66(12.63) do not apply in respect of the amount.
Marginal note:Filing re assistance
(12.701)Where a corporation receives or becomes entitled to receive assistance as an agent in respect of any Canadian exploration expense or Canadian development expense that is or, but for paragraph 66(12.61)(b) or 66(12.63)(b), would be incurred by the corporation, the corporation shall, before the end of the first month after the particular month in which it first becomes known to the corporation that a person that holds a flow-through share of the corporation is entitled to a share of any part of the assistance, file with the Minister a prescribed form identifying the share of the assistance to which each of those persons is entitled at the end of the particular month.
Marginal note:Consequences of failure to file
(12.702)Where a corporation fails to file a prescribed form as required under subsection 66(12.701) in respect of assistance, except for the purpose of subsection 66(12.701) the Canadian exploration expense or Canadian development expense to which the assistance relates is deemed not to have been incurred by the corporation.
Marginal note:Restriction on renunciation
(12.71)A corporation may renounce an amount under subsection 66(12.6), 66(12.601) or 66(12.62) in respect of Canadian exploration expenses or Canadian development expenses incurred by it only to the extent that, but for the renunciation, it would be entitled to a deduction in respect of the expenses in computing its income.
(12.72)[Repealed, 1997, c. 25, s. 13(23)]
Marginal note:Reductions in renunciations
(12.73)Where an amount that a corporation purports to renounce to a person under subsection 66(12.6), 66(12.601) or 66(12.62) exceeds the amount that it can renounce to the person under that subsection,
(a)the corporation shall file a statement with the Minister in prescribed form where
(i)the Minister sends a notice in writing to the corporation demanding the statement, or
(ii)the excess arose as a consequence of a renunciation purported to be made in a calendar year under subsection 66(12.6) or 66(12.601) because of the application of subsection 66(12.66) and, at the end of the year, the corporation knew or ought to have known of all or part of the excess;
(b)where subparagraph 66(12.73)(a)(i) applies, the statement shall be filed not later than 30 days after the Minister sends a notice in writing to the corporation demanding the statement;
(c)where subparagraph 66(12.73)(a)(ii) applies, the statement shall be filed before March of the calendar year following the calendar year in which the purported renunciation was made;
(d)except for the purpose of Part XII.6, any amount that is purported to have been so renounced to any person is deemed, after the statement is filed with the Minister, to have always been reduced by the portion of the excess identified in the statement in respect of that purported renunciation; and
(e)where a corporation fails in the statement to apply the excess fully to reduce one or more purported renunciations, the Minister may at any time reduce the total amount purported to be renounced by the corporation to one or more persons by the amount of the unapplied excess in which case, except for the purpose of Part XII.6, the amount purported to have been so renounced to a person is deemed, after that time, always to have been reduced by the portion of the unapplied excess allocated by the Minister in respect of that person.
Marginal note:COVID-19 – agreements in 2019 or 2020
(12.731)If an agreement is entered into in 2019 or 2020 by a corporation to issue flow-through shares of the corporation,
(a)the reference in subparagraph (12.73)(a)(ii) to “at the end of the year” is to be read as a reference to “at the end of the subsequent year”; and
(b)the reference in paragraph (12.73)(c) to “before March of the calendar year” is to be read as a reference to “before March of the second calendar year”.
Marginal note:Late filed forms
(12.74)A corporation or partnership may file with the Minister a document referred to in subsection 66(12.68), 66(12.69), 66(12.691), 66(12.7) or 66(12.701) after the particular day on or before which the document is required to be filed under the applicable subsection and the document shall, except for the purposes of this subsection and subsection 66(12.75), be deemed to have been filed on the day on or before which it was required to be filed if
(a)it is filed
(i)on or before the day that is 90 days after the particular day, or
(ii)after the day that is 90 days after the particular day where, in the opinion of the Minister, the circumstances are such that it would be just and equitable to permit the document to be filed; and
(b)the corporation or partnership, as the case may be, pays to the Receiver General at the time of filing a penalty in respect of the late filing.
Marginal note:Late renunciation
(12.741)Where a corporation purports to renounce an amount under subsection 66(12.6), 66(12.601) or 66(12.62) after the period in which the corporation was entitled to renounce the amount, the amount is deemed, except for the purposes of this subsection and subsections 66(12.7) and 66(12.75), to have been renounced at the end of the period if
(a)the corporation purports to renounce the amount
(i)on or before the day that is 90 days after the end of that period, or
(ii)after the day that is 90 days after the end of that period where, in the opinion of the Minister, the circumstances are such that it would be just and equitable that the amount be renounced; and
(b)the corporation pays to the Receiver General a penalty in respect of the renunciation not more than 90 days after the renunciation.
Marginal note:Penalty
(12.75)For the purposes of subsections 66(12.74) and 66(12.741), the penalty in respect of the late filing of a document referred to in subsection 66(12.68), 66(12.69), 66(12.691), 66(12.7) or 66(12.701) or in respect of a renunciation referred to in subsection 66(12.741) is the lesser of $15,000 and
(a)where the penalty is in respect of the late filing of a document referred to in subsection 66(12.68), 66(12.69) or 66(12.7), the greater of
(i)$100, and
(ii)1/4 of 1% of the maximum amount in respect of the Canadian exploration expenses and Canadian development expenses renounced or attributed or to be renounced or attributed as set out in the document;
(b)where the penalty is in respect of the late filing of a document referred to in subsection 66(12.691) or 66(12.701), the greater of
(i)$100, and
(ii)1/4 of 1% of the assistance reported in the document; and
(c)where the penalty is in respect of a renunciation referred to in subsection 66(12.741), the greater of
(i)$100, and
(ii)1/4 of 1% of the amount of the renunciation.
Marginal note:Limitation
(13)Where a taxpayer has incurred an outlay or expense in respect of which a deduction from income is authorized under more than one provision of this section or section 66.1, 66.2 or 66.4, the taxpayer is not entitled to make the deduction under more than one provision but is entitled to select the provision under which to make the deduction.
Marginal note:Short taxation year
(13.1)If a taxpayer has a taxation year that is less than 51 weeks, the amount determined in respect of the year under each of subparagraph (4)(b)(i), paragraphs 66.2(2)(c) and (d), subparagraph (b)(i) of the definitionglobal foreign resource limitin subsection 66.21(1), subparagraph 66.21(4)(a)(i), clause 66.21(4)(a)(ii)(B) and paragraphs 66.4(2)(b) and (c) and 66.7(2.3)(a), (4)(a) and (5)(a) shall not exceed that proportion of the amount otherwise determined that the number of days in the year is of 365.
Marginal note:Amounts deemed deductible under this Subdivision
(14)For the purposes of section 3, any amount deductible under theIncome Tax Application Rulesin respect of this subsection shall be deemed to be deductible under this Subdivision.
Marginal note:Designation respecting Canadian exploration expense
(14.1)A corporation may designate for a taxation year, by filing a designation in prescribed form with the Minister on or before the day on or before which it is required to file a return of its income for the year under section 150, a particular amount not exceeding the lesser of
(a)its prescribed Canadian exploration expense for the year, and
(b)its cumulative Canadian exploration expense at the end of the year,
and the particular amount shall be added in computing its cumulative offset account immediately before the end of the year and deducted in computing its cumulative Canadian exploration expense at any time after the end of the year.
Marginal note:Designation respecting cumulative Canadian development expense
(14.2)A corporation may designate for a taxation year, by filing a designation in prescribed form with the Minister on or before the day on or before which it is required to file a return of its income for the year under section 150, a particular amount not exceeding
(a)where a deduction has been made under subsection 66.2(2) in computing its income for the year, the lesser of
(i)30% of its prescribed Canadian development expense for the year, and
(ii)the amount, if any, by which 30% of its cumulative Canadian development expense at the end of the year exceeds the amount, if any, deducted for the year under subsection 66.2(2) in computing its income for the year, or
(b)where a deduction has not been made under subsection 66.2(2) in computing its income for the year, the lesser of
(i)30% of its prescribed Canadian development expense for the year, and
(ii)30% of the amount, if any, of its adjusted cumulative Canadian development expense at the end of the year,
and the particular amount shall be added in computing its cumulative offset account immediately before the end of the year and deducted in computing its cumulative Canadian development expense at any time after the end of the year.
Definition ofadjusted cumulative Canadian development expense
(14.3)For the purposes of paragraph 66(14.2)(b),adjusted cumulative Canadian development expenseof a corporation at the end of a taxation year means the amount, if any, that would be its cumulative Canadian development expense at the end of the year, if no Canadian resource property were disposed of by it in the year.
Marginal note:Special cases
(14.4)Where, in the opinion of the Minister, the circumstances of a case are such that it would be just and equitable
(a)to permit a designation under subsection 66(14.1) or 66(14.2) to be filed after the day on or before which it is required by that subsection to be filed, or
(b)to permit a designation filed under subsection 66(14.1) or 66(14.2) to be amended,
the Minister may permit the designation to be filed or amended, as the case may be, after that day, and where the designation or amendment is filed pursuant to that permission, it shall be deemed to have been filed on the day on or before which it was required to be filed if
(c)it is filed with the Minister in prescribed form, and
(d)the corporation filing it pays to the Receiver General at the time of filing the penalty in respect of it,
and where a designation is amended under this subsection, the designation to which the amendment is made shall be deemed not to have been effective.
Marginal note:Penalty for late designation
(14.5)For the purposes of this section, the penalty in respect of a designation or amended designation referred to in paragraph 66(14.4)(a) or 66(14.4)(b) is the lesser of
(a)an amount determined by the formula
0.0025 × A × B
where
(i)in the case of a late-filed designation, the amount designated therein, and
(ii)in the case of an amended designation, the amount, if any, by which the amount designated in the designation being amended differs from the amount designated in the amended designation, and
(b)an amount, not exceeding $8,000, equal to the product obtained by multiplying $100 by the number of months each of which is included in whole or in part in the period referred to in the description of B in paragraph 66(14.5)(a).
Marginal note:Deduction of carved-out income
(14.6)A taxpayer may deduct in computing the taxpayer’s income under this Part for a taxation year, an amount equal to the total of the taxpayer’s carved-out incomes for the year within the meaning assigned by subsection 209(1).
Marginal note:Definitions
(15)In this section,
agreed portionin respect of a corporation that was a shareholder corporation of a joint exploration corporation means such amount as may be agreed on between the joint exploration corporation and the shareholder corporation not exceeding
(a)the total of all amounts each of which is a payment or loan referred to in paragraph (b) of the definitionshareholder corporationin this subsection 66(15) except to the extent that the payment or loan was made by a shareholder corporation that was not a Canadian corporation and was used by the joint exploration corporation to acquire a Canadian resource property after December 11, 1979 from a shareholder corporation that was not a Canadian corporation) made by the shareholder corporation to the joint exploration corporation during the period it was a shareholder corporation of the joint exploration corporation,
minus
(b)the total of the amounts, if any, previously renounced by the joint exploration corporation under any of subsections 66(10) to 66(10.3) in favour of the shareholder corporation; (partie convenue)
assistancemeans any amount, other than a prescribed amount, received or receivable at any time from a person or government, municipality or other public authority whether the amount is by way of a grant, subsidy, rebate, forgivable loan, deduction from royalty or tax, rebate of royalty or tax, investment allowance or any other form of assistance or benefit; (montant à titre d’aide)
Canadian exploration and development expensesincurred by a taxpayer means any expense incurred before May 7, 1974 that is
(a)any drilling or exploration expense, including any general geological or geophysical expense, incurred by the taxpayer after 1971 on or in respect of exploring or drilling for petroleum or natural gas in Canada,
(b)any prospecting, exploration or development expense incurred by the taxpayer after 1971 in searching for minerals in Canada,
(c)the cost to the taxpayer of any Canadian resource property acquired by the taxpayer after 1971,
(d)the taxpayer’s share of the Canadian exploration and development expenses incurred after 1971 by any association, partnership or syndicate in a fiscal period thereof, if at the end of that fiscal period the taxpayer was a member or partner thereof,
(e)any expense incurred by the taxpayer after 1971 pursuant to an agreement with a corporation under which the taxpayer incurred the expense solely in consideration for shares of the capital stock of the corporation issued to the taxpayer by the corporation or any interest in such shares or right thereto, to the extent that the expense was incurred as or on account of the cost of
(i)drilling or exploration activities, including any general geological or geophysical activities, in or in respect of exploring or drilling for petroleum or natural gas in Canada,
(ii)prospecting, exploration or development activities in searching for minerals in Canada, or
(iii)acquiring a Canadian resource property, and
(f)any annual payment made by the taxpayer for the preservation of a Canadian resource property,
but, for greater certainty, does not include
(g)any consideration given by the taxpayer for any share or any interest therein or right thereto, except as provided by paragraph (e), or
(h)any expense described in paragraph (e) incurred by another taxpayer to the extent that the expense was, by virtue of that paragraph, a Canadian exploration and development expense of that other taxpayer; (frais d’exploration et d’aménagement au Canada)
Canadian resource propertyof a taxpayer means any property of the taxpayer that is
(a)any right, licence or privilege to explore for, drill for or take petroleum, natural gas or related hydrocarbons in Canada,
(b)any right, licence or privilege to
(i)store underground petroleum, natural gas or related hydrocarbons in Canada, or
(ii)prospect, explore, drill or mine for minerals in a mineral resource in Canada other than a bituminous sands deposit or an oil shale deposit,
(c)any oil or gas well in Canada or any real property or immovable in Canada the principal value of which depends on its petroleum, natural gas or related hydrocarbon content (not including any depreciable property),
(d)any right to a rental or royalty computed by reference to the amount or value of production from an oil or a gas well in Canada, or from a natural accumulation of petroleum, natural gas or a related hydrocarbon in Canada, if the payer of the rental or royalty has an interest in, or for civil law a right in, the well or accumulation, as the case may be, and 90% or more of the rental or royalty is payable out of, or from the proceeds of, the production from the well or accumulation,
(e)any right to a rental or royalty computed by reference to the amount or value of production from a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, if the payer of the rental or royalty has an interest in, or for civil law a right in, the mineral resource and 90% or more of the rental or royalty is payable out of, or from the proceeds of, the production from the mineral resource,
(f)any real property or immovable in Canada (not including any depreciable property) the principal value of which depends on its mineral resource content other than where the mineral resource is a bituminous sands deposit or an oil shale deposit,
(g)any right to or interest in — or, for civil law, any right to or in — any property described in any of paragraphs (a) to (e), other than a right or an interest that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership, or
(h)an interest in real property described in paragraph (f) or a real right in an immovable described in that paragraph, other than an interest or a right that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership; (avoir minier canadien)
drilling or exploration expenseincurred on or in respect of exploring or drilling for petroleum or natural gas includes any expense incurred on or in respect of
(a)drilling or converting a well for the disposal of waste liquids from a petroleum or natural gas well,
(b)drilling for water or gas for injection into a petroleum or natural gas formation, or
(c)drilling or converting a well for the injection of water or gas to assist in the recovery of petroleum or natural gas from another well; (frais d’exploration ou de forage)
expense, incurred before a particular time by a taxpayer,
(a)includes an amount designated by the taxpayer at that time under paragraph 98(3)(d) or (5)(d) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as a cost in respect of property that is a Canadian resource property or a foreign resource property,
but
(b)for greater certainty, does not include any amount paid or payable
(i)as consideration for services to be rendered after that time, or
(ii)as, on account or in lieu of payment of, or in satisfaction of, rent in respect of a period after that time; (dépenses)
flow-through sharemeans a share (other than a prescribed share) of the capital stock of a principal-business corporation, or a right (other than a prescribed right) to acquire a share of the capital stock of a principal-business corporation, issued to a person under an agreement in writing made between the person and the corporation under which the corporation, for consideration that does not include property to be exchanged or transferred by the person under the agreement in circumstances to which any of sections 51, 85, 85.1, 86 and 87 applies, agrees
(a)to incur, in the period that begins on the day on which the agreement was made and ends 24 months after the month that includes that day, Canadian exploration expenses or Canadian development expenses in an amount not less than the consideration for which the share or right is to be issued, and
(b)to renounce, in prescribed form and before March of the first calendar year that begins after that period, to the person in respect of the share or right, an amount in respect of the Canadian exploration expenses or Canadian development expenses so incurred by it not exceeding the consideration received by the corporation for the share or right; (action accréditive)
foreign exploration and development expensesincurred by a taxpayer means
(a)any drilling or exploration expense, including any general geological or geophysical expense, incurred by the taxpayer after 1971 on or in respect of exploring or drilling for petroleum or natural gas outside Canada,
(b)any expense incurred by the taxpayer for the purpose of determining the existence, location, extent or quality of a mineral resource outside Canada, including any expense incurred in the course of
(i)prospecting,
(ii)carrying out geological, geophysical or geochemical surveys,
(iii)drilling by rotary, diamond, percussion or other method, or
(iv)trenching, digging test pits and preliminary sampling,
(c)the cost to the taxpayer of any foreign resource property acquired by him,
(d)subject to section 66.8, the taxpayer’s share of the foreign exploration and development expenses incurred after 1971 by a partnership in a fiscal period thereof, if at the end of that period the taxpayer was a member of the partnership, and
(e)any annual payment made by the taxpayer for the preservation of a foreign resource property;
but does not include
(f)any amount included at any time in the capital cost to the taxpayer of any depreciable property of a prescribed class,
(g)an expenditure incurred at any time after the commencement of production from a foreign resource property of the taxpayer in order to evaluate the feasibility of a method of recovery of petroleum, natural gas or related hydrocarbons from the portion of a natural reservoir to which the foreign resource property relates,
(h)an expenditure (other than a drilling expense) incurred at any time after the commencement of production from a foreign resource property of the taxpayer in order to assist in the recovery of petroleum, natural gas or related hydrocarbons from the portion of a natural reservoir to which the foreign resource property relates,
(i)an expenditure incurred at any time relating to the injection of any substance to assist in the recovery of petroleum, natural gas or related hydrocarbons from a natural reservoir,
(j)an expenditure that is the cost, or any part of the cost, to the taxpayer of any depreciable property of a prescribed class that was acquired after December 21, 2000,
(k)foreign resource expenses in respect of a country, or
(l)an expenditure made after February 27, 2000 by the taxpayer unless the expenditure was made
(i)pursuant to an agreement in writing made by the taxpayer before February 28, 2000,
(ii)for the acquisition of foreign resource property by the taxpayer, or
(iii)for the purpose of
(A)enhancing the value of foreign resource property that the taxpayer owned at the time the expenditure was incurred or that the taxpayer had a reasonable expectation of owning after that time, or
(B)assisting in evaluating whether a foreign resource property is to be acquired by the taxpayer; (frais d’exploration et d’aménagement à l’étranger)
foreign resource propertyof a taxpayer means any property that would be a Canadian resource property of the taxpayer if the definitionCanadian resource propertyin this subsection were read as if the references therein to “in Canada” were references to “outside Canada”; (avoir minier étranger)
joint exploration corporationmeans a principal-business corporation that has not at any time since its incorporation had more than 10 shareholders, not including any individual holding a share for the sole purpose of qualifying as a director; (société d’exploration en commun)
original ownerof a Canadian resource property or a foreign resource property means a person
(a)who owned the property and disposed of it to a corporation that acquired it in circumstances in which subsection 29(25) of theIncome Tax Application Rulesor subsection 66.7(1), (2), (2.3), (3), (4) or (5) applies, or would apply if the corporation had continued to own the property, to the corporation in respect of the property, and
(b)who would, but for subsection 66.7(12), (13), (13.1) or (17), as the case may be, be entitled in computing that person’s income for a taxation year that ends after that person disposed of the property to a deduction under section 29 of theIncome Tax Application Rulesor subsection (2), (3) or (4), 66.1(2) or (3), 66.2(2), 66.21(4) or 66.4(2) of this Act in respect of expenses described in subparagraph 29(25)(c)(i) or (ii) of that Act, Canadian exploration and development expenses, foreign resource pool expenses, Canadian exploration expenses, Canadian development expenses or Canadian oil and gas property expenses incurred by the person before the person disposed of the property; (propriétaire obligé)
outlay, made before a particular time by a taxpayer, has the meaning assigned to the expressionexpenseby this subsection; (dépenses)
predecessor ownerof a Canadian resource property or a foreign resource property means a corporation
(a)that acquired the property in circumstances in which subsection 29(25) of theIncome Tax Application Rulesor subsection 66.7(1), (2), (2.3), (3), (4) or (5) applies, or would apply if the corporation had continued to own the property, to the corporation in respect of the property,
(b)that disposed of the property to another corporation that acquired it in circumstances in which subsection 29(25) of theIncome Tax Application Rulesor subsection 66.7(1), (2), (2.3), (3), (4) or (5) applies, or would apply if the other corporation had continued to own the property, to the other corporation in respect of the property, and
(c)that would, but for subsection 66.7(14), (15), (15.1) or (17), as the case may be, be entitled in computing its income for a taxation year ending after it disposed of the property to a deduction under subsection 29(25) of theIncome Tax Application Rulesor subsection 66.7(1), (2), (2.3), (3), (4) or (5) in respect of expenses incurred by an original owner of the property; (propriétaire antérieur)
principal-business corporationmeans a corporation the principal business of which is any of, or a combination of,
(a)the production, refining or marketing of petroleum, petroleum products or natural gas,
(a.1)exploring or drilling for petroleum or natural gas,
(b)mining or exploring for minerals,
(c)the processing of mineral ores for the purpose of recovering metals or minerals from the ores,
(d)the processing or marketing of metals or minerals that were recovered from mineral ores and that include metals or minerals recovered from mineral ores processed by the corporation,
(e)the fabrication of metals,
(f)the operation of a pipeline for the transmission of oil or gas,
(f.1)the production or marketing of calcium chloride, gypsum, kaolin, sodium chloride or potash,
(g)the manufacturing of products, where the manufacturing involves the processing of calcium chloride, gypsum, kaolin, sodium chloride or potash,
(h)the generation or distribution of energy, or the production of fuel, using property described in Class 43.1 or 43.2 of Schedule II to theIncome Tax Regulations, and
(i)the development of projects for which it is reasonable to expect that at least 50% of the capital cost of the depreciable property to be used in each project would be the capital cost of property described in Class 43.1 or 43.2 of Schedule II to theIncome Tax Regulations,
or a corporation all or substantially all of the assets of which are shares of the capital stock or indebtedness of one or more principal-business corporations that are related to the corporation (otherwise than because of a right referred to in paragraph 251(5)(b)), (société exploitant une entreprise principale)
productionfrom a Canadian resource property or a foreign resource property means
(a)petroleum, natural gas and related hydrocarbons produced from the property,
(b)heavy crude oil produced from the property processed to any stage that is not beyond the crude oil stage or its equivalent, (c) ore (other than iron ore or tar sands) produced from the property processed to any stage that is not beyond the prime metal stage or its equivalent,
(d)iron ore produced from the property processed to any stage that is not beyond the pellet stage or its equivalent,
(e)tar sands produced from the property processed to any stage that is not beyond the crude oil stage or its equivalent, and
(f)any rental or royalty from the property computed by reference to the amount or value of the production of petroleum, natural gas or related hydrocarbons or ore; (production)
reserve amountof a corporation for a taxation year in respect of an owner or predecessor owner of a Canadian resource property means the amount determined by the formula
A - B
where
(a)required by subsection 59(2) to be included in computing the corporation’s income for the year, and
(b)in respect of a reserve, deducted in computing the income of the original owner or predecessor owner and deemed by paragraph 87(2)(g) or by virtue of that paragraph and paragraph 88(1)(e.2) to have been deducted by the corporation as a reserve in computing its income for a preceding taxation year, and
selling instrumentin respect of flow-through shares means a prospectus, registration statement, offering memorandum, term sheet or other similar document that describes the terms of the offer (including the price and number of shares) pursuant to which a corporation offers to issue flow-through shares; (avis d’émission)
shareholder corporationof a joint exploration corporation means a corporation that for the period in respect of which the expression is being applied
(a)was a shareholder of the joint exploration corporation, and
(b)made a payment or loan to the joint exploration corporation in respect of Canadian exploration and development expenses, a Canadian exploration expense, a Canadian development expense or a Canadian oil and gas property expense incurred or to be incurred by the joint exploration corporation; (société actionnaire)
specified foreign exploration and development expenseof a taxpayer in respect of a country (other than Canada) means an amount that is included in the taxpayer’s foreign exploration and development expenses and that is
(a)a drilling or exploration expense, including any general geological or geophysical expense, incurred by the taxpayer on or in respect of exploring or drilling for petroleum or natural gas in that country,
(a.1)an expense incurred by the taxpayer after December 21, 2000 (otherwise than pursuant to an agreement in writing made before December 22, 2000) for the purpose of determining the existence, location, extent or quality of a mineral resource in that country, including any expense incurred in the course of
(i)prospecting,
(ii)carrying out geological, geophysical or geochemical surveys,
(iii)drilling by rotary, diamond, percussion or other methods, or
(iv)trenching, digging test pits and preliminary sampling,
(b)a prospecting, exploration or development expense incurred by the taxpayer before December 22, 2000 (or after December 21, 2000 pursuant to an agreement in writing made before December 22, 2000) in searching for minerals in that country,
(c)the cost to the taxpayer of the taxpayer’s foreign resource property in respect of that country,
(d)an annual payment made by the taxpayer in a taxation year of the taxpayer for the preservation of a foreign resource property in respect of that country,
(e)an amount deemed by subsection 21(2) or (4) to be a foreign exploration and development expense incurred by the taxpayer, to the extent that it can reasonably be considered to relate to an amount that, without reference to this paragraph and paragraph (f), would be a specified foreign exploration and development expense in respect of that country, or
(f)subject to section 66.8, the taxpayer’s share of the specified foreign exploration and development expenses of a partnership incurred in respect of that country in a fiscal period of the partnership if, at the end of that period, the taxpayer was a member of the partnership. (frais d’exploration et d’aménagement à l’étranger déterminés)
Marginal note:Other definitions
(15.1)The definitions in subsections 66.1(6), 66.2(5), 66.21(1), 66.4(5) and 66.5(2) apply in this section.
Marginal note:Partnerships
(16)For the purposes of subsections 66(12.6) to 66(12.73), the definitionsassistanceandflow-through sharein subsection 66(15) and subsections 66(18), 66(19) and 66.3(3) and 66.3(4), a partnership is deemed to be a person and its taxation year is deemed to be its fiscal period.
Marginal note:Non-arm’s length partnerships
(17)For the purpose of paragraph (12.66)(d), a partnership and a corporation are, at all times in a calendar year,
(a)deemed not to deal with each other at arm’s length, if
(i)an expense is deemed by subsection (12.61) to be incurred by the partnership,
(ii)the expense would, if this Act were read without reference to paragraph (12.61)(b), be incurred in the calendar year by the corporation, and
(iii)a share of the expense is included, because of paragraph (h) of the definitionCanadian exploration expensein subsection 66.1(6), in the Canadian exploration expense of the corporation or of a member of the partnership with whom the corporation, at any time in that calendar year, does not deal at arm’s length; and
(b)deemed to deal with each other at arm’s length, in any other case.
Marginal note:Members of partnerships
(18)For the purposes of this section, subsection 21(2), sections 59.1 and 66.1 to 66.7, paragraph (d) of the definitioninvestment expensein subsection 110.6(1), the definitionpre-production mining expenditurein subsection 127(9) and the descriptions of C and D in subsection 211.91(1), where a person’s share of an outlay or expense made or incurred by a partnership in a fiscal period of the partnership is included in respect of the person under paragraph (d) of the definitionforeign exploration and development expensesin subsection (15), paragraph (h) of the definitionCanadian exploration expensein subsection 66.1(6), paragraph (f) of the definitionCanadian development expensein subsection 66.2(5), paragraph (e) of the definitionforeign resource expensein subsection 66.21(1) or paragraph (b) of the definitionCanadian oil and gas property expensein subsection 66.4(5), the portion of the outlay or expense so included is deemed, except for the purposes of applying the definitionsforeign exploration and development expenses,Canadian exploration expense,Canadian development expense,foreign resource expenseandCanadian oil and gas property expensein respect of the person, to be made or incurred by the person at the end of that fiscal period.
Marginal note:Renunciation by corporate partner, etc.
(19)A corporation is not entitled to renounce under subsection 66(12.6), 66(12.601) or 66(12.62) to a person a specified amount in respect of the corporation where the corporation would not be entitled to so renounce the specified amount if
(a)the expression “end of that fiscal period” in subsection 66(18) were read as “time the outlay or expense was made or incurred by the partnership”; and
(b)the expression “on the effective date of the renunciation” in each of paragraphs 66(12.61)(a) and 66(12.63)(a) were read as “at the earliest time that any part of such expense was incurred by the corporation”.
Marginal note:Specified amount
(20)For the purpose of subsection 66(19), a specified amount in respect of a corporation is an amount that represents
(a)all or part of the corporation’s share of an outlay or expense made or incurred by a partnership of which the corporation is a member or former member; or
(b)all or part of an amount renounced to the corporation under subsection 66(12.6), 66(12.601) or 66(12.62).
Marginal note:Amount to be included in income
66.1(1)There shall be included in computing the amount referred to in paragraph 59(3.2)(b) in respect of a taxpayer for a taxation year the amount, if any, by which
(a)the total of all amounts referred to in the descriptions of F to M in the definitioncumulative Canadian exploration expensein subsection 66.1(6) that are deducted in computing the taxpayer’s cumulative Canadian exploration expense at the end of the year
exceeds the total of
(b)all amounts referred to in the descriptions of A to E.1 in the definitioncumulative Canadian exploration expensein subsection 66.1(6) that are included in computing the taxpayer’s cumulative Canadian exploration expense at the end of the year, and
(c)the total determined under subparagraph 66.7(12.1)(a)(i) in respect of the taxpayer for the year.
Marginal note:Deduction for certain principal-business corporations
(2)In computing the income for a taxation year of a principal-business corporation (other than a corporation that would not be a principal-business corporation if the definitionprincipal-business corporationin subsection 66(15) were read without reference to paragraphs (h) and (i) of that definition), there may be deducted any amount that the corporation claims not exceeding the lesser of
(a)the total of
(i)the amount, if any, by which its cumulative Canadian exploration expense at the end of the year exceeds the amount, if any, designated by it for the year under subsection 66(14.1), and
(ii)the amount, if any, by which
(A)the total determined under subparagraph 66.7(12.1)(a)(i) in respect of the corporation for the year
exceeds
(B)the amount that would be determined under subsection 66.1(1) in respect of the corporation for the year, if that subsection were read without reference to paragraph (c) thereof, and
(b)the amount, if any, by which
(i)the amount that would be its income for the year if no deduction (other than a prescribed deduction) were allowed under this subsection or section 65
exceeds
(ii)the total of all amounts each of which is an amount deducted by the corporation under section 112 or 113 in computing its taxable income for the year.
Marginal note:Expenses of other taxpayer
(3)In computing the income for a taxation year of a taxpayer that is not a principal-business corporation, or that is a corporation that would not be a principal-business corporation if the definitionprincipal-business corporationin subsection 66(15) were read without reference to paragraphs (h) and (i) of that definition, there may be deducted such amount as the taxpayer claims not exceeding the total of
(a)the amount, if any, by which the taxpayer’s cumulative Canadian exploration expense at the end of the year exceeds the amount, if any, designated by the taxpayer for the year under subsection 66(14.1), and
(b)the amount, if any, by which
(i)the total determined under subparagraph 66.7(12.1)(a)(i) in respect of the taxpayer for the year
exceeds
(ii)the amount that would, but for paragraph 66.1(1)(c), be the amount determined under subsection 66.1(1) in respect of the taxpayer for the year.
Marginal note:Definitions
(6)In this section,
bitumen mine development project, of a taxpayer, means an undertaking for the sole purpose of developing a new mine to extract and process tar sands from a mineral resource of the taxpayer to produce bitumen or a similar product; (projet de mise en valeur d’une mine de bitume)
bitumen upgrading development project, of a taxpayer, means an undertaking for the sole purpose of constructing an upgrading facility to process bitumen or a similar feedstock (all or substantially all of which is from a mineral resource of the taxpayer) from a new mine to the crude oil stage or its equivalent; (projet de valorisation du bitume)
Canadian exploration expenseof a taxpayer means any expense incurred after May 6, 1974 that is
(a)any expense incurred by the taxpayer (other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well) for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas (other than a mineral resource) in Canada, including such an expense that is
(i)a geological, geophysical or geochemical expense, or
(ii)an expense for environmental studies or community consultations (including studies or consultations that are undertaken to obtain a right, licence or privilege for the purpose of determining the existence, location, extent or quality of an accumulation of petroleum or natural gas),
(b)any expense (other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well) incurred by the taxpayer after March, 1985 for the purpose of bringing a natural accumulation of petroleum or natural gas (other than a mineral resource) in Canada into production and incurred prior to the commencement of the production (other than the production from an oil or gas well) in reasonable commercial quantities from such accumulation, including
(i)clearing, removing overburden and stripping, and
(ii)sinking a shaft or constructing an adit or other underground entry,
(c)any expense incurred before April, 1987 in drilling or completing an oil or gas well in Canada or in building a temporary access road to, or preparing a site in respect of, any such well,
(i)incurred by the taxpayer in the year, or
(ii)incurred by the taxpayer in any previous year and included by the taxpayer in computing the taxpayer’s Canadian development expense for a previous taxation year,
if, within six months after the end of the year, the drilling of the well is completed and
(iii)it is determined that the well is the first well capable of production in commercial quantities from an accumulation of petroleum or natural gas (other than a mineral resource) not previously known to exist, or
(iv)it is reasonable to expect that the well will not come into production in commercial quantities within twelve months of its completion,
(d)any expense incurred by the taxpayer after March, 1987 and in a taxation year of the taxpayer in drilling or completing an oil or gas well in Canada or in building a temporary access road to, or preparing a site in respect of, any such well if
(i)the drilling or completing of the well resulted in the discovery that a natural underground reservoir contains petroleum or natural gas, where
(A)before the time of the discovery, no person or partnership had discovered that the reservoir contained either petroleum or natural gas,
(B)the discovery occurred at any time before six months after the end of the year, and
(C)the expense is incurred
(I)before 2021 (excluding an expense that is deemed by subsection 66(12.66) to have been incurred on December 31, 2020), if the expense is incurred in connection with an obligation that was committed to in writing (including a commitment to a government under the terms of a license or permit) by the taxpayer before March 22, 2017, or
(II)before 2019 (excluding an expense that is deemed by subsection 66(12.66) to have been incurred on December 31, 2018), in any other case,
(ii)the well is abandoned in the year or within six months after the end of the year without ever having produced otherwise than for specified purposes,
(iii)the period of 24 months commencing on the day of completion of the drilling of the well ends in the year, the expense was incurred within that period and in the year and the well has not within that period produced otherwise than for specified purposes, or
(iv)there has been filed with the Minister, on or before the day that is 6 months after the end of the taxation year of the taxpayer in which the drilling of the well was commenced, a certificate issued by the Minister of Natural Resources certifying that, on the basis of evidence submitted to that Minister, that Minister is satisfied that
(A)the total of expenses incurred and to be incurred in drilling and completing the well, in building a temporary access road to the well and in preparing the site in respect of the well will exceed $5,000,000, and
(B)the well will not produce, otherwise than for a specified purpose, within the period of 24 months commencing on the day on which the drilling of the well is completed,
(e)any expense deemed by subsection 66.1(9) to be a Canadian exploration expense incurred by the taxpayer,
(f)any expense incurred by the taxpayer (other than an expense incurred in drilling or completing an oil or gas well or in building a temporary access road to, or preparing a site in respect of, any such well) for the purpose of determining the existence, location, extent or quality of a mineral resource in Canada including such an expense for environmental studies or community consultations (including, notwithstanding subparagraph (v), studies or consultations that are undertaken to obtain a right, licence or privilege for the purpose of determining the existence, location, extent or quality of a mineral resource in Canada) and any expense incurred in the course of
(i)prospecting,
(ii)carrying out geological, geophysical or geochemical surveys,
(iii)drilling by rotary, diamond, percussion or other methods, or
(iv)trenching, digging test pits and preliminary sampling,
but not including
(v)any Canadian development expense,
(v.1)any expense described in subparagraph (i), (iii) or (iv) in respect of the mineral resource, incurred before a new mine in the mineral resource comes into production in reasonable commercial quantities, that results in revenue or can reasonably be expected to result in revenue earned before the new mine comes into production in reasonable commercial quantities, except to the extent that the total of all such expenses exceeds the total of those revenues, or
(vi)any expense that may reasonably be considered to be related to a mine in the mineral resource that has come into production in reasonable commercial quantities or to be related to a potential or actual extension of the mine,
(g)any expense incurred by the taxpayer after November 16, 1978 and before March 21, 2013 for the purpose of bringing a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production in reasonable commercial quantities and incurred before the new mine comes into production in such quantities, including an expense for clearing, removing overburden, stripping, sinking a mine shaft or constructing an adit or other underground entry, but not including any expense that results in revenue or can reasonably be expected to result in revenue earned before the new mine comes into production in reasonable commercial quantities, except to the extent that the total of all such expenses exceeds the total of those revenues,
(g.1)any Canadian renewable and conservation expense incurred by the taxpayer,
(g.2)any expense incurred by the taxpayer after March 21, 2011, that is
(i)a specified oil sands mine development expense, or
(ii)an eligible oil sands mine development expense,
(g.3)any expense incurred by the taxpayer that would be described in paragraph (g) if the reference to “March 21, 2013” in that paragraph were “2017” and that is incurred
(i)under an agreement in writing entered into by the taxpayer before March 21, 2013, or
(ii)as part of the development of a new mine, if
(A)the construction of the new mine was started by, or on behalf of, the taxpayer before March 21, 2013 (and for this purpose construction does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), or
(B)the engineering and design work for the construction of the new mine, as evidenced in writing, was started by, or on behalf of, the taxpayer before March 21, 2013 (and for this purpose engineering and design work does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities),
(g.4)any expense incurred by the taxpayer, the amount of which is determined by the formula
A × B
where
(i)100% if the expense is incurred before 2015,
(ii)80% if the expense is incurred in 2015,
(iii)60% if the expense is incurred in 2016, and
(iv)30% if the expense is incurred in 2017,
(h)subject to section 66.8, the taxpayer’s share of any expense referred to in any of paragraphs (a) to (d) and (f) to (g.4) incurred by a partnership in a fiscal period of the partnership, if at the end of the period the taxpayer is a member of the partnership, or
(i)any expense referred to in any of paragraphs (a) to (g) incurred by the taxpayer pursuant to an agreement in writing with a corporation, entered into before 1987, under which the taxpayer incurred the expense solely as consideration for shares, other than prescribed shares, of the capital stock of the corporation issued to the taxpayer or any interest in or right to — or, for civil law, any right in or to — such shares,
but for greater certainty, shall not include
(j)any consideration given by the taxpayer for any share or any interest in or right to — or, for civil law, any right in or to — a share, except as provided by paragraph (i),
(k)any expense described in paragraph (i) incurred by any other taxpayer to the extent that the expense was,
(i)by virtue of that paragraph, a Canadian exploration expense of that other taxpayer,
(ii)by virtue of paragraph (g) of the definitionCanadian development expensein subsection 66.2(5), a Canadian development expense of that other taxpayer, or
(iii)by virtue of paragraph (c) of the definitionCanadian oil and gas property expensein subsection 66.4(5), a Canadian oil and gas property expense of that other taxpayer,
(k.1)an expense that is the cost, or any part of the cost, to the taxpayer of any depreciable property of a prescribed class that was acquired after 1987,
(k.2)[Repealed, 2011, c. 24, s. 14]
(l)any amount (other than a Canadian renewable and conservation expense) included at any time in the capital cost to the taxpayer of any depreciable property of a prescribed class,
(m)an expenditure incurred at any time after the commencement of production from a Canadian resource property of the taxpayer in order to evaluate the feasibility of a method of recovery of, or to assist in the recovery of, petroleum, natural gas or related hydrocarbons from the portion of a natural reservoir to which the Canadian resource property relates,
(n)an expenditure incurred at any time relating to the injection of any substance to assist in the recovery of petroleum, natural gas or related hydrocarbons from a natural reservoir, or
(o)the taxpayer’s share of any consideration, expense, cost or expenditure referred to in any of paragraphs (j) to (n) given or incurred by a partnership,
but any assistance that a taxpayer has received or is entitled to receive after May 25, 1976 in respect of or related to the taxpayer’s Canadian exploration expense shall not reduce the amount of any of the expenses described in any of paragraphs (a) to (i); (frais d’exploration au Canada)
Canadian renewable and conservation expensehas the meaning assigned by regulation, and for the purpose of determining whether an outlay or expense in respect of a prescribed energy conservation property is a Canadian renewable and conservation expense, theTechnical Guide to Canadian Renewable and Conservation Expenses (CRCE), as amended from time to time and published by the Department of Natural Resources, shall apply conclusively with respect to engineering and scientific matters; (frais liés aux énergies renouvelables et à l’économie d’énergie au Canada)
completion, of a specified oil sands mine development project, means the first attainment of a level of average output, measured over a 60-day period, equal to at least 60% of the planned level of average daily output (as determined in paragraph (b) of the definitionspecified oil sands mine development project) for the specified oil sands mine development project; (achèvement)
cumulative Canadian exploration expenseof a taxpayer at any time in a taxation year means the amount determined by the formula
(A+B+C+D+E+E.1) - (F+G+H+I+J+J.1+K+L+M)
where
(a)under theNorthern Mineral Exploration Assistance Regulationsmade under an appropriation Act that provides for payments in respect of the Northern Mineral Grants Program, or
(b)pursuant to any agreement entered into between the taxpayer and Her Majesty in right of Canada under the Northern Mineral Grants Program or the Development Program of the Department of Indian Affairs and Northern Development,
to the extent that the amounts have been expended by the taxpayer as or on account of Canadian exploration and development expenses or Canadian exploration expense incurred by the taxpayer,
designated asset, in respect of an oil sands mine development project of a taxpayer, means a property that is a building, a structure, machinery or equipment and is, or is an integral and substantial part of,
(a)in the case of a bitumen mine development project,
(i)a crusher,
(ii)a froth treatment plant,
(iii)a primary separation unit,
(iv)a steam generation plant,
(v)a cogeneration plant, or
(vi)a water treatment plant, or
(b)in the case of a bitumen upgrading development project,
(i)a gasifier unit,
(ii)a vacuum distillation unit,
(iii)a hydrocracker unit,
(iv)a hydrotreater unit,
(v)a hydroprocessor unit, or
(vi)a coker; (bien désigné)
eligible oil sands mine development expense, of a taxpayer, means an expense incurred by the taxpayer after March 21, 2011 and before 2016, the amount of which is determined by the formula
A × B
where
(a)100% if the expense is incurred before 2013,
(b)80% if the expense is incurred in 2013,
(c)60% if the expense is incurred in 2014, and
(d)30% if the expense is incurred in 2015; (frais d’aménagement admissibles relatifs à une mine de sables bitumineux)
oil sands mine development project, of a taxpayer, means a bitumen mine development project or a bitumen upgrading development project of the taxpayer; (projet de mise en valeur d’une mine de sables bitumineux)
preliminary work activity, in respect of an oil sands mine development project, means activity that is preliminary to the acquisition, construction, fabrication or installation by or on behalf of a taxpayer of designated assets in respect of the taxpayer’s oil sands mine development project including, without limiting the generality of the foregoing, the following activities:
(a)obtaining permits or regulatory approvals,
(b)performing design or engineering work,
(c)conducting feasibility studies,
(d)conducting environmental assessments, and
(e)entering into contracts; (travaux préliminaires)
restricted expenseof a taxpayer means an expense
(a)incurred by the taxpayer before April, 1987,
(b)that is deemed by paragraph 66(10.2)(c) to have been incurred by the taxpayer, or included by the taxpayer in the amount referred to in paragraph (a) of the definitionCanadian development expensein subsection 66.2(5) by virtue of paragraph 66(12.3)(b), to the extent that the expense was originally incurred before April, 1987,
(c)that was renounced by the taxpayer under subsection 66(10.2), 66(12.601) or 66(12.62),
(d)in respect of which an amount referred to in subsection 66(12.3) becomes receivable by the taxpayer,
(e)deemed to be a Canadian exploration expense of the taxpayer or any other taxpayer by virtue of subsection 66.1(9), or
(f)where the taxpayer is a corporation, that was incurred by the corporation before the time control of the corporation was last acquired by a person or persons; (frais spécifiés)
specified oil sands mine development expense, of a taxpayer, means an expense that
(a)would be a Canadian exploration expense described in paragraph (g) of the definitionCanadian exploration expenseif that paragraph were read without reference to “and before March 21, 2013” and “other than a bituminous sands deposit or an oil shale deposit”,
(b)is incurred by the taxpayer after March 21, 2011 and before 2015, and
(c)is incurred by the taxpayer to achieve completion of a specified oil sands mine development project of the taxpayer; (frais d’aménagement déterminés relatifs à une mine de sables bitumineux)
specified oil sands mine development project, of a taxpayer, means an oil sands mine development project (not including any preliminary work activity) in respect of which
(a)one or more designated assets was, before March 22, 2011,
(i)acquired by the taxpayer, or
(ii)in the process of being constructed, fabricated or installed, by or on behalf of the taxpayer, and
(b)the planned level of average daily output (where that output is bitumen or a similar product in the case of a bitumen mine development project, or synthetic crude oil or a similar product in the case of a bitumen upgrading development project) that can reasonably be expected, is the lesser of
(i)the level that was the demonstrated intention of the taxpayer as of March 21, 2011 to produce from the oil sands mine development project, and
(ii)the maximum level of output associated with the design capacity, as of March 21, 2011, of the designated asset referred to in paragraph (a); (projet déterminé de mise en valeur d’une mine de sables bitumineux)
specified purposemeans
(a)the operation of an oil or gas well for the sole purpose of testing the well or the well head and related equipment, in accordance with generally accepted engineering practices,
(b)the burning of natural gas and related hydrocarbons to protect the environment, and
(c)prescribed purposes. (fin admise)
Marginal note:Application of ss. 66(15), 66.2(5) and 66.4(5)
(6.1)The definitions in subsections 66(15), 66.2(5) and 66.4(5) apply to this section.
Marginal note:Deductible expense
(6.2)An expense of a taxpayer that is not included in paragraph (f) or (g) of the definitionCanadian exploration expensein subsection (6) because the taxpayer earned revenue from a mine in a mineral resource is deemed, for the purposes of this Part, not to be an outlay or payment described in paragraph 18(1)(b).
Marginal note:Share of partner
(7)Where a taxpayer is a member of a partnership, the taxpayer’s share of any amount that would be an amount referred to in the description of E, G or J in the definitioncumulative Canadian exploration expensein subsection 66.1(6) in respect of the partnership for a taxation year of the partnership if section 96 were read without reference to paragraph 96(1)(d) shall, for the purposes of this Act, be deemed to be an amount referred to in the description of E, G or J, as the case may be, in that definition in respect of the taxpayer for the taxation year of the taxpayer in which the partnership’s taxation year ends.
(8)[Repealed, 1997, c. 25, s. 14(6)]
Marginal note:Canadian development expenses for preceding years
(9)Where at any time in a taxpayer’s taxation year
(a)the drilling or completing of an oil or gas well resulted in the discovery that a natural underground reservoir contains petroleum or natural gas and, before the time of the discovery, no person or partnership had discovered that the reservoir contained either petroleum or natural gas,
(b)the period of 24 months commencing on the day of completion of the drilling of an oil or gas well ends and the well has not, within that period, produced otherwise than for specified purposes, or
(c)an oil or gas well that has never produced, otherwise than for specified purposes, is abandoned,
the amount, if any, by which the total of
(d)all Canadian development expenses (other than restricted expenses) described in subparagraph (a)(ii) of the definitionCanadian development expensein subsection 66.2(5) in respect of the well that are deemed by subsection 66(10.2) or 66(12.63) to have been incurred by the taxpayer in the year or a preceding taxation year,
(e)all Canadian development Canadian development expenses (other than restricted expenses) described in subparagraph (a)(ii) of the definitionCanadian development expensein subsection 66.2(5) in respect of the well that are required by paragraph 66(12.3)(b) to be included by the taxpayer in the amount referred to in paragraph (a) of that definition for the year or a preceding taxation year, and
(f)all Canadian development expenses (other than expenses referred to in paragraph 66.1(9)(d) or 66.1(9)(e) and restricted expenses) described in subparagraph (a)(ii) of the definitionCanadian development expensein subsection 66.2(5) incurred by the taxpayer in respect of the well in a taxation year preceding the year,
exceeds
(g)any assistance that the taxpayer or a partnership of which the taxpayer is a member has received or is entitled to receive in respect of the expenses referred to in any of paragraphs 66.1(9)(d) to 66.1(9)(f),
shall, for the purposes of this Act, be deemed to be a Canadian exploration expense referred to in paragraph (e) of the definitionCanadian exploration expensein subsection 66.1(6) incurred by the taxpayer at that time.
Marginal note:Certificate ceasing to be valid
(10)A certificate in respect of an oil or gas well issued by the Minister of Natural Resources for the purposes of subparagraph (d)(iv) of the definitionCanadian exploration expensein subsection 66.1(6) shall be deemed never to have been issued and never to have been filed with the Minister where
(a)the well produces, otherwise than for a specified purpose, within the period of 24 months commencing on the day on which the drilling of the well was completed; or
(b)in applying for the certificate, the applicant, in any material respect, provided any incorrect information or failed to provide information.
Marginal note:Amount to be included in income
66.2(1)There shall be included in computing the amount referred to in paragraph 59(3.2)(c) in respect of a taxpayer for a taxation year the amount, if any, by which the total of
(a)all amounts referred to in the descriptions of E to O in the definitioncumulative Canadian development expensein subsection 66.2(5) that are deducted in computing the taxpayer’s cumulative Canadian development expense at the end of the year, and
(b)the amount that is designated by the taxpayer for the year under subsection 66(14.2)
exceeds the total of
(c)all amounts referred to in the descriptions of A to .1 in the definitioncumulative Canadian development expensein subsection 66.2(5) that are included in computing the taxpayer’s cumulative Canadian development expense at the end of the year, and
(d)the total determined under subparagraph 66.7(12.1)(b)(i) in respect of the taxpayer for the year.
Marginal note:Deduction for cumulative Canadian development expenses
(2)A taxpayer may deduct, in computing the taxpayer’s income for a taxation year, such amount as the taxpayer may claim not exceeding the total of
(a)the lesser of
(i)the total of
(A)the taxpayer’s cumulative Canadian development expense at the end of the year, and
(B)the amount, if any, by which
(I)the total determined under subparagraph 66.7(12.1)(b)(i) in respect of the taxpayer for the year
exceeds
(II)the amount that would, but for paragraph 66.2(1)(d), be determined under subsection 66.2(1) in respect of the taxpayer for the year, and
(ii)the amount, if any, by which the amount determined under subparagraph 66.4(2)(a)(ii) exceeds the amount determined under subparagraph 66.4(2)(a)(i),
(b)the lesser of
(i)the amount, if any, by which the amount determined under subparagraph 66.2(2)(a)(i) exceeds the amount determined under subparagraph 66.2(2)(a)(ii), and
(ii)the amount, if any, by which the total of all amounts each of which is
(A)an amount included in the taxpayer’s income for the year by virtue of a disposition in the year of inventory described in section 66.3 that was a share or any interest in or right to — or, for civil law, any right in or to — a share, acquired by the taxpayer under circumstances described in paragraph (g) of the definitionCanadian development expensein subsection (5) or paragraph (i) of the definitionCanadian exploration expensein subsection 66.1(6), or
(B)an amount included by virtue of paragraph 12(1)(e) in computing the taxpayer’s income for the year to the extent that it relates to inventory described in clause 66.2(2)(b)(ii)(A)
exceeds
(C)the total of all amounts deducted as a reserve by virtue of paragraph 20(1)(n) in computing the taxpayer’s income for the year to the extent that the reserve relates to inventory described in clause 66.2(2)(b)(ii)(A),
(c)30% of the amount, if any, by which the amount determined under subparagraph 66.2(2)(b)(i) exceeds the amount determined under subparagraph 66.2(2)(b)(ii), and
(d)the amount determined by the formula
A(B − C)
where
(i)for taxation years that end before 2024, 15%,
(ii)for taxation years that begin before 2024 and end after 2023, the amount determined by the formula
0.15(I/J) + 0.075(K/J)
where
(iii)for taxation years that begin after 2023, 7.5%,
(D − E) − (F − G − H)
where
Marginal note:Definitions
(5)In this section,
accelerated Canadian development expense, of a taxpayer, means any cost or expense incurred by the taxpayer during a taxation year if the cost or expense
(a)qualifies as a Canadian development expense at the time it is incurred, other than
(i)an expense in respect of which the taxpayer is a successor, within the meaning of subsection 66.7(4), and
(ii)a cost in respect of a Canadian resource property acquired by the taxpayer, or a partnership in which the taxpayer is a member, from a person or partnership with which the taxpayer does not deal at arm’s length,
(b)is incurred after November 20, 2018 and before 2028, other than expenses deemed to have been incurred on December 31, 2027 because of subsection 66(12.66), and
(c)if the Canadian development expense is deemed to be a Canadian development expense incurred by the taxpayer because of paragraph 66(12.63)(a), is an amount renounced under an agreement entered into after November 20, 2018; (frais d’aménagement au Canada accélérés)
Canadian development expenseof a taxpayer means any cost or expense incurred after May 6, 1974 that is
(a)any expense incurred by the taxpayer in
(i)drilling or converting a well in Canada for the disposal of waste liquids from an oil or gas well,
(ii)drilling or completing an oil or gas well in Canada, building a temporary access road to the well or preparing a site in respect of the well, to the extent that the expense was not a Canadian exploration expense of the taxpayer in the taxation year in which it was incurred,
(iii)drilling or converting a well in Canada for the injection of water, gas or any other substance to assist in the recovery of petroleum or natural gas from another well,
(iv)drilling for water or gas in Canada for injection into a petroleum or natural gas formation, or
(v)drilling or converting a well in Canada for the purposes of monitoring fluid levels, pressure changes or other phenomena in an accumulation of petroleum or natural gas,
(b)any expense incurred by the taxpayer in drilling or recompleting an oil or gas well in Canada after the commencement of production from the well,
(c)any expense incurred by the taxpayer before November 17, 1978 for the purpose of bringing a mineral resource in Canada into production and incurred prior to the commencement of production from the resource in reasonable commercial quantities, including
(i)clearing, removing overburden and stripping, and
(ii)sinking a mine shaft, constructing an adit or other underground entry,
(c.1)any expense, or portion of any expense, that is not a Canadian exploration expense, incurred by the taxpayer for the purpose of bringing a new mine in a mineral resource in Canada that is a bituminous sands deposit or an oil shale deposit into production and incurred before the new mine comes into production in reasonable commercial quantities, including an expense for clearing the land, removing overburden and stripping, or building an entry ramp,
(c.2)any expense, or portion of any expense, that is not a Canadian exploration expense, incurred by the taxpayer after March 20, 2013 for the purpose of bringing a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production in reasonable commercial quantities and incurred before the new mine comes into production in such quantities, including an expense for clearing, removing overburden, stripping, sinking a mine shaft or constructing an adit or other underground entry,
(d)any expense (other than an amount included in the capital cost of depreciable property) incurred by the taxpayer after 1987
(i)in sinking or excavating a mine shaft, main haulage way or similar underground work designed for continuing use, for a mine in a mineral resource in Canada built or excavated after the mine came into production, or
(ii)in extending any such shaft, haulage way or work,
(e)the cost to the taxpayer of, including any payment for the preservation of a taxpayer’s rights in respect of, any property described in paragraph (b), (e) or (f) of the definitionCanadian resource propertyin subsection 66(15), or any right to or interest in — or for civil law, any right in or to — the property (other than a right or an interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership),
(f)subject to section 66.8, the taxpayer’s share of any expense referred to in any of paragraphs (a) to (e) incurred by a partnership in a fiscal period thereof at the end of which the taxpayer was a member of the partnership, unless the taxpayer elects in respect of the share in prescribed form and manner on or before the day that is 6 months after the taxpayer’s taxation year in which that period ends, or
(g)any cost or expense referred to in any of paragraphs (a) to (e) incurred by the taxpayer pursuant to an agreement in writing with a corporation, entered into before 1987, under which the taxpayer incurred the cost or expense solely as consideration for shares, other than prescribed shares, of the capital stock of the corporation issued to the taxpayer or any interest in or right to — or, for civil law, any right in or to — such shares,
but for greater certainty, shall not include
(h)any consideration given by the taxpayer for any share or any interest in or right to — or, for civil law, any right in or to — a share, except as provided by paragraph (g),
(i)any expense described in paragraph (g) incurred by any other taxpayer to the extent that the expense was,
(i)by virtue of that paragraph, a Canadian development expense of that other taxpayer,
(ii)by virtue of paragraph (i) of the definitionCanadian exploration expensein subsection 66.1(6), a Canadian exploration expense of that other taxpayer, or
(iii)by virtue of paragraph (c) of the definitionCanadian oil and gas property expensein subsection 66.4(5), a Canadian oil and gas property expense of that other taxpayer,
(i.1)an expense that is the cost, or any part of the cost, to the taxpayer of any depreciable property of a prescribed class that was acquired after 1987,
(j)any amount included at any time in the capital cost to the taxpayer of any depreciable property of a prescribed class, or
(k)the taxpayer’s share of any consideration, expense, cost or expenditure referred to in any of paragraphs (h) to (j) given or incurred by a partnership,
but any assistance that a taxpayer has received or is entitled to receive after May 25, 1976 in respect of or related to the taxpayer’s Canadian development expense shall not reduce the amount of any of the expenses described in any of paragraphs (a) to (g); (frais d’aménagement au Canada)
cumulative Canadian development expenseof a taxpayer at any time in a taxation year means the amount determined by the formula
(A+B+C+D+D.1) - (E+F+G+H+I+J+K+L+M+M.1+N+O)
where
(a)the amount, if any, by which the proceeds of disposition in respect of the particular property that became receivable by the taxpayer after May 6, 1974 and before that time exceed any outlays or expenses that were made or incurred by the taxpayer after May 6, 1974 and before that time for the purpose of making the disposition and that were not otherwise deductible for the purposes of this Part
exceeds
(b)the amount, if any, by which
(i)the total of all amounts that would be determined under paragraph 66.7(4)(a), immediately before the time (in this paragraph referred to as the “relevant time”) when such proceeds of disposition became receivable, in respect of the taxpayer and an original owner of the particular property (or of any other property acquired by the taxpayer with the particular property in circumstances in which subsection 66.7(4) applied and in respect of which the proceeds of disposition became receivable by the taxpayer at the relevant time) if
(A)amounts that became receivable at or after the relevant time were not taken into account,
(B)each designation made under subparagraph 66.7(4)(a)(iii) in respect of an amount that became receivable before the relevant time were made before the relevant time,
(C)paragraph 66.7(4)(a) were read without reference to “30% of”, and
(D)no reduction under subsection 80(8) at or after the relevant time were taken into account
exceeds the total of
(ii)all amounts that would be determined under paragraph 66.7(4)(a) at the relevant time in respect of the taxpayer and an original owner of the particular property (or of that other property) if
(A)amounts that became receivable after the relevant time were not taken into account,
(B)each designation made under subparagraph 66.7(4)(a)(iii) in respect of an amount that became receivable at or before the relevant time were made before the relevant time,
(C)paragraph 66.7(4)(a) were read without reference to “30% of”,
(D)amounts described in subparagraph 66.7(4)(a)(iii) that became receivable at the relevant time were not taken into account, and
(E)no reduction under subsection 80(8) at or after the relevant time were taken into account, and
(iii)such portion of the amount otherwise determined under this paragraph as was otherwise applied to reduce the amount otherwise determined under this description,
(a)under theNorthern Mineral Exploration Assistance Regulationsmade under an appropriation Act that provides for payments in respect of the Northern Mineral Grants Program, or
(b)pursuant to any agreement, entered into between the taxpayer and Her Majesty in right of Canada under the Northern Mineral Grants Program or the Development Program of the Department of Indian Affairs and Northern Development,
to the extent that the amounts have been expended by the taxpayer as or on account of Canadian development expense incurred by the taxpayer,
(a)the amount that would be determined under paragraph 66.7(4)(a), at a time (hereafter in this description referred to only as the “particular time”) that is the end of the latest taxation year of the taxpayer ending at or before that time, in respect of the taxpayer as successor in respect of a disposition (in this description referred to as the “original disposition”) of Canadian resource property by a person who is an original owner of the property because of the original disposition, if
(i)that paragraph were read without reference to “30% of”,
(ii)where the taxpayer has disposed of all or part of the property in circumstances in which subsection 66.7(4) applied, that subsection continued to apply to the taxpayer in respect of the original disposition as if subsequent successors were the same person as the taxpayer, and
(iii)each designation made under subparagraph 66.7(4)(a)(iii) in respect of an amount that became receivable before the particular time were made before the particular time,
(b)the amount, if any, by which the total of all amounts each of which became receivable at or before the particular time and before 1993 by the taxpayer and is included in computing the amount determined under subparagraph 66.7(5)(a)(ii) in respect of the original disposition exceeds the amount, if any, by which
(i)where the taxpayer disposed of all or part of the property before the particular time in circumstances in which subsection 66.7(5) applied, the amount that would be determined at the particular time under subparagraph 66.7(5)(a)(i) in respect of the original disposition if that subparagraph continued to apply to the taxpayer in respect of the original disposition as if subsequent successors were the same person as the taxpayer, and
(ii)in any other case, the amount determined at the particular time under subparagraph 66.7(5)(a)(i) in respect of the original disposition
exceeds
(iii)the amount that would be determined at the particular time under subparagraph 66.7(5)(a)(ii) in respect of the original disposition if that subparagraph were read without reference to the words “or the successor”, wherever they appear therein, and if amounts that became receivable after 1992 were not taken into account, and
(c)where
(i)after the original disposition and at or before the particular time, the taxpayer disposed of all or part of the property in circumstances in which subsection 66.7(4) applied, otherwise than by way of an amalgamation or merger or solely because of the application of paragraph 66.7(10)(c), and
(ii)the winding-up of the taxpayer began at or before that time or the taxpayer’s disposition referred to in subparagraph (i) (other than a disposition under an agreement in writing entered into before December 22, 1992) occurred after December 21, 1992,
nil
Marginal note:Application of ss. 66(15), 66.1(6) and 66.4(5)
(5.1)The definitions in subsections 66(15), 66.1(6) and 66.4(5) apply to this section.
Marginal note:Share of partner
(6)Except as provided in subsection 66.2(7), where a taxpayer is a member of a partnership, the taxpayer’s share of any amount that would be an amount referred to in the description of in the definitioncumulative Canadian development expensein subsection 66.2(5), in paragraph (a) of the description of F in that definition or in the description of G or M in that definition in respect of the partnership for a taxation year of the partnership if section 96 were read without reference to paragraph 96(1)(d) shall, for the purposes of this Act, be deemed to be an amount referred to in the description of in the definitioncumulative Canadian development expensein subsection (5), in paragraph (a) of the description of F in that definition or in the description of G or M in that definition, whichever is applicable, in respect of the taxpayer for the taxation year of the taxpayer in which the partnership’s taxation year ends.
Marginal note:Exception
(7)Where a non-resident person is a member of a partnership that is deemed under paragraph 115(4)(b) to have disposed of any Canadian resource property, the person’s share of any amount that would be an amount referred to in the description of in the definitioncumulative Canadian development expensein subsection 66.2(5), in paragraph (a) of the description of F in that definition or in the description of G or M in that definition in respect of the partnership for a taxation year of the partnership if section 96 were read without reference to paragraph 96(1)(d) shall, for the purposes of this Act, be deemed to be an amount referred to in the description of in the definitioncumulative Canadian development expensein subsection (5), in paragraph (a) of the description of F in that definition or in the description of G or M in that definition, whichever is applicable, in respect of the person for the taxation year of the person that is deemed under paragraph 115(4)(a) to have ended.
Marginal note:Presumption
(8)Where pursuant to the terms of an arrangement in writing entered into before December 12, 1979 a taxpayer acquired a property described in paragraph (a) of the definitionCanadian oil and gas property expensein subsection 66.4(5), for the purposes of this Act, the cost of acquisition shall be deemed to be a Canadian development expense incurred at the time the taxpayer acquired the property.
Marginal note:Definitions
66.21(1)The definitions in this subsection apply in this section.
adjusted cumulative foreign resource expenseof a taxpayer, in respect of a country, at the end of a taxation year means the total of
(a)the cumulative foreign resource expense of the taxpayer, in respect of that country, at the end of the year; and
(b)the amount, if any, by which
(i)the total determined under paragraph 66.7(13.2)(a) in respect of that country and the taxpayer for the year
exceeds
(ii)the amount that would, but for paragraph (3)(c), be determined under subsection (3) in respect of that country and the taxpayer for the year. (frais cumulatifs rajustés relatifs à des ressources à l’étranger)
cumulative foreign resource expenseof a taxpayer, in respect of a country other than Canada at a particular time, means the amount determined by the formula
(A + A.1 + B + C + D) – (E + F + G + H + I + J)
where
(a)before the particular time, and
(b)at a time (in this definition referred to as a “resident time”)
(i)at which the taxpayer was resident in Canada, and
(ii)where the taxpayer became resident in Canada before the particular time, that is after the last time (before the particular time) that the taxpayer became resident in Canada;
(a)the amount designated under subparagraph 59(1)(b)(ii) by the taxpayer in respect of the portion of the proceeds of that disposition that became receivable before the particular time and at a resident time
exceeds
(b)the amount, if any, by which
(i)the total of all amounts that would be determined under paragraph 66.7(2.3)(a), immediately before the time (in this paragraph referred to as the “relevant time”) when such proceeds of disposition became receivable, in respect of the taxpayer, that country and an original owner of the particular property (or of any other property acquired by the taxpayer with the particular property in circumstances to which subsection 66.7(2.3) applied and in respect of which the proceeds of disposition became receivable by the taxpayer at the relevant time) if
(A)amounts that became receivable at or after the relevant time were not taken into account,
(B)paragraph 66.7(2.3)(a) were read without reference to “30% of”, and
(C)no reduction under subsection 80(8) at or after the relevant time were taken into account
exceeds the total of
(ii)all amounts that would be determined under paragraph 66.7(2.3)(a) at the relevant time in respect of the taxpayer, that country and an original owner of the particular property (or of that other property) if
(A)amounts that became receivable after the relevant time were not taken into account,
(B)paragraph 66.7(2.3)(a) were read without reference to “30% of”, and
(C)no reduction under subsection 80(8) at or after the relevant time were taken into account, and
(iii)the portion of the amount otherwise determined under this paragraph that was otherwise applied to reduce the amount otherwise determined under this description;
foreign resource expenseof a taxpayer, in respect of a country other than Canada, means
(a)any drilling or exploration expense, including any general geological or geophysical expense, incurred by the taxpayer on or in respect of exploring or drilling for petroleum or natural gas in that country,
(b)any expense incurred by the taxpayer for the purpose of determining the existence, location, extent or quality of a mineral resource in that country, including any expense incurred in the course of
(i)prospecting,
(ii)carrying out geological, geophysical or geochemical surveys,
(iii)drilling by rotary, diamond, percussion or other methods, or
(iv)trenching, digging test pits and preliminary sampling,
(c)the cost to the taxpayer of any of the taxpayer’s foreign resource property in respect of that country,
(d)any annual payment made by the taxpayer for the preservation of a foreign resource property in respect of that country, and
(e)subject to section 66.8, the taxpayer’s share of an expense, cost or payment referred to in any of paragraphs (a) to (d) that is made or incurred by a partnership in a fiscal period of the partnership that begins after 2000 if, at the end of that period, the taxpayer was a member of the partnership
but does not include
(f)an expenditure that is the cost, or any part of the cost, to the taxpayer of any depreciable property of a prescribed class,
(g)an expenditure incurred at any time after the commencement of production from a foreign resource property of the taxpayer in order to evaluate the feasibility of a method of recovery of petroleum, natural gas or related hydrocarbons from the portion of a natural reservoir to which the foreign resource property relates,
(h)an expenditure (other than a drilling expense) incurred at any time after the commencement of production from a foreign resource property of the taxpayer in order to assist in the recovery of petroleum, natural gas or related hydrocarbons from the portion of a natural reservoir to which the foreign resource property relates,
(i)an expenditure, incurred at any time, that relates to the injection of any substance to assist in the recovery of petroleum, natural gas or related hydrocarbons from a natural reservoir,
(j)an expenditure incurred by the taxpayer, unless the expenditure was made
(i)for the acquisition of foreign resource property by the taxpayer, or
(ii)for the purpose of
(A)enhancing the value of foreign resource property that the taxpayer owned at the time the expenditure was incurred or that the taxpayer had a reasonable expectation of owning after that time, or
(B)assisting in evaluating whether a foreign resource property is to be acquired by the taxpayer, or
(k)the taxpayer’s share of any cost or expenditure referred to in any of paragraphs (f) to (j) that is incurred by a partnership. (frais relatifs à des ressources à l’étranger)
foreign resource incomeof a taxpayer for a taxation year, in respect of a country other than Canada, means the total of
(a)that part of the taxpayer’s income for the year, determined without reference to subsections (4) and 66(4), that is reasonably attributable to
(i)the production of petroleum or natural gas from natural accumulations of petroleum or natural gas in that country or from oil or gas wells in that country, or
(ii)the production of minerals from mines in that country;
(b)the taxpayer’s income for the year from royalties in respect of a natural accumulation of petroleum or natural gas in that country, an oil or gas well in that country or a mine in that country, determined without reference to subsections (4) and 66(4); and
(c)all amounts each of which is an amount, in respect of a foreign resource property in respect of that country that has been disposed of by the taxpayer, equal to the amount, if any, by which
(i)the amount included in computing the taxpayer’s income for the year by reason of subsection 59(1) in respect of that disposition
exceeds
(ii)the total of all amounts each of which is that portion of an amount deducted under subsection 66.7(2) in computing the taxpayer’s income for the year that
(A)can reasonably be considered to be in respect of the foreign resource property, and
(B)cannot reasonably be considered to have reduced the amount otherwise determined under paragraph (a) or (b) in respect of the taxpayer for the year. (revenu provenant de ressources à l’étranger)
foreign resource lossof a taxpayer for a taxation year in respect of a country other than Canada means the taxpayer’s loss for the year in respect of the country determined in accordance with the definitionforeign resource incomewith such modifications as the circumstances require. (perte résultant de ressources à l’étranger)
global foreign resource limitof a taxpayer for a taxation year means the amount that is the lesser of
(a)the amount, if any, by which
(i)the amount determined under subparagraph 66(4)(b)(ii) in respect of the taxpayer for the year
exceeds the total of
(ii)the total of all amounts each of which is the maximum amount that the taxpayer would be permitted to deduct, in respect of a country, under subsection (4) in computing the taxpayer’s income for the year if, in its application to the year, subsection (4) were read without reference to paragraph (4)(b), and
(iii)the amount deducted for the year under subsection 66(4) in computing the taxpayer’s income for the year; and
(b)the amount, if any, by which
(i)30% of the total of all amounts each of which is, at the end of the year, the taxpayer’s adjusted cumulative foreign resource expense in respect of a country
exceeds
(ii)the total described in subparagraph (a)(ii). (limite globale des frais relatifs à des ressources à l’étranger)
Marginal note:Application of subsection 66(15)
(2)The definitions in subsection 66(15) apply in this section.
Marginal note:Amount to be included in income
(3)For the purpose of paragraph 59(3.2)(c.1), the amount referred to in this subsection in respect of a taxpayer for a taxation year is the amount, if any, by which
(a)the total of all amounts referred to in the descriptions of E to J in the definitioncumulative foreign resource expensein subsection (1) that are deducted in computing the taxpayer’s cumulative foreign resource expense at the end of the year in respect of a country
exceeds the total of
(b)the total of all amounts referred to in the descriptions of A to D in the definitioncumulative foreign resource expensein subsection (1) that are included in computing the taxpayer’s cumulative foreign resource expense at the end of the year in respect of the country, and
(c)the total determined under paragraph 66.7(13.2)(a) for the year in respect of the taxpayer and the country.
Marginal note:Deduction for cumulative foreign resource expense
(4)In computing a taxpayer’s income for a taxation year throughout which the taxpayer is resident in Canada, the taxpayer may deduct the amount claimed by the taxpayer, in respect of a country other than Canada, not exceeding the total of
(a)the greater of
(i)10% of a particular amount equal to the taxpayer’s adjusted cumulative foreign resource expense in respect of the country at the end of the year, and
(ii)the least of
(A)if the taxpayer ceased to be resident in Canada immediately after the end of the year, the particular amount,
(B)if clause (A) does not apply, 30% of the particular amount,
(C)the amount, if any, by which the taxpayer’s foreign resource income for the year in respect of the country exceeds the portion of the amount, deducted under subsection 66(4) in computing the taxpayer’s income for the year, that applies to a source in the country, and
(D)the amount, if any, by which
(I)the total of all amounts each of which is the taxpayer’s foreign resource income for the year in respect of a country
exceeds the total of
(II)all amounts each of which is the taxpayer’s foreign resource loss for the year in respect of a country, and
(III)the amount deducted under subsection 66(4) in computing the taxpayer’s income for the year, and
(b)the lesser of
(i)the amount, if any, by which the particular amount exceeds the amount determined for the year under paragraph (a) in respect of the taxpayer, and
(ii)that portion of the taxpayer’s global foreign resource limit for the year that is designated for the year by the taxpayer, in respect of that country and no other country, in prescribed form filed with the Minister with the taxpayer’s return of income for the year.
Marginal note:Individual changing residence
(5)Where at any time in a taxation year an individual becomes or ceases to be resident in Canada,
(a)subsection (4) applies to the individual as if the year were the period or periods in the year throughout which the individual was resident in Canada; and
(b)for the purpose of applying this section, subsection 66(13.1) does not apply to the individual for the year.
Marginal note:Exploration and development shares
66.3(1)Any shares of the capital stock of a corporation or any interest in any such shares or right thereto acquired by a taxpayer under circumstances described in paragraph (i) of the definitionCanadian exploration expensein subsection 66.1(6), paragraph (g) of the definitionCanadian development expensein subsection 66.2(5) or paragraph (c) of the definitionCanadian oil and gas property expensein subsection 66.4(5)
(a)shall, if acquired before November 13, 1981, be deemed
(i)not to be a capital property of the taxpayer,
(ii)subject to subsection 142.6(3), to be inventory of the taxpayer, and
(iii)to have been acquired by the taxpayer at a cost to the taxpayer of nil; and
(b)shall, if acquired after November 12, 1981, be deemed to have been acquired by the taxpayer at a cost to the taxpayer of nil.
Marginal note:Deductions from paid-up capital
(2)If, at any time after May 23, 1985, a corporation has issued a share of its capital stock under circumstances described in paragraph (i) of the definitionCanadian exploration expensein subsection 66.1(6), paragraph (g) of the definitionCanadian development expensein subsection 66.2(5) or paragraph (c) of the definitionCanadian oil and gas property expensein subsection 66.4(5) or has issued a share of its capital stock on the exercise of an interest in or right to — or, for civil law, a right in or to — such a share granted under circumstances described in any of those paragraphs, in computing, at any particular time after that time, the paid-up capital in respect of the class of shares of the capital stock of the corporation that included that share
(a)there shall be deducted the amount, if any, by which
(i)the increase as a result of the issue of the share in the paid-up capital, determined without reference to this subsection as it applies to the share, in respect of all of the shares of that class
exceeds
(ii)the amount, if any, by which
(A)the total amount of consideration received by the corporation in respect of the share, including any consideration for the interest or right in respect of the share
exceeds
(B)50% of the amount of the expense referred to in paragraph (i) of the definitionCanadian exploration expensein subsection 66.1(6), paragraph (g) of the definitionCanadian development expensein subsection 66.2(5) or paragraph (c) of the definitionCanadian oil and gas property expensein subsection 66.4(5) that was incurred by a taxpayer who acquired the share or the interest or right on the exercise of which the share was issued, as the case may be, pursuant to an agreement with the corporation under which the taxpayer incurred the expense solely as consideration for the share, interest or right, as the case may be; and
(b)there shall be added an amount equal to the lesser of
(i)the amount, if any, by which
(A)the total of all amounts each of which is an amount deemed by subsection 84(3), (4) or (4.1) to be a dividend on shares of that class paid by the corporation after May 23, 1985 and before the particular time
exceeds
(B)the total that would be determined under clause (A) if this Act were read without reference to paragraph 66.3(2)(a), and
(ii)the total of all amounts each of which is an amount required by paragraph 66.3(2)(a) to be deducted in computing the paid-up capital in respect of that class of shares after May 22, 1985 and before the particular time.
Marginal note:Cost of flow-through shares
(3)Any flow-through share (within the meaning assigned by subsection 66(15)) of a corporation acquired by a person who was a party to the agreement pursuant to which it was issued shall be deemed to have been acquired by the person at a cost to the person of nil.
Marginal note:Paid-up capital
(4)Where, at any time after February, 1986, a corporation has issued a flow-through share (within the meaning assigned by subsection 66(15)), in computing, at any particular time after that time, the paid-up capital in respect of the class of shares of the capital stock of the corporation that included that share
(a)there shall be deducted the amount, if any, by which
(i)the increase as a result of the issue of the share in the paid-up capital, determined without reference to this subsection as it applies to the share, in respect of all of the shares of that class
exceeds
(ii)the amount, if any, by which
(A)the total amount of consideration received by the corporation in respect of the share
exceeds
(B)50% of the total of the expenses that were renounced by the corporation under subsection 66(12.6), (12.601), (12.62) or (12.64) in respect of the share; and
(b)there shall be added an amount equal to the lesser of
(i)the amount, if any, by which
(A)the total of all amounts each of which is an amount deemed by subsection 84(3), (4) or (4.1) to be a dividend on shares of that class paid by the corporation after February, 1986 and before the particular time
exceeds
(B)the total that would be determined under clause (A) if this Act were read without reference to paragraph 66.3(4)(a), and
(ii)the total of all amounts each of which is an amount required by paragraph 66.3(4)(a) to be deducted in computing the paid-up capital in respect of that class of shares after February, 1986 and before the particular time.
Marginal note:Recovery of costs
66.4(1)For the purposes of the description of B in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5) and the description of L in the definitioncumulative Canadian development expensein subsection 66.2(5) and for the purpose of subparagraph 64(1.2)(a)(ii) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it applies to dispositions occurring before November 13, 1981, the amount determined under this subsection in respect of a taxpayer for a taxation year is the amount, if any, by which
(a)the total of all amounts referred to in the descriptions of E to J in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5) that are deducted in computing the taxpayer’s cumulative Canadian oil and gas property expense at the end of the year
exceeds the total of
(b)all amounts referred to in the descriptions of A to D.1 in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5) that are included in computing the taxpayer’s cumulative Canadian oil and gas property expense at the end of the year, and
(c)the total determined under subparagraph 66.7(12.1)(c)(i) in respect of the taxpayer for the year.
Marginal note:Deduction for cumulative Canadian oil and gas property expense
(2)A taxpayer may deduct, in computing the taxpayer’s income for a taxation year, such amount as the taxpayer may claim not exceeding the total of
(a)the lesser of
(i)the total of
(A)the taxpayer’s cumulative Canadian oil and gas property expense at the end of the year, and
(B)the amount, if any, by which
(I)the total determined under subparagraph 66.7(12.1)(c)(i) in respect of the taxpayer for the year
exceeds
(II)the amount that would, but for paragraph 66.4(1)(c), be determined under subsection 66.4(1) in respect of the taxpayer for the year, and
(ii)the amount, if any, by which the total of all amounts each of which is
(A)an amount included in the taxpayer’s income for the year by virtue of a disposition in the year of inventory described in section 66.3 that was a share or any interest in or right to — or, for civil law, any right in or to — a share acquired by the taxpayer under circumstances described in paragraph (c) of the definitionCanadian oil and gas property expensein subsection (5), or
(B)an amount included by virtue of paragraph 12(1)(e) in computing the taxpayer’s income for the year to the extent that it relates to inventory described in clause (A)
exceeds
(C)the total of all amounts deducted as a reserve by virtue of paragraph 20(1)(n) in computing the taxpayer’s income for the year to the extent that the reserve relates to inventory described in clause (A);
(b)10% of the amount, if any, by which the amount determined under subparagraph 66.4(2)(a)(i) exceeds the amount determined under subparagraph 66.4(2)(a)(ii); and
(c)the amount determined by the formula
A(B − C)
where
(i)for taxation years that end before 2024, 5%,
(ii)for taxation years that begin before 2024 and end after 2023, the amount determined by the formula
0.05(I/J) + 0.025(K/J)
where
(iii)for taxation years that begin after 2023, 2.5%,
(D − E) − (F − G − H)
where
Marginal note:Definitions
(5)In this section,
accelerated Canadian oil and gas property expense, of a taxpayer, means any cost or expense incurred by the taxpayer during a taxation year, if the cost or expense
(a)qualifies as a Canadian oil and gas property expense at the time it is incurred, other than
(i)an expense in respect of which the taxpayer is a successor, within the meaning of subsection 66.7(5), and
(ii)a cost in respect of a Canadian resource property acquired by the taxpayer, or a partnership in which the taxpayer is a member, from a person or partnership with which the taxpayer does not deal at arm’s length, and
(b)is incurred after November 20, 2018 and before 2028; (frais à l’égard de biens canadiens relatifs au pétrole et au gaz accélérés)
Canadian oil and gas property expenseof a taxpayer means any cost or expense incurred after December 11, 1979 that is
(a)the cost to the taxpayer of, including any payment for the preservation of a taxpayer’s rights in respect of, any property described in paragraph (a), (c) or (d) of the definitionCanadian resource propertyin subsection 66(15) or any right to or interest in — or, for civil law, any right in or to — the property (other than a right or an interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership), or an amount paid to Her Majesty in right of the Province of Saskatchewan as a net royalty payment pursuant to a net royalty petroleum and natural gas lease that was in effect on March 31, 1977 to the extent that it can reasonably be regarded as a cost of acquiring the lease,
(b)subject to section 66.8, the taxpayer’s share of any expense referred to in paragraph (a) incurred by a partnership in a fiscal period thereof at the end of which the taxpayer was a member of the partnership, unless the taxpayer elects in respect of the share in prescribed form and manner on or before the day that is 6 months after the taxpayer’s taxation year in which that period ends, or
(c)any cost or expense referred to in paragraph (a) incurred by the taxpayer pursuant to an agreement in writing with a corporation, entered into before 1987, under which the taxpayer incurred the cost or expense solely as consideration for shares, other than prescribed shares, of the capital stock of the corporation issued to the taxpayer or any interest in or right to — or, for civil law, any right in or to — such shares,
but for greater certainty, shall not include
(d)any consideration given by the taxpayer for any share or any interest therein or right thereto, except as provided by paragraph (c), or
(e)any expense described in paragraph (c) incurred by any other taxpayer to the extent that the expense was,
(i)by virtue of that paragraph, a Canadian oil and gas property expense of that other taxpayer,
(ii)by virtue of paragraph (i) of the definitionCanadian exploration expensein subsection 66.1(6), a Canadian exploration expense of that other taxpayer, or
(iii)by virtue of paragraph (g) of the definitionCanadian development expensein subsection 66.2(5), a Canadian development expense of that other taxpayer,
but any amount of assistance that a taxpayer has received or is entitled to receive in respect of or related to the taxpayer’s Canadian oil and gas property expense shall not reduce the amount of any of the expenses described in any of paragraphs (a) to (c); (frais à l’égard de biens canadiens relatifs au pétrole et au gaz)
cumulative Canadian oil and gas property expenseof a taxpayer at any time in a taxation year means the amount determined by the formula
(A + B + C + D + D.1) - (E + F + G + H + I + I.1 + J)
where
(a)the amount, if any, by which the proceeds of disposition in respect of the particular property that became receivable by the taxpayer before that time exceed any outlays or expenses made or incurred by the taxpayer before that time for the purpose of making the disposition and that were not otherwise deductible for the purposes of this Part
exceeds the total of
(b)the amount, if any, by which
(i)the total of all amounts that would be determined under paragraph 66.7(5)(a), immediately before the time (in this paragraph and paragraph (c) referred to as the “relevant time”) when such proceeds of disposition became receivable, in respect of the taxpayer and an original owner of the particular property (or of any other property acquired by the taxpayer with the particular property in circumstances in which subsection 66.7(5) applied and in respect of which the proceeds of disposition became receivable by the taxpayer at the relevant time) if
(A)amounts that became receivable at or after the relevant time were not taken into account,
(B)each designation made under subparagraph 66.7(4)(a)(iii) in respect of an amount that became receivable before the relevant time were made before the relevant time,
(C)paragraph 66.7(5)(a) were read without reference to “10% of”, and
(D)no reduction under subsection 80(8) at or after the relevant time were taken into account
exceeds the total of
(ii)all amounts that would be determined under paragraph 66.7(5)(a) at the relevant time in respect of the taxpayer and an original owner of the particular property (or of that other property described in subparagraph (i)) if
(A)amounts that became receivable after the relevant time were not taken into account,
(B)each designation made under subparagraph 66.7(4)(a)(iii) in respect of an amount that became receivable at or before the relevant time were made before the relevant time,
(C)paragraph 66.7(5)(a) were read without reference to “10% of”, and
(D)no reduction under subsection 80(8) at or after the relevant time were taken into account, and
(iii)such portion of the amount determined under this paragraph as was otherwise applied to reduce the amount otherwise determined under this description, and
(c)the amount, if any, by which
(i)the total of all amounts that would be determined under paragraph 66.7(4)(a), immediately before the relevant time, in respect of the taxpayer and an original owner of the particular property (or of any other property acquired by the taxpayer with the particular property in circumstances in which subsection 66.7(4) applied and in respect of which the proceeds of disposition became receivable by the taxpayer at the relevant time) if
(A)amounts that became receivable at or after the relevant time were not taken into account,
(B)each designation made under subparagraph 66.7(4)(a)(iii) in respect of an amount that became receivable before the relevant time were made before the relevant time,
(C)paragraph 66.7(4)(a) were read without reference to “30% of”, and
(D)no reduction under subsection 80(8) at or after the relevant time were taken into account
exceeds the total of
(ii)all amounts that would be determined under paragraph 66.7(4)(a) at the relevant time in respect of the taxpayer and an original owner of the particular property (or of that other property described in subparagraph (i)) if
(A)amounts that became receivable after the relevant time were not taken into account,
(B)each designation made under subparagraph 66.7(4)(a)(iii) in respect of an amount that became receivable at or before the relevant time were made before the relevant time,
(C)paragraph 66.7(4)(a) were read without reference to “30% of”,
(D)amounts described in subparagraph 66.7(4)(a)(ii) that became receivable at the relevant time were not taken into account, and
(E)no reduction under subsection 80(8) at or after the relevant time were taken into account, and
(iii)such portion of the amount otherwise determined under this paragraph as was otherwise applied to reduce the amount otherwise determined under this description,
proceeds of dispositionhas the meaning assigned by section 54. (produit de disposition)
Marginal note:Application of ss. 66(15) and 66.1(6)
(5.1)The definitions in subsections 66(15) and 66.1(6) apply to this section.
Marginal note:Share of partner
(6)Except as provided in subsection 66.4(7), where a taxpayer is a member of a partnership, the taxpayer’s share of any amount that would be an amount referred to in the description of in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5), in paragraph (a) of the description of F in that definition or in the description of G or I in that definition in respect of the partnership for a taxation year of the partnership if section 96 were read without reference to paragraph 96(1)(d) shall, for the purposes of this Act, be deemed to be an amount referred to in the description of D in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5), in paragraph (a) of the description of F in that definition or in the description of G or I in that definition, whichever is applicable, in respect of the taxpayer for the taxation year of the taxpayer in which the partnership’s taxation year ends.
Marginal note:Exception
(7)Where a non-resident person is a member of a partnership that is deemed under paragraph 115(4)(b) to have disposed of any Canadian resource property, the person’s share of any amount that would be an amount referred to in the description of D in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5), in paragraph (a) of the description of F in that definition or in the description of G or I in that definition in respect of the partnership for a taxation year of the partnership if section 96 were read without reference to paragraph 96(1)(d) shall, for the purposes of this Act, be deemed to be an amount referred to in the description of D in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5), in paragraph (a) of the description of F in that definition or in the description of G or I in that definition, whichever is applicable, in respect of the person for the taxation year of the person that is deemed under paragraph 115(4)(a) to have ended.
Marginal note:Deduction from income
66.5(1)In computing its income for a taxation year that ends before 1995, a corporation that has not made a designation for the year under subsection 66(14.1) or (14.2) may deduct such amount as it may claim not exceeding its cumulative offset account at the end of the year.
Marginal note:Definition ofcumulative offset account
(2)In this section,cumulative offset accountof a corporation at any time means the amount, if any, by which
(a)the total of all amounts required to be added under subsections 66(14.1) and (14.2) in computing its cumulative offset account before that time,
exceeds
(b)the total of all amounts deducted under subsection 66.5(1) in computing its income for taxation years ending before that time.
Marginal note:Change of control
(3)Where at any time after June 5, 1987 control of a corporation has been acquired by a person or group of persons, the amount deductible under subsection 66.5(1) by the corporation in computing its income for a taxation year ending after that time shall not exceed the amount, if any, by which
(a)the part of its income for the year that may reasonably be regarded as attributable to production from Canadian resource properties owned by it immediately before that time
exceeds
(b)the total of all amounts deducted under subsection 29(25) of theIncome Tax Application Rulesand subsections 66.7(1), (3), (4) and (5) by it in respect of its income for the year in computing its income for the year.
Marginal note:Acquisition from tax-exempt
66.6Where a corporation acquires, by purchase, amalgamation, merger, winding-up or otherwise, all or substantially all of the Canadian resource properties or foreign resource properties of a person whose taxable income is exempt from tax under this Part, subsection 29(25) of theIncome Tax Application Rulesand subsections 66.7(1) to 66.7(5) do not apply to the corporation in respect of the acquisition of the properties.
Marginal note:Successor of Canadian exploration and development expenses
66.7(1)Subject to subsections 66.7(6) and 66.7(7), where after 1971 a corporation (in this subsection referred to as the “successor”) acquired a particular Canadian resource property (whether by way of a purchase, amalgamation, merger, winding-up or otherwise), there may be deducted by the successor in computing its income for a taxation year an amount not exceeding the total of all amounts each of which is an amount determined in respect of an original owner of the particular property that is the lesser of
(a)the Canadian exploration and development expenses incurred by the original owner before the original owner disposed of the particular property to the extent that those expenses were not otherwise deducted in computing the income of the successor for the year, were not deducted in computing the income of the successor for a preceding taxation year and were not deductible under subsection 66(1) or deducted under subsection 66(2) or 66(3) by the original owner, or deducted by any predecessor owner of the particular property, in computing income for any taxation year, and
(b)the amount, if any, by which
(i)the part of the successor’s income for the year that may reasonably be regarded as attributable to
(A)the amount included in computing its income for the year under paragraph 59(3.2)(c) that may reasonably be regarded as attributable to the disposition by it in the year or a preceding taxation year of any interest in or right to — or, for civil law, any right in or to — the particular property to the extent that the proceeds of the disposition have not been included in determining an amount under clause 29(25)(d)(i)(A) of theIncome Tax Application Rules, this clause, clause (3)(b)(i)(A) or paragraph (10)(g) for a preceding taxation year,
(B)its reserve amount for the year in respect of the original owner and each predecessor owner, if any, of the particular property, or
(C)production from the particular property,
computed as if no deduction were allowed under section 29 of theIncome Tax Application Rules, this section or any of sections 65 to 66.5,
exceeds the total of
(ii)all other amounts deducted under subsection 29(25) of theIncome Tax Application Rules, this subsection and subsections 66.7(3), 66.7(4) and 66.7(5) for the year that can reasonably be regarded as attributable to the part of its income for the year described in subparagraph 66.7(1)(b)(i) in respect of the particular property, and
(iii)all amounts added because of subsection 80(13) in computing the amount determined under subparagraph 66.7(1)(b)(i).
Marginal note:Successor of foreign exploration and development expenses
(2)Subject to subsections 66.7(6) and 66.7(8), where after 1971 a corporation (in this subsection referred to as the “successor”) acquired a particular foreign resource property (whether by way of a purchase, amalgamation, merger, winding-up or otherwise), there may be deducted by the successor in computing its income for a taxation year an amount not exceeding the total of all amounts each of which is an amount determined in respect of an original owner of the particular property that is the lesser of
(a)the amount, if any, by which
(i)the foreign exploration and development expenses incurred by the original owner before the original owner disposed of the particular property to the extent that those expenses were incurred when the original owner was resident in Canada, were not otherwise deducted in computing the successor’s income for the year, were not deducted in computing the successor’s income for a preceding taxation year and were not deductible by the original owner, nor deducted by any predecessor owner of the particular property, in computing income for any taxation year
exceeds
(ii)the total of all amounts each of which is an amount by which the amount described in this paragraph is required because of subsection 80(8) to be reduced at or before the end of the year, and
(b)the amount, if any, by which the total of
(i)the part of the successor’s income for the year that can reasonably be regarded as attributable to
(A)the amount included under subsection 59(1) in computing its income for the year that can reasonably be regarded as attributable to the disposition by it of any interest in or right to — or, for civil law, any right in or to — the particular property, or
(B)production from the particular property,
computed as if no deduction were allowed under sections 65 to 66.5 and this section, and
(ii)the lesser of
(A)the total of all amounts each of which is the amount designated by the successor for the year in respect of a Canadian resource property owned by the original owner immediately before being acquired with the particular property by the successor or a predecessor owner of the particular property, not exceeding the amount included in the successor’s income for the year, computed as if no deduction were allowed under section 29 of theIncome Tax Application Rules, this section or any of sections 65 to 66.5, that can reasonably be regarded as being attributable to the production after 1988 from the Canadian resource property, and
(B)the amount, if any, by which 10% of the amount described in paragraph 66.7(2)(a) for the year in respect of the original owner exceeds the total of all amounts each of which would, but for this subparagraph, clause 66.7(2)(b)(iii)(B) and subparagraph 66.7(10)(h)(vi), be determined under this paragraph for the year in respect of the particular property or other foreign resource property owned by the original owner immediately before being acquired with the particular property by the successor or a predecessor owner of the particular property
exceeds the total of
(iii)all other amounts deducted under this subsection for the year that can reasonably be regarded as attributable to
(A)the part of its income for the year described in subparagraph 66.7(2)(b)(i) in respect of the particular property, or
(B)a part of its income for the year described in clause 66.7(2)(b)(ii)(A) in respect of which an amount is designated by the successor under clause 66.7(2)(b)(ii)(A), and
(iv)all amounts added because of subsection 80(13) in computing the amount determined under subparagraph 66.7(2)(b)(i),
and income in respect of which an amount is designated under clause 66.7(2)(b)(ii)(A) shall, for the purposes of clause 29(25)(d)(i)(B) of theIncome Tax Application Rules, clauses 66.7(1)(b)(i)(C), 66.7(3)(b)(i)(C), 66.7(4)(b)(i)(B) and 66.7(5)(b)(i)(B) and subparagraph 66.7(10)(g)(iii), be deemed not to be attributable to production from a Canadian resource property.
Marginal note:Country-by-country successor FEDE allocations
(2.1)For greater certainty, the portion of an amount deducted under subsection (2) in computing a taxpayer’s income for a taxation year that can reasonably be considered to be in respect of specified foreign exploration and development expenses of the taxpayer in respect of a country is considered to apply to a source in that country.
Marginal note:Method of allocation
(2.2)For the purpose of subsection (2.1), where a taxpayer has incurred specified foreign exploration and development expenses in respect of two or more countries, an allocation to each of those countries for a taxation year shall be determined in a manner that is
(a)reasonable having regard to all the circumstances, including the level and timing of
(i)the taxpayer’s specified foreign exploration and development expenses in respect of the country, and
(ii)the profits or gains to which those expenses relate; and
(b)not inconsistent with the allocation made under subsection (2.1) for the preceding taxation year.
Marginal note:Successor of foreign resource expenses
(2.3)Subject to subsections (6) and (8), where a corporation (in this subsection referred to as the “successor”) acquired a particular foreign resource property in respect of a country (whether by way of a purchase, amalgamation, merger, winding-up or otherwise), there may be deducted by the successor in computing its income for a taxation year an amount not exceeding the total of all amounts each of which is an amount determined in respect of an original owner of the particular property that is the lesser of
(a)30% of the amount, if any, by which
(i)the cumulative foreign resource expense, in respect of the country, of the original owner determined immediately after the disposition of the particular property by the original owner to the extent that it has not been
(A)deducted by the original owner or any predecessor owner of the particular property in computing income for any taxation year,
(B)otherwise deducted in computing the income of the successor for the year, or
(C)deducted by the successor in computing its income for any preceding taxation year
exceeds the total of
(ii)all amounts each of which is an amount (other than any portion of the amount that can reasonably be considered to result in a reduction of the amount otherwise determined under this paragraph in respect of another original owner of a relevant resource property who is not a predecessor owner of a relevant resource property or who became a predecessor owner of a relevant resource property before the original owner became a predecessor owner of a relevant resource property) that became receivable by a predecessor owner of the particular property, or by the successor in the year or a preceding taxation year, and that
(A)was included by the predecessor owner or the successor in computing an amount determined under paragraph (a) of the description of F in the definitioncumulative foreign resource expensein subsection 66.21(1) at the end of the year, and
(B)can reasonably be regarded as attributable to the disposition of a property (in this subparagraph referred to as a “relevant resource property”) that is
(I)the particular property, or
(II)another foreign resource property in respect of the country that was acquired from the original owner with the particular property by the successor or a predecessor owner of the particular property, and
(iii)all amounts each of which is an amount by which the amount described in this paragraph is required by reason of subsection 80(8) to be reduced at or before the end of the year, and
(b)the amount, if any, by which the total of
(i)the part of the successor’s income for the year that can reasonably be regarded as attributable to production from the particular property, computed as if no deduction were permitted under section 29 of theIncome Tax Application Rules, this section or any of sections 65 to 66.5, except that, where the successor acquired the particular property from the original owner at any time in the year (otherwise than by way of an amalgamation or merger or solely by reason of the application of paragraph (10)(c)) and did not deal with the original owner at arm’s length at that time, the amount determined under this subparagraph is deemed to be nil, and
(ii)unless the amount determined under subparagraph (i) is nil by reason of the exception provided under that subparagraph, the lesser of
(A)the total of all amounts each of which is the amount designated by the successor for the year in respect of a Canadian resource property owned by the original owner immediately before being acquired with the particular property by the successor or a predecessor owner of the particular property, not exceeding the amount included in the successor’s income for the year, computed as if no deduction were permitted under section 29 of theIncome Tax Application Rules, this section or any of sections 65 to 66.5, that can reasonably be regarded as being attributable to the production from the Canadian resource property, and
(B)the amount, if any, by which 10% of the amount described in paragraph (a) for the year, in respect of the original owner, exceeds the total of all amounts each of which would, but for this subparagraph, clause (2)(b)(iii)(B) and subparagraph (10)(h)(vi), be determined under this paragraph for the year in respect of the particular property or other foreign resource property, in respect of the country, owned by the original owner immediately before being acquired with the particular property by the successor or by a predecessor owner of the particular property
exceeds the total of
(iii)all other amounts each of which is an amount deducted for the year under this subsection or subsection (2) that can reasonably be regarded as attributable to
(A)the part of its income for the year described in subparagraph (i) in respect of the particular property, or
(B)a part of its income for the year described in clause (ii)(A) in respect of which an amount is designated by the successor under clause (ii)(A), and
(iv)all amounts added by reason of subsection 80(13) in computing the amount determined under subparagraph (i),
and income in respect of which an amount is designated under clause (b)(ii)(A) is, for the purposes of clause 29(25)(d)(i)(B) of theIncome Tax Application Rules, clauses (1)(b)(i)(C), (3)(b)(i)(C), (4)(b)(i)(B) and (5)(b)(i)(B) and subparagraph (10)(g)(iii), deemed not to be attributable to production from a Canadian resource property.
Marginal note:Successor of Canadian exploration expense
(3)Subject to subsections 66.7(6) and 66.7(7), where after May 6, 1974 a corporation (in this subsection referred to as the “successor”) acquired a particular Canadian resource property (whether by way of a purchase, amalgamation, merger, winding-up or otherwise), there may be deducted by the successor in computing its income for a taxation year an amount not exceeding the total of all amounts each of which is an amount determined in respect of an original owner of the particular property that is the lesser of
(a)the amount, if any, by which
(i)the total of
(A)the cumulative Canadian exploration expense of the original owner determined immediately after the disposition of the particular property by the original owner, and
(B)all amounts required to be added under paragraph 66.7(9)(f) to the cumulative Canadian exploration expense of the original owner in respect of a predecessor owner of the particular property, or the successor, as the case may be, at any time after the disposition of the particular property by the original owner and before the end of the year,
to the extent that an amount in respect of that total was not
(C)deducted or required to be deducted under subsection 66.1(2) or 66.1(3) by the original owner or deducted by any predecessor owner of the particular property in computing income for any taxation year,
(D)otherwise deducted in computing the successor’s income for the year,
(E)deducted in computing the successor’s income for a preceding taxation year, or
(F)designated by the original owner pursuant to subsection 66(14.1) for any taxation year,
exceeds
(ii)the total of all amounts each of which is an amount by which the amount described in this paragraph is required because of subsection 80(8) to be reduced at or before the end of the year, and
(b)the amount, if any, by which
(i)the part of the successor’s income for the year that may reasonably be regarded as attributable to
(A)the amount included in computing its income for the year under paragraph 59(3.2)(c) that may reasonably be regarded as being attributable to the disposition by it in the year or a preceding taxation year of any interest in or right to — or, for civil law, any right in or to — the particular property to the extent that the proceeds have not been included in determining an amount under clause 29(25)(d)(i)(A) of theIncome Tax Application Rules, this clause, clause (1)(b)(i)(A) or paragraph (10)(g) for a preceding taxation year,
(B)its reserve amount for the year in respect of the original owner and each predecessor owner, if any, of the particular property, or
(C)production from the particular property,
computed as if no deduction were allowed under section 29 of theIncome Tax Application Rules, this section or any of sections 65 to 66.5,
exceeds the total of
(ii)all other amounts deducted under subsection 29(25) of theIncome Tax Application Rules, this subsection and subsections 66.7(1), 66.7(4) and 66.7(5) for the year that can reasonably be regarded as attributable to the part of its income for the year described in subparagraph 66.7(3)(b)(i) in respect of the particular property, and
(iii)all amounts added because of subsection 80(13) in computing the amount determined under subparagraph 66.7(3)(b)(i).
Marginal note:Successor of Canadian development expense
(4)Subject to subsections 66.7(6) and 66.7(7), where after May 6, 1974 a corporation (in this subsection referred to as the “successor”) acquired a particular Canadian resource property (whether by way of a purchase, amalgamation, merger, winding-up or otherwise), there may be deducted by the successor in computing its income for a taxation year an amount not exceeding the total of all amounts each of which is an amount determined in respect of an original owner of the particular property that is the lesser of
(a)30% of the amount, if any, by which
(i)the amount, if any, by which
(A)the cumulative Canadian development expense of the original owner determined immediately after the disposition of the particular property by the original owner to the extent that it has not been
(I)deducted by the original owner or any predecessor owner of the particular property in computing income for any taxation year,
(I.1)otherwise deducted in computing the income of the successor for the year,
(II)deducted by the successor in computing its income for any preceding taxation year, or
(III)designated by the original owner pursuant to subsection 66(14.2) for any taxation year,
(B)any amount required to be deducted under paragraph (9)(e) from the cumulative Canadian development expense of the original owner in respect of a predecessor owner of the particular property or the successor, as the case may be, at any time after the disposition of the particular property by the original owner and before the end of the year,
exceeds the total of
(ii)all amounts each of which is an amount (other than any portion thereof that can reasonably be considered to result in a reduction of the amount otherwise determined under this paragraph in respect of another original owner of a relevant mining property who is not a predecessor owner of a relevant mining property or who became a predecessor owner of a relevant mining property before the original owner became a predecessor owner of a relevant mining property) that became receivable by a predecessor owner of the particular property or the successor in the year or a preceding taxation year and that
(A)was included by the predecessor owner or the successor in computing an amount determined under paragraph (a) of the description of F in the definitioncumulative Canadian development expensein subsection 66.2(5) at the end of the year, and
(B)can reasonably be regarded as attributable to the disposition of a property (in this subparagraph referred to as a “relevant mining property”) that is the particular property or another Canadian resource property that was acquired from the original owner with the particular property by the successor or a predecessor owner of the particular property,
(iii)all amounts each of which is an amount (other than any portion thereof that can reasonably be considered to result in a reduction of the amount otherwise determined under paragraph 66.7(5)(a) in respect of the original owner or under this paragraph or paragraph 66.7(5)(a) in respect of another original owner of a relevant oil and gas property who is not a predecessor owner of a relevant oil and gas property or who became a predecessor owner of a relevant oil and gas property before the original owner became a predecessor owner of a relevant oil and gas property) that became receivable by a predecessor owner of the particular property or the successor after 1992 and in the year or a preceding taxation year and that
(A)is designated in respect of the original owner by the predecessor owner or the successor, as the case may be, in prescribed form filed with the Minister within 6 months after the end of the taxation year in which the amount became receivable,
(B)was included by the predecessor owner or the successor in computing an amount determined under paragraph (a) of the description of F in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5) at the end of the year, and
(C)can reasonably be regarded as attributable to the disposition of a property (in this subparagraph referred to as a “relevant oil and gas property”) that is the particular property or another Canadian resource property that was acquired from the original owner with the particular property by the successor or a predecessor owner of the particular property, and
(iv)all amounts each of which is an amount by which the amount described in this paragraph is required because of subsection 80(8) to be reduced at or before the end of the year, and
(b)the amount, if any, by which
(i)the part of the successor’s income for the year that can reasonably be regarded as attributable to
(A)its reserve amount for the year in respect of the original owner and each predecessor owner of the particular property, or
(B)production from the particular property,
computed as if no deduction were allowed under section 29 of theIncome Tax Application Rules, this section or any of sections 65 to 66.5, except that, where the successor acquired the particular property from the original owner at any time in the year (otherwise than by way of an amalgamation or merger or solely because of the application of paragraph 66.7(10)(c)) and did not deal with the original owner at arm’s length at that time, the amount determined under this subparagraph shall be deemed to be nil,
exceeds the total of
(ii)all other amounts deducted under subsection 29(25) of theIncome Tax Application Rules, this subsection and subsections 66.7(1), 66.7(3) and 66.7(5) for the year that can reasonably be regarded as attributable to the part of its income for the year described in subparagraph 66.7(4)(b)(i) in respect of the particular property, and
(iii)all amounts added because of subsection 80(13) in computing the amount determined under subparagraph 66.7(4)(b)(i).
Marginal note:Successor of Canadian oil and gas property expense
(5)Subject to subsections 66.7(6) and 66.7(7), where after December 11, 1979 a corporation (in this subsection referred to as the “successor”) acquired a particular Canadian resource property (whether by way of a purchase, amalgamation, merger, winding-up or otherwise), there may be deducted by the successor in computing its income for a taxation year an amount not exceeding the total of all amounts each of which is an amount determined in respect of an original owner of the particular property that is the lesser of
(a)10% of the amount, if any, by which
(i)the cumulative Canadian oil and gas property expense of the original owner determined immediately after the disposition of the particular property by the original owner to the extent it has not been
(A)deducted by the original owner or any predecessor owner of the particular property in computing income for any taxation year,
(A.1)otherwise deducted in computing the income of the successor for the year, or
(B)deducted by the successor in computing its income for any preceding taxation year
exceeds the total of
(ii)the total of all amounts each of which is an amount (other than any portion thereof that can reasonably be considered to result in a reduction of the amount otherwise determined under this paragraph or paragraph 66.7(4)(a) in respect of another original owner of a relevant oil and gas property who is not a predecessor owner of a relevant oil and gas property or who became a predecessor owner of a relevant oil and gas property before the original owner became a predecessor owner of a relevant oil and gas property) that became receivable by a predecessor owner of the particular property or the successor in the year or a preceding taxation year and that
(A)was included by the predecessor owner or the successor in computing an amount determined under paragraph (a) of the description of F in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5) at the end of the year, and
(B)can reasonably be regarded as attributable to the disposition of a property (in this subparagraph referred to as a “relevant oil and gas property”) that is the particular property or another Canadian resource property that was acquired from the original owner with the particular property by the successor or a predecessor owner of the particular property, and
(iii)the total of all amounts each of which is an amount by which the amount described in this paragraph is required because of subsection 80(8) to be reduced at or before the end of the year, and
(b)the amount, if any, by which
(i)the part of the successor’s income for the year that can reasonably be regarded as attributable to
(A)its reserve amount for the year in respect of the original owner and each predecessor owner of the particular property, or
(B)production from the particular property,
computed as if no deduction were allowed under section 29 of theIncome Tax Application Rules, this section or any of sections 65 to 66.5, except that, where the successor acquired the particular property from the original owner at any time in the year (otherwise than by way of an amalgamation or merger or solely because of the application of paragraph 66.7(10)(c)) and did not deal with the original owner at arm’s length at that time, the amount determined under this subparagraph shall be deemed to be nil,
exceeds the total of
(ii)all other amounts deducted under subsection 29(25) of theIncome Tax Application Rules, this subsection and subsections 66.7(1), 66.7(3) and 66.7(4) for the year that can reasonably be regarded as attributable to the part of its income for the year described in subparagraph 66.7(5)(b)(i) in respect of the particular property, and
(iii)all amounts added because of subsection 80(13) in computing the amount determined under subparagraph 66.7(5)(b)(i).
Marginal note:Where s. 29(25) of ITAR and ss. (1) to (5) do not apply
(6)Subsection 29(25) of theIncome Tax Application Rulesand subsections 66.7(1) to 66.7(5) do not apply
(a)in respect of a Canadian resource property or a foreign resource property acquired by way of an amalgamation to which subsection 87(1.2) applies or a winding-up to which subsection 88(1.5) applies; or
(b)to permit, in respect of the acquisition by a corporation before February 18, 1987 of a Canadian resource property or a foreign resource property, a deduction by the corporation of an amount that the corporation would not have been entitled to deduct under section 29 of theIncome Tax Application Rulesor section 66, 66.1, 66.2 or 66.4 if those sections, as they read in their application to taxation years ending before February 18, 1987, applied to taxation years ending after February 17, 1987.
Marginal note:Application of s. 29(25) of ITAR and ss. (1), (3), (4) and (5)
(7)Subsection 29(25) of theIncome Tax Application Rulesand subsections 66.7(1), 66.7(3), 66.7(4) and 66.7(5) apply only to a corporation that has acquired a particular Canadian resource property
(a)where it acquired the particular property in a taxation year commencing before 1985 and, at the time it acquired the particular property, the corporation acquired all or substantially all of the property used by the person from whom it acquired the particular property in carrying on in Canada such of the businesses described in paragraphs (a) to (g) of the definitionprincipal-business corporationin subsection 66(15) as were carried on by the person;
(b)where it acquired the particular property in a taxation year commencing after 1984 and, at the time it acquired the particular property, the corporation acquired all or substantially all of the Canadian resource properties of the person from whom it acquired the particular property;
(c)where it acquired the particular property after June 5, 1987 by way of an amalgamation or winding-up and it has filed an election in prescribed form with the Minister on or before the day on or before which the corporation is required to file a return of income pursuant to section 150 for its taxation year in which it acquired the particular property;
(d)where it acquired the particular property after November 16, 1978 and in a taxation year ending before February 18, 1987 by any means other than by way of an amalgamation or winding-up and it and the person from whom it acquired the particular property, have filed with the Minister a joint election under and in accordance with any of subsection 29(25) of theIncome Tax Application Rules, subsection 29(29) of theIncome Tax Application Rules, 1971, Part III of chapter 63 of the Statutes of Canada, 1970-71-72, and subsections 66(6) and (7), 66.1(4) and (5), 66.2(3) and (4) and 66.4(3) and (4) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as all of those subsections read in their application to that year; and
(e)where it acquired the particular property in a taxation year ending after February 17, 1987 by any means other than by way of an amalgamation or winding-up and it and the person from whom it acquired the particular property have filed a joint election in prescribed form with the Minister on or before the earlier of the days on or before which either of them is required to file a return of income pursuant to section 150 for its or the person’s taxation year in which the corporation acquired the particular property.
Marginal note:Application of subsections (2) and (2.3)
(8)Subsections (2) and (2.3) apply only to a corporation that has acquired a particular foreign resource property
(a)where it acquired the particular property in a taxation year commencing before 1985 and, at the time it acquired the particular property, the corporation acquired all or substantially all of the property used by the person from whom it acquired the particular property in carrying on outside Canada such of the businesses described in paragraphs (a) to (g) of the definitionprincipal-business corporationin subsection 66(15) as were carried on by that person;
(b)where it acquired the particular property in a taxation year commencing after 1984 and, at the time it acquired the particular property, the corporation acquired all or substantially all of the foreign resource properties of the person from whom it acquired the particular property;
(c)where it acquired the particular property after June 5, 1987 by way of an amalgamation or winding-up and it has filed an election in prescribed form with the Minister on or before the day on or before which the corporation is required to file a return of income pursuant to section 150 for its taxation year in which it acquired the particular property;
(d)where it acquired the particular property after November 16, 1978 and in a taxation year ending before February 18, 1987 by any means other than by way of an amalgamation or winding-up and it and the person from whom it acquired the particular property, have filed with the Minister a joint election under and in accordance with subsection 66(6) or 66(7) (as modified by subsections 66(8) and 66(9), respectively) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as those subsections read in their application to that year; and
(e)where it acquired the particular property in a taxation year ending after February 17, 1987 by any means other than by way of an amalgamation or winding-up and it and the person from whom it acquired the particular property have filed a joint election in prescribed form with the Minister on or before the earlier of the days on or before which either of them is required to file a return of income pursuant to section 150 for its or the person’s taxation year in which the corporation acquired the particular property.
Marginal note:Canadian development expense becoming Canadian exploration expense
(9)Where
(a)a corporation acquires a Canadian resource property,
(b)subsection 66.7(4) applies in respect of the acquisition, and
(c)the cumulative Canadian development expense of an original owner of the property determined under clause 66.7(4)(a)(i)(A) in respect of the corporation includes a Canadian development expense incurred by the original owner in respect of an oil or gas well that would, but for this subsection, be deemed by subsection 66.1(9) to be a Canadian exploration expense incurred in respect of the well by the original owner at any particular time after the acquisition by the corporation and before it disposed of the property,
the following rules apply:
(d)subsection 66.1(9) does not apply in respect of the Canadian development expense incurred in respect of the well by the original owner,
(e)an amount equal to the lesser of
(i)the amount that would be deemed by subsection 66.1(9) to be a Canadian exploration expense incurred in respect of the well by the original owner at the particular time if that subsection applied in respect of the expense, and
(ii)the cumulative Canadian development expense of the original owner as determined under clause 66.7(4)(a)(i)(A) in respect of the corporation immediately before the particular time
shall be deducted at the particular time from the cumulative Canadian development expense of the original owner in respect of the corporation for the purposes of subparagraph 66.7(4)(a)(i), and
(f)the amount required by paragraph 66.7(9)(e) to be deducted shall be added at the particular time to the cumulative Canadian exploration expense of the original owner in respect of the corporation for the purpose of paragraph 66.7(3)(a).
Marginal note:Change of control
(10)Where at any time after November 12, 1981
(a)control of a corporation has been acquired by a person or group of persons, or
(b)a corporation ceased on or before April 26, 1995 to be exempt from tax under this Part on its taxable income,
for the purposes of the provisions of theIncome Tax Application Rulesand this Act (other than subsections 66(12.6), (12.601), (12.602), (12.62) and (12.71)) relating to deductions in respect of drilling and exploration expenses, prospecting, exploration and development expenses, Canadian exploration and development expenses, foreign resource pool expenses, Canadian exploration expenses, Canadian development expenses and Canadian oil and gas property expenses (in this subsection referred to as “resource expenses”) incurred by the corporation before that time, the following rules apply:
(c)the corporation shall be deemed after that time to be a successor (within the meaning assigned by subsection 29(25) of theIncome Tax Application Rulesor any of subsections 66.7(1) to 66.7(5)) that had, at that time, acquired all the properties owned by the corporation immediately before that time from an original owner thereof,
(c.1)where the corporation did not own a foreign resource property immediately before that time, the corporation is deemed to have owned a foreign resource property immediately before that time,
(d)a joint election shall be deemed to have been filed in accordance with subsections 66.7(7) and 66.7(8) in respect of the acquisition,
(e)the resource expenses incurred by the corporation before that time shall be deemed to have been incurred by an original owner of the properties and not by the corporation,
(f)the original owner is deemed to have been resident in Canada before that time while the corporation was resident in Canada,
(g)where the corporation (in this paragraph referred to as the “transferee”) was, immediately before and at that time,
(i)a parent corporation (within the meaning assigned by subsection 87(1.4)), or
(ii)a subsidiary wholly-owned corporation (within the meaning assigned by subsection 87(1.4))
of a particular corporation (in this paragraph referred to as the “transferor”), if both corporations agree to have this paragraph apply to them in respect of a taxation year of the transferor ending after that time and notify the Minister in writing of the agreement in the return of income under this Part of the transferor for that year, the transferor may, if throughout that year the transferee was such a parent corporation or subsidiary wholly-owned corporation of the transferor, designate in favour of the transferee, in respect of that year, for the purpose of making a deduction under subsection 29(25) of theIncome Tax Application Rulesor this section in respect of resource expenses incurred by the transferee before that time and when it was such a parent corporation or subsidiary wholly-owned corporation of the transferor, an amount not exceeding such portion of the amount that would be its income for the year, if no deductions were allowed under any of section 29 of theIncome Tax Application Rules, this section and sections 65 to 66.5, that may reasonably be regarded as being attributable to
(iii)the production from Canadian resource properties owned by the transferor immediately before that time, and
(iv)the disposition in the year of any Canadian resource properties owned by the transferor immediately before that time,
to the extent that the portion of the amount so designated is not designated under this paragraph in favour of any other taxpayer, and the amount so designated shall be deemed, for the purposes of determining the amount under paragraph 29(25)(d) of theIncome Tax Application Rulesand paragraphs 66.7(1)(b), 66.7(3)(b), 66.7(4)(b) and 66.7(5)(b),
(v)to be income from the sources described in subparagraph 66.7(10)(g)(iii) or 66.7(10)(g)(iv), as the case may be, of the transferee for its taxation year in which that taxation year of the transferor ends, and
(vi)not to be income from the sources described in subparagraph 66.7(10)(g)(iii) or 66.7(10)(g)(iv), as the case may be, of the transferor for that year,
(h)where the corporation (in this paragraph referred to as the “transferee”) was, immediately before and at that time,
(i)a parent corporation (within the meaning assigned by subsection 87(1.4)), or
(ii)a subsidiary wholly-owned corporation (within the meaning assigned by subsection 87(1.4))
of a particular corporation (in this paragraph referred to as the “transferor”), if both corporations agree to have this paragraph apply to them in respect of a taxation year of the transferor ending after that time and notify the Minister in writing of the agreement in the return of income under this Part of the transferor for that year, the transferor may, if throughout that year the transferee was such a parent corporation or subsidiary wholly-owned corporation of the transferor, designate in favour of the transferee, in respect of that year, for the purpose of making a deduction under this section in respect of resource expenses incurred by the transferee before that time and when it was such a parent corporation or subsidiary wholly-owned corporation of the transferor, an amount not exceeding such portion of the amount that would be its income for the year, if no deductions were allowed under this section and sections 65 to 66.5, that may reasonably be regarded as being attributable to
(iii)the production from foreign resource properties owned by the transferor immediately before that time, and
(iv)the disposition of any foreign resource properties owned by the transferor immediately before that time,
to the extent that the portion of the amount so designated is not designated under this paragraph in favour of any other taxpayer, and the amount so designated shall be deemed,
(v)for the purposes of determining the amounts under paragraphs (2)(b) and (2.3)(b), to be income from the sources described in subparagraph (iii) or (iv), as the case may be, of the transferee for its taxation year in which that taxation year of the transferor ends, and
(vi)for the purposes of determining the amounts under paragraphs (2)(b) and (2.3)(b), not to be income from the sources described in subparagraph (iii) or (iv), as the case may be, of the transferor for that year,
(i)where, immediately before and at that time, the corporation (in this paragraph referred to as the “transferee”) and another corporation (in this paragraph referred to as the “transferor”) were both subsidiary wholly-owned corporations (within the meaning assigned by subsection 87(1.4)) of a particular parent corporation (within the meaning assigned by subsection 87(1.4)), if the transferee and the transferor agree to have this paragraph apply to them in respect of a taxation year of the transferor ending after that time and notify the Minister in writing of the agreement in the return of income under this Part of the transferor for that year, paragraph 66.7(10)(g) or 66.7(10)(h), or both, as the agreement provides, shall apply for that year to the transferee and transferor as though one were the parent corporation (within the meaning of subsection 87(1.4)) of the other, and
(j)where that time is after January 15, 1987 and at that time the corporation was a member of a partnership that owned a Canadian resource property or a foreign resource property at that time
(i)for the purpose of paragraph 66.7(10)(c), the corporation shall be deemed to have owned immediately before that time that portion of the property owned by the partnership at that time that is equal to its percentage share of the total of amounts that would be paid to all members of the partnership if it were wound up at that time, and
(ii)for the purposes of clause 29(25)(d)(i)(B) of theIncome Tax Application Rules, clauses (1)(b)(i)(C) and (2)(b)(i)(B), subparagraph (2.3)(b)(i) and clauses (3)(b)(i)(C), (4)(b)(i)(B) and (5)(b)(i)(B) for a taxation year ending after that time, the lesser of
(A)its share of the part of the income of the partnership for the fiscal period of the partnership ending in the year that may reasonably be regarded as being attributable to the production from the property, and
(B)an amount that would be determined under clause 66.7(10)(j)(ii)(A) for the year if its share of the income of the partnership for the fiscal period of the partnership ending in the year were determined on the basis of the percentage share referred to in subparagraph 66.7(10)(j)(i),
shall be deemed to be income of the corporation for the year that may reasonably be attributable to production from the property.
Marginal note:Amalgamation — partnership property
(10.1)For the purposes of subsections (1) to (5) and the definitionoriginal ownerin subsection 66(15), if at any particular time there has been an amalgamation within the meaning assigned by subsection 87(1), other than an amalgamation to which subsection 87(1.2) applies, of two or more corporations (each of which is referred to in this subsection as a “predecessor corporation”) to form one corporate entity (referred to in this subsection as the “new corporation”) and immediately before the particular time a predecessor corporation was a member of a partnership that owned a Canadian resource property or a foreign resource property,
(a)the predecessor corporation is deemed
(i)to have owned, immediately before the particular time, that portion of each Canadian resource property and of each foreign resource property owned by the partnership at the particular time that is equal to the predecessor corporation’s percentage share of the total of the amounts that would be paid to all members of the partnership if the partnership were wound up immediately before the particular time, and
(ii)to have disposed of those portions to the new corporation at the particular time;
(b)the new corporation is deemed to have, by way of the amalgamation, acquired those portions at the particular time; and
(c)the income of the new corporation for a taxation year that ends after the particular time that can reasonably be attributable to production from those properties is deemed to be the lesser of
(i)the new corporation’s share of the part of the income of the partnership for fiscal periods of the partnership that end in the year that can reasonably be regarded as being attributable to production from those properties, and
(ii)the amount that would be determined under subparagraph (i) for the year if the new corporation’s share of the income of the partnership for the fiscal periods of the partnership that end in the year were determined on the basis of the percentage share referred to in paragraph (a).
Marginal note:Idem
(11)Where, at any time,
(a)control of a taxpayer that is a corporation has been acquired by a person or group of persons, or
(b)a taxpayer has disposed of all or substantially all of the taxpayer’s Canadian resource properties or foreign resource properties,
and, before that time, the taxpayer or a partnership of which the taxpayer was a member acquired a property that is a Canadian resource property, a foreign resource property or an interest in a partnership and it may reasonably be considered that one of the main purposes of the acquisition was to avoid any limitation provided in subsection 29(25) of theIncome Tax Application Rulesor any of subsections 66.7(1) to 66.7(5) on the deduction in respect of any expenses incurred by the taxpayer or a corporation referred to as a transferee in paragraph 66.7(10)(g) or 66.7(10)(h), the taxpayer or the partnership, as the case may be, shall be deemed, for the purposes of applying those subsections to or in respect of the taxpayer, not to have acquired the property.
Marginal note:Reduction of Canadian resource expenses
(12)Where in a taxation year an owner of Canadian resource properties disposes of all or substantially all of the original owner’s Canadian resource properties to a particular corporation in circumstances in which subsection 29(25) of theIncome Tax Application Rulesor subsection 66.7(1), 66.7(3), 66.7(4) or 66.7(5) applies,
(a)the Canadian exploration and development expenses incurred by the original owner before that owner so disposed of the properties shall, for the purposes of this Subdivision, be deemed after the disposition not to have been incurred by the original owner except for the purposes of making a deduction under subsection 66(1) or 66(2) for the year and of determining the amount that may be deducted under subsection 66.7(1) by the particular corporation or by any other corporation that subsequently acquires any of the properties;
(b)in determining the cumulative Canadian exploration expense of the original owner at any time after the time referred to in subparagraph 66.7(3)(a)(i), there shall be deducted the amount thereof determined immediately after the disposition;
(b.1)for the purposes of paragraph 66.7(3)(a), the cumulative Canadian exploration expenses of the original owner determined immediately after the disposition that was deducted or required to be deducted under subsection 66.1(2) or 66.1(3) in computing the original owner’s income for the year shall be deemed to be equal to the lesser of
(i)the amount deducted under paragraph 66.7(12)(b) in respect of the disposition, and
(ii)the amount, if any, by which
(A)the specified amount determined under paragraph 66.7(12.1)(a) in respect of the original owner for the year
exceeds
(B)the total of all amounts each of which is an amount determined under this paragraph in respect of any disposition made by the original owner before the disposition and in the year;
(b.2)for greater certainty, any amount (other than the amount determined under paragraph 66.7(12)(b.1)) that was deducted or required to be deducted under subsection 66.1(2) or 66.1(3) by the original owner for the year or a subsequent taxation year shall, for the purposes of paragraph 66.7(3)(a), be deemed not to be in respect of the cumulative Canadian exploration expense of the original owner determined immediately after the disposition;
(c)in determining the cumulative Canadian development expense of the original owner at any time after the time referred to in clause 66.7(4)(a)(i)(A), there shall be deducted the amount thereof determined immediately after the disposition;
(c.1)for the purpose of paragraph 66.7(4)(a), the cumulative Canadian development expense of the original owner determined immediately after the disposition that was deducted under subsection 66.2(2) in computing the original owner’s income for the year shall be deemed to be equal to the lesser of
(i)the amount deducted under paragraph 66.7(12)(c) in respect of the disposition, and
(ii)the amount, if any, by which
(A)the specified amount determined under paragraph 66.7(12.1)(b) in respect of the original owner for the year
exceeds
(B)the total of all amounts determined under this paragraph in respect of any dispositions made by the original owner before the disposition and in the year;
(c.2)for greater certainty, any amount (other than the amount determined under paragraph 66.7(12)(c.1)) that was deducted under subsection 66.2(2) by the original owner for the year or a subsequent taxation year shall, for the purpose of paragraph 66.7(4)(a), be deemed not to be in respect of the cumulative Canadian development expense of the original owner determined immediately after the disposition;
(d)in determining the cumulative Canadian oil and gas property expense of the original owner at any time after the time referred to in subparagraph 66.7(5)(a)(i), there shall be deducted the amount thereof determined immediately after the disposition;
(d.1)for the purpose of paragraph 66.7(5)(a), the cumulative Canadian oil and gas property expense of the original owner determined immediately after the disposition that was deducted under subsection 66.4(2) in computing the original owner’s income for the year shall be deemed to be equal to the lesser of
(i)the amount deducted under paragraph 66.7(12)(d) in respect of the disposition, and
(ii)the amount, if any, by which
(A)the specified amount determined under paragraph 66.7(12.1)(c) in respect of the original owner for the year
exceeds
(B)the total of all amounts determined under this paragraph in respect of any dispositions made by the original owner before the disposition and in the year;
(d.2)for greater certainty, any amount (other than the amount determined under paragraph 66.7(12)(d.1)) that was deducted under subsection 66.4(2) by the original owner for the year or a subsequent taxation year shall, for the purpose of paragraph 66.7(5)(a), be deemed not to be in respect of the cumulative Canadian oil and gas property expense of the original owner determined immediately after the disposition; and
(e)the drilling and exploration expenses, including all general geological and geophysical expenses, incurred by the original owner before 1972 on or in respect of exploring or drilling for petroleum or natural gas in Canada and the prospecting, exploration and development expenses incurred by the original owner before 1972 in searching for minerals in Canada shall, for the purposes of section 29 of theIncome Tax Application Rules, be deemed after the disposition not to have been incurred by the original owner except for the purposes of making a deduction under that section for the year and of determining the amount that may be deducted under subsection 29(25) of that Act by the particular corporation or any other corporation that subsequently acquires any of the properties.
Marginal note:Specified amount
(12.1)Where in a taxation year an original owner of Canadian resource properties disposes of all or substantially all of the original owner’s Canadian resource properties in circumstances in which subsection 66.7(3), 66.7(4) or 66.7(5) applies,
(a)the lesser of
(i)the total of all amounts each of which is the amount, if any, by which
(A)an amount deducted under paragraph 66.7(12)(b) in respect of a disposition in the year by the original owner
exceeds
(B)the amount, if any, designated by the original owner in prescribed form filed with the Minister within 6 months after the end of the year in respect of an amount determined under clause 66.7(12.1)(a)(i)(A), and
(ii)the total of
(A)the amount claimed under subsection 66.1(2) or 66.1(3) by the original owner for the year, and
(B)the amount that would, but for paragraph 66.1(1)(c), be determined under subsection 66.1(1) in respect of the original owner for the year
is the specified amount in respect of the original owner for the year for the purposes of clause 66.7(12)(b.1)(ii)(A) and of determining the value of E.1 in the definitioncumulative Canadian exploration expensein subsection 66.1(6);
(b)the lesser of
(i)the total of all amounts each of which is the amount, if any, by which
(A)an amount deducted under paragraph 66.7(12)(c) in respect of a disposition in the year by the original owner
exceeds
(B)the amount, if any, designated by the original owner in prescribed form filed with the Minister within 6 months after the end of the year in respect of an amount determined under clause 66.7(12.1)(b)(i)(A), and
(ii)the total of
(A)the amount claimed under subsection 66.2(2) by the original owner for the year, and
(B)the amount that would, but for paragraph 66.2(1)(d), be determined under subsection 66.2(1) in respect of the original owner for the year
is the specified amount in respect of the original owner for the year for the purposes of clause 66.7(12)(c.1)(ii)(A) and of determining the value of D.1 in the definitioncumulative Canadian development expensein subsection 66.2(5); and
(c)the lesser of
(i)the total of all amounts each of which is the amount, if any, by which
(A)an amount deducted under paragraph 66.7(12)(d) in respect of a disposition in the year by the original owner
exceeds
(B)the amount, if any, designated by the original owner in prescribed form filed with the Minister within 6 months after the end of the year in respect of an amount determined under clause 66.7(12.1)(c)(i)(A), and
(ii)the total of
(A)the amount claimed under subsection 66.4(2) by the original owner for the year, and
(B)the amount that would, but for paragraph 66.4(1)(c), be determined under subsection 66.4(1) in respect of the original owner for the year
is the specified amount in respect of the original owner for the year for the purposes of clause 66.7(12)(d.1)(ii)(A) and of determining the value of D.1 in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5).
Marginal note:Reduction of foreign resource expenses
(13)Where after June 5, 1987 an original owner of foreign resource properties disposes of all or substantially all of the original owner’s foreign resource properties to a particular corporation in circumstances in which subsection 66.7(2) applies, the foreign exploration and development expenses incurred by the original owner before that owner so disposed of the properties shall be deemed after the disposition not to have been incurred by the original owner except for the purposes of determining the amounts that may be deducted under that subsection by the particular corporation or any other corporation that subsequently acquires any of the properties.
Marginal note:Reduction of foreign resource expenses
(13.1)Where in a taxation year an original owner of foreign resource properties in respect of a country disposes of all or substantially all of the original owner’s foreign resource properties in circumstances to which subsection (2.3) applies,
(a)in determining the cumulative foreign resource expense of the original owner in respect of the country at any time after the time referred to in subparagraph (2.3)(a)(i), there shall be deducted the amount of that cumulative foreign resource expense determined immediately after the disposition; and
(b)for the purpose of paragraph (2.3)(a), the cumulative foreign resource expense of the original owner in respect of the country determined immediately after the disposition that was deducted under subsection 66.21(4) in computing the original owner’s income for the year is deemed to be equal to the lesser of
(i)the amount deducted under paragraph (a) in respect of the disposition, and
(ii)the amount, if any, by which
(A)the specified amount determined under subsection (13.2) in respect of the original owner and the country for the year
exceeds
(B)the total of all amounts determined under this paragraph in respect of another disposition of foreign resource property in respect of the country made by the original owner before the disposition and in the year.
Marginal note:Specified amount — foreign resource expenses
(13.2)Where in a taxation year an original owner of foreign resource properties in respect of a country disposes of all or substantially all of the original owner’s foreign resource properties in circumstances to which subsection (2.3) applies, the specified amount in respect of the country and the original owner for the year for the purposes of clause (13.1)(b)(ii)(A) and of determining the value of D in the definitioncumulative foreign resource expensein subsection 66.21(1) is the lesser of
(a)the total of all amounts each of which is the amount, if any, by which
(i)an amount deducted under paragraph (13.1)(a) in respect of a disposition in the year by the original owner of foreign resource property in respect of the country
exceeds
(ii)the amount, if any, designated by the original owner in the prescribed form filed with the Minister within six months after the end of the year in respect of an amount described under subparagraph (i), and
(b)the total of
(i)the amount claimed under subsection 66.21(4) by the original owner in respect of the country for the year, and
(ii)the amount that would, but for paragraph 66.21(3)(c), be determined under subsection 66.21(3) in respect of the country and the original owner for the year.
Marginal note:Disposal of Canadian resource properties
(14)Where in a taxation year a predecessor owner of Canadian resource properties disposes of Canadian resource properties to a corporation in circumstances in which subsection 29(25) of theIncome Tax Application Rulesor subsection 66.7(1), 66.7(3), 66.7(4) or 66.7(5) applies,
(a)for the purposes of applying any of those subsections to the predecessor owner in respect of its acquisition of any Canadian resource property owned by it immediately before the disposition, it shall be deemed, after the disposition, never to have acquired any such properties except for the purposes of
(i)determining an amount deductible under subsection 66.7(1) or 66.7(3) for the year,
(ii)where the predecessor owner and the corporation dealt with each other at arm’s length at the time of the disposition or the disposition was by way of an amalgamation or merger, determining an amount deductible under subsection 66.7(4) or 66.7(5) for the year, and
(iii)determining the amount for F in the definitioncumulative Canadian development expensein subsection 66.2(5), the amounts for paragraphs 66.7(14)(a) and 66.7(14)(b) in the description of L in that definition and the amount for F in the definitioncumulative Canadian oil and gas property expensein subsection 66.4(5); and
(b)where the corporation or another corporation acquires any of the properties on or after the disposition in circumstances in which subsection 66.7(4) or 66.7(5) applies, amounts that become receivable by the predecessor owner after the disposition in respect of Canadian resource properties retained by it at the time of the disposition shall, for the purposes of applying subsection 66.7(4) or 66.7(5) to the corporation or the other corporation in respect of the acquisition, be deemed not to have become receivable by the predecessor owner.
Marginal note:Disposal of foreign resource properties
(15)Where after June 5, 1987 a predecessor owner of foreign resource properties disposes of all or substantially all of its foreign resource properties to a corporation in circumstances in which subsection 66.7(2) applies, for the purpose of applying that subsection to the predecessor owner in respect of its acquisition of any of those properties (or other foreign resource properties retained by it at the time of the disposition which were acquired by it in circumstances in which subsection 66.7(2) applied), it shall be deemed, after the disposition, never to have acquired the properties.
Marginal note:Disposal of foreign resource properties — subsection (2.3)
(15.1)Where in a taxation year a predecessor owner of foreign resource properties disposes of foreign resource properties to a corporation in circumstances to which subsection (2.3) applies,
(a)for the purpose of applying that subsection to the predecessor owner in respect of its acquisition of any foreign resource properties owned by it immediately before the disposition, it is deemed, after the disposition, never to have acquired any such properties except for the purposes of
(i)where the predecessor owner and the corporation dealt with each other at arm’s length at the time of the disposition or the disposition was by way of an amalgamation or merger, determining an amount deductible under subsection (2.3) for the year, and
(ii)determining the value of F in the definitioncumulative foreign resource expensein subsection 66.21(1); and
(b)where the corporation or another corporation acquires any of the properties on or after the disposition in circumstances to which subsection (2.3) applies, amounts that become receivable by the predecessor owner after the disposition in respect of foreign resource properties retained by it at the time of the disposition are, for the purposes of applying subsection (2.3) to the corporation or the other corporation in respect of the acquisition, deemed not to have become receivable by the predecessor owner.
Marginal note:Non-successor acquisitions
(16)If at any time a Canadian resource property or a foreign resource property is acquired by a person in circumstances in which none of subsections (1) to (5), nor subsection 29(25) of theIncome Tax Application Rules,apply, every person who was an original owner or predecessor owner of the property before that time is, for the purpose of applying those subsections to or in respect of the person or any other person who after that time acquires the property, deemed after that time not to be an original owner or predecessor owner of the property before that time.
Marginal note:Restriction on deductions
(17)Where in a particular taxation year and before June 6, 1987 a person disposed of a Canadian resource property or a foreign resource property in circumstances in which any of subsection 29(25) of theIncome Tax Application Rulesand subsections 66.7(1) to 66.7(5) applies, no deduction in respect of an expense incurred before the property was disposed of may be made under this section or section 66, 66.1, 66.2 or 66.4 by the person in computing the person’s income for a taxation year subsequent to the particular taxation year.
Marginal note:Application of interpretation provisions
(18)The definitions in subsection 66(15) and sections 66.1 to 66.4 apply in this section.
Marginal note:Resource expenses of limited partner
66.8(1)Where a taxpayer is a limited partner of a partnership at the end of a fiscal period of the partnership, the following rules apply:
(a)determine the amount, if any, by which
(i)the total of all amounts each of which is the taxpayer’s share of
(A)the Canadian oil and gas property expenses (in this subsection referred to as “property expenses”),
(B)the Canadian development expenses (in this subsection referred to as “development expenses”),
(C)the Canadian exploration expenses (in this subsection referred to as “exploration expenses”),
(D)the foreign resource expenses in respect of a country (in this subsection referred to as “country-specific foreign expenses”), or
(E)the foreign exploration and development expenses (in this subsection referred to as “global foreign expenses”),
incurred by the partnership in the fiscal period determined without reference to this subsection
exceeds
(ii)the amount, if any, by which
(A)the taxpayer’s at-risk amount at the end of the fiscal period in respect of the partnership
exceeds
(B)the total of
(I)the amount required by subsection 127(8) in respect of the partnership to be added in computing the investment tax credit of the taxpayer in respect of the fiscal period, and
(II)the taxpayer’s share of any losses of the partnership for the fiscal period from a farming business;
(b)the amount determined under paragraph 66.8(1)(a) shall be applied
(i)first to reduce the taxpayer’s share of property expenses,
(ii)if any remains unapplied, then to reduce the taxpayer’s share of development expenses,
(iii)if any remains unapplied, then to reduce the taxpayer’s share of exploration expenses,
(iv)if any remains unapplied, then to reduce (in the order specified by the taxpayer in writing filed with the Minister on or before the taxpayer’s filing-due date for the taxpayer’s taxation year in which the fiscal period ends or, where no such specification is made, in the order determined by the Minister) the taxpayer’s share of country-specific foreign expenses, and
(v)if any remains unapplied, then to reduce the taxpayer’s share of global foreign expenses; and
incurred by the partnership in the fiscal period; and
(c)for the purposes of subparagraph 53(2)(c)(ii), sections 66 to 66.7, subsection 96(2.1) and section 111, the taxpayer’s share of each class of expenses described in subparagraph 66.8(1)(a)(i) incurred by the partnership in the fiscal period shall be deemed to be the amount by which the taxpayer’s share of that class of expenses as determined under subparagraph 66.8(1)(a)(i) exceeds the amount, if any, that was applied under paragraph 66.8(1)(b) to reduce the taxpayer’s share of that class of expenses.
Marginal note:Expenses in following fiscal period
(2)For the purposes of subparagraph 66.8(1)(a)(i), the amount by which a taxpayer’s share of a class of expenses incurred by a partnership is reduced under paragraph 66.8(1)(b) in respect of a fiscal period of the partnership shall be added to the taxpayer’s share, otherwise determined, of that class of expenses incurred by the partnership in the immediately following fiscal period of the partnership.
Marginal note:Interpretation
(3)In this section,
(a)the expressionlimited partnerof a partnership has the meaning that would be assigned by subsection 96(2.4), if in subsection 96(2.5) each reference to
(i)“February 25, 1986” were a reference to “June 17, 1987”,
(ii)“February 26, 1986” were a reference to “June 18, 1987”,
(iii)“January 1, 1987” were a reference to “January 1, 1988”,
(iv)“June 12, 1986” were a reference to “June 18, 1987”, and
(v)“prospectus, preliminary prospectus or registration statement” were a reference to “prospectus, preliminary prospectus, registration statement, offering memorandum or notice that is required to be filed before any distribution of securities may commence”;
(a.1)the expressionat-risk amountof a taxpayer in respect of a partnership has the meaning that would be assigned by subsection 96(2.2) if paragraph 96(2.2)(c) read as follows:
(c)all amounts each of which is an amount owing at that time to the partnership, or to a person or partnership not dealing at arm’s length with the partnership, by the taxpayer or by a person or partnership not dealing at arm’s length with the taxpayer, other than any amount deducted under subparagraph 53(2)(c)(i.3) in computing the adjusted cost base, or under section 143.2 in computing the cost, to the taxpayer of the taxpayer’s partnership interest at that time, or any amount owing by the taxpayer to a person in respect of which the taxpayer is a subsidiary wholly-owned corporation or where the taxpayer is a trust, to a person that is the sole beneficiary of the taxpayer, and;
(b)a reference to a taxpayer who is a member of a particular partnership shall include a reference to another partnership that is a member if the particular partnership; and
(c)a taxpayer’s share of Canadian development expenses or Canadian oil and gas property expenses incurred by a partnership in a fiscal period in respect of which the taxpayer has elected in respect of the share under paragraph (f) of the definitionCanadian development expensein subsection 66.2(5) or paragraph (b) of the definitionCanadian oil and gas property expensein subsection 66.4(5), as the case may be, shall be deemed to be nil.
Marginal note:General limitation re expenses
67In computing income, no deduction shall be made in respect of an outlay or expense in respect of which any amount is otherwise deductible under this Act, except to the extent that the outlay or expense was reasonable in the circumstances.
Marginal note:Expenses for food, etc.
67.1(1)Subject to subsection (1.1), for the purposes of this Act, other than sections 62, 63, 118.01 and 118.2, an amount paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment is deemed to be 50 per cent of the lesser of
(a)the amount actually paid or payable in respect thereof, and
(b)an amount in respect thereof that would be reasonable in the circumstances.
Marginal note:Meal expenses for long-haul truck drivers
(1.1)An amount paid or payable in respect of the consumption of food or beverages by a long-haul truck driver during an eligible travel period of the driver is deemed to be the amount determined by multiplying the specified percentage in respect of the amount so paid or payable by the lesser of
(a)the amount so paid or payable, and
(b)a reasonable amount in the circumstances.
Marginal note:Exceptions
(2)Subsection 67.1(1) does not apply to an amount paid or payable by a person in respect of the consumption of food or beverages or the enjoyment of entertainment where the amount
(a)is paid or payable for food, beverages or entertainment provided for, or in expectation of, compensation in the ordinary course of a business carried on by that person of providing the food, beverages or entertainment for compensation;
(b)relates to a fund-raising event the primary purpose of which is to benefit a registered charity;
(c)is an amount for which the person is compensated and the amount of the compensation is reasonable and specifically identified in writing to the person paying the compensation;
(d)is required to be included in computing any taxpayer’s income because of the application of section 6 in respect of food or beverages consumed or entertainment enjoyed by the taxpayer or a person with whom the taxpayer does not deal at arm’s length, or would be so required but for subparagraph 6(6)(a)(ii);
(e)is an amount that
(i)is not paid or payable in respect of a conference, convention, seminar or similar event,
(ii)would, but for subparagraph 6(6)(a)(i), be required to be included in computing any taxpayer’s income for a taxation year because of the application of section 6 in respect of food or beverages consumed or entertainment enjoyed by the taxpayer or a person with whom the taxpayer does not deal at arm’s length, and
(iii)is paid or payable in respect of the taxpayer’s duties performed at a work site in Canada that is
(A)outside any population centre, as defined by the last Census Dictionary published by Statistics Canada before the year, that has a population of at least 40,000 individuals as determined in the last census published by Statistics Canada before the year, and
(B)at least 30 kilometres from the nearest point on the boundary of the nearest such population centre;
(e.1)is an amount that
(i)is not paid or payable in respect of entertainment or of a conference, convention, seminar or similar event,
(ii)would, if this Act were read without reference to subparagraph 6(6)(a)(i), be required to be included in computing a taxpayer’s income for a taxation year because of the application of section 6 in respect of food or beverages consumed by the taxpayer or by a person with whom the taxpayer does not deal at arm’s length,
(iii)is paid or payable in respect of the taxpayer’s duties performed at a site in Canada at which the person carries on a construction activity or at a construction work camp referred to in subparagraph (iv) in respect of the site, and
(iv)is paid or payable for food or beverages provided at a construction work camp, at which the taxpayer is lodged, that was constructed or installed at or near the site to provide board and lodging to employees while they are engaged in construction services at the site; or
(f)is in respect of one of six or fewer special events held in a calendar year at which the food, beverages or entertainment is generally available to all individuals employed by the person at a particular place of business of the person and consumed or enjoyed by those individuals.
Marginal note:Fees for convention, etc.
(3)For the purposes of this section, where a fee paid or payable for a conference, convention, seminar or similar event entitles the participant to food, beverages or entertainment (other than incidental beverages and refreshments made available during the course of meetings or receptions at the event) and a reasonable part of the fee, determined on the basis of the cost of providing the food, beverages and entertainment, is not identified in the account for the fee as compensation for the food, beverages and entertainment, $50 or such other amount as may be prescribed shall be deemed to be the actual amount paid or payable in respect of food, beverages and entertainment for each day of the event on which food, beverages or entertainment is provided and, for the purposes of this Act, the fee for the event shall be deemed to be the actual amount of the fee minus the amount deemed by this subsection to be the actual amount paid or payable for the food, beverages and entertainment.
Marginal note:Interpretation
(4)For the purposes of this section,
(a)no amount paid or payable for travel on an airplane, train or bus shall be considered to be in respect of food, beverages or entertainment consumed or enjoyed while travelling thereon; and
(b)entertainmentincludes amusement and recreation.
Marginal note:Definitions
(5)The following definitions apply for the purpose of this section.
eligible travel periodin respect of a long-haul truck driver is a period during which the driver is away from the municipality or metropolitan area where the specified place in respect of the driver is located for a period of at least 24 continuous hours for the purpose of driving a long-haul truck that transports goods to, or from, a location that is beyond a radius of 160 kilometres from the specified place. (période de déplacement admissible)
long-haul truckmeans a truck or a tractor that is designed for hauling freight and that has a gross vehicle weight rating (as that term is defined in subsection 2(1) of theMotor Vehicle Safety Regulations) that exceeds 11 788 kilograms. (grand routier)
long-haul truck drivermeans an individual whose principal business or principal duty of employment is driving a long-haul truck that transports goods. (conducteur de grand routier)
specified percentagein respect of an amount paid or payable is
(a)60 per cent, if the amount is paid or becomes payable on or after March 19, 2007 and before 2008;
(b)65 per cent, if the amount is paid or becomes payable in 2008;
(c)70 per cent, if the amount is paid or becomes payable in 2009;
(d)75 per cent, if the amount is paid or becomes payable in 2010; and
(e)80 per cent, if the amount is paid or becomes payable after 2010. (pourcentage déterminé)
specified placemeans, in the case of an employee, the employer’s establishment to which the employee ordinarily reports to work is located and, in the case of an individual whose principal business is to drive a long-haul truck to transport goods, the place where the individual resides. (endroit déterminé)
Marginal note:Interest on money borrowed for certain vehicles
67.2For the purposes of this Act, if an amount is paid or payable for a period by a person in respect of interest on borrowed money used to acquire a passenger vehicle or zero-emission passenger vehicle, or on an amount paid or payable for the acquisition of such a vehicle, then in computing the person’s income for a taxation year the amount of interest so paid or payable is deemed to be the lesser of the actual amount paid or payable and the amount determined by the formula
A/30 × B
where
Marginal note:Limitation re cost of leasing passenger vehicle
67.3Notwithstanding any other section of this Act, where
(a)in a taxation year all or part of the actual lease charges in respect of a passenger vehicle are paid or payable, directly or indirectly, by a taxpayer, and
(b)in computing the taxpayer’s income for the year an amount may be deducted in respect of those charges,
in determining the amount that may be so deducted, the total of those charges shall be deemed not to exceed the lesser of
(c)the amount determined by the formula
(A × B)/30 - C - D - E
where
(i)payable on the refundable amounts at the prescribed rate, and
(ii)computed for the period before the end of the year during which the refundable amounts were outstanding, and
(d)the amount determined by the formula
(A × B)/0.85C - D - E
where
(i)payable on the refundable amounts at the prescribed rate, and
(ii)computed for the period in the year during which the refundable amounts are outstanding, and
Marginal note:More than one owner or lessee
67.4Where a person owns or leases a motor vehicle jointly with one or more other persons, the reference in paragraph 13(7)(g) to the amount of $20,000, in section 67.2 to the amount of $250 and in section 67.3 to the amounts of $600, $20,000 and $23,529 shall be read as a reference to that proportion of each of those amounts or such other amounts as may be prescribed for the purposes thereof that the fair market value of the first-mentioned person’s interest in the vehicle is of the fair market value of the interests in the vehicle of all those persons.
Marginal note:More than one owner
67.41If a person owns a zero-emission passenger vehicle jointly with one or more other persons, any reference in paragraph 13(7)(i) to the prescribed amount and in section 67.2 to the amount of $250 or such other amount as may be prescribed is to be read as a reference to that proportion of each of those amounts that the fair market value of the first-mentioned person’s interest in the vehicle is of the fair market value of the interests in the vehicle of all those persons.
Marginal note:Non-deductibility of illegal payments
67.5(1)In computing income, no deduction shall be made in respect of an outlay made or expense incurred for the purpose of doing anything that is an offence under section 3 of theCorruption of Foreign Public Officials Actor under any of sections 119 to 121, 123 to 125, 393 and 426 of theCriminal Code, or an offence under section 465 of theCriminal Codeas it relates to an offence described in any of those sections.
Marginal note:Reassessments
(2)Notwithstanding subsections 152(4) to (5), the Minister may make such assessments, reassessments and additional assessments of tax, interest and penalties and such determinations and redeterminations as are necessary to give effect to subsection (1) for any taxation year.
Marginal note:Non-deductibility of fines and penalties
67.6In computing income, no deduction shall be made in respect of any amount that is a fine or penalty (other than a prescribed fine or penalty) imposed under a law of a country or of a political subdivision of a country (including a state, province or territory) by any person or public body that has authority to impose the fine or penalty.
Marginal note:Allocation of amounts in consideration for property, services or restrictive covenants
68If an amount received or receivable from a person can reasonably be regarded as being in part the consideration for the disposition of a particular property of a taxpayer, for the provision of particular services by a taxpayer or for a restrictive covenant as defined by subsection 56.4(1) granted by a taxpayer,
(a)the part of the amount that can reasonably be regarded as being the consideration for the disposition shall be deemed to be proceeds of disposition of the particular property irrespective of the form or legal effect of the contract or agreement, and the person to whom the property was disposed of shall be deemed to have acquired it for an amount equal to that part;
(b)the part of the amount that can reasonably be regarded as being consideration for the provision of particular services shall be deemed to be an amount received or receivable by the taxpayer in respect of those services irrespective of the form or legal effect of the contract or agreement, and that part shall be deemed to be an amount paid or payable to the taxpayer by the person to whom the services were rendered in respect of those services; and
(c)the part of the amount that can reasonably be regarded as being consideration for the restrictive covenant is deemed to be an amount received or receivable by the taxpayer in respect of the restrictive covenant irrespective of the form or legal effect of the contract or agreement, and that part is deemed to be an amount paid or payable to the taxpayer by the person to whom the restrictive covenant was granted.
Marginal note:Inadequate considerations
69(1)Except as expressly otherwise provided in this Act,
(a)where a taxpayer has acquired anything from a person with whom the taxpayer was not dealing at arm’s length at an amount in excess of the fair market value thereof at the time the taxpayer so acquired it, the taxpayer shall be deemed to have acquired it at that fair market value;
(b)where a taxpayer has disposed of anything
(i)to a person with whom the taxpayer was not dealing at arm’s length for no proceeds or for proceeds less than the fair market value thereof at the time the taxpayer so disposed of it,
(ii)to any person by way of gift, or
(iii)to a trust because of a disposition of a property that does not result in a change in the beneficial ownership of the property;
the taxpayer shall be deemed to have received proceeds of disposition therefor equal to that fair market value; and
(c)where a taxpayer acquires a property by way of gift, bequest or inheritance or because of a disposition that does not result in a change in the beneficial ownership of the property, the taxpayer is deemed to acquire the property at its fair market value.
Marginal note:Idem, where s. 70(3) applies
(1.1)Where a taxpayer has acquired property that is a right or thing to which subsection 70(3) applies, the following rules apply:
(a)paragraph 69(1)(c) is not applicable to that property; and
(b)the taxpayer shall be deemed to have acquired the property at a cost equal to the total of
(i)such part, if any, of the cost thereof to the taxpayer who has died as had not been deducted by the taxpayer in computing the taxpayer’s income for any year, and
(ii)any expenditures made or incurred by the taxpayer to acquire the property.
Marginal note:Idem
(1.2)Where, at any time,
(a)a taxpayer disposed of property for proceeds of disposition (determined without reference to this subsection) equal to or greater than the fair market value at that time of the property, and
(b)there existed at that time an agreement under which a person with whom the taxpayer was not dealing at arm’s length agreed to pay as rent, royalty or other payment for the use of or the right to use the property an amount less than the amount that would have been reasonable in the circumstances if the taxpayer and the person had been dealing at arm’s length at the time the agreement was entered into,
the taxpayer’s proceeds of disposition of the property shall be deemed to be the greater of
(c)those proceeds determined without reference to this subsection, and
(d)the fair market value of the property at the time of the disposition, determined without reference to the existence of the agreement.
(2) and (3)[Repealed, 1998, c. 19, s. 107]
Marginal note:Shareholder appropriations
(4)Where at any time property of a corporation has been appropriated in any manner whatever to or for the benefit of a shareholder of the corporation for no consideration or for consideration that is less than the property’s fair market value and a sale of the property at its fair market value would have increased the corporation’s income or reduced a loss of the corporation, the corporation shall be deemed to have disposed of the property, and to have received proceeds of disposition therefor equal to its fair market value, at that time.
Marginal note:Idem
(5)Where in a taxation year of a corporation property of the corporation has been appropriated in any manner whatever to, or for the benefit of, a shareholder, on the winding-up of the corporation, the following rules apply:
(a)the corporation is deemed, for the purpose of computing its income for the year, to have disposed of the property immediately before the winding-up for proceeds equal to its fair market value at that time;
(b)the shareholder shall be deemed to have acquired the property at a cost equal to its fair market value immediately before the winding-up;
(c)subsections 52(1) and (2) do not apply for the purposes of determining the cost to the shareholder of the property; and
(d)subsections 13(21.2), 18(15) and 40(3.4) and (3.6) do not apply in respect of any property disposed of on the winding-up.
(e)[Repealed, 1998, c. 19, s. 107]
(6) to (10)[Repealed, 2003, c. 28, s. 8]
Marginal note:Deemed proceeds of disposition
(11)Where, at any particular time as part of a series of transactions or events, a taxpayer disposes of property for proceeds of disposition that are less than its fair market value and it can reasonably be considered that one of the main purposes of the series is
(a)to obtain the benefit of
(i)any deduction (other than a deduction under subsection 110.6(2.1) in respect of a capital gain from a disposition of a share acquired by the taxpayer in an acquisition to which subsection 85(3) or 98(3) applied) in computing income, taxable income, taxable income earned in Canada or tax payable under this Act, or
(ii)any balance of undeducted outlays, expenses or other amounts
available to a person (other than a person that would be affiliated with the taxpayer immediately before the series began, if section 251.1 were read without reference to the definitioncontrolledin subsection 251.1(3)) in respect of a subsequent disposition of the property or property substituted for the property, or
(b)to obtain the benefit of an exemption available to any person from tax payable under this Act on any income arising on a subsequent disposition of the property or property substituted for the property,
notwithstanding any other provision of this Act, where the subsequent disposition occurs, or arrangements for the subsequent disposition are made, before the day that is 3 years after the particular time, the taxpayer is deemed to have disposed of the property at the particular time for proceeds of disposition equal to its fair market value at the particular time.
Marginal note:Reassessments
(12)Notwithstanding subsections 152(4) to 152(5), the Minister may at any time make any assessments or reassessments of the tax, interest and penalties payable by the taxpayer that are necessary to give effect to subsection 69(11).
(12.1) and (12.2)[Repealed, 1998, c. 19, s. 107]
Marginal note:Amalgamation or merger
(13)Where there is an amalgamation or merger of a corporation with one or more other corporations to form one corporate entity (in this subsection referred to as the “new corporation”), each property of the corporation that becomes property of the new corporation as a result of the amalgamation or merger is deemed, for the purpose of determining whether subsection 69(11) applies to the amalgamation or merger, to have been disposed of by the corporation immediately before the amalgamation or merger for proceeds equal to
(a)in the case of a Canadian resource property or a foreign resource property, nil; and
(b)in the case of any other property, the cost amount to the corporation of the property immediately before the amalgamation or merger.
Marginal note:New taxpayer
(14)For the purpose of subsection 69(11), where a taxpayer is incorporated or otherwise comes into existence at a particular time during a series of transactions or events, the taxpayer is deemed
(a)to have existed at the time that was immediately before the series began; and
(b)to have been affiliated at that time with every person with whom the taxpayer is affiliated (otherwise than because of a right referred to in paragraph 251(5)(b)) at the particular time.
Marginal note:Death of a taxpayer
70(1)In computing the income of a taxpayer for the taxation year in which the taxpayer died,
(a)an amount of interest, rent, royalty, annuity (other than an amount with respect to an interest in an annuity contract to which paragraph 148(2)(b) applies), remuneration from an office or employment, or other amount payable periodically, that was not paid before the taxpayer’s death, shall be deemed to have accrued in equal daily amounts in the period for or in respect of which the amount was payable, and the value of the portion thereof so deemed to have accrued to the day of death shall be included in computing the taxpayer’s income for the year in which the taxpayer died; and
(b)paragraph 12(1)(t) shall be read as follows:
“12(1)(t)the amount deducted under subsection 127(5) or 127(6) in computing the taxpayer’s tax payable for the year or a preceding taxation year to the extent that it was not included in computing the taxpayer’s income for a preceding taxation year under this paragraph or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e) or subparagraph 53(2)(c)(vi) or 53(2)(h)(ii) or for I in the definitionundepreciated capital costin subsection 13(21) or L in the definitioncumulative Canadian exploration expensein subsection 66.1(6);”
Marginal note:Amounts receivable
(2)If a taxpayer who has died had at the time of death rights or things (other than any capital property or any amount included in computing the taxpayer’s income by virtue of subsection (1)), the amount of which when realized or disposed of would have been included in computing the taxpayer’s income, the value of the rights or things at the time of death shall be included in computing the taxpayer’s income for the taxation year in which the taxpayer died, unless the taxpayer’s legal representative has, not later than the later of the day that is one year after the date of death of the taxpayer and the day that is 90 days after the sending of any notice of assessment in respect of the tax of the taxpayer for the year of death, elected otherwise, in which case the legal representative shall file a separate return of income for the year under this Part and pay the tax for the year under this Part as if
(a)the taxpayer were another person;
(b)that other person’s only income for the year were the value of the rights or things; and
(c)subject to sections 114.2 and 118.93, that other person were entitled to the deductions to which the taxpayer was entitled under sections 110, 118 to 118.7 and 118.9 for the year in computing the taxpayer’s taxable income or tax payable under this Part, as the case may be, for the year.
Marginal note:Rights or things transferred to beneficiaries
(3)Where before the time for making an election under subsection 70(2) has expired, a right or thing to which that subsection would otherwise apply has been transferred or distributed to beneficiaries or other persons beneficially interested in the estate or trust,
(a)subsection 70(2) is not applicable to that right or thing; and
(b)an amount received by one of the beneficiaries or persons on the realization or disposition of the right or thing shall be included in computing the income of the beneficiary or person for the taxation year in which the beneficiary or person received it.
Marginal note:Exception
(3.1)For the purposes of this section,rights or thingsdo not include an interest in a life insurance policy (other than an annuity contract of a taxpayer where the payment therefor was deductible in computing the taxpayer’s income because of paragraph 60(l) or was made in circumstances in which subsection 146(21) applied), land included in the inventory of a business, a Canadian resource property or a foreign resource property.
Marginal note:Revocation of election
(4)An election made under subsection 70(2) may be revoked by a notice of revocation signed by the legal representative of the taxpayer and filed with the Minister within the time that an election under that subsection may be made.
Marginal note:Capital property of a deceased taxpayer
(5)Where in a taxation year a taxpayer dies,
(a)the taxpayer shall be deemed to have, immediately before the taxpayer’s death, disposed of each capital property of the taxpayer and received proceeds of disposition therefor equal to the fair market value of the property immediately before the death;
(b)any person who as a consequence of the taxpayer’s death acquires any property that is deemed by paragraph 70(5)(a) to have been disposed of by the taxpayer shall be deemed to have acquired it at the time of the death at a cost equal to its fair market value immediately before the death;
(c)where any depreciable property of the taxpayer of a prescribed class that is deemed by paragraph 70(5)(a) to have been disposed of is acquired by any person as a consequence of the taxpayer’s death (other than where the taxpayer’s proceeds of disposition of the property under paragraph 70(5)(a) are redetermined under subsection 13(21.1)) and the amount that was the capital cost to the taxpayer of the property exceeds the amount determined under paragraph 70(5)(b) to be the cost to the person thereof, for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),
(i)the capital cost to the person of the property shall be deemed to be the amount that was the capital cost to the taxpayer of the property, and
(ii)the excess shall be deemed to have been allowed to the person in respect of the property under regulations made for the purpose of paragraph 20(1)(a) in computing income for taxation years that ended before the person acquired the property; and
(d)where a property of the taxpayer that was deemed by paragraph 70(5)(a) to have been disposed of is acquired by any person as a consequence of the taxpayer’s death and the taxpayer’s proceeds of disposition of the property under paragraph 70(5)(a) are redetermined under subsection 13(21.1), notwithstanding paragraph 70(5)(b),
(i)where the property was depreciable property of a prescribed class and the amount that was the capital cost to the taxpayer of the property exceeds the amount so redetermined under subsection 13(21.1), for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),
(A)its capital cost to the person shall be deemed to be the amount that was its capital cost to the taxpayer, and
(B)the excess shall be deemed to have been allowed to the person in respect of the property under regulations made for the purpose of paragraph 20(1)(a) in computing income for taxation years that ended before the person acquired the property, and
(ii)where the property is land (other than land to which subparagraph 70(5)(d)(i) applies), its cost to the person shall be deemed to be the amount that was the taxpayer’s proceeds of disposition of the land as redetermined under subsection 13(21.1).
Marginal note:Transfer or distribution — Class 14.1
(5.1)Notwithstanding subsection (6), if property included in Class 14.1 of Schedule II to theIncome Tax Regulationsof the taxpayer in respect of a business carried on by the taxpayer immediately before the taxpayer’s death that is a property to which subsection (5) would otherwise apply is, as a consequence of the death, transferred or distributed (otherwise than by way of a distribution of property by a trust that claimed a deduction under paragraph 20(1)(a) or (b) in respect of the property or in circumstances to which subsection 24(2) applies) to any person (in this subsection referred to as thebeneficiary), the following rules apply:
(a)paragraphs (5)(a) and (b) do not apply in respect of the property;
(b)the taxpayer is deemed to have, immediately before the taxpayer’s death, disposed of the property and received proceeds of disposition equal to the lesser of the capital cost and the cost amount to the taxpayer of the property immediately before the death;
(c)the beneficiary is deemed to have acquired the property at the time of the death at a cost equal to those proceeds; and
(d)paragraph (5)(c) applies as if the references to “paragraph (a)” were read as references to “paragraph (5.1)(b)” and the reference to “paragraph (b)” were read as reference to “paragraph (5.1)(c)”.
Marginal note:Resource property and land inventory
(5.2)If in a taxation year a taxpayer dies,
(a)the taxpayer is deemed
(i)to have disposed, at the time that is immediately before the taxpayer’s death, of each
(A)Canadian resource property of the taxpayer,
(B)foreign resource property of the taxpayer, and
(C)property that was land included in the inventory of a business of the taxpayer, and
(ii)subject to paragraph (c), to have received at that time proceeds of disposition for each such property equal to its fair market value at that time;
(b)any person who, as a consequence of the taxpayer’s death, acquires a property that is deemed by paragraph (a) to have been disposed of by the taxpayer is, subject to paragraph (c), deemed to have acquired the property at the time of the death at a cost equal to its fair market value at the time that is immediately before the death; and
(c)where the taxpayer was resident in Canada at the time that is immediately before the taxpayer’s death, a particular property described in clause (a)(i)(A), (B) or (C) is, on or after the death and as a consequence of the death, transferred or distributed to a spouse or common-law partner of the taxpayer described in paragraph (6)(a) or a trust described in paragraph (6)(b), and it can be shown within the period that ends 36 months after the death (or, where written application has been made to the Minister by the taxpayer’s legal representative within that period, within any longer period that the Minister considers reasonable in the circumstances) that the particular property has, within that period, vested indefeasibly in the spouse, common-law partner or trust, as the case may be,
(i)the taxpayer is deemed to have received, at the time that is immediately before the taxpayer’s death, proceeds of disposition of the particular property equal to
(A)if the particular property is Canadian resource property of the taxpayer or foreign resource property of the taxpayer, the amount specified by the taxpayer’s legal representative in the taxpayer’s return of income filed under paragraph 150(1)(b), not exceeding its fair market value at that time, and
(B)if the particular property was land included in the inventory of a business of the taxpayer, its cost amount to the taxpayer at that time, and
(ii)the spouse, common-law partner or trust, as the case may be, is deemed to have acquired at the time of the death the particular property at a cost equal to the amount determined under subparagraph (i) in respect of the disposition of it under paragraph (a).
Marginal note:Fair market value
(5.3)For the purposes of subsections (5) and 104(4) and section 128.1, the fair market value at any time of any property deemed to have been disposed of at that time as a consequence of a particular individual’s death or as a consequence of the particular individual becoming or ceasing to be resident in Canada shall be determined as though the fair market value at that time of any life insurance policy, under which the particular individual (or any other individual not dealing at arm’s length with the particular individual at that time or at the time the policy was issued) was a person whose life was insured, were the cash surrender value (as defined in subsection 148(9)) of the policy immediately before the particular individual died or became or ceased to be resident in Canada, as the case may be.
Marginal note:Fair market value
(5.31)For the purposes of subsections (5) and 104(4), the fair market value at any time of any property deemed to have been disposed of at that time as a consequence of a particular individual’s death is to be determined as though the fair market value at that time of any annuity contract were the total of all amounts each of which is the amount of a premium paid on or before that time under the contract if
(a)the contract is, in respect of an LIA policy, a contract referred to in subparagraph (b)(ii) of the definitionLIA policyin subsection 248(1); and
(b)the particular individual is the individual, in respect of the LIA policy, referred to in that subparagraph.
Marginal note:NISA on death
(5.4)Where a taxpayer who dies has at the time of death a net income stabilization account, all amounts held for or on behalf of the taxpayer in the taxpayer’s NISA Fund No. 2 shall be deemed to have been paid out of that fund to the taxpayer immediately before that time.
Marginal note:Where transfer or distribution to spouse or spouse trust
(6)Where any property of a taxpayer who was resident in Canada immediately before the taxpayer’s death that is a property to which subsection 70(5) would otherwise apply is, as a consequence of the death, transferred or distributed to
(a)the taxpayer’s spouse or common-law partner who was resident in Canada immediately before the taxpayer’s death, or
(b)a trust, created by the taxpayer’s will, that was resident in Canada immediately after the time the property vested indefeasibly in the trust and under which
(i)the taxpayer’s spouse or common-law partner is entitled to receive all of the income of the trust that arises before the spouse’s or common-law partner’s death, and
(ii)no person except the spouse or common-law partner may, before the spouse’s or common-law partner’s death, receive or otherwise obtain the use of any of the income or capital of the trust,
if it can be shown, within the period ending 36 months after the death of the taxpayer or, where written application therefor has been made to the Minister by the taxpayer’s legal representative within that period, within such longer period as the Minister considers reasonable in the circumstances, that the property has become vested indefeasibly in the spouse or common-law partner or trust, as the case may be, the following rules apply:
(c)paragraphs 70(5)(a) and 70(5)(b) do not apply in respect of the property,
(d)subject to paragraph 70(6)(d.1), the taxpayer shall be deemed to have, immediately before the taxpayer’s death, disposed of the property and received proceeds of disposition therefor equal to
(i)where the property was depreciable property of a prescribed class, the lesser of the capital cost and the cost amount to the taxpayer of the property immediately before the death, and
(ii)in any other case, its adjusted cost base to the taxpayer immediately before the death,
and the spouse or common-law partner or trust, as the case may be, shall be deemed to have acquired the property at the time of the death at a cost equal to those proceeds,
(d.1)where the property is an interest in a partnership (other than an interest in a partnership to which subsection 100(3) applies),
(i)the taxpayer shall, except for the purposes of paragraph 98(5)(g), be deemed not to have disposed of the property as a consequence of the taxpayer’s death,
(ii)the spouse or common-law partner or the trust, as the case may be, shall be deemed to have acquired the property at the time of the death at a cost equal to its cost to the taxpayer, and
(iii)each amount added or deducted in computing the adjusted cost base to the taxpayer of the property shall be deemed to be required by subsection 53(1) or 53(2) to be added or deducted, as the case may be, in computing the adjusted cost base to the spouse or common-law partner or the trust, as the case may be, of the property; and
(e)where the property was depreciable property of the taxpayer of a prescribed class, paragraph (5)(c) applies as if the references therein to “paragraph 70(6)(a)” and to “paragraph 70(6)(b)” were read as references to “paragraph 70(6)(d)”.
Marginal note:Transfer or distribution of NISA to spouse or trust
(6.1)Where a property that is a net income stabilization account of a taxpayer is, on or after the taxpayer’s death and as a consequence thereof, transferred or distributed to
(a)the taxpayer’s spouse or common-law partner, or
(b)a trust, created by the taxpayer’s will, under which
(i)the taxpayer’s spouse or common-law partner is entitled to receive all of the income of the trust that arises before the spouse’s or common-law partner’s death, and
(ii)no person except the spouse or common-law partner may, before the spouse’s or common-law partner’s death, receive or otherwise obtain the use of any of the income or capital of the trust,
subsections 70(5.4) and 73(5) do not apply in respect of the taxpayer’s NISA Fund No. 2 if it can be shown, within the period ending 36 months after the death of the taxpayer or, where written application therefor has been made to the Minister by the taxpayer’s legal representative within that period, within such longer period as the Minister considers reasonable in the circumstances, that the property has vested indefeasibly in the spouse or common-law partner or trust, as the case may be.
Marginal note:Election
(6.2)Subsection (5.1), (6) or (6.1) does not apply to any property of a deceased taxpayer in respect of which the taxpayer’s legal representative elects, in the taxpayer’s return of income under this Part (other than a return of income filed under subsection (2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) for the year in which the taxpayer died, to have subsection (5) or (5.4), as the case may be, apply.
Marginal note:Special rules applicable in respect of trust for benefit of spouse
(7)Where a trust created by a taxpayer’s will would, but for the payment of, or provision for payment of, any particular testamentary debts in respect of the taxpayer, be a trust to which subsection 70(6) or 70(6.1) applies,
(a)for the purpose of determining the day on or before which a return (in this subsection referred to as the “taxpayer’s return”) of the taxpayer’s income for the taxation year in which the taxpayer died is required to be filed by the taxpayer’s legal representatives, subsection 150(1) shall be read without reference to paragraph 150(1)(b) and as if paragraph 150(1)(d) read as follows:
“150(1)(d)in the case of any other person, by the person’s legal representative within 18 months after the person’s death; or;” and
(b)where the taxpayer’s legal representative so elects in the taxpayer’s return (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) and lists therein one or more properties (other than a net income stabilization account) that were, on or after the taxpayer’s death and as a consequence thereof, transferred or distributed to the trust, the total fair market value of which properties immediately after the taxpayer’s death was not less than the total of the non-qualifying debts in respect of the taxpayer,
(i)subsection 70(6) does not apply in respect of the properties so listed, and
(ii)notwithstanding the payment of, or provision for payment of, any such particular testamentary debts, the trust shall be deemed to be a trust described in subsection 70(6),
except that, where the fair market value, immediately after the taxpayer’s death, of all of the properties so listed exceeds the total of the non-qualifying debts in respect of the taxpayer (the amount of which excess is referred to in this subsection as the “listed value excess”) and the taxpayer’s legal representative designates in the taxpayer’s return one property so listed (other than money) that is capital property other than depreciable property,
(iii)the amount of the taxpayer’s capital gain or capital loss, as the case may be, from the disposition of that property deemed by subsection 70(5) to have been made by the taxpayer is that proportion of that capital gain or capital loss otherwise determined that
(A)the amount, if any, by which the fair market value of that property immediately after the taxpayer’s death exceeds the listed value excess,
is of
(B)the fair market value of that property immediately after the taxpayer’s death, and
(iv)the cost to the trust of that property is
(A)where the taxpayer has a capital gain from the disposition of that property deemed by subsection 70(5) to have been made by the taxpayer, the total of
(I)its adjusted cost base to the taxpayer immediately before the taxpayer’s death, and
(II)the amount determined under subparagraph 70(7)(b)(iii) to be the taxpayer’s capital gain from the disposition of that property, or
(B)where the taxpayer has a capital loss from the disposition of that property deemed by subsection 70(5) to have been made by the taxpayer, the amount by which
(I)its adjusted cost base to the taxpayer immediately before the taxpayer’s death
exceeds
(II)the amount determined under subparagraph 70(7)(b)(iii) to be the taxpayer’s capital loss from the disposition of that property.
Marginal note:Meaning of certain expressions in s. (7)
(8)In subsection 70(7),
(a)thefair market valueat any time of any property subject to a mortgage or hypothec is the amount, if any, by which the fair market value at that time of the property otherwise determined exceeds the amount outstanding at that time of the debt secured by the mortgage or hypothec, as the case may be;
(b)non-qualifying debtin respect of a taxpayer who has died and by whose will any trust has been created that would, but for the payment of, or provision for payment of, any particular testamentary debts in respect of the taxpayer, be a trust described in subsection 70(6), means any such particular testamentary debt in respect of the taxpayer other than
(i)any estate, legacy, succession or inheritance duty payable, in consequence of the taxpayer’s death, in respect of any property of, or interest in, the trust, or
(ii)any debt secured by a mortgage or hypothec on property owned by the taxpayer immediately before the taxpayer’s death; and
(c)testamentary debt, in respect of a taxpayer who has died, means
(i)any debt owing by the taxpayer, or any other obligation of the taxpayer to pay an amount, that was outstanding immediately before the taxpayer’s death, and
(ii)any amount payable (other than any amount payable to any person as a beneficiary of the taxpayer’s estate) by the taxpayer’s estate in consequence of the taxpayer’s death,
including any income or profits tax payable by or in respect of the taxpayer for the taxation year in which the taxpayer died or for any previous taxation year, and any estate, legacy, succession or inheritance duty payable in consequence of the taxpayer’s death.
Marginal note:When subsection (9.01) applies
(9)Subsection (9.01) applies to a taxpayer and a child of the taxpayer in respect of land in Canada or depreciable property in Canada of a prescribed class of the taxpayer in respect of which subsection (5) would, if this Act were read without reference to this subsection, apply if
(a)the property was, before the death of the taxpayer, used principally in a farming or fishing business carried on in Canada in which the taxpayer, the spouse or common-law partner of the taxpayer or a child or parent of the taxpayer was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot);
(b)the child of the taxpayer was resident in Canada immediately before the day on which the taxpayer died; and
(c)as a consequence of the death of the taxpayer, the property is transferred to and becomes vested indefeasibly in the child within the period ending 36 months after the death of the taxpayer or, if written application has been made to the Minister by the taxpayer’s legal representative within that period, within any longer period that the Minister considers reasonable in the circumstances.
Marginal note:Transfer of farming and fishing property to child
(9.01)If, because of subsection (9), this subsection applies to the taxpayer and a child of the taxpayer in respect of a property of the taxpayer that has been transferred to the child as a consequence of the death of the taxpayer, the following rules apply:
(a)where the taxpayer’s legal representative does not elect in the taxpayer’s return of income under this Part for the year in which the taxpayer died, to have paragraph (b) apply to the taxpayer and the child in respect of the property,
(i)paragraphs (5)(a) and (b) and section 69 do not apply to the taxpayer and the child in respect of the property,
(ii)the taxpayer is deemed to have
(A)disposed of the property immediately before the taxpayer’s death, and
(B)received, at the time of the disposition of the property, proceeds of disposition in respect of that disposition of the property equal to
(I)where the property was depreciable property of a prescribed class, the lesser of
1the capital cost to the taxpayer of the property, and
2the amount, determined immediately before the time of the disposition of the property, that is that proportion of the undepreciated capital cost of property of that class to the taxpayer that the capital cost to the taxpayer of the property is of the capital cost to the taxpayer of all property of that class that had not, at or before that time, been disposed of, and
(II)where the property is land (other than land to which subclause (I) applies), the adjusted cost base to the taxpayer of the property immediately before the time of the disposition of the property,
(iii)the child is, immediately after the time of the disposition of the property, deemed to have acquired the property at a cost equal to the taxpayer’s proceeds of disposition in respect of the disposition of the property determined under subparagraph (ii), and
(iv)where the property was depreciable property of a prescribed class, paragraphs (5)(c) and (d) apply to the taxpayer and the child in respect of the property as if the references in those paragraphs to “paragraph (a)” and “paragraph (b)” were read as “subparagraph (9.01)(a)(ii)” and “subparagraph (9.01)(a)(iii)”, respectively; and
(b)where the taxpayer’s legal representative elects, in the taxpayer’s return of income under this Part for the taxation year in which the taxpayer died, to have this paragraph apply to the taxpayer in respect of the property,
(i)paragraphs (5)(a) and (b) and section 69 do not apply to the taxpayer and the child in respect of the property,
(ii)the taxpayer is deemed to have
(A)disposed of the property immediately before the taxpayer’s death, and
(B)received, at the time of the disposition of the property, proceeds of disposition in respect of that disposition of the property equal to
(I)where the property was depreciable property of a prescribed class, the amount that the legal representative designates, which must not be greater than the greater of nor less than the lesser of
1the fair market value of the property immediately before the time of the disposition of the property, and
2the lesser of the capital cost to the taxpayer of the property and the amount, determined immediately before the time of the disposition of the property, that is that proportion of the undepreciated capital cost of property of that class to the taxpayer that the capital cost to the taxpayer of the property is of the capital cost to the taxpayer of all property of that class that had not, at or before that time, been disposed of, and
(II)where the property is land (other than land to which subclause (I) applies), the amount that the legal representative designates, which must not be greater than the greater of nor less than the lesser of
1the fair market value of the property immediately before the time of the disposition of the property, and
2the adjusted cost base to the taxpayer of the property immediately before the time of the disposition of the property,
(iii)the child is, immediately after the time of the disposition of the property, deemed to have acquired the property at a cost equal to the taxpayer’s proceeds of disposition in respect of the disposition of the property determined under subparagraph (ii),
(iv)where the property was depreciable property of a prescribed class, paragraphs (5)(c) and (d) apply to the taxpayer in respect of the property as if the references in those paragraphs to “paragraph (a)” and “paragraph (b)” were read as “subparagraph (9.01)(b)(ii)” and “subparagraph (9.01)(b)(iii)”, respectively,
(v)except for the purpose of this subparagraph,
(A)where the amount designated by the taxpayer’s legal representative under subclause (ii)(B)(I), exceeds the greater of the amounts determined under sub-subclauses (ii)(B)(I)1 and 2 in respect of the property, the amount designated is deemed to be equal to the greater of those amounts, and
(B)where the amount designated by the taxpayer’s legal representative under subclause (ii)(B)(II) exceeds the greater of the amounts determined under sub-subclauses (ii)(B)(II)1 and 2 in respect of the property, the amount designated is deemed to be equal to the greater of those amounts, and
(vi)except for the purpose of this subparagraph,
(A)where the amount designated by the taxpayer’s legal representative under subclause (ii)(B)(I) is less than the lesser of the amounts determined under sub-subclauses (ii)(B)(I)1 and 2 in respect of the property, the amount designated is deemed to be equal to the lesser of those amounts, and
(B)where the amount designated by the taxpayer’s legal representative under subclause (ii)(B)(II) is less than the lesser of the amounts determined under sub-subclauses (ii)(B)(II)1 and 2 in respect of the property, the amount designated is deemed to be equal to the lesser of those amounts.
Marginal note:When subsection (9.11) applies
(9.1)Subsection (9.11) applies to a trust and a child of the settlor of the trust in respect of a property in respect of which subsection 104(4) or (5) would, if this Act were read without reference to this subsection, apply to the trust as a consequence of the death of the beneficiary under the trust who was a spouse or a common-law partner of the settlor if
(a)the property (or property for which the property was substituted) was transferred to the trust by the settlor;
(b)subsection (6), subsection 73(1) (as that subsection applied to transfers before 2000) or subparagraph 73(1.01)(c)(i) applied to the settlor and the trust in respect of the transfer referred to in paragraph (a);
(c)the property is, immediately before the beneficiary’s death, land or a depreciable property of a prescribed class of the trust that was used in a farming or fishing business carried on in Canada;
(d)the child of the settlor is, immediately before the beneficiary’s death, resident in Canada; and
(e)as a consequence of the beneficiary’s death, the property is transferred to and becomes vested indefeasibly in the child of the settlor within the period ending 36 months after that beneficiary’s death or, if written application has been made to the Minister by the taxpayer’s legal representative within that period, within any longer period that the Minister considers reasonable in the circumstances.
Marginal note:Transfer of farming and fishing property from trust to settlor’s children
(9.11)If, because of subsection (9.1), this subsection applies to the trust and a child of the settlor of the trust in respect of a property of the trust that has been distributed to the child as a consequence of the death of the beneficiary under the trust who was the spouse or common-law partner of the settlor, the following rules apply:
(a)where the trust does not elect, in its return of income under this Part for the taxation year in which the beneficiary died, to have paragraph (b) apply to the trust in respect of the property,
(i)subsections 104(4) and (5) and section 69 do not apply to the trust and the child in respect of the property,
(ii)the trust is deemed to have
(A)disposed of the property immediately before the beneficiary’s death, and
(B)received, at the time of the disposition, proceeds of disposition in respect of that disposition equal to
(I)where the property was depreciable property of a prescribed class, the lesser of
1the capital cost to the trust of the property, and
2the amount, determined immediately before the time of the disposition of the property, that is that proportion of the undepreciated capital cost of property of that class to the trust that the capital cost to the trust of the property is of the capital cost to the trust of all property of that class that had not, at or before that time, been disposed of, and
(II)where the property is land (other than land to which subclause (I) applies), the adjusted cost base to the trust of the property immediately before the time of the disposition of the property, and
(iii)the child is, immediately after the time of the disposition of the property, deemed to have acquired the property at a cost equal to the trust’s proceeds of disposition in respect of the disposition of the property determined under subparagraph (ii);
(b)where the trust elects, in the trust’s return of income under this Part for the taxation year in which the beneficiary died, to have this paragraph apply to the trust in respect of the property,
(i)subsections 104(4) and (5) do not apply to the trust in respect of the property,
(ii)the trust is deemed to have
(A)disposed of the property immediately before the beneficiary’s death, and
(B)received, at the time of the disposition of the property, proceeds of disposition in respect of the disposition of the property equal to
(I)where the property was depreciable property of a prescribed class, the amount that the trust designates, which must not be greater than the greater of nor less than the lesser of
1the fair market value of the property immediately before the time of the disposition of the property, and
2the lesser of the capital cost to the trust of the property and the amount, determined immediately before the time of the disposition of the property, that is that proportion of the undepreciated capital cost of property of that class to the trust that the capital cost to the trust of the property is of the capital cost to the trust of all property of that class that had not, at or before that time, been disposed of, and
(II)where the property is land (other than land to which subclause (I) applies), the amount that the trust designates, which must not be greater than the greater of nor less than the lesser of
1the fair market value of the property immediately before the time of the disposition of the property, and
2the adjusted cost base to the trust of the property immediately before the time of the disposition of the property,
(iii)the child is, immediately after the time of the disposition of the property, deemed to have acquired the property at a cost equal to the trust’s proceeds of disposition in respect of the disposition of the property determined under subparagraph (ii),
(iv)except for the purpose of this subparagraph,
(A)where the amount designated by the trust under subclause (ii)(B)(I) exceeds the greater of the amounts determined under sub-subclauses (ii)(B)(I)1 and 2 in respect of the property, the amount designated is deemed to be equal to the greater of those amounts, and
(B)where the amount designated by the trust under subclause (ii)(B)(II) exceeds the greater of the amounts determined under sub-subclauses (ii)(B)(II)1 and 2 in respect of the property, the amount designated is deemed to be equal to the greater of those amounts, and
(v)except for the purpose of this subparagraph,
(A)where the amount designated by the trust under subclause (ii)(B)(I) is less than the lesser of the amounts determined under sub-subclauses (ii)(B)(I)1 and 2 in respect of the property, the amount designated is deemed to be equal to the lesser of those amounts, and
(B)where the amount designated by the trust under subclause (ii)(B)(II), is less than the lesser of the amounts determined under sub-subclauses (ii)(B)(II)1 and 2 in respect of the property, the amount designated is deemed to be equal to the lesser of those amounts;
(c)where paragraph (a) or (b) (each of which is referred to in this subsection as the “relevant provision”) applied to the trust in respect of a property that was depreciable property of a prescribed class (other than where the trust’s proceeds of disposition of the property under the relevant provision are redetermined under subsection 13(21.1)),
(i)the capital cost to the child of the property, immediately after the time of the disposition, is deemed to be the amount that was the capital cost to the trust of the property, immediately before the time of the disposition, and
(ii)the amount, if any, by which the capital cost to the trust of the property, immediately before the time of the disposition, exceeds the amount determined under the relevant provision to be the cost of the property to the child, immediately after the time of the disposition, is, for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a), deemed to have been allowed to the child in respect of the property under regulations made for the purpose of paragraph 20(1)(a) in computing income for taxation years that ended before the child acquired the property; and
(d)where the relevant provision applied to the trust in respect of a property and the trust’s proceeds of disposition in respect of the disposition of the property determined under the relevant provision are redetermined under subsection 13(21.1), notwithstanding the relevant provision,
(i)where the capital cost to the trust of the property, immediately before the time of the disposition, exceeds the amount redetermined under subsection 13(21.1), for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),
(A)the capital cost to the child of the property, immediately after the time of the disposition, is deemed to be the amount that was the capital cost to the trust of the property, immediately before the time of the disposition, and
(B)the amount, if any, by which the capital cost to the trust of the property, immediately before the time of the disposition, exceeds the amount redetermined under subsection 13(21.1) is deemed to have been allowed to the child in respect of the property under regulations made for the purpose of paragraph 20(1)(a) in computing income for taxation years that ended before the child acquired the property, and
(ii)where the property is land, the cost to the child of the property is deemed to be the amount that was the trust’s proceeds of disposition as redetermined under subsection 13(21.1).
Marginal note:When subsection (9.21) applies
(9.2)Subsection (9.21) applies to a taxpayer and a child of the taxpayer in respect of a property of the taxpayer in respect of which subsection (5) would, if this Act were read without reference to this subsection, apply to the taxpayer and the child if
(a)the property was, immediately before the death of the taxpayer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer;
(b)the child of the taxpayer was resident in Canada immediately before the day on which taxpayer died; and
(c)as a consequence of the death of the taxpayer, the property is transferred to and becomes vested indefeasibly in the child within the period ending 36 months after the death of the taxpayer or, if written application has been made to the Minister by the taxpayer’s legal representative within that period, within any longer period that the Minister considers reasonable in the circumstances.
Marginal note:Transfer of family farm and fishing corporations and partnerships
(9.21)If, because of subsection (9.2), this subsection applies to the taxpayer and a child of the taxpayer in respect of a property of the taxpayer that has been transferred to the child as a consequence of the death of the taxpayer, the following rules apply:
(a)where the taxpayer’s legal representative does not elect, in the taxpayer’s return of income under this Part for the taxation year in which the taxpayer died, to have paragraph (b) apply to the taxpayer in respect of the property,
(i)paragraphs (5)(a) and (b) and section 69 do not apply to the taxpayer and the child in respect of the property,
(ii)where the property is, immediately before the death of the taxpayer, a share of the capital stock of a family farm or fishing corporation of the taxpayer,
(A)the taxpayer is deemed to have
(I)disposed of the property immediately before the taxpayer’s death, and
(II)received proceeds of disposition in respect of that disposition equal to the adjusted cost base to the taxpayer, immediately before the time of that disposition, of the property, and
(B)the child is, immediately after the time of the disposition, deemed to have acquired the property at a cost equal to the taxpayer’s proceeds of disposition in respect of that disposition determined under clause (A), and
(iii)where the property is, immediately before the death of the taxpayer, a partnership interest described in paragraph (9.2)(a) (other than a partnership interest to which subsection 100(3) applies),
(A)the taxpayer is, except for the purpose of paragraph 98(5)(g), deemed not to have disposed of the property as a consequence of the taxpayer’s death,
(B)the child is deemed to have acquired the property at the time of the taxpayer’s death at a cost equal to the cost to the taxpayer of the interest immediately before the time that is immediately before the time of the taxpayer’s death, and
(C)each amount required by subsection 53(1) or (2) to be added or deducted in computing the adjusted cost base to the taxpayer, immediately before the time of the taxpayer’s death, of the property is deemed to be an amount required by subsection 53(1) or (2) to be added or deducted in computing, at any time at or after the time of the taxpayer’s death, the adjusted cost base to the child of the property; and
(b)where the taxpayer’s legal representative elects, in the taxpayer’s return of income under this Part for the taxation year in which the taxpayer died, to have this paragraph apply to the taxpayer in respect of the property,
(i)paragraphs (5)(a) and (b) and section 69 do not apply to the taxpayer and the child in respect of the property,
(ii)subject to subparagraph (iii), where the property is, immediately before the taxpayer’s death, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer,
(A)the taxpayer is deemed to have
(I)disposed of the property immediately before the taxpayer’s death, and
(II)received, at the time of the disposition of the property, proceeds of disposition in respect of the disposition of the property equal to the amount that the taxpayer’s legal representative designates, which must not be greater than the greater of nor less than the lesser of
1the fair market value of the property immediately before the taxpayer’s death, and
2the adjusted cost base to the taxpayer of the property immediately before the time of the disposition,
(B)the child is, immediately after the time of the disposition, deemed to have acquired the property at a cost equal to the taxpayer’s proceeds of disposition in respect of the disposition of the property determined under clause (A),
(C)except for the purpose of this clause, where the amount designated by the taxpayer’s legal representative under subclause (A)(II) exceeds the greater of the amounts determined under sub-subclauses (A)(II)1 and 2 in respect of the property, the amount designated is deemed to be equal to the greater of those amounts, and
(D)except for the purpose of this clause, where the amount designated by the taxpayer’s legal representative under subclause (A)(II) is less than the lesser of the amounts determined under sub-subclauses (A)(II)1 and 2 in respect of the property, the amount designated is deemed to be equal to the lesser of those amounts, and
(iii)where the property is, immediately before the death of the taxpayer, a partnership interest described in paragraph (9.2)(a) (other than a partnership interest to which subsection 100(3) applies), and the taxpayer’s legal representative further elects, in the taxpayer’s return of income under this Part for the taxation year in which the taxpayer died, to have this subparagraph apply to the taxpayer in respect of the property,
(A)the taxpayer is, except for the purpose of paragraph 98(5)(g), deemed not to have disposed of the property as a consequence of the taxpayer’s death,
(B)the child is deemed to have acquired the property at the time of the taxpayer’s death at a cost equal to the cost to the taxpayer of the interest immediately before the time that is immediately before the death of the taxpayer, and
(C)each amount required by subsection 53(1) or (2) to be added or deducted in computing the adjusted cost base to the taxpayer, immediately before the time of the taxpayer’s death, of the property is deemed to be an amount required by subsection 53(1) or (2) to be added or deducted in computing, at any time at or after the taxpayer’s death, the adjusted cost base to the child of the property.
Marginal note:When subsection (9.31) applies
(9.3)Subsection (9.31) applies to a trust and a child of the settlor of the trust in respect of a property in respect of which subsection 104(4) would, if this Act were read without reference to this subsection, apply to the trust as a consequence of the death of the beneficiary under the trust who was a spouse or a common-law partner of the settlor of the trust if
(a)the property (or property for which the property was substituted) was transferred to the trust by the settlor and was, immediately before that transfer, a share of the capital stock of a family farm or fishing corporation of the settlor or an interest in a family farm or fishing partnership of the settlor;
(b)subsection (6), subsection 73(1) (as that subsection applied to transfers before 2000) or subparagraph 73(1.01)(c)(i) applied to the settlor and the trust in respect of the transfer referred to in paragraph (a);
(c)the property is, immediately before the beneficiary’s death,
(i)a share of the capital stock of a Canadian corporation that would, immediately before that beneficiary’s death, be a share of the capital stock of a family farm or fishing corporation of the settlor, if the settlor owned the share at that time and paragraph (a) of the definitionshare of the capital stock of a family farm or fishing corporationin subsection (10) were read without the words “in which the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot)”, or
(ii)[Repealed, 2014, c. 39, s. 13]
(iii)a partnership interest in a partnership that carried on in Canada a farming or fishing business in which it used all or substantially all of the property;
(d)the child of the settlor was, immediately before that beneficiary’s death, resident in Canada; and
(e)as a consequence of that beneficiary’s death, the property is transferred to and becomes vested indefeasibly in the child within the period ending 36 months after that beneficiary’s death or, if written application has been made to the Minister by the taxpayer’s legal representative within that period, within any longer period that the Minister considers reasonable in the circumstances.
Marginal note:Transfer of family farm or fishing corporation or family farm or fishing partnership from trust to children of settlor
(9.31)If, because of subsection (9.3), this subsection applies to the trust and a child of the settlor of the trust in respect of a property of the trust that has been distributed to the child as a consequence of the death of the beneficiary under the trust who was a spouse or common-law partner of the settlor of the trust, the following rules apply:
(a)where the trust does not elect, in its return of income under this Part for the taxation year in which the beneficiary died, to have paragraph (b) apply to the trust in respect of the property
(i)section 69 and subsection 104(4) do not apply to the trust and the child in respect of the property,
(ii)where the property is, immediately before the beneficiary’s death, a share described in subparagraph (9.3)(c)(i),
(A)the trust is deemed to have
(I)disposed of the property immediately before the beneficiary’s death, and
(II)received proceeds of disposition in respect of that disposition equal to the adjusted cost base to the trust of the property immediately before the time of that disposition, and
(B)the child is, immediately after the time of the disposition, deemed to have acquired the property at a cost equal to the trust’s proceeds of disposition in respect of that disposition of the property determined under clause (A), and
(iii)where the property is, immediately before the beneficiary’s death, a partnership interest described in subparagraph (9.3)(c)(iii) (other than a partnership interest to which subsection 100(3) applies),
(A)the trust is, except for the purpose of paragraph 98(5)(g), deemed not to have disposed of the property as a consequence of the beneficiary’s death,
(B)the child is deemed to have acquired the property, at the time of the beneficiary’s death, at a cost equal to the cost to the trust of the interest immediately before the time that is immediately before the time of the beneficiary’s death, and
(C)each amount required by subsection 53(1) or (2) to be added or deducted in computing the adjusted cost base to the trust, immediately before the beneficiary’s death, of the property is deemed to be an amount required by subsection 53(1) or (2) to be added or deducted in computing, at or after the time of the beneficiary’s death, the adjusted cost base to the child of the property; and
(b)where the trust elects, in its return of income under this Part for the taxation year in which the beneficiary died, to have this paragraph apply to the trust in respect of the property
(i)subsection 104(4) does not apply to the trust in respect of the property and section 69 does not apply to the trust or the child in respect of the transfer of the property,
(ii)subject to subparagraph (iii), where the property is, immediately before the beneficiary’s death, a share described in subparagraph (9.3)(c)(i) or a partnership interest described in subparagraph (9.3)(c)(iii),
(A)the trust is deemed to have
(I)disposed of the property immediately before the beneficiary’s death, and
(II)received, at the time of the disposition of property, proceeds of disposition in respect of the disposition of the property equal to the amount that the trust designates, which must not be greater than the greater of nor less than the lesser of
1the fair market value of the property immediately before the beneficiary’s death, and
2the adjusted cost base to the trust of the property immediately before the beneficiary’s death, and
(B)the child is, immediately after the time of the disposition of the property, deemed to have acquired the property at a cost equal to the trust’s proceeds of disposition in respect of that disposition of the property determined under clause (A),
(iii)where the property is, immediately before that beneficiary’s death, a partnership interest described in subparagraph (9.3)(c)(iii) (other than a partnership interest to which subsection 100(3) applies), and the trust further elects, in its return of income under this Part for the taxation year in which the beneficiary died, to have this subparagraph apply to the trust in respect of the property,
(A)the trust is, except for the purpose of paragraph 98(5)(g), deemed not to have disposed of the property as a consequence of the beneficiary’s death,
(B)the child is deemed to have acquired the property, at the time of the beneficiary’s death, at a cost equal to the cost to the trust of the property immediately before the time that is immediately before the beneficiary’s death, and
(C)each amount required by subsection 53(1) or (2) to be added or deducted in computing, immediately before the beneficiary’s death, the adjusted cost base to the trust of the property is deemed to be an amount required by subsection 53(1) or (2) to be added or deducted in computing, at or after the time of the beneficiary’s death, the adjusted cost base to the child of the property,
(iv)except for the purpose of this subparagraph, where the amount designated by the trust under subclause (ii)(A)(II) exceeds the greater of the amounts determined under sub-subclauses (ii)(A)(II)1 and 2 in respect of the property, the amount designated is deemed to be equal to the greater of those amounts, and
(v)except for the purpose of this subparagraph, where the amount designated by the trust under subclause (ii)(A)(II) is less than the lesser of the amounts determined under sub-subclauses (ii)(A)(II)1 and 2 in respect of the property, the amount designated is deemed to be equal to the lesser of those amounts.
Marginal note:Transfer to a parent
(9.6)Subsection (9.01) or (9.21), as the case may be, applies in respect of a transfer of a property as if the references in those subsections to “child” were read as references to “parent” if
(a)the property was acquired by a taxpayer in circumstances where any of subsections (9.01), (9.11), (9.21), (9.31) and 73(3.1) and (4.1) applied in respect of the acquisition;
(b)as a consequence of the death of the taxpayer the property is transferred to a parent of the taxpayer; and
(c)the taxpayer’s legal representative has elected, in the taxpayer’s return of income under this Part for the taxation year in which the taxpayer died, that this subsection apply in respect of the transfer.
Marginal note:Leased farm or fishing property
(9.8)For the purposes of subsections (9) and 73(3) and paragraph (d) of the definitionqualified farm or fishing propertyin subsection 110.6(1), a property of an individual is, at a particular time, deemed to be used by the individual in a farming or fishing business carried on in Canada if, at that particular time, the property is being used, principally in the course of carrying on a farming or fishing business in Canada, by
(a)a corporation, a share of the capital stock of which is a share of the capital stock of a family farm or fishing corporation of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual; or
(b)a partnership, a partnership interest in which is an interest in a family farm or fishing partnership of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual.
Marginal note:Definitions
(10)In this section,
childof a taxpayer includes
(a)a child of the taxpayer’s child,
(b)a child of the taxpayer’s child’s child,
(b.1)a person who was a child of the taxpayer immediately before the death of the person’s spouse or common-law partner, and
(c)a person who, at any time before the person attained the age of 19 years, was wholly dependent on the taxpayer for support and of whom the taxpayer had, at that time, in law or in fact, the custody and control; (enfant)
interest in a family farm or fishing partnership, of an individual at any time, means a partnership interest owned by the individual at that time if, at that time, all or substantially all of the fair market value of the property of the partnership was attributable to
(a)property that has been used principally in the course of carrying on a farming or fishing business in Canada in which the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot), by
(i)the partnership,
(ii)a corporation, a share of the capital stock of which was a share of the capital stock of a family farm or fishing corporation of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual,
(iii)a partnership, a partnership interest in which was an interest in a family farm or fishing partnership of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual, or
(iv)the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual,
(b)shares of the capital stock or indebtedness of one or more corporations of which all or substantially all of the fair market value of the property was attributable to property described in paragraph (d),
(c)partnership interests or indebtedness of one or more partnerships of which all or substantially all of the fair market value of the property was attributable to property described in paragraph (d), or
(d)properties described in any of paragraphs (a) to (c); (participation dans une société de personnes agricole ou de pêche familiale)
interest in a family farm partnership[Repealed, 2014, c. 39, s. 13]
interest in a family fishing partnership[Repealed, 2014, c. 39, s. 13]
share of the capital stock of a family farm corporation[Repealed, 2014, c. 39, s. 13]
share of the capital stock of a family farm or fishing corporation, of an individual at any time, means a share of the capital stock of a corporation owned by the individual at that time if, at that time, all or substantially all of the fair market value of the property owned by the corporation was attributable to
(a)property that has been used principally in the course of carrying on a farming or fishing business in Canada in which the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot), by
(i)the corporation,
(ii)a corporation, a share of the capital stock of which was a share of the capital stock of a family farm or fishing corporation of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual,
(iii)a corporation controlled by a corporation described in subparagraph (i) or (ii),
(iv)a partnership, a partnership interest in which was an interest in a family farm or fishing partnership of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual, or
(v)the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual,
(b)shares of the capital stock or indebtedness of one or more corporations of which all or substantially all of the fair market value of the property was attributable to property described in paragraph (d),
(c)partnership interests or indebtedness of one or more partnerships of which all or substantially all of the fair market value of the property was attributable to property described in paragraph (d), or
(d)properties described in any of paragraphs (a) to (c). (action du capital-actions d’une société agricole ou de pêche familiale)
share of the capital stock of a family fishing corporation[Repealed, 2014, c. 39, s. 13]
Marginal note:Application of s. 138(12)
(11)The definitions in subsection 138(12) apply to this section.
Marginal note:Value of NISA
(12)For the purpose of the definitionshare of the capital stock of a family farm or fishing corporationin subsection (10), the fair market value of a net income stabilization account is deemed to be nil.
Marginal note:Capital cost of certain depreciable property
(13)For the purposes of this section and, where a provision of this section (other than this subsection) applies, for the purposes of sections 13 and 20 (but not for the purposes of any regulation made for the purpose of paragraph 20(1)(a)),
(a)the capital cost to a taxpayer of depreciable property of a prescribed class disposed of immediately before the taxpayer’s death, or
(b)the capital cost to a trust, to which subsection 70(9.1) applies, of depreciable property of a prescribed class disposed of immediately before the death of the spouse or common-law partner described in that subsection,
shall, in respect of property that was not disposed of by the taxpayer or the trust before that time, be the amount that it would be if subsection 13(7) were read without reference to
(c)the expression “the lesser of” in paragraph 13(7)(b) and clause (d)(i)(A) thereof, and
(d)subparagraph 13(7)(b)(ii), subclause 13(7)(d)(i)(A)(II), clause 13(7)(d)(i)(B) and paragraph (e) thereof.
Marginal note:Order of disposal of depreciable property
(14)Where 2 or more depreciable properties of a prescribed class are disposed of at the same time as a consequence of a taxpayer’s death, this section and paragraph (a) of the definitioncost amountin subsection 248(1) apply as if each property so disposed of were separately disposed of in the order designated by the taxpayer’s legal representative or, in the case of a trust described in subsection 70(9.1), by the trust and, where the taxpayer’s legal representative or the trust, as the case may be, does not designate an order, in the order designated by the Minister.
Marginal note:Reserves, etc., for year of death
72(1)Where in a taxation year a taxpayer has died,
(a)paragraph 20(1)(n) does not apply to allow, in computing the income of the taxpayer for the year from a business, the deduction of any amount as a reserve in respect of property sold in the course of the business;
(b)no amount is deductible under subsection 32(1) as a reserve in respect of unearned commissions in computing the taxpayer’s income for the year;
(c)no amount may be claimed under subparagraph 40(1)(a)(iii), paragraph 40(1.01)(c) or subparagraph 44(1)(e)(iii) in computing any gain of the taxpayer for the year;
(d)subsection 64(1) does not apply to allow, in computing the income of the taxpayer for the year, the deduction of any amount as a reserve in respect of the disposition of any property; and
(e)subsection 64(1.1) does not apply to allow, in computing the income of the taxpayer for the year, the deduction of any amount as a reserve in respect of the disposition of any property.
Marginal note:Election by legal representative and transferee re reserves
(2)Where property of a taxpayer that is a right to receive any amount has, on or after the death of the taxpayer and as a consequence thereof, been transferred or distributed to the taxpayer’s spouse or common-law partner described in paragraph 70(6)(a) or to a trust described in paragraph 70(6)(b) (in this subsection referred to as the “transferee”), if the taxpayer was resident in Canada immediately before the taxpayer’s death and the taxpayer’s legal representative and the transferee have executed jointly an election in respect of the property in prescribed form,
(a)any amount in respect of the property that would, but for paragraph 72(1)(a), (b), (d) or (e), as the case may be, have been deductible as a reserve in computing the taxpayer’s income for the taxation year in which the taxpayer died shall,
(i)notwithstanding subsection 72(1), be deducted in computing the taxpayer’s income for the taxation year in which the taxpayer died,
(ii)be included in computing the transferee’s income for the transferee’s first taxation year ending after the death of the taxpayer, and
(iii)be deemed to be
(A)an amount that has been included in computing the transferee’s income from a business for a previous year in respect of property sold in the course of the business,
(B)an amount that has been included in computing the transferee’s income for a previous year as a commission in respect of an insurance contract, other than a life insurance contract,
(C)an amount that by virtue of subsection 59(1) has been included in computing the transferee’s income for a preceding taxation year, or
(D)for the purposes of subsection 64(1.1), an amount that by virtue of paragraph 59(3.2)(c) has been included in computing the transferee’s income for a preceding taxation year and to be an amount deducted by the transferee pursuant to paragraph 64(1.1)(a) in computing the transferee’s income for the transferee’s last taxation year ending before the death,
as the case may be;
(b)any amount in respect of the property that could, but for paragraph 72(1)(c), have been claimed under subparagraph 40(1)(a)(iii) or 44(1)(e)(iii) in computing the amount of any gain of the taxpayer for the year shall,
(i)notwithstanding paragraph 72(1)(c), be deemed to have been so claimed, and
(ii)for the purpose of computing the transferee’s income for the transferee’s first taxation year ending after the death of the taxpayer and any subsequent taxation year, be deemed to have been
(A)proceeds of the disposition of capital property disposed of by the transferee in that first taxation year, and
(B)the amount determined under subparagraph 40(1)(a)(i) or 44(1)(e)(i), as the case may be, in respect of the capital property referred to in clause (A); and
(c)notwithstanding paragraphs 72(2)(a) (b), where any property had been disposed of by the taxpayer, in computing the income of the transferee for any taxation year ending after the death of the taxpayer,
(i)the amount of the transferee’s deduction under paragraph 20(1)(n) as a reserve in respect of the property sold in the course of business,
(ii)the amount of the transferee’s claim under subparagraph 40(1)(a)(iii) or 44(1)(e)(iii) in respect of the disposition of the property, and
(iii)the amount of the transferee’s deduction under section 64 as a reserve in respect of the disposition of the property
shall be computed as if the transferee were the taxpayer who had disposed of the property and as if the property were disposed of by the transferee at the time it was disposed of by the taxpayer.
Marginal note:Inter vivos transfers by individuals
73(1)For the purposes of this Part, where at any time any particular capital property of an individual (other than a trust) has been transferred in circumstances to which subsection (1.01) applies and both the individual and the transferee are resident in Canada at that time, unless the individual elects in the individual’s return of income under this Part for the taxation year in which the property was transferred that the provisions of this subsection not apply, the particular property is deemed
(a)to have been disposed of at that time by the individual for proceeds equal to,
(i)where the particular property is depreciable property of a prescribed class, that proportion of the undepreciated capital cost to the individual immediately before that time of all property of that class that the fair market value immediately before that time of the particular property is of the fair market value immediately before that time of all of that property of that class, and
(ii)in any other case, the adjusted cost base to the individual of the particular property immediately before that time; and
(b)to have been acquired at that time by the transferee for an amount equal to those proceeds.
Marginal note:Qualifying transfers
(1.01)Subject to subsection (1.02), property is transferred by an individual in circumstances to which this subsection applies where it is transferred to
(a)the individual’s spouse or common-law partner;
(b)a former spouse or common-law partner of the individual in settlement of rights arising out of their marriage or common-law partnership; or
(c)a trust created by the individual under which
(i)the individual’s spouse or common-law partner is entitled to receive all of the income of the trust that arises before the spouse’s or common-law partner’s death and no person except the spouse or common-law partner may, before the spouse’s or common-law partner’s death, receive or otherwise obtain the use of any of the income or capital of the trust,
(ii)the individual is entitled to receive all of the income of the trust that arises before the individual’s death and no person except the individual may, before the individual’s death, receive or otherwise obtain the use of any of the income or capital of the trust, or
(iii)either
(A)the individual or the individual’s spouse is, in combination with the other, entitled to receive all of the income of the trust that arises before the later of the death of the individual and the death of the spouse and no other person may, before the later of those deaths, receive or otherwise obtain the use of any of the income or capital of the trust, or
(B)the individual or the individual’s common-law partner is, in combination with the other, entitled to receive all of the income of the trust that arises before the later of the death of the individual and the death of the common-law partner and no other person may, before the later of those deaths, receive or otherwise obtain the use of any of the income or capital of the trust.
Marginal note:Exception for transfers
(1.02)Subsection (1.01) applies to a transfer of property by an individual to a trust the terms of which satisfy the conditions in subparagraph (1.01)(c)(ii) or (iii) only where
(a)the trust was created after 1999;
(b)either
(i)the individual had attained 65 years of age at the time the trust was created, or
(ii)the transfer does not result in a change in beneficial ownership of the property and there is immediately after the transfer no absolute or contingent right of a person (other than the individual) or partnership as a beneficiary (determined with reference to subsection 104(1.1)) under the trust; and
(c)in the case of a trust the terms of which satisfy the conditions in subparagraph (1.01)(c)(ii), the trust does not make an election under subparagraph 104(4)(a)(ii.1).
Marginal note:Interpretation
(1.1)For greater certainty, a property is, for the purposes of subsections (1) and (1.01), deemed to be property of the individual referred to in subsection (1) that has been transferred to a particular transferee where,
(a)under the laws of a province or because of a decree, order or judgment of a competent tribunal made in accordance with those laws, the property
(i)is acquired or is deemed to have been acquired by the particular transferee,
(ii)is deemed or declared to be property of, or is awarded to, the particular transferee, or
(iii)has vested in the particular transferee; and
(b)the property was or would, but for those laws, have been a capital property of the individual referred to in subsection (1).
Marginal note:Capital cost and amount deemed allowed to spouse, etc., or trust
(2)If a transferee is deemed by subsection (1) to have acquired any particular depreciable property of a prescribed class of a taxpayer for an amount determined under paragraph (1)(b) and the capital cost to the taxpayer of the particular property exceeds the amount determined under that paragraph, in applying sections 13 and 20 and any regulations made under paragraph 20(1)(a)
(a)the capital cost to the transferee of the particular property is deemed to be the amount that was the capital cost to the taxpayer of the particular property; and
(b)the excess is deemed to have been allowed to the transferee in respect of the particular property under regulations made under paragraph 20(1)(a) in computing income for taxation years before the acquisition of the particular property.
Marginal note:When subsection (3.1) applies
(3)Subsection (3.1) applies to a taxpayer and a child of the taxpayer in respect of property that has been transferred, at any time, by the taxpayer to the child, where
(a)the property was, before the transfer, land in Canada or depreciable property in Canada of a prescribed class, of the taxpayer;
(b)the child of the taxpayer was resident in Canada immediately before the transfer; and
(c)the property has been used principally in a farming or fishing business in which the taxpayer, the taxpayer’s spouse or common-law partner, a child of the taxpayer or a parent of the taxpayer was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot).
Marginal note:Inter vivostransfer of farm or fishing property to child
(3.1)If, because of subsection (3), this subsection applies to the taxpayer and a child of the taxpayer in respect of a property transferred by the taxpayer to the child of the taxpayer, the following rules apply:
(a)where, immediately before the transfer, the property was depreciable property of a prescribed class, the taxpayer is deemed to have disposed of the property, at the time of the transfer, for proceeds of disposition equal to
(i)in any case to which neither subparagraph (ii) nor (iii) applies, the taxpayer’s proceeds of disposition otherwise determined,
(ii)the greater of the amounts referred to in clauses (A) and (B), if the taxpayer’s proceeds of disposition otherwise determined exceed the greater of
(A)the fair market value of the property immediately before the time of the transfer, and
(B)the lesser of
(I)the capital cost to the taxpayer of the property, and
(II)the amount, determined immediately before the time of the disposition of the property, that is that proportion of the undepreciated capital cost of property of that class to the taxpayer that the capital cost to the taxpayer of the property is of the capital cost to the taxpayer of all property of that class that had not, at or before that time, been disposed of, or
(iii)if the taxpayer’s proceeds of disposition otherwise determined are less than the lesser of the amounts referred to in clauses (ii)(A) and (B), the lesser of those amounts;
(b)where the property transferred was land, the taxpayer is deemed to have disposed of the property at the time of the transfer for proceeds of disposition equal to,
(i)in any case to which neither subparagraph (ii) nor (iii) applies, the taxpayer’s proceeds of disposition otherwise determined,
(ii)the greater of the amounts referred to in clauses (A) and (B), if the taxpayer’s proceeds of disposition otherwise determined exceed the greater of
(A)the fair market value of the land immediately before the time of the transfer, and
(B)the adjusted cost base to the taxpayer of the land immediately before the time of the transfer, or
(iii)if the taxpayer’s proceeds of disposition otherwise determined are less than the lesser of the amounts referred to in clauses (ii)(A) and (B), the lesser of those amounts;
(c)[Repealed, 2016, c. 12, s. 21]
(d)subsection 69(1) does not apply to the taxpayer and the child in respect of the property;
(e)the child is deemed to have acquired the property at a cost equal to the taxpayer’s proceeds of disposition in respect of the disposition of the property determined under
(i)where the property is depreciable property of the taxpayer, paragraph (a), and
(ii)where the property is land of the taxpayer, paragraph (b); and
(f) and (g)[Repealed, 2016, c. 12, s. 21]
(h)where the property is depreciable property of a prescribed class of the taxpayer and the capital cost to the taxpayer of the property exceeds the cost to the child of the property, for the purposes of sections 13 and 20 and any regulations made under paragraph 20(1)(a),
(i)the capital cost to the child of the property is deemed to be the amount that was the capital cost to the taxpayer of the property immediately before the transfer, and
(ii)the excess is deemed to have been allowed to the child in respect of the property under regulations made under paragraph 20(1)(a) in computing income for taxation years that ended before the child acquired the property.
Marginal note:When subsection (4.1) applies
(4)Subsection (4.1) applies to a taxpayer and a child of the taxpayer in respect of property that has been transferred, at any time, to the child if
(a)the child was resident in Canada immediately before the transfer; and
(b)the property was, immediately before the transfer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer (as defined in subsection 70(10)).
Marginal note:Inter vivostransfer of family farm or fishing corporations and partnerships
(4.1)If, because of subsection (4), this subsection applies to the taxpayer and the taxpayer’s child in respect of the transfer of the property by the taxpayer to the child,
(a)subject to paragraph (c), where the property was, immediately before the transfer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer, the taxpayer is deemed to have disposed of the property at the time of the transfer for proceeds of disposition equal to,
(i)in any case to which neither subparagraph (ii) nor (iii) applies, the taxpayer’s proceeds of disposition otherwise determined,
(ii)the greater of the amounts referred to in clauses (A) and (B), if the taxpayer’s proceeds of disposition otherwise determined exceed the greater of
(A)the fair market value of the property immediately before the time of the transfer, and
(B)the adjusted cost base to the taxpayer of the property immediately before the time of the transfer, or
(iii)if the taxpayer’s proceeds of disposition otherwise determined are less than the lesser of the amounts referred to in clauses (ii)(A) and (B), the lesser of those amounts;
(b)subject to paragraph (c), where the property is, immediately before the transfer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer, the child is deemed to have acquired the property for an amount equal to the taxpayer’s proceeds of disposition in respect of the disposition of the property determined under paragraph (a);
(c)where the property is, immediately before the transfer, an interest in a family farm or fishing partnership of the taxpayer (other than a partnership interest to which subsection 100(3) applies), the taxpayer receives no consideration in respect of the transfer of the property and the taxpayer elects, in the taxpayer’s return of income under this Part for the taxation year which includes the time of the transfer, to have this paragraph apply in respect of the transfer of the property,
(i)the taxpayer is, except for the purpose of paragraph 98(5)(g), deemed not to have disposed of the property at the time of the transfer,
(ii)the child is deemed to have acquired the property at the time of the transfer at a cost equal to the cost to the taxpayer of the interest immediately before the transfer, and
(iii)each amount required by subsection 53(1) or (2) to be added or deducted in computing the adjusted cost base to the taxpayer, immediately before the transfer, of the property is deemed to be an amount required by subsection 53(1) or (2) to be added or deducted in computing at any time at or after the time of the transfer, the adjusted cost base to the child of the property; and
(d)subsection 69(1) does not apply to the taxpayer and the child in respect of the property.
Marginal note:Disposition of a NISA
(5)Where at any time a taxpayer disposes of an interest in the taxpayer’s NISA Fund No. 2, an amount equal to the balance in the fund so disposed of shall be deemed to have been paid out of the fund at that time to the taxpayer except that,
(a)where the interest is disposed of to the taxpayer’s spouse or common-law partner, former spouse or common-law partner or an individual referred to in paragraph 73(1)(d) (as it applies to transfers of property that occurred before 1993) in settlement of rights arising out of their marriage or common-law partnership, on or after the breakdown of the marriage or common-law partnership, that amount shall not be deemed to have been paid to the taxpayer if
(i)the disposition is made under a decree, order or judgment of a competent tribunal or, in the case of a spouse or common-law partner or former spouse or common-law partner, a written separation agreement, and
(ii)the taxpayer elects in the taxpayer’s return of income under this Part for the taxation year in which the property was disposed of to have this paragraph apply to the disposition; and
(b)where the interest is disposed of to a taxable Canadian corporation in a transaction in respect of which an election is made under section 85, an amount equal to the proceeds of disposition in respect of that interest shall be deemed to be paid, at that time, to the taxpayer out of the taxpayer’s NISA Fund No. 2.
Marginal note:Application of s. 70(10)
(6)The definitions in subsection 70(10) apply to this section.
Marginal note:Transfers and loans to spouse or common-law partner
74.1(1)If an individual has transferred or lent property (otherwise than by an assignment of any portion of a retirement pension under section 65.1 of theCanada Pension Planor a comparable provision of a provincial pension plan as defined in section 3 of that Act), either directly or indirectly, by means of a trust or by any other means whatever, to or for the benefit of a person who is the individual’s spouse or common-law partner or who has since become the individual’s spouse or common-law partner, any income or loss, as the case may be, of that person for a taxation year from the property or from property substituted therefor, that relates to the period in the year throughout which the individual is resident in Canada and that person is the individual’s spouse or common-law partner, is deemed to be income or a loss, as the case may be, of the individual for the year and not of that person.
Marginal note:Transfers and loans to minors
(2)If an individual has transferred or lent property, either directly or indirectly, by means of a trust or by any other means whatever, to or for the benefit of a person who was under 18 years of age (other than an amount received in respect of that person either as a consequence of the operation of subsection 122.61(1) or under section 4 of theUniversal Child Care Benefit Act) and who
(a)does not deal with the individual at arm’s length, or
(b)is the niece or nephew of the individual,
any income or loss, as the case may be, of that person for a taxation year from the property or from property substituted for that property, that relates to the period in the taxation year throughout which the individual is resident in Canada, is deemed to be income or a loss, as the case may be, of the individual and not of that person unless that person has, before the end of the taxation year, attained the age of 18 years.
Marginal note:Repayment of existing indebtedness
(3)For the purposes of subsections 74.1(1) and (2), where, at any time, an individual has lent or transferred property (in this subsection referred to as the “lent or transferred property”) either directly or indirectly, by means of a trust or by any other means whatever, to or for the benefit of a person, and the lent or transferred property or property substituted therefor is used
(a)to repay, in whole or in part, borrowed money with which other property was acquired, or
(b)to reduce an amount payable for other property,
there shall be included in computing the income from the lent or transferred property, or from property substituted therefor, that is so used, that proportion of the income or loss, as the case may be, derived after that time from the other property or from property substituted therefor that the fair market value at that time of the lent or transferred property, or property substituted therefor, that is so used is of the cost to that person of the other property at the time of its acquisition, but for greater certainty nothing in this subsection shall affect the application of subsections 74.1(1) and (2) to any income or loss derived from the other property or from property substituted therefor.
Marginal note:Gain or loss deemed that of lender or transferor
74.2(1)Where an individual has lent or transferred property (in this section referred to as “lent or transferred property”), either directly or indirectly, by means of a trust or by any other means whatever, to or for the benefit of a person (in this subsection referred to as the “recipient”) who is the individual’s spouse or common-law partner or who has since become the individual’s spouse or common-law partner, the following rules apply for the purposes of computing the income of the individual and the recipient for a taxation year:
(a)the amount, if any, by which
(i)the total of the recipient’s taxable capital gains for the year from dispositions of property (other than listed personal property) that is lent or transferred property or property substituted therefor occurring in the period (in this subsection referred to as the “attribution period”) throughout which the individual is resident in Canada and the recipient is the individual’s spouse or common-law partner
exceeds
(ii)the total of the recipient’s allowable capital losses for the year from dispositions occurring in the attribution period of property (other than listed personal property) that is lent or transferred property or property substituted therefor
shall be deemed to be a taxable capital gain of the individual for the year from the disposition of property other than listed personal property;
(b)the amount, if any, by which the total determined under subparagraph 74.2(1)(a)(ii) exceeds the total determined under subparagraph 74.2(1)(a)(i) shall be deemed to be an allowable capital loss of the individual for the year from the disposition of property other than listed personal property;
(c)the amount, if any, by which
(i)the amount that the total of the recipient’s gains for the year from dispositions occurring in the attribution period of listed personal property that is lent or transferred property or property substituted therefor would be if the recipient had at no time owned listed personal property other than listed personal property that was lent or transferred property or property substituted therefor
exceeds
(ii)the amount that the total of the recipient’s losses for the year from dispositions of listed personal property that is lent or transferred property or property substituted therefor would be if the recipient had at no time owned listed personal property other than listed personal property that was lent or transferred property or property substituted therefor,
shall be deemed to be a gain of the individual for the year from the disposition of listed personal property;
(d)the amount, if any, by which the total determined under subparagraph 74.2(1)(c)(ii) exceeds the total determined under subparagraph 74.2(1)(c)(i) shall be deemed to be a loss of the individual for the year from the disposition of listed personal property; and
(e)any taxable capital gain or allowable capital loss or any gain or loss taken into account in computing an amount described in paragraph 74.2(1)(a), 74.2(1)(b), 74.2(1)(c) or 74.2(1)(d) shall, except for the purposes of those paragraphs and to the extent that the amount so described is deemed by virtue of this subsection to be a taxable capital gain or an allowable capital loss or a gain or loss of the individual, be deemed not to be a taxable capital gain or an allowable capital loss or a gain or loss, as the case may be, of the recipient.
Marginal note:Deemed gain or loss
(2)Where an amount is deemed by subsection 74.2(1) or 75(2) or section 75.1 of this Act, or subsection 74(2) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, to be a taxable capital gain or an allowable capital loss of an individual for a taxation year,
(a)for the purposes of sections 3 and 111, as they apply for the purposes of section 110.6, such portion of the gain or loss as may reasonably be considered to relate to the disposition of a property by another person in the year shall be deemed to arise from the disposition of that property by the individual in the year; and
(b)for the purposes of section 110.6, that property shall be deemed to have been disposed of by the individual on the day on which it was disposed of by the other person.
Marginal note:Election for subsection (1) to apply
(3)Subsection (1) does not apply to a disposition at any particular time (in this subsection referred to as the “emigration disposition”) under paragraph 128.1(4)(b), by a taxpayer who is a recipient referred to in subsection (1), unless the recipient and the individual referred to in that subsection, in their returns of income for the taxation year that includes the first time, after the particular time, at which the recipient disposes of the property, jointly elect that subsection (1) apply to the emigration disposition.
Marginal note:Application of subsection (3)
(4)For the purpose of applying subsection (3) and notwithstanding subsections 152(4) to (5), any assessment of tax payable under this Act by the recipient or the individual referred to in subsection (1) shall be made that is necessary to take an election under subsection (3) into account except that no such assessment shall affect the computation of
(a)interest payable under this Act to or by a taxpayer in respect of any period that is before the taxpayer’s filing-due date for the taxation year that includes the first time, after the particular time referred to in subsection (3), at which the recipient disposes of the property referred to in that subsection; or
(b)any penalty payable under this Act.
Marginal note:Transfers or loans to a trust
74.3(1)Where an individual has lent or transferred property (in this section referred to as “lent or transferred property”), either directly or indirectly, by means of a trust or by any other means whatever, to a trust in which another individual who is at any time a designated person in respect of the individual is beneficially interested at any time, the following rules apply:
(a)for the purposes of section 74.1, the income of the designated person for a taxation year from the lent or transferred property shall be deemed to be an amount equal to the lesser of
(i)the amount in respect of the trust that was included by virtue of paragraph 12(1)(m) in computing the income for the year of the designated person, and
(ii)that proportion of the amount that would be the income of the trust for the year from the lent or transferred property or from property substituted therefor if no deduction were made under subsection 104(6) or (12) that
(A)the amount determined under subparagraph 74.3(1)(a)(i) in respect of the designated person for the year
is of
(B)the total of all amounts each of which is an amount determined under subparagraph 74.3(1)(a)(i) for the year in respect of the designated person or any other person who is throughout the year a designated person in respect of the individual; and
(b)for the purposes of section 74.2, an amount equal to the lesser of
(i)the amount that was designated under subsection 104(21) in respect of the designated person in the trust’s return of income for the year, and
(ii)the amount, if any, by which
(A)the total of all amounts each of which is a taxable capital gain for the year from the disposition by the trust of the lent or transferred property or property substituted therefor
exceeds
(B)the total of all amounts each of which is an allowable capital loss for the year from the disposition by the trust of the lent or transferred property or property substituted therefor,
shall be deemed to be a taxable capital gain of the designated person for the year from the disposition of property (other than listed personal property) that is lent or transferred property.
Definition ofdesignated person
(2)In this section,designated person, in respect of an individual, has the meaning assigned by subsection 74.5(5).
Marginal note:Definitions
74.4(1)In this section,
designated person, in respect of an individual, has the meaning assigned by subsection 74.5(5); (personne désignée)
excluded consideration, at any time, means consideration received by an individual that is
(a)indebtedness,
(b)a share of the capital stock of a corporation, or
(c)a right to receive indebtedness or a share of the capital stock of a corporation. (contrepartie exclue)
Marginal note:Transfers and loans to corporations
(2)Where an individual has transferred or lent property, either directly or indirectly, by means of a trust or by any other means whatever, to a corporation and one of the main purposes of the transfer or loan may reasonably be considered to be to reduce the income of the individual and to benefit, either directly or indirectly, by means of a trust or by any other means whatever, a person who is a designated person in respect of the individual, in computing the income of the individual for any taxation year that includes a period after the loan or transfer throughout which
(a)the person is a designated person in respect of the individual and would have been a specified shareholder of the corporation if the definitionspecified shareholderin subsection 248(1) were read without reference to paragraphs (a) and (d) of that definition and if the reference therein to “any other corporation that is related to the corporation” were read as a reference to “any other corporation (other than a small business corporation) that is related to the corporation”,
(b)the individual was resident in Canada, and
(c)the corporation was not a small business corporation,
the individual shall be deemed to have received as interest in the year the amount, if any, by which
(d)the amount that would be interest on the outstanding amount of the loan or transfer of the property for such periods in the year if the interest were computed thereon at the prescribed rate of interest for such periods
exceeds the total of
(e)any interest received in the year by the individual in respect of the transfer or loan (other than amounts deemed by this subsection to be interest),
(f)all amounts included in the individual’s income for the taxation year pursuant to subsection 82(1) or 90(1) in respect of taxable dividends received (other than dividends deemed by section 84 to have been received) by the individual in the year on shares that were received from the corporation as consideration for the transfer or as repayment for the loan that were excluded consideration at the time the dividends were received or on shares substituted therefor that were excluded consideration at that time, and
(g)where the designated person is a specified individual in relation to the year, the amount required to be included in computing the designated person’s income for the year in respect of all taxable dividends received by the designated person that
(i)can reasonably be considered to be part of the benefit sought to be conferred, and
(ii)are included in computing the designated person’s split income for any taxation year.
Marginal note:Outstanding amount
(3)For the purposes of subsection 74.4(2), the outstanding amount of a transferred property or loan at a particular time is
(a)in the case of a transfer of property to a corporation, the amount, if any, by which the fair market value of the property at the time of the transfer exceeds the total of
(i)the fair market value, at the time of the transfer, of the consideration (other than consideration that is excluded consideration at the particular time) received by the transferor for the property, and
(ii)the fair market value, at the time of receipt, of any consideration (other than consideration that is excluded consideration at the particular time) received by the transferor at or before the particular time from the corporation or from a person with whom the transferor deals at arm’s length, in exchange for excluded consideration previously received by the transferor as consideration for the property or for excluded consideration substituted for such consideration;
(b)in the case of a loan of money or property to a corporation, the amount, if any, by which
(i)the principal amount of the loan of money at the time the loan was made, or
(ii)the fair market value of the property lent at the time the loan was made,
as the case may be, exceeds the fair market value, at the time the repayment is received by the lender, of any repayment of the loan (other than a repayment that is excluded consideration at the particular time).
Marginal note:Benefit not granted to a designated person
(4)For the purposes of subsection 74.4(2), one of the main purposes of a transfer or loan by an individual to a corporation shall not be considered to be to benefit, either directly or indirectly, a designated person in respect of the individual, where
(a)the only interest that the designated person has in the corporation is a beneficial interest in shares of the corporation held by a trust;
(b)by the terms of the trust, the designated person may not receive or otherwise obtain the use of any of the income or capital of the trust while being a designated person in respect of the individual; and
(c)the designated person has not received or otherwise obtained the use of any of the income or capital of the trust, and no deduction has been made by the trust in computing its income under subsection 104(6) or (12) in respect of amounts paid or payable to, or included in the income of, that person while being a designated person in respect of the individual.
Marginal note:Transfers for fair market consideration
74.5(1)Notwithstanding any other provision of this Act, subsections 74.1(1) and (2) and section 74.2 do not apply to any income, gain or loss derived in a particular taxation year from transferred property or from property substituted therefor if
(a)at the time of the transfer the fair market value of the transferred property did not exceed the fair market value of the property received by the transferor as consideration for the transferred property;
(b)where the consideration received by the transferor included indebtedness,
(i)interest was charged on the indebtedness at a rate equal to or greater than the lesser of
(A)the prescribed rate that was in effect at the time the indebtedness was incurred, and
(B)the rate that would, having regard to all the circumstances, have been agreed on, at the time the indebtedness was incurred, between parties dealing with each other at arm’s length,
(ii)the amount of interest that was payable in respect of the particular year in respect of the indebtedness was paid not later than 30 days after the end of the particular year, and
(iii)the amount of interest that was payable in respect of each taxation year preceding the particular year in respect of the indebtedness was paid not later than 30 days after the end of each such taxation year; and
(c)where the property was transferred to or for the benefit of the transferor’s spouse or common-law partner, the transferor elected in the transferor’s return of income under this Part for the taxation year in which the property was transferred not to have the provisions of subsection 73(1) apply.
Marginal note:Loans for value
(2)Notwithstanding any other provision of this Act, subsections 74.1(1) and (2) and section 74.2 do not apply to any income, gain or loss derived in a particular taxation year from lent property or from property substituted therefor if
(a)interest was charged on the loan at a rate equal to or greater than the lesser of
(i)the prescribed rate that was in effect at the time the loan was made, and
(ii)the rate that would, having regard to all the circumstances, have been agreed on, at the time the loan was made, between parties dealing with each other at arm’s length;
(b)the amount of interest that was payable in respect of the particular year in respect of the loan was paid not later than 30 days after the end of the particular year; and
(c)the amount of interest that was payable in respect of each taxation year preceding the particular year in respect of the loan was paid not later than 30 days after the end of each such taxation year.
Marginal note:Spouses or common-law partners living apart
(3)Notwithstanding subsection 74.1(1) and section 74.2, where an individual has lent or transferred property, either directly or indirectly, by means of a trust or by any other means whatever, to or for the benefit of a person who is the individual’s spouse or common-law partner or who has since become the individual’s spouse or common-law partner,
(a)subsection 74.1(1) does not apply with respect to any income or loss from the property, or property substituted therefor, that relates to the period throughout which the individual is living separate and apart from that person by reason of a breakdown of their marriage or common-law partnership; and
(b)section 74.2 does not apply to a disposition of the property, or property substituted therefor, occurring at any time while the individual is living separate and apart from that person because of a breakdown of their marriage or common-law partnership, if an election completed jointly with that person not to have that section apply is filed with the individual’s return of income under this Part for the taxation year that includes that time or for any preceding taxation year.
Marginal note:Idem
(4)No amount shall be included in computing the income of an individual under subsection 74.4(2) in respect of a designated person in respect of the individual who is the spouse or common-law partner of the individual for any period throughout which the individual is living separate and apart from the designated person by reason of a breakdown of their marriage or common-law partnership.
Definition ofdesignated person
(5)For the purposes of this section,designated person, in respect of an individual, means a person
(a)who is the spouse or common-law partner of the individual; or
(b)who is under 18 years of age and who
(i)does not deal with the individual at arm’s length, or
(ii)is the niece or nephew of the individual.
Marginal note:Back to back loans and transfers
(6)Where an individual has lent or transferred property
(a)to another person and that property, or property substituted therefor, is lent or transferred by any person (in this subsection referred to as a “third party”) directly or indirectly to or for the benefit of a specified person with respect to the individual, or
(b)to another person on condition that property be lent or transferred by any person (in this subsection referred to as a “third party”) directly or indirectly to or for the benefit of a specified person with respect to the individual,
the following rules apply:
(c)for the purposes of sections 74.1, 74.2, 74.3 and 74.4, the property lent or transferred by the third party shall be deemed to have been lent or transferred, as the case may be, by the individual to or for the benefit of the specified person, and
(d)for the purposes of subsection 74.5(1), the consideration received by the third party for the transfer of the property shall be deemed to have been received by the individual.
Marginal note:Guarantees
(7)Where an individual is obligated, either absolutely or contingently, to effect any undertaking including any guarantee, covenant or agreement given to ensure the repayment, in whole or in part, of a loan made by any person (in this subsection referred to as the “third party”) directly or indirectly to or for the benefit of a specified person with respect to the individual or the payment, in whole or in part, of any interest payable in respect of the loan, the following rules apply:
(a)for the purposes of sections 74.1, 74.2, 74.3 and 74.4, the property lent by the third party shall be deemed to have been lent by the individual to or for the benefit of the specified person; and
(b)for the purposes of paragraphs 74.5(2)(b) and (c), the amount of interest that is paid in respect of the loan shall be deemed not to include any amount paid by the individual to the third party as interest on the loan.
Definition ofspecified person
(8)For the purposes of subsections 74.5(6) and (7),specified person, with respect to an individual, means
(a)a designated person in respect of the individual; or
(b)a corporation, other than a small business corporation, of which a designated person in respect of the individual would have been a specified shareholder if the definitionspecified shareholderin subsection 248(1) were read without reference to paragraphs (a) and (d) of that definition.
Marginal note:Transfers or loans to a trust
(9)Where a taxpayer has lent or transferred property, either directly or indirectly, by means of a trust or by any other means whatever, to a trust in which another taxpayer is beneficially interested, the taxpayer shall, for the purposes of this section and sections 74.1 to 74.4, be deemed to have lent or transferred the property, as the case may be, to or for the benefit of the other taxpayer.
(10)[Repealed, 1994, c. 7, Sch