T-0.1, in respect of an input tax refund relating to property or service that had been previously deducted in determining the net tax of the taxpayer, that amount is deemed to be assistance repaid at the particular time in respect of the property or service under a legal obligation to repay all or part of that assistance.
Marginal note:When property available for use
(19)Except as otherwise provided, property shall be considered to have become available for use for the purposes of this Act at the time at which it has, or would have if it were depreciable property, become available for use for the purpose of subsection 13(26).
Marginal note:Partition of property
(20)Subject to subsections (21) to (23), for the purposes of this Act, if at any time a property owned by two or more persons is the subject of a partition, the following rules apply, notwithstanding any retroactive or declaratory effect of the partition:
(a)each such person who had, immediately before that time, an interest in, or for civil law a right in, the property (which interest or right in the property is referred to in this subsection and subsection (21) as an “interest” or a “right”, as the case may be) is deemed not to have disposed at that time of that proportion, not exceeding 100%, of the interest or right that the fair market value of that person’s interest or right in the property immediately after that time is of the fair market value of that person’s interest or right in the property immediately before that time,
(b)each such person who has an interest or a right in the property immediately after that time is deemed not to have acquired at that time that proportion of the interest or right that the fair market value of that person’s interest or right in the property immediately before that time is of the fair market value of that person’s interest or right in the property immediately after that time,
(c)each such person who had an interest or a right in the property immediately before that time is deemed to have had until that time, and to have disposed at that time of, that proportion of the person’s interest or right to which paragraph (a) does not apply,
(d)each such person who has an interest or a right in the property immediately after that time is deemed not to have had before that time, and to have acquired at that time, that proportion of the person’s interest or right to which paragraph (b) does not apply, and
(e)paragraphs (a) to (d) do not apply if the interest or right of the person is an interest or a right in fungible tangible property, or for civil law fungible corporeal property described in that person’s inventory,
and, for the purposes of this subsection, if an interest or a right in the property is an undivided interest or right, the fair market value of the interest or right at any time is deemed to be equal to that proportion of the fair market value of the property at that time that the interest or right is of all the undivided interests or rights in the property.
Marginal note:Subdivision of property
(21)If a property that was owned by two or more persons is the subject of a partition among those persons and, as a consequence of it, each such person has, in the property, a new interest or right the fair market value of which immediately after the partition, expressed as a percentage of the fair market value of all the new interests or rights in the property immediately after the partition, is equal to the fair market value of that person’s undivided interest or right immediately before the partition, expressed as a percentage of the fair market value of all the undivided interests or rights in the property immediately before the partition,
(a)subsection (20) does not apply to the property, and
(b)the new interest or right of each such person is deemed to be a continuation of that person’s undivided interest or right in the property immediately before the partition,
and, for the purposes of this subsection,
(c)subdivisions of a building or of a parcel of land that are established in the course of, or in contemplation of, a partition and that are co-owned by the same persons who co-owned the building or the parcel of land, or by their assignee, shall be regarded as one property, and
(d)if an interest or a right in the property is or includes an undivided interest or right, the fair market value of the interest or right shall be determined without regard to any discount or premium that applies to a minority or majority interest or right in the property.
Marginal note:Matrimonial regimes
(22)Where at any time property could, as a consequence of the dissolution of a matrimonial regime between 2 spouses or common-law partners, be the subject of a partition, for the purposes of this Act
(a)where that property was owned by one of the spouses or common-law partners immediately before it became subject to that regime and had not subsequently been disposed of before that time, it shall be deemed to be owned at that time by that spouse or common-law partner and not by the other spouse or common-law partner; and
(b)in any other case, the property shall be deemed to be owned by the spouse or common-law partner who has the administration of that property at that time and not by the other spouse or common-law partner.
Marginal note:Dissolution of a matrimonial regime
(23)Where, immediately after the dissolution of a matrimonial regime (other than a dissolution occurring as a consequence of death), the owner of a property that was subject to that regime is not the person, or the estate of the person, who is deemed by subsection 248(22) to have been the owner of the property immediately before the dissolution, the person shall be deemed for the purposes of this Act to have transferred the property to the person’s spouse or common-law partner immediately before the dissolution.
Marginal note:Transfers after death
(23.1)If, as a consequence of the laws of a province relating to spouses’ or common-law partners’ interests or rights in respect of property as a result of marriage or common-law partnership, property is, after the death of a taxpayer,
(a)transferred or distributed to a person who was the taxpayer’s spouse or common-law partner at the time of the death, or acquired by that person, the property shall be deemed to have been so transferred, distributed or acquired, as the case may be, as a consequence of the death; or
(b)transferred or distributed to the taxpayer’s estate, or acquired by the taxpayer’s estate, the property shall be deemed to have been so transferred, distributed or acquired, as the case may be, immediately before the time that is immediately before the death.
Marginal note:Accounting methods
(24)For greater certainty, it is hereby declared that, unless specifically required, neither the equity nor the consolidation method of accounting shall be used to determine any amount for the purposes of this Act.
Marginal note:Beneficially interested
(25)For the purposes of this Act,
(a)a person or partnership beneficially interested in a particular trust includes any person or partnership that has any right (whether immediate or future, whether absolute or contingent or whether conditional on or subject to the exercise of any discretion by any person or partnership) as a beneficiary under a trust to receive any of the income or capital of the particular trust either directly from the particular trust or indirectly through one or more trusts or partnerships;
(b)except for the purpose of this paragraph, a particular person or partnership is deemed to be beneficially interested in a particular trust at a particular time where
(i)the particular person or partnership is not beneficially interested in the particular trust at the particular time,
(ii)because of the terms or conditions of the particular trust or any arrangement in respect of the particular trust at the particular time, the particular person or partnership might, because of the exercise of any discretion by any person or partnership, become beneficially interested in the particular trust at the particular time or at a later time, and
(iii)at or before the particular time, either
(A)the particular trust has acquired property, directly or indirectly in any manner whatever, from
(I)the particular person or partnership,
(II)another person with whom the particular person or partnership, or a member of the particular partnership, does not deal at arm’s length,
(III)a person or partnership with whom the other person referred to in subclause 248(25)(b)(iii)(A)(II) does not deal at arm’s length,
(IV)a controlled foreign affiliate of the particular person or of another person with whom the particular person or partnership, or a member of the particular partnership, does not deal at arm’s length, or
(V)a non-resident corporation that would, if the particular partnership were a corporation resident in Canada, be a controlled foreign affiliate of the particular partnership, or
(B)a person or partnership described in any of subclauses 248(25)(b)(iii)(A)(I) to 248(25)(b)(iii)(A)(V) has given a guarantee on behalf of the particular trust or provided any other financial assistance whatever to the particular trust; and
(c)a member of a partnership that is beneficially interested in a trust is deemed to be beneficially interested in the trust.
Marginal note:Trust-to-trust transfers
(25.1)If, at any time, a particular trust transfers property to another trust (other than a trust governed by a registered retirement savings plan or by a registered retirement income fund) in circumstances to which paragraph (f) of the definitiondispositionin subsection (1) applies, without affecting the personal liabilities under this Act of the trustees of either trust or the application of subsection 104(5.8),
(a)the other trust is deemed to be after that time the same trust as, and a continuation of, the particular trust; and
(b)for greater certainty, if, as a result of a transaction or event, the property was deemed to be taxable Canadian property of the particular trust by any of paragraphs 51(1)(f), 85(1)(i) and 85.1(1)(a), subsection 85.1(5), paragraph 85.1(8)(b), subsections 87(4) and (5) and paragraphs 97(2)(c) and 107(3.1)(d), the property is also deemed to be, at any time that is within 60 months after the transaction or event, taxable Canadian property of the other trust.
Marginal note:Trusts to ensure obligations fulfilled
(25.2)Except for the purpose of this subsection, where at any time property is transferred to a trust in circumstances to which paragraph (k) of the definitiondispositionin subsection (1) applies, the trust is deemed to deal with the property as agent for the transferor throughout the period that begins at the time of the transfer and ends at the time of the first change after that time in the beneficial ownership of the property.
Marginal note:Cost of trust interest
(25.3)The cost to a taxpayer of a particular unit of a trust is deemed to be equal to the amount described in paragraph (a) where
(a)the trust issues the particular unit to the taxpayer directly in satisfaction of a right to enforce payment of an amount by the trust in respect of the taxpayer’s capital interest in the trust;
(b)at the time that the particular unit is issued, the trust is neither a personal trust nor a trust prescribed for the purpose of subsection 107(2); and
(c)either
(i)the particular unit is capital property and the amount is not proceeds of disposition of a capital interest in the trust, or
(ii)the particular unit is not capital property and subparagraph 53(2)(h)(i.1) does not apply in respect of the amount described in paragraph (a) but would so apply if that subparagraph were read without reference to clauses 53(2)(h)(i.1)(A) and (B).
Marginal note:Where acquisition by another of right to enforce
(25.4)If at a particular time a taxpayer’s capital interest in a trust includes a right to enforce payment of an amount by the trust, the amount shall be added at the particular time to the cost otherwise determined to the taxpayer of the capital interest where
(a)immediately after the particular time there is a disposition by the taxpayer of the capital interest;
(b)as a consequence of the disposition, the right to enforce payment of the amount is acquired by another person or partnership; and
(c)if the right to enforce payment of the amount had been satisfied by a payment to the taxpayer by the trust, there would have been no disposition of that right for the purposes of this Act because of the application of paragraph (i) of the definitiondispositionin subsection (1).
Marginal note:Debt obligations
(26)For greater certainty, where at any time a person or partnership (in this subsection referred to as the “debtor”) becomes liable to repay money borrowed by the debtor or becomes liable to pay an amount (other than interest)
(a)as consideration for any property acquired by the debtor or services rendered to the debtor, or
(b)that is deductible in computing the debtor’s income,
for the purposes of applying the provisions of this Act relating to the treatment of the debtor in respect of the liability, the liability shall be considered to be an obligation, issued at that time by the debtor, that has a principal amount at that time equal to the amount of the liability at that time.
Marginal note:Parts of debt obligations
(27)For greater certainty,
(a)unless the context requires otherwise, an obligation issued by a debtor includes any part of a larger obligation that was issued by the debtor;
(b)the principal amount of that part shall be considered to be the portion of the principal amount of that larger obligation that relates to that part; and
(c)the amount for which that part was issued shall be considered to be the portion of the amount for which that larger obligation was issued that relates to that part.
Marginal note:Limitation respecting inclusions, deductions and tax credits
(28)Unless a contrary intention is evident, no provision of this Act shall be read or construed
(a)to require the inclusion or permit the deduction, either directly or indirectly, in computing a taxpayer’s income, taxable income or taxable income earned in Canada, for a taxation year or in computing a taxpayer’s income or loss for a taxation year from a particular source or from sources in a particular place, of any amount to the extent that the amount has already been directly or indirectly included or deducted, as the case may be, in computing such income, taxable income, taxable income earned in Canada or loss, for the year or any preceding taxation year;
(b)to permit the deduction, either directly or indirectly, in computing a taxpayer’s tax payable under any Part of this Act for a taxation year of any amount to the extent that the amount has already been directly or indirectly deducted in computing such tax payable for the year or any preceding taxation year; or
(c)to consider an amount to have been paid on account of a taxpayer’s tax payable under any Part of this Act for a taxation year to the extent that the amount has already been considered to have been paid on account of such tax payable for the year or any preceding taxation year.
Marginal note:Farming or fishing business
(29)For the purposes of subsection 40(1.1) and sections 70, 73 and 110.6, if at any time a person or partnership carries on a farming business and a fishing business, a property used at that time principally in a combination of the activities of the farming business and the fishing business is deemed to be used at that time principally in the course of carrying on a farming or fishing business.
Marginal note:Intention to give
(30)The existence of an amount of an advantage in respect of a transfer of property does not in and by itself disqualify the transfer from being a gift to a qualified donee if
(a)the amount of the advantage does not exceed 80% of the fair market value of the transferred property; or
(b)the transferor of the property establishes to the satisfaction of the Minister that the transfer was made with the intention to make a gift.
Marginal note:Eligible amount of gift or monetary contribution
(31)The eligible amount of a gift or monetary contribution is the amount by which the fair market value of the property that is the subject of the gift or monetary contribution exceeds the amount of the advantage, if any, in respect of the gift or monetary contribution.
Marginal note:Amount of advantage
(32)The amount of the advantage in respect of a gift or monetary contribution by a taxpayer is the total of
(a)the total of all amounts, other than an amount referred to in paragraph (b), each of which is the value, at the time the gift or monetary contribution is made, of any property, service, compensation, use or other benefit that the taxpayer, or a person or partnership who does not deal at arm’s length with the taxpayer, has received, obtained or enjoyed, or is entitled, either immediately or in the future and either absolutely or contingently, to receive, obtain, or enjoy
(i)that is consideration for the gift or monetary contribution,
(ii)that is in gratitude for the gift or monetary contribution, or
(iii)that is in any other way related to the gift or monetary contribution, and
(b)the limited-recourse debt, determined under subsection 143.2(6.1), in respect of the gift or monetary contribution at the time the gift or monetary contribution is made.
Marginal note:Cost of property acquired by donor
(33)The cost to a taxpayer of a property, acquired by the taxpayer in circumstances where subsection (32) applies to include the value of the property in computing the amount of the advantage in respect of a gift or monetary contribution, is equal to the fair market value of the property at the time the gift or monetary contribution is made.
Marginal note:Repayment of limited-recourse debt
(34)If at any time in a taxation year a taxpayer has paid an amount (in this subsection referred to as the “repaid amount”) on account of the principal amount of an indebtedness which was, before that time, an unpaid principal amount that was a limited-recourse debt referred to in subsection 143.2(6.1) (in this subsection referred to as the “former limited-recourse debt”) in respect of a gift or monetary contribution (in this subsection referred to as the “original gift” or “original monetary contribution”, respectively, as the case may be) of the taxpayer (otherwise than by way of an assignment or transfer of a guarantee, security or similar indemnity or covenant, or by way of a payment in respect of which any taxpayer referred to in subsection 143.2(6.1) has incurred an indebtedness that would be a limited-recourse debt referred to in that subsection if that indebtedness were in respect of a gift or monetary contribution made at the time that that indebtedness was incurred), the following rules apply:
(a)if the former limited-recourse debt is in respect of the original gift, for the purposes of sections 110.1 and 118.1, the taxpayer is deemed to have made in the taxation year a gift to a qualified donee, the eligible amount of which deemed gift is the amount, if any, by which
(i)the amount that would have been the eligible amount of the original gift, if the total of all such repaid amounts paid at or before that time were paid immediately before the original gift was made,
exceeds
(ii)the total of
(A)the eligible amount of the original gift, and
(B)the eligible amount of all other gifts deemed by this paragraph to have been made before that time in respect of the original gift; and
(b)if the former limited-recourse debt is in respect of the original monetary contribution, for the purposes of subsection 127(3), the taxpayer is deemed to have made in the taxation year a monetary contribution referred to in that subsection, the eligible amount of which is the amount, if any, by which
(i)the amount that would have been the eligible amount of the original monetary contribution, if the total of all such repaid amounts paid at or before that time were paid immediately before the original monetary contribution was made,
exceeds
(ii)the total of
(A)the eligible amount of the original monetary contribution, and
(B)the eligible amount of all other monetary contributions deemed by this paragraph to have been made before that time in respect of the original monetary contribution.
Marginal note:Deemed fair market value
(35)For the purposes of subsection (31), paragraph 69(1)(b) and subsections 110.1(2.1) and (3) and 118.1(5.4), (6) and (13.2), the fair market value of a property that is the subject of a gift made by a taxpayer to a qualified donee is deemed to be the lesser of the fair market value of the property otherwise determined and the cost or, in the case of capital property, the adjusted cost base or, in the case of a life insurance policy in respect of which the taxpayer is a policyholder, the adjusted cost basis (as defined in subsection 148(9)), of the property to the taxpayer immediately before the gift is made if
(a)the taxpayer acquired the property under a gifting arrangement that is a tax shelter as defined in subsection 237.1(1); or
(b)except where the gift is made as a consequence of the taxpayer’s death,
(i)the taxpayer acquired the property less than three years before the day that the gift is made, or
(ii)the taxpayer acquired the property less than 10 years before the day that the gift is made and it is reasonable to conclude that, at the time the taxpayer acquired the property, one of the main reasons for the acquisition was to make a gift of the property to a qualified donee.
Marginal note:Non-arm’s length transaction
(36)If a taxpayer acquired a property, otherwise than by reason of the death of an individual, that is the subject of a gift to which subsection (35) applies because of subparagraph (35)(b)(i) or (ii) and the property was, at any time within the 3-year or 10-year period, respectively, that ends when the gift was made, acquired by a person or partnership with whom the taxpayer does not deal at arm’s length, for the purpose of applying subsection (35) to the taxpayer, the cost, or in the case of capital property, the adjusted cost base, of the property to the taxpayer immediately before the gift is made is deemed to be equal to the lowest amount that is the cost, or in the case of capital property, the adjusted cost base, to the taxpayer or any of those persons or partnerships immediately before the property was disposed of by that person or partnership.
Marginal note:Non-application of subsection (35)
(37)Subsection (35) does not apply to a gift
(a)of inventory;
(b)of real property or an immovable situated in Canada;
(c)of an object referred to in subparagraph 39(1)(a)(i.1), other than an object acquired under a gifting arrangement (as defined in subsection 237.1(1)) that is a tax shelter;
(d)of property to which paragraph 38(a.1) or (a.2) applies;
(e)of a share of the capital stock of a corporation if
(i)the share was issued by the corporation to the donor,
(ii)immediately before the gift, the corporation was controlled by the donor, a person related to the donor or a group of persons each of whom is related to the donor, and
(iii)subsection (35) would not have applied in respect of the consideration for which the share was issued had that consideration been donated by the donor to the qualified donee when the share was so donated;
(f)by a corporation of property if
(i)the property was acquired by the corporation in circumstances to which subsection 85(1) or (2) applied,
(ii)immediately before the gift, the shareholder from whom the corporation acquired the property controlled the corporation or was related to a person or each member of a group of persons that controlled the corporation, and
(iii)subsection (35) would not have applied in respect of the property had the property not been transferred to the corporation and had the shareholder made the gift to the qualified donee when the corporation so made the gift; or
(g)of a property that was acquired in circumstances where subsection 70(6) or (9) or 73(1), (3) or (4) applied, unless subsection (36) would have applied if this subsection were read without reference to this paragraph.
Marginal note:Artificial transactions
(38)The eligible amount of a particular gift of property by a taxpayer is nil if it can reasonably be concluded that the particular gift relates to a transaction or series of transactions
(a)one of the purposes of which is to avoid the application of subsection (35) to a gift of any property; or
(b)that would, if this Act were read without reference to this paragraph, result in a tax benefit to which subsection 245(2) applies.
Marginal note:Substantive gift
(39)If a taxpayer disposes of a property (in this subsection referred to as thesubstantive gift) that is a capital property of the taxpayer, to a recipient that is aregistered party, aregistered associationor acandidate, as those terms are defined in theCanada Elections Act, or that is a qualified donee, subsection (35) would have applied in respect of the substantive gift if it had been the subject of a gift by the taxpayer to a qualified donee, and all or a part of the proceeds of disposition of the substantive gift are (or are substituted, directly or indirectly in any manner whatever, for) property that is the subject of a gift or monetary contribution by the taxpayer to the recipient or any person dealing not at arm’s length with the recipient, the following rules apply:
(a)for the purpose of subsection (31), the fair market value of the property that is the subject of the gift or monetary contribution made by the taxpayer is deemed to be that proportion of the lesser of the fair market value of the substantive gift and the cost, or if the substantive gift is capital property of the taxpayer, the adjusted cost base, of the substantive gift to the taxpayer immediately before the disposition to the recipient, that the fair market value otherwise determined of the property that is the subject of the gift or monetary contribution is of the proceeds of disposition of the substantive gift; and
(b)if the substantive gift is capital property of the taxpayer, for the purpose of the definitionsproceeds of dispositionof property in subsection 13(21) and section 54, the sale price of the substantive gift is to be reduced by the amount by which the fair market value of the property that is the subject of the gift (determined without reference to this section) exceeds the fair market value determined under paragraph (a).
(c)[Repealed, 2016, c. 12, s. 63]
Marginal note:Inter-charity gifts
(40)Subsection (30) does not apply in respect of a gift received by a qualified donee from a registered charity.
Marginal note:Information not provided
(41)Notwithstanding subsection (31), the eligible amount of a gift or monetary contribution made by a taxpayer is nil if the taxpayer does not — before a receipt referred to in subsection 110.1(2), 118.1(2) or 127(3), as the case may be, is issued in respect of the gift or monetary contribution — inform the qualified donee or the recipient, as the case may be, of any circumstances in respect of which subsection (31), (35), (36), (38) or (39) requires that the eligible amount of the gift or monetary contribution be less than the fair market value, determined without reference to subsections (35), 110.1(3) and 118.1(6), of the property that is the subject of the gift or monetary contribution.
Marginal note:Synthetic equity arrangements — disaggregation
(42)For the purposes of the definitionsynthetic equity arrangementin subsection (1), paragraphs (c) and (d) of the definitiondividend rental arrangementin subsection (1) and subsections 112(2.31), (2.32) and (10), an arrangement that reflects the fair market value of more than one type ofidentical share(as defined in subsection 112(10)) is considered to be a separate arrangement with respect to each type of identical share the value of which the arrangement reflects.
Definition oftaxation year
249(1)In this Act, except as expressly otherwise provided, ataxation yearis
(a)in the case of a corporation or Canadian resident partnership, a fiscal period;
(b)in the case of a graduated rate estate, the period for which the accounts of the estate are made up for purposes of assessment under this Act; and
(c)in any other case, a calendar year.
Marginal note:References to calendar year
(1.1)When a taxation year is referred to by reference to a calendar year, the reference is to the taxation year or taxation years that coincide with, or that end in, that calendar year.
Marginal note:References to certain taxation years and fiscal periods
(2)For the purposes of this Act,
(a)a reference to a taxation year ending in another year includes a reference to a taxation year ending coincidentally with that other year; and
(b)a reference to a fiscal period ending in a taxation year includes a reference to a fiscal period ending coincidentally with that year.
Marginal note:Fiscal period exceeding 365 days
(3)If a fiscal period of a corporation exceeds 365 days and for that reason the corporation does not have a taxation year that ends in a particular calendar year, for the purposes of this Act,
(a)the corporation’s first taxation year that would otherwise end in the immediately following calendar year is deemed to end on the last day of the particular calendar year and its next taxation year is deemed to commence on the first day of the immediately following calendar year; and
(b)the corporation’s first fiscal period that would otherwise end in the immediately following calendar year is deemed to end on the last day of the particular calendar year and its next fiscal period is deemed to commence on the first day of the immediately following calendar year.
Marginal note:Year end on status change
(3.1)If at any time a corporation becomes or ceases to be a Canadian-controlled private corporation, otherwise than because of an acquisition of control to which subsection (4) would, if this Act were read without reference to this subsection, apply,
(a)subject to paragraph (c), the corporation’s taxation year that would, if this Act were read without reference to this subsection, include that time is deemed to end immediately before that time;
(b)a new taxation year of the corporation is deemed to begin at that time;
(c)notwithstanding subsections (1) and (3), the corporation’s taxation year that would, if this Act were read without reference to this subsection, have been its last taxation year that ended before that time is deemed instead to end immediately before that time if
(i)were this Act read without reference to this paragraph, that taxation year would, otherwise than because of paragraph 128(1)(d), section 128.1 and paragraphs 142.6(1)(a) or 149(10)(a), have ended within the 7-day period that ended immediately before that time,
(ii)within that 7-day period no person or group of persons acquired control of the corporation, and the corporation did not become or cease to be a Canadian-controlled private corporation, and
(iii)the corporation elects, in its return of income under Part I for that taxation year to have this paragraph apply; and
(d)for the purpose of determining the corporation’s fiscal period after that time, the corporation is deemed not to have established a fiscal period before that time.
Marginal note:Loss restriction event  —  year end
(4)If at any time a taxpayer is subject to a loss restriction event (other than a foreign affiliate, of a taxpayer resident in Canada, that did not carry on a business in Canada at any time in its last taxation year that began before that time), then for the purposes of this Act,
(a)subject to paragraph (b), the taxpayer’s taxation year that would, but for this paragraph, have included that time is deemed to end immediately before that time, a new taxation year of the taxpayer is deemed to begin at that time and, for the purpose of determining the taxpayer’s fiscal period after that time, the taxpayer is deemed not to have established a fiscal period before that time; and
(b)subject to paragraph 128(1)(d), section 128.1 and paragraphs 142.6(1)(a) and 149(10)(a), and notwithstanding subsections (1) and (3), if the taxpayer is a corporation and the taxpayer’s taxation year that would, but for this subsection, have been its last taxation year that ended before that time, would, but for this paragraph, have ended within the seven-day period that ended immediately before that time, that taxation year is, except if the taxpayer is subject to a loss restriction event within that period, deemed to end immediately before that time, provided that the taxpayer so elects in its return of income under Part I for that taxation year.
Marginal note:Trust transition from graduated rate estate
(4.1)For a particular trust that is a testamentary trust,
(a)its taxation year that otherwise includes a particular time is deemed to end immediately before the particular time if
(i)the particular trust is an estate and the particular time is the first time after 2015 at which the estate is not a graduated rate estate, or
(ii)the particular trust is not an estate and the particular time is immediately after 2015; and
(b)if the particular trust exists at the particular time,
(i)a new taxation year of the particular trust is deemed to begin at the particular time, and
(ii)for the purpose of determining the particular trust’s fiscal period after the particular time, the particular trust is deemed not to have established a fiscal period before that time.
Marginal note:Graduated rate estate
(5)The period for which the accounts of a graduated rate estate are made up for the purposes of an assessment under this Act may not exceed 12 months, and no change in the time when that period ends may be made for the purposes of this Act without the concurrence of the Minister.
(6)[Repealed, 2014, c. 39, s. 72]
Definition offiscal period
249.1(1)For the purposes of this Act, afiscal periodof a business or a property of a person or partnership means the period for which the person’s or partnership’s accounts in respect of the business or property are made up for purposes of assessment under this Act, but no fiscal period may end
(a)in the case of a corporation, more than 53 weeks after the period began,
(b)in the case of
(i)an individual (other than an individual to whom section 149 or 149.1 applies or a trust),
(i.1)a trust (other than a mutual fund trust if the fiscal period is one to which paragraph 132.11(1)(c) applies or a graduated rate estate),
(ii)a partnership of which
(A)an individual (other than an individual to whom section 149 or 149.1 applies or a graduated rate estate),
(B)a professional corporation, or
(C)a partnership to which this subparagraph applies,
would, if the fiscal period ended at the end of the calendar year in which the period began, be a member of the partnership in the period, or
(iii)a professional corporation that would, if the fiscal period ended at the end of the calendar year in which the period began, be in the period a member of a partnership to which subparagraph 249.1(1)(b)(ii) applies,
after the end of the calendar year in which the period began unless, in the case of a business, the business is not carried on in Canada,
(c)in the case of a partnership (other than a partnership to which subparagraph (b)(ii) or subsection (9) applies) that is a member of a partnership or has a member that is a partnership, after the end of the calendar year in which it began, if at the end of the calendar year
(i)a corporation has a significant interest, as defined in section 34.2, in the partnership,
(ii)the partnership is a member of another partnership in which a corporation has a significant interest as defined in section 34.2,
(iii)a membership interest in the partnership is held directly, or indirectly through one or more partnerships, by a partnership described in subparagraph (i) or (ii), or
(iv)the partnership holds directly, or indirectly through one or more partnerships, a membership interest in a partnership described in any of subparagraphs (i) to (iii), or
(d)in any other case, more than 12 months after the period began,
and, for the purpose of this subsection, the activities of a person to whom section 149 or 149.1 applies are deemed to be a business.
Marginal note:Not a member of a partnership
(2)For the purpose of subparagraph 249.1(1)(b)(ii) and subsection 249.1(4), a person or partnership that would not have a share of any income or loss of a partnership for a fiscal period of the partnership, if the period ended at the end of the calendar year in which the period began, is deemed not to be a member of the partnership in that fiscal period.
Marginal note:Subsequent fiscal periods
(3)Where a fiscal period of a business or a property of a person or partnership ends at any time, the subsequent fiscal period, if any, of the business or property of the person or partnership is deemed to begin immediately after that time.
Marginal note:Alternative method
(4)Paragraph 249.1(1)(b) does not apply to a fiscal period of a business carried on, throughout the period of time that began at the beginning of the fiscal period and ended at the end of the calendar year in which the fiscal period began,
(a)by an individual (otherwise than as a member of a partnership), or
(b)by an individual as a member of a partnership, where throughout that period
(i)each member of the partnership is an individual, and
(ii)the partnership is not a member of another partnership,
where
(c)in the case of an individual
(i)who is referred to in paragraph 249.1(4)(a), or
(ii)who is a member of a partnership no member of which is a graduated rate estate,
an election in prescribed form to have paragraph 249.1(1)(b) not apply is filed with the Minister by the individual on or before the individual’s filing-due date, and with the individual’s return of income under Part I, for the taxation year that includes the first day of the first fiscal period of the business that begins after 1994, and
(d)in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, an election in prescribed form to have paragraph (1)(b) not apply is filed with the Minister by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after 1994.
Marginal note:Alternative method not applicable to tax shelter investments
(5)Subsection 249.1(4) does not apply to a particular fiscal period of a business where, in a preceding fiscal period or throughout the period of time that began at the beginning of the particular period and ended at the end of the calendar year in which the particular period began, the expenditures made in the course of carrying on the business were primarily the cost or capital cost of tax shelter investments (as defined in subsection 143.2(1)).
Marginal note:Revocation of election
(6)Subsection 249.1(4) does not apply to fiscal periods of a business carried on by an individual that begin after the beginning of a particular taxation year of the individual where
(a)an election in prescribed form to revoke an election filed under subsection 249.1(4) in respect of the business is filed with the Minister; and
(b)the election to revoke is filed
(i)in the case of an individual
(A)who is not a member of a partnership, or
(B)who is a member of a partnership no member of which is a graduated rate estate,
by the individual on or before the individual’s filing-due date, and with the individual’s return of income under Part I, for the particular taxation year, and
(ii)in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after the beginning of the particular year.
Marginal note:Change of fiscal period
(7)No change in the time when a fiscal period ends may be made for the purposes of this Act without the concurrence of the Minister.
Marginal note:Single-tier fiscal period alignment
(8)The members of a partnership that has a fiscal period that begins before March 22, 2011 and that would, if this Act were read without reference to this subsection and subsection (10), end on a day after March 22, 2011, may elect to end that fiscal period on a particular day that is before the day on which the fiscal period would otherwise end (in this subsection and subsection (10) referred to as a “single-tier alignment election”) if
(a)each member of the partnership is, on the particular day, a corporation that is not a professional corporation;
(b)the partnership is not, on the particular day, a member of another partnership;
(c)at least one member of the partnership is, on the particular day, a corporation that has a significant interest, as defined in section 34.2, in the partnership;
(d)at least one member of the partnership referred to in paragraph (c) has a taxation year that ends on a day that differs from the day on which the fiscal period of the partnership would end if this Act were read without reference to this subsection and subsection (10);
(e)the particular day is after March 22, 2011 and no later than the latest day that is the last day of the first taxation year that ends after March 22, 2011 of any corporation that has been a member of the partnership continuously since March 21, 2011; and
(f)subsection (10) applies to the single-tier alignment election.
Marginal note:Multi-tier fiscal period alignment — one-time election
(9)The members of a partnership to which paragraph (1)(c) would apply if it were read without reference to this subsection may elect (in this subsection and subsections (10) and (11) referred to as a “multi-tier alignment election”) to end a fiscal period of the partnership on a particular day if
(a)as a consequence of the multi-tier alignment election, the fiscal period of the partnership, and of each other partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), ends on the particular day;
(b)the particular day is before March 22, 2012; and
(c)subsection (10) applies to the multi-tier alignment election.
Marginal note:When subsection (9) ceases to apply
(9.1)If paragraph (1)(c) did not apply to end the fiscal period of a partnership on December 31 of a calendar year (in this subsection referred to as the “preceding year”) because subsection (9) applies to the partnership, and to each other partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), (in this subsection referred to collectively as the “aligned multi-tier partnerships” and each individually as an “aligned multi-tier partnership”),
(a)subsection (9) ceases to apply — for the purpose of applying paragraph (1)(c) to each of the aligned multi-tier partnerships — in the calendar year following the preceding year (in this subsection referred to as the “current year”) if another partnership (in this subsection referred to as the “new partnership”) becomes in the current year a member of any of the aligned multi-tier partnerships, or any of the aligned multi-tier partnerships becomes in the current year a member of the new partnership, unless
(i)the fiscal period of the new partnership, and each other partnership described in relation to the new partnership by any of subparagraphs (1)(c)(ii) to (iv), ends in the current year on the same day as the fiscal period of each of the aligned multi-tier partnerships, and
(ii)each member (other than a partnership) of each aligned multi-tier partnership — or a subsidiary wholly-owned corporation of such a member — has been a member of the aligned multi-tier partnership from the end of the last fiscal period ending in the preceding year until the time at which the new partnership becomes a member of an aligned multi-tier partnership, or any of the aligned multi-tier partnerships becomes a member of the new partnership, as the case may be; and
(b)if paragraph (a) does not apply because the conditions in subparagraphs (a)(i) and (ii) are met, the new partnership is deemed — for the purpose of applying paragraph (1)(c) to each of the aligned multi-tier partnerships and the new partnership in the current year and subsequent years — to have made the multi-tier alignment election referred to in subsection (9).
Marginal note:Conditions to align a partnership fiscal period
(10)This subsection applies to a single-tier alignment election or a multi-tier alignment election, as the case may be, for a partnership if
(a)the election is filed in writing and in prescribed form with the Minister
(i)in the case of a single-tier alignment election, by a corporation that is a member of the partnership on or before the day that is the earliest filing-due date of any corporation that is a member of the partnership for its first taxation year ending after March 22, 2011, and
(ii)in the case of a multi-tier alignment election,
(A)by a corporation that is a member of the partnership, or of a partnership described in relation to the partnership by any of subparagraphs (1)(c)(ii) to (iv), and
(B)on or before the day that is the earliest filing-due date of any corporation that is a member of a partnership referred to in clause (A) for the first taxation year of the corporation ending after March 22, 2011;
(b)as a consequence of the election, the fiscal period of each partnership to which the election applies is 12 months or less;
(c)the election was made by a corporation that has the authority to act for the members of the partnership and each member of any other partnership described in relation to the partnership in subparagraph (1)(c)(ii) to (iv); and
(d)no other election is filed with the Minister to end the fiscal period of the partnership, or of any other partnership described in relation to the partnership in subparagraph (1)(c)(ii) to (iv), on a day other than the particular day referred to in subsection (8) or (9), as the case may be.
Marginal note:Deemed multi-tier alignment election
(11)For the purposes of this Act, if paragraph (1)(c) applies to end the fiscal period of a partnership on December 31, 2011, a multi-tier alignment election under subsection (9) is deemed to have been made to end the fiscal period of the partnership on December 31, 2011.
Marginal note:Person deemed resident
250(1)For the purposes of this Act, a person shall, subject to subsection 250(2), be deemed to have been resident in Canada throughout a taxation year if the person
(a)sojourned in Canada in the year for a period of, or periods the total of which is, 183 days or more;
(b)was, at any time in the year, a member of the Canadian Forces;
(c)was, at any time in the year,
(i)an ambassador, minister, high commissioner, officer or servant of Canada, or
(ii)an agent-general, officer or servant of a province,
and was resident in Canada immediately prior to appointment or employment by Canada or the province or received representation allowances in respect of the year;
(d)performed services, at any time in the year, in a country other than Canada under a prescribed international development assistance program of the Government of Canada and was resident in Canada at any time in the 3 month period preceding the day on which those services commenced;
(d.1)was, at any time in the year, a member of the overseas Canadian Forces school staff who filed his or her return for the year on the basis that the person was resident in Canada throughout the period during which the person was such a member;
(e)[Repealed, 1999, c. 22, s. 82(1)]
(f)was at any time in the year a child of, and dependent for support on, an individual to whom paragraph (b), (c), (d) or (d.1) applies and the person’s income for the year did not exceed the amount determined for F in subsection 118(1.1) for the year; or
(g)was at any time in the year, under an agreement or a convention with one or more other countries that has the force of law in Canada, entitled to an exemption from an income tax otherwise payable in any of those countries in respect of income from any source (unless all or substantially all of the person’s income from all sources was not so exempt), because at that time the person was related to or a member of the family of an individual (other than a trust) who was resident in Canada.
Marginal note:Idem
(2)Where at any time in a taxation year a person described in paragraph (1)b), (c) or (d) ceases to be a person so described, or a person described in paragraph (1)(d.1) ceases to be a member of the overseas Canadian Forces school staff, that person shall be deemed to have been resident in Canada throughout the part of the year preceding that time and the spouse or common-law partner and child of that person who by reason of paragraph (1)(e) or (f) would, but for this subsection, be deemed to have been resident in Canada throughout the year shall be deemed to have been resident in Canada throughout that part of the year.
Marginal note:Ordinarily resident
(3)In this Act, a reference to a person resident in Canada includes a person who was at the relevant time ordinarily resident in Canada.
Marginal note:Corporation deemed resident
(4)For the purposes of this Act, a corporation shall be deemed to have been resident in Canada throughout a taxation year if
(a)in the case of a corporation incorporated after April 26, 1965, it was incorporated in Canada;
(b)in the case of a corporation that
(i)was incorporated before April 9, 1959,
(ii)was, on June 18, 1971, a foreign business corporation (within the meaning of section 71 of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it read in its application to the 1971 taxation year) that was controlled by a corporation resident in Canada,
(iii)throughout the 10 year period ending on June 18, 1971, carried on business in any one particular country other than Canada, and
(iv)during the period referred to in subparagraph 250(4)(b)(iii), paid dividends to its shareholders resident in Canada on which its shareholders paid tax to the government of the country referred to in that subparagraph,
it was incorporated in Canada and, at any time in the taxation year or at any time in any preceding taxation year commencing after 1971, it was resident in Canada or carried on business in Canada; and
(c)in the case of a corporation incorporated before April 27, 1965 (other than a corporation to which subparagraphs 250(4)(b)(i) to 250(4)(b)(iv) apply), it was incorporated in Canada and, at any time in the taxation year or at any time in any preceding taxation year of the corporation ending after April 26, 1965, it was resident in Canada or carried on business in Canada.
Marginal note:Deemed non-resident
(5)Notwithstanding any other provision of this Act (other than paragraph 126(1.1)(a)), a person is deemed not to be resident in Canada at a time if, at that time, the person would, but for this subsection and any tax treaty, be resident in Canada for the purposes of this Act but is, under a tax treaty with another country, resident in the other country and not resident in Canada.
Marginal note:Continued corporation
(5.1)Where a corporation is at any time (in this subsection referred to as the “time of continuation”) granted articles of continuance (or similar constitutional documents) in a particular jurisdiction, the corporation shall
(a)for the purposes of applying this Act (other than subsection 250(4)) in respect of all times from the time of continuation until the time, if any, of continuation in a different jurisdiction, be deemed to have been incorporated in the particular jurisdiction and not to have been incorporated in any other jurisdiction; and
(b)for the purpose of applying subsection 250(4) in respect of all times from the time of continuation until the time, if any, of continuation in a different jurisdiction, be deemed to have been incorporated in the particular jurisdiction at the time of continuation and not to have been incorporated in any other jurisdiction.
Marginal note:Residence of international shipping corporation
(6)For the purposes of this Act, a corporation that was incorporated or otherwise formed under the laws of a country other than Canada or of a state, province or other political subdivision of such a country is deemed to be resident in that country throughout a taxation year and not to be resident in Canada at any time in the year, if
(a)the corporation
(i)has international shipping as its principal business in the year, or
(ii)holds eligible interests in one or more eligible entities throughout the year and at no time in the year is the total of the cost amounts to it of all those eligible interests and of all debts owing to it by an eligible entity in which an eligible interest is held by it, by a person related to it or by a partnership affiliated with it less than 50% of the total of the cost amounts to it of all its property;
(b)all or substantially all the corporation’s gross revenue for the year consists of any one or more of
(i)gross revenue from international shipping,
(ii)gross revenue from an eligible interest held by it in an eligible entity, and
(iii)interest on a debt owing by an eligible entity in which an eligible interest is held by it, by a person related to it or by a partnership affiliated with it; and
(c)the corporation was not granted articles of continuance in Canada before the end of the year.
Marginal note:Partner’s gross revenue
(6.01)For the purposes of paragraph (6)(b), an amount of profit allocated from a partnership to a member of the partnership for a taxation year is deemed to be gross revenue of the member from member’s interest in the partnership for the year.
Marginal note:Service providers
(6.02)Subsection (6.03) applies to a corporation, trust or partnership (in this subsection and subsection (6.03) referred to as the “relevant entity”) for a taxation year if
(a)the relevant entity does not satisfy the condition in subparagraph (6)(a)(i), determined without reference to subsection (6.03);
(b)all or substantially all the gross revenue of the relevant entity for the year consists of any one or more of
(i)gross revenue from the provision of services to one or more eligible entities, other than services described in any of paragraphs (a) to (h) of the definitioninternational shippingin subsection 248(1),
(ii)gross revenue from international shipping,
(iii)gross revenue from an eligible interest held by it in an eligible entity, and
(iv)interest on a debt owing by an eligible entity in which an eligible interest is held by it or a person related to it;
(c)either the relevant entity is a subsidiary wholly-owned corporation (as defined in subsection 87(1.4)) of the eligible entity referred to in paragraph (b) or an eligible interest in each eligible entity referred to in paragraph (b) is held throughout the year by
(i)the relevant entity,
(ii)one or more persons related to the relevant entity (if the relevant entity and each such person is a corporation), or persons or partnerships affiliated with the relevant entity (in any other case), or
(iii)any combination of the relevant entity and persons or partnerships described in subparagraph (ii); and
(d)all or substantially all the shares of the capital stock of, or interests in, the relevant entity are held, directly or indirectly through one or more subsidiary wholly-owned corporations (as defined in subsection 87(1.4)), throughout the year by one or more corporations, trusts or partnerships that would be eligible entities if they did not own shares of, or interests in, the relevant entity.
Marginal note:Service providers
(6.03)If this subsection applies for a taxation year, then for the purposes of subsection (6) and paragraph 81(1)(c),
(a)the relevant entity is deemed to have international shipping as its principal business in the year; and
(b)the gross revenue described in subparagraph (6.02)(b)(i) is deemed to be gross revenue from international shipping.
Marginal note:Definitions
(6.04)The following definitions apply in this subsection and subsections (6) to (6.03).
eligible entity, for a taxation year, means
(a)a corporation that is deemed by subsection (6) to be resident in a country other than Canada for the year; or
(b)a partnership or trust, if
(i)it satisfies the conditions in subparagraph (6)(a)(i) or (ii), and
(ii)all or substantially all its gross revenue for the year consists of any combination of amounts described in any of subparagraphs (6)(b)(i) to (iii). (entité admissible)
eligible interestmeans
(a)in respect of a corporation, shares of the capital stock of the corporation that
(i)give the holders of those shares not less than 25% of the votes that could be cast at an annual meeting of the shareholders of the corporation, and
(ii)have a fair market value that is not less than 25% of the fair market value of all the issued and outstanding shares of the capital stock of the corporation;
(b)in respect of a trust, an interest as a beneficiary (as defined in subsection 108(1)) under the trust with a fair market value that is not less than 25% of the fair market value of all the interests of all beneficiaries under the trust; and
(c)in respect of a partnership, an interest as a member of the partnership with a fair market value that is not less than 25% of the fair market value of all the membership interests in the partnership. (participation admissible)
Marginal note:Holdings in eligible entities
(6.05)For the purpose of determining whether a person or partnership (in this subsection referred to as the “holder”) holds an eligible interest in an eligible entity in subsections (6) to (6.04), the holder is deemed to hold all of the shares or interests, as the case may be, in the eligible entity held by
(a)the holder;
(b)if the holder is a corporation,
(i)each corporation related to the holder, and
(ii)each person, other than a corporation, or partnership that is affiliated with the holder; and
(c)if the holder is not a corporation, each person or partnership affiliated with the holder.
Marginal note:Residence ofinter vivostrusts
(6.1)For the purposes of provisions of this Act that apply to a trust for a taxation year only where the trust has been resident in Canada throughout the year, where a particular trust ceases at any time to exist and the particular trust was resident in Canada immediately before that time, the particular trust is deemed to be resident in Canada throughout the period that begins at that time and ends at the end of the year.
(7)[Repealed, 2011, c. 24, s. 74]
Marginal note:Non-resident person’s taxation year and income
250.1For greater certainty, unless the context requires otherwise
(a)a taxation year of a non-resident person shall be determined, except as otherwise permitted by the Minister, in the same manner as the taxation year of a person resident in Canada; and
(b)a person for whom income for a taxation year is determined in accordance with this Act includes a non-resident person.
Marginal note:Arm’s length
251(1)For the purposes of this Act,
(a)related persons shall be deemed not to deal with each other at arm’s length;
(b)a taxpayer and a personal trust (other than a trust described in any of paragraphs (a) to (e.1) of the definitiontrustin subsection 108(1)) are deemed not to deal with each other at arm’s length if the taxpayer, or any person not dealing at arm’s length with the taxpayer, would be beneficially interested in the trust if subsection 248(25) were read without reference to subclauses 248(25)(b)(iii)(A)(II) to (IV); and
(c)in any other case, it is a question of fact whether persons not related to each other are, at a particular time, dealing with each other at arm’s length.
Definition ofrelated persons
(2)For the purpose of this Act,related persons, or persons related to each other, are
(a)individuals connected by blood relationship, marriage or common-law partnership or adoption;
(b)a corporation and
(i)a person who controls the corporation, if it is controlled by one person,
(ii)a person who is a member of a related group that controls the corporation, or
(iii)any person related to a person described in subparagraph 251(2)(b)(i) or 251(2)(b)(ii); and
(c)any two corporations
(i)if they are controlled by the same person or group of persons,
(ii)if each of the corporations is controlled by one person and the person who controls one of the corporations is related to the person who controls the other corporation,
(iii)if one of the corporations is controlled by one person and that person is related to any member of a related group that controls the other corporation,
(iv)if one of the corporations is controlled by one person and that person is related to each member of an unrelated group that controls the other corporation,
(v)if any member of a related group that controls one of the corporations is related to each member of an unrelated group that controls the other corporation, or
(vi)if each member of an unrelated group that controls one of the corporations is related to at least one member of an unrelated group that controls the other corporation.
Marginal note:Corporations related through a third corporation
(3)Where two corporations are related to the same corporation within the meaning of subsection 251(2), they shall, for the purposes of subsections 251(1) and 251(2), be deemed to be related to each other.
Marginal note:Relation where amalgamation or merger
(3.1)Where there has been an amalgamation or merger of two or more corporations and the new corporation formed as a result of the amalgamation or merger and any predecessor corporation would have been related immediately before the amalgamation or merger if the new corporation were in existence at that time, and if the persons who were the shareholders of the new corporation immediately after the amalgamation or merger were the shareholders of the new corporation at that time, the new corporation and any such predecessor corporation shall be deemed to have been related persons.
Marginal note:Amalgamation of related corporations
(3.2)Where there has been an amalgamation or merger of 2 or more corporations each of which was related (otherwise than because of a right referred to in paragraph 251(5)(b)) to each other immediately before the amalgamation or merger, the new corporation formed as a result of the amalgamation or merger and each of the predecessor corporations is deemed to have been related to each other.
Marginal note:Definitions concerning groups
(4)In this Act,
related groupmeans a group of persons each member of which is related to every other member of the group; (groupe lié)
unrelated groupmeans a group of persons that is not a related group. (groupe non lié)
Marginal note:Control by related groups, options, etc.
(5)For the purposes of subsection 251(2) and the definitionCanadian-controlled private corporationin subsection 125(7),
(a)where a related group is in a position to control a corporation, it shall be deemed to be a related group that controls the corporation whether or not it is part of a larger group by which the corporation is in fact controlled;
(b)where at any time a person has a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently,
(i)to, or to acquire, shares of the capital stock of a corporation or to control the voting rights of such shares, the person shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed to have the same position in relation to the control of the corporation as if the person owned the shares at that time,
(ii)to cause a corporation to redeem, acquire or cancel any shares of its capital stock owned by other shareholders of the corporation, the person shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed to have the same position in relation to the control of the corporation as if the shares were so redeemed, acquired or cancelled by the corporation at that time;
(iii)to, or to acquire or control, voting rights in respect of shares of the capital stock of a corporation, the person is, except where the right is not exercisable at that time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual, deemed to have the same position in relation to the control of the corporation as if the person could exercise the voting rights at that time, or
(iv)to cause the reduction of voting rights in respect of shares, owned by other shareholders, of the capital stock of a corporation, the person is, except where the right is not exercisable at that time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual, deemed to have the same position in relation to the control of the corporation as if the voting rights were so reduced at that time; and
(c)where a person owns shares in two or more corporations, the person shall as shareholder of one of the corporations be deemed to be related to himself, herself or itself as shareholder of each of the other corporations.
Marginal note:Blood relationship, etc.
(6)For the purposes of this Act, persons are connected by
(a)blood relationship if one is the child or other descendant of the other or one is the brother or sister of the other;
(b)marriage if one is married to the other or to a person who is so connected by blood relationship to the other;
(b.1)common-law partnership if one is in a common-law partnership with the other or with a person who is connected by blood relationship to the other; and
(c)adoption if one has been adopted, either legally or in fact, as the child of the other or as the child of a person who is so connected by blood relationship (otherwise than as a brother or sister) to the other.
Definition ofaffiliated persons
251.1(1)For the purposes of this Act,affiliated persons, or persons affiliated with each other, are
(a)an individual and a spouse or common-law partner of the individual;
(b)a corporation and
(i)a person by whom the corporation is controlled,
(ii)each member of an affiliated group of persons by which the corporation is controlled, and
(iii)a spouse or common-law partner of a person described in subparagraph (i) or (ii);
(c)two corporations, if
(i)each corporation is controlled by a person, and the person by whom one corporation is controlled is affiliated with the person by whom the other corporation is controlled,
(ii)one corporation is controlled by a person, the other corporation is controlled by a group of persons, and each member of that group is affiliated with that person, or
(iii)each corporation is controlled by a group of persons, and each member of each group is affiliated with at least one member of the other group;
(d)a corporation and a partnership, if the corporation is controlled by a particular group of persons each member of which is affiliated with at least one member of a majority-interest group of partners of the partnership, and each member of that majority-interest group is affiliated with at least one member of the particular group;
(e)a partnership and a majority-interest partner of the partnership;
(f)two partnerships, if
(i)the same person is a majority-interest partner of both partnerships,
(ii)a majority-interest partner of one partnership is affiliated with each member of a majority-interest group of partners of the other partnership, or
(iii)each member of a majority-interest group of partners of each partnership is affiliated with at least one member of a majority-interest group of partners of the other partnership;
(g)a person and a trust, if the person
(i)is a majority-interest beneficiary of the trust, or
(ii)would, if this subsection were read without reference to this paragraph, be affiliated with a majority-interest beneficiary of the trust; and
(h)two trusts, if a contributor to one of the trusts is affiliated with a contributor to the other trust and
(i)a majority-interest beneficiary of one of the trusts is affiliated with a majority-interest beneficiary of the other trust,
(ii)a majority-interest beneficiary of one of the trusts is affiliated with each member of a majority-interest group of beneficiaries of the other trust, or
(iii)each member of a majority-interest group of beneficiaries of each of the trusts is affiliated with at least one member of a majority-interest group of beneficiaries of the other trust.
Marginal note:Affiliation where amalgamation or merger
(2)Where at any time 2 or more corporations (in this subsection referred to as the “predecessors”) amalgamate or merge to form a new corporation, the new corporation and any predecessor are deemed to have been affiliated with each other where they would have been affiliated with each other immediately before that time if
(a)the new corporation had existed immediately before that time; and
(b)the persons who were the shareholders of the new corporation immediately after that time had been the shareholders of the new corporation immediately before that time.
Marginal note:Definitions
(3)The definitions in this subsection apply in this section.
affiliated group of personsmeans a group of persons each member of which is affiliated with every other member. (groupe de personnes affiliées)
beneficiary, under a trust, includes a person beneficially interested in the trust. (bénéficiaire)
contributor, to a trust, means a person who has at any time made a loan or transfer of property, either directly or indirectly, in any manner whatever, to or for the benefit of the trust other than, if the person deals at arm’s length with the trust at that time and is not immediately after that time a majority-interest beneficiary of the trust,
(a)a loan made at a reasonable rate of interest; or
(b)a transfer made for fair market value consideration. (cotisant)
controlledmeans controlled, directly or indirectly in any manner whatever. (contrôlé)
majority-interest beneficiary, of a trust at any time, means a person whose interest as a beneficiary, if any, at that time
(a)in the income of the trust has, together with the interests as a beneficiary in the income of the trust of all persons with whom the person is affiliated, a fair market value that is greater than 50% of the fair market value of all the interests as a beneficiary in the income of the trust; or
(b)in the capital of the trust has, together with the interests as a beneficiary in the capital of the trust of all persons with whom the person is affiliated, a fair market value that is greater than 50% of the fair market value of all the interests as a beneficiary in the capital of the trust. (bénéficiaire détenant une participation majoritaire)
majority-interest group of beneficiaries, of a trust at any time, means a group of persons each of whom is a beneficiary under the trust at that time such that
(a)if one person held the interests as a beneficiary of all of the members of the group, that person would be a majority-interest beneficiary of the trust; and
(b)if any member of the group were not a member, the test described in paragraph (a) would not be met. (groupe de bénéficiaires détenant une participation majoritaire)
majority-interest group of partnersof a partnership means a group of persons each of whom has an interest in the partnership such that
(a)if one person held the interests of all members of the group, that person would be a majority-interest partner of the partnership; and
(b)if any member of the group were not a member, the test described in paragraph (a) would not be met. (groupe d’associés détenant une participation majoritaire)
Marginal note:Interpretation
(4)For the purposes of this section,
(a)persons are affiliated with themselves;
(b)a person includes a partnership;
(c)notwithstanding subsection 104(1), a reference to a trust does not include a reference to the trustee or other persons who own or control the trust property; and
(d)in determining whether a person is affiliated with a trust,
(i)if the amount of income or capital of the trust that a person may receive as a beneficiary under the trust depends on the exercise by any person of, or the failure by any person to exercise, a discretionary power, that person is deemed to have fully exercised, or to have failed to exercise, the power, as the case may be,
(ii)the interest of a person in a trust as a beneficiary is disregarded in determining whether the person deals at arm’s length with the trust if the person would, in the absence of the interest as a beneficiary, be considered to deal at arm’s length with the trust,
(iii)a trust is not a majority interest beneficiary of another trust unless the trust has an interest as a beneficiary in the income or capital, as the case may be, of the other trust, and
(iv)in determining whether a contributor to one trust is affiliated with a contributor to another trust, individuals connected by blood relationship, marriage, common-law partnership or adoption are deemed to be affiliated with one another.
Marginal note:Definitions
251.2(1)The following definitions apply in this section.
beneficiaryhas the same meaning as in subsection 251.1(3). (bénéficiaire)
equityhas the same meaning as in subsection 122.1(1) read without reference to paragraph (e) of the definitionequityin that subsection. (capitaux propres)
equity valuehas the same meaning as in subsection 122.1(1). (valeur des capitaux propres)
fixed interest, at any time of a person in a trust, means an interest of the person as a beneficiary (in this definition, determined without reference to subsection 248(25)) under the trust provided that no amount of the income or capital of the trust to be distributed at any time in respect of any interest in the trust depends on the exercise by any person of, or the failure by any person to exercise, any discretionary power, other than a power in respect of which it is reasonable to conclude that
(a)the power is consistent with normal commercial practice;
(b)the power is consistent with terms that would be acceptable to the beneficiaries under the trust if the beneficiaries were dealing with each other at arm’s length; and
(c)the exercise of, or failure to exercise, the power will not materially affect the value of an interest as a beneficiary under the trust relative to the value of other such interests under the trust. (participation fixe)
investment fund, at any time, means a trust, if
(a)at all times throughout the period that begins at the later of March 21, 2013 and the end of the calendar year in which it is created and that ends at that time, the trust has a class of units outstanding that complies with the conditions prescribed for the purposes of paragraph 132(6)(c) determined without reference to paragraph 4801(b) of theIncome Tax Regulations; and
(b)at all times throughout the period that begins at the later of March 21, 2013 and the time of its creation and that ends at that time, the trust
(i)is resident in Canada,
(ii)has no beneficiaries who may for any reason receive directly from the trust any of the income or capital of the trust, other than beneficiaries whose interests as beneficiaries under the trust are fixed interests described by reference to units of the trust,
(iii)follows a reasonable policy of investment diversification,
(iv)limits its undertaking to the investing of its funds in property,
(v)does not alone, or as a member of a group of persons, control a corporation, and
(vi)does not hold
(A)property that the trust, or a person with which the trust does not deal at arm’s length, uses in carrying on a business,
(B)real or immovable property, an interest in real property or an immovable, or a real right in an immovable,
(C)Canadian resource property, foreign resource property, or an interest or right in Canadian resource property or foreign resource property, or
(D)more than 20% of the securities of any class of securities of a person (other than an investment fund or a mutual fund corporation that would meet the conditions in this paragraph, other than in subparagraph (ii), if it were a trust), unless at that time
(I)the securities (other than liabilities) of the person held by the trust have a total fair market value that is no more than 10% of the equity value of the person, and
(II)the liabilities of the person held by the trust have a total fair market value that is no more than 10% of the fair market value of all of the liabilities of the person. (fiducie de placement déterminée)
majority-interest beneficiaryhas the same meaning as in subsection 251.1(3) read without reference to the expression “, if any,” in the definitionmajority-interest beneficiaryin that subsection. (bénéficiaires détenant une participation majoritaire)
majority-interest group of beneficiarieshas the same meaning as in subsection 251.1(3). (groupe de bénéficiaires détenant une participation majoritaire)
majority-interest group of partnershas the same meaning as in subsection 251.1(3). (groupe d’associés détenant une participation majoritaire)
personincludes a partnership. (personne)
portfolio investment fund[Repealed, 2016, c. 12, s. 65]
specified right, held at any time by a person in respect of a trust, means a right under a contract, in equity or otherwise, to acquire, either immediately or in the future and either absolutely or contingently, equity of the trust, or to cause the trust to redeem or cancel equity of the trust, unless the right is not exercisable at that time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual. (droit déterminé)
subsidiary, of a particular person at any time, means a corporation, partnership or trust (in this definition referred to as the “subject entity”) where
(a)the particular person holds at that time property
(i)that is equity of the subject entity, or
(ii)that derives all or part of its fair market value, directly or indirectly, from equity of the subject entity; and
(b)the total of the following amounts is at that time equal to more than 50% of the equity value of the subject entity:
(i)each amount that is the fair market value at that time of equity of the subject entity that is held at that time by the particular person or a person with whom the particular person is affiliated, and
(ii)each amount (other than an amount described in subparagraph (i)) that is the portion of the fair market value at that time — derived directly or indirectly from equity of the subject entity — of a property that is held at that time by the particular person or a person with whom the particular person is affiliated. (filiale)
Marginal note:Loss restriction event
(2)For the purposes of this Act, a taxpayer is at any time subject to a loss restriction event if
(a)the taxpayer is a corporation and at that time control of the corporation is acquired by a person or group of persons; or
(b)the taxpayer is a trust and
(i)that time is after March 20, 2013 and after the time at which the trust is created, and
(ii)at that time a person becomes a majority-interest beneficiary, or a group of persons becomes a majority-interest group of beneficiaries, of the trust.
Marginal note:Trusts — exceptions
(3)For the purposes of paragraph (2)(b), a person is deemed not to become a majority-interest beneficiary, and a group of persons is deemed not to become a majority-interest group of beneficiaries, as the case may be, of a particular trust solely because of
(a)the acquisition of equity of the particular trust by
(i)a particular person from another person with whom the particular person was affiliated immediately before the acquisition,
(ii)a particular person who was affiliated with the particular trust immediately before the acquisition,
(iii)an estate from an individual, if the estate arose on and as a consequence of the death of the individual and the estate acquired the equity from the individual as a consequence of the death, or
(iv)a particular person from an estate that arose on and as a consequence of the death of an individual, if the estate acquired the equity from the individual as a consequence of the death and the individual was affiliated with the particular person immediately before the death;
(b)a variation in the terms of the particular trust, the satisfaction of, or failure to satisfy, a condition under the terms of the particular trust, the exercise by any person of, or the failure by any person to exercise, a power, or (without limiting the generality of the foregoing) the redemption, surrender or termination of equity of the particular trust at any time, if each majority-interest beneficiary, and each member of a majority-interest group of beneficiaries, of the particular trust immediately after that time was affiliated with the particular trust immediately before
(i)that time, or
(ii)in the case of the redemption or surrender of equity of the particular trust that was held, immediately before that time, by an estate and that was acquired by the estate from an individual as described in subparagraph (a)(iii), the individual’s death;
(c)the transfer at any time of all the equity of the particular trust to a corporation, partnership or another trust (in this paragraph referred to as the “acquirer”), if
(i)the only consideration for the transfer is equity (determined without reference to paragraph (d) of the definitionequityin subsection 122.1(1)) of the acquirer,
(ii)at all times before that time the acquirer held no property or held only property having a nominal value, and
(iii)immediately after that time the acquirer is neither
(A)a subsidiary of any person, nor
(B)a corporation controlled, directly or indirectly in any manner whatever, by a person or group of persons;
(d)the transfer at any time of equity of the particular trust to a corporation, partnership or another trust (in this paragraph referred to as the “acquirer”), if
(i)immediately before that time a person was a majority-interest beneficiary, or a group of persons was a majority-interest group of beneficiaries, of the particular trust,
(ii)immediately after that time the person, or group of persons, as the case may be, described in subparagraph (i) in respect of the particular trust, and no other person or group of persons, is
(A)if the acquirer is a corporation, a person by whom, or a group of persons by which, the corporation is controlled directly or indirectly in any manner whatever,
(B)if the acquirer is a partnership, a majority-interest partner, or a majority-interest group of partners, of the partnership, and
(C)if the acquirer is a trust, a majority-interest beneficiary, or a majority-interest group of beneficiaries, of the trust, and
(iii)at no time during a series of transactions or events that includes the transfer does the person or group of persons, as the case may be, described in subparagraph (i) in respect of the particular trust, cease to be a person or group of persons described in any of clauses (ii)(A) to (C) in respect of the acquirer;
(e)a transaction (other than a transaction one or more of the parties to which may be excused from completing as a result of changes to this Act) the parties to which are obligated to complete under the terms of an agreement in writing between the parties entered into before March 21, 2013; or
(f)the acquisition or disposition of equity of the particular trust at any time if
(i)the particular trust is an investment fund immediately before that time, and
(ii)the acquisition or disposition, as the case may be, is not part of a series of transactions or events that includes the particular trust ceasing to be an investment fund.
Marginal note:Trusts — additional cases
(4)For the purposes of paragraph (2)(b) and subject to subsection (3), a person is deemed to become at a particular time a majority-interest beneficiary of a particular trust if
(a)a particular person is at and immediately before the particular time a majority-interest beneficiary, or a member of a majority-interest group of beneficiaries, of the particular trust, and the particular person is at the particular time, but is not immediately before the particular time, a subsidiary of another person (in this paragraph referred to as the “acquirer”), unless
(i)the acquirer is immediately before the particular time affiliated with the particular trust, or
(ii)this paragraph previously applied to deem a person to become a majority-interest beneficiary of the particular trust because the particular person became, as part of a series of transactions or events that includes the particular person becoming at the particular time a subsidiary of the acquirer, a subsidiary of another person that is at the particular time a subsidiary of the acquirer; or
(b)at the particular time, as part of a series of transactions or events, two or more persons acquire equity of the particular trust in exchange for or upon a redemption or surrender of equity of, or as a consequence of a distribution from, a corporation, partnership or another trust, unless
(i)a person affiliated with the corporation, partnership or other trust was immediately before the particular time a majority-interest beneficiary of the particular trust,
(ii)if all the equity of the particular trust that was acquired at or before the particular time as part of the series were acquired by one person, the person would not at the particular time be a majority-interest beneficiary of the particular trust, or
(iii)this paragraph previously applied to deem a person to become a majority-interest beneficiary of the particular trust because of an acquisition of equity of the particular trust that was part of the series.
Marginal note:Trusts — special rules of application
(5)For the purposes of this section,
(a)in determining whether persons are affiliated with each other
(i)except for the purposes of paragraph (b) of the definitionsubsidiaryin subsection (1), section 251.1 is to be read without reference to the definitioncontrolledin subsection 251.1(3),
(ii)in determining whether an individual (other than a trust) is affiliated with another individual (other than a trust), individuals connected by blood relationship, marriage or common-law partnership or adoption are deemed to be affiliated with one another, and
(iii)if, at any time as part of a series of transactions or events a person acquires equity of a corporation, partnership or trust, and it can reasonably be concluded that one of the reasons for the acquisition, or for making any agreement or undertaking in respect of the acquisition, is to cause a condition in paragraph (3)(a) or (b) or subparagraph (4)(a)(i) or (b)(i) regarding affiliation to be satisfied at a particular time, the condition is deemed not to be satisfied at the particular time;
(b)in determining whether a particular person becomes at any time a majority-interest beneficiary, or a particular group of persons becomes at any time a majority-interest group of beneficiaries, of a trust, the fair market value of each person’s equity of the trust is to be determined at and immediately before that time
(i)without reference to the portion of that fair market value that is attributable to property acquired if it can reasonably be concluded that one of the reasons for the acquisition is to cause paragraph (2)(b), or any provision that applies by reference to a trust being subject to a loss restriction event at any time, not to apply,
(ii)without reference to the portion of that fair market value that is attributable to a change in the fair market value of all or part of any equity of the trust if it can reasonably be concluded that one of the reasons for the change is to cause paragraph (2)(b), or any provision that applies by reference to a trust being subject to a loss restriction event at any time, not to apply, and
(iii)as if each specified right held immediately before that time by the particular person, or by a member of the particular group, in respect of the trust is at that time exercised if it can reasonably be concluded that one of the reasons for the acquisition of the right is to cause paragraph (2)(b), or any provision that applies by reference to a trust being subject to a loss restriction event at any time, not to apply; and
(c)if, at any time as part of a series of transactions or events a person acquires asecurity(as defined in subsection 122.1(1)) and it can reasonably be concluded that one of the reasons for the acquisition, or for making any agreement or undertaking in respect of the acquisition, is to cause a condition in subparagraph (b)(v) or clause (b)(vi)(D) of the definitioninvestment fundin subsection (1) to be satisfied at a particular time in respect of a trust, the condition is deemed not to be satisfied at the particular time in respect of the trust.
Marginal note:Trusts — time of day
(6)For the purposes of this Act, if a trust is subject to a loss restriction event at a particular time during a day, the trust is deemed to be subject to the loss restriction event at the beginning of that day and not at the particular time unless the trust elects in its return of income under Part I filed for its taxation year that ends immediately before the loss restriction event to have this subsection not apply.
Marginal note:Filing and other deadlines
(7)If at any time a trust is subject to a loss restriction event, in respect of the trust for its taxation year that ends immediately before that time,
(a)the reference in paragraph 132(2.1)(a) to “the day that is 90 days after the end of the year” is to be read as “the balance-due day of the trust for the year”;
(b)the reference in subsection 132(6.1) to “before the 91st day after the end of” is to be read as “on or before the balance-due day of the trust for”;
(c)the reference in paragraph 150(1)(c) to “within 90 days from the end of” is to be read as “on or before the balance-due day of the trust for”;
(d)the reference in subsection 204.7(1) to “Within 90 days from the end of each taxation year commencing after 1980” is to be read as “On or before the balance-due day of the trust for each taxation year”;
(e)the reference in subsection 210.2(5), and in subsection 221(2) of theIncome Tax Regulations, to “within 90 days after the end of” is to be read as “on or before the balance-due day of the trust for”; and
(f)the references in subsections 202(8) and 204(2) of theIncome Tax Regulationsto “within 90 days from the end of” are to be read as “on or before the balance-due day of the trust for”.
Extended meaning ofchild
252(1)In this Act, words referring to a child of a taxpayer include
(a)a person of whom the taxpayer is the legal parent;
(b)a person who is wholly dependent on the taxpayer for support and of whom the taxpayer has, or immediately before the person attained the age of 19 years had, in law or in fact, the custody and control;
(c)a child of the taxpayer’s spouse or common-law partner; and
(d)[Repealed, 2005, c. 33, s. 12]
(e)a spouse or common-law partner of a child of the taxpayer.
Marginal note:Relationships
(2)In this Act, words referring to
(a)a parent of a taxpayer include a person
(i)whose child the taxpayer is,
(ii)whose child the taxpayer had previously been within the meaning of paragraph 252(1)(b), or
(iii)who is a parent of the taxpayer’s spouse or common-law partner;
(b)a brother of a taxpayer include a person who is
(i)the brother of the taxpayer’s spouse or common-law partner, or
(ii)the spouse or common-law partner of the taxpayer’s sister;
(c)a sister of a taxpayer include a person who is
(i)the sister of the taxpayer’s spouse or common-law partner, or
(ii)the spouse or common-law partner of the taxpayer’s brother;
(d)a grandparent of a taxpayer include a person who is
(i)the grandfather or grandmother of the taxpayer’s spouse or common-law partner, or
(ii)the spouse or common-law partner of the taxpayer’s grandfather or grandmother;
(e)an aunt or uncle of a taxpayer include the spouse or common-law partner of the taxpayer’s aunt or uncle, as the case may be;
(f)a great-aunt or great-uncle of a taxpayer include the spouse or common-law partner of the taxpayer’s great-aunt or great-uncle, as the case may be; and
(g)a niece or nephew of a taxpayer include the niece or nephew, as the case may be, of the taxpayer’s spouse or common-law partner.
Marginal note:Extended meaning ofspouseandformer spouse
(3)For the purposes of paragraph 56(1)(b), section 56.1, paragraphs 60(b) and (j), section 60.1, subsections 70(6) and (6.1), 73(1) and (5) and 104(4) and (5.1), the definitionpre-1972 spousal trustin subsection 108(1), subsection 146(16), the definitionsurvivorin subsection 146.2(1), subparagraph 146.3(2)(f)(iv), subsection 146.3(14), section 146.5, subsections 147(19) and 147.3(5) and (7), section 147.5, subsections 148(8.1) and (8.2), the definitionqualifying transferin subsection 207.01(1), and subsections 210(1) and 248(22) and (23),spouseandformer spouseof a particular individual include another individual who is a party to a void or voidable marriage with the particular individual.
(4)[Repealed, 2000, c. 12, s. 141(2)]
Marginal note:Union employer
252.1All the structural units of a trade union, including each local, branch, national and international unit, shall be deemed to be a single employer and a single entity for the purposes of the provisions of this Act and the regulations relating to
(a)pension adjustments and past service pension adjustments for years after 1994;
(b)the determination of whether a pension plan is, in a year after 1994, a multi-employer plan or a specified multi-employer plan (within the meanings assigned by subsection 147.1(1));
(c)the determination of whether a contribution made under a plan or arrangement is a resident’s contribution (within the meaning assigned by subsection 207.6(5.1)); and
(d)the deduction or withholding and the remittance of any amount as required by subsection 153(1) in respect of a contribution made after 1991 under a retirement compensation arrangement.
Extended meaning ofcarrying on business
253For the purposes of this Act, where in a taxation year a person who is a non-resident person or a trust to which Part XII.2 applies
(a)produces, grows, mines, creates, manufactures, fabricates, improves, packs, preserves or constructs, in whole or in part, anything in Canada whether or not the person exports that thing without selling it before exportation,
(b)solicits orders or offers anything for sale in Canada through an agent or servant, whether the contract or transaction is to be completed inside or outside Canada or partly in and partly outside Canada, or
(c)disposes of
(i)Canadian resource property, except where an amount in respect of the disposition is included under paragraph 66.2(1)(a) or 66.4(1)(a),
(ii)property (other than depreciable property) that is a timber resource property, an option in respect of a timber resource property or an interest in, or for civil law a right in, a timber resource property, or
(iii)property (other than capital property) that is real or immovable property situated in Canada, including an option in respect of such property or an interest in, or for civil law a real right in, such property, whether or not the property is in existence,
the person shall be deemed, in respect of the activity or disposition, to have been carrying on business in Canada in the year.
Marginal note:Investments in limited partnerships
253.1(1)For the purposes of subparagraph 108(2)(b)(ii), paragraphs 130.1(6)(b), 131(8)(b), 132(6)(b) and 146.1(2.1)(c), subsection 146.2(6), paragraph 146.4(5)(b), subsections 146.6(3) and 147.5(8), paragraph 149(1)(o.2), the definitionprivate holding corporationin subsection 191(1), the definitioninvestment fundin subsection 251.2(1) and regulations made for the purposes of paragraphs 149(1)(o.3) and (o.4), if a trust or corporation holds an interest as a member of a partnership and, by operation of any law governing the arrangement in respect of the partnership, the liability of the member as a member of the partnership is limited, the member shall not, solely because of its acquisition and holding of that interest, be considered to carry on any business or other activity of the partnership.
Marginal note:Investments in limited partnerships
(2)For the purposes of section 149.1 and subsections 188.1(1) and (2), if a registered charity, a registered Canadian amateur athletic association or a registered journalism organization holds an interest as a member of a partnership, the member shall not, solely because of its acquisition and holding of that interest, be considered to carry on any business of the partnership if
(a)by operation of any law governing the arrangement in respect of the partnership, the liability of the member as a member of the partnership is limited;
(b)the member deals at arm’s length with each general partner of the partnership; and
(c)the member, or the member together with persons and partnerships with which it does not deal at arm’s length, holds interests in the partnership that have a fair market value of not more than 20% of the fair market value of the interests of all members in the partnership.
Marginal note:Contract under pension plan
254Where a document has been issued or a contract has been entered into before July 31, 1997 purporting to create, to establish, to extinguish or to be in substitution for, a taxpayer’s right to an amount or amounts, immediately or in the future, out of or under a superannuation or pension fund or plan,
(a)if the rights provided for in the document or contract are rights provided for by the superannuation or pension plan or are rights to a payment or payments out of the superannuation or pension fund, and the taxpayer acquired an interest under the document or in the contract before that day, any payment under the document or contract is deemed to be a payment out of or under the superannuation or pension fund or plan and the taxpayer is deemed not to have received, by the issuance of the document or entering into the contract, an amount out of or under the superannuation or pension fund or plan; and
(b)if the rights created or established by the document or contract are not rights provided for by the superannuation or pension plan or a right to payments out of the superannuation or pension fund, an amount equal to the value of the rights created or established by the document or contract shall be deemed to have been received by the taxpayer out of or under the superannuation or pension fund or plan when the document was issued or the contract was entered into.
Canada
255For the purposes of this Act,Canadais hereby declared to include and to have always included
(a)the sea bed and subsoil of the submarine areas adjacent to the coasts of Canada in respect of which the Government of Canada or of a province grants a right, licence or privilege to explore for, drill for or take any minerals, petroleum, natural gas or any related hydrocarbons; and
(b)the seas and airspace above the submarine areas referred to in paragraph 255(a) in respect of any activities carried on in connection with the exploration for or exploitation of the minerals, petroleum, natural gas or hydrocarbons referred to in that paragraph.
Marginal note:Associated corporations
256(1)For the purposes of this Act, one corporation is associated with another in a taxation year if, at any time in the year,
(a)one of the corporations controlled, directly or indirectly in any manner whatever, the other;
(b)both of the corporations were controlled, directly or indirectly in any manner whatever, by the same person or group of persons;
(c)each of the corporations was controlled, directly or indirectly in any manner whatever, by a person and the person who so controlled one of the corporations was related to the person who so controlled the other, and either of those persons owned, in respect of each corporation, not less than 25% of the issued shares of any class, other than a specified class, of the capital stock thereof;
(d)one of the corporations was controlled, directly or indirectly in any manner whatever, by a person and that person was related to each member of a group of persons that so controlled the other corporation, and that person owned, in respect of the other corporation, not less than 25% of the issued shares of any class, other than a specified class, of the capital stock thereof; or
(e)each of the corporations was controlled, directly or indirectly in any manner whatever, by a related group and each of the members of one of the related groups was related to all of the members of the other related group, and one or more persons who were members of both related groups, either alone or together, owned, in respect of each corporation, not less than 25% of the issued shares of any class, other than a specified class, of the capital stock thereof.
Definition ofspecified class
(1.1)For the purposes of subsection 256(1),specified classmeans a class of shares of the capital stock of a corporation where, under the terms or conditions of the shares or any agreement in respect thereof,
(a)the shares are not convertible or exchangeable;
(b)the shares are non-voting;
(c)the amount of each dividend payable on the shares is calculated as a fixed amount or by reference to a fixed percentage of an amount equal to the fair market value of the consideration for which the shares were issued;
(d)the annual rate of the dividend on the shares, expressed as a percentage of an amount equal to the fair market value of the consideration for which the shares were issued, cannot in any event exceed,
(i)where the shares were issued before 1984, the rate of interest prescribed for the purposes of subsection 161(1) at the time the shares were issued, and
(ii)where the shares were issued after 1983, the prescribed rate of interest at the time the shares were issued; and
(e)the amount that any holder of the shares is entitled to receive on the redemption, cancellation or acquisition of the shares by the corporation or by any person with whom the corporation does not deal at arm’s length cannot exceed the total of an amount equal to the fair market value of the consideration for which the shares were issued and the amount of any unpaid dividends thereon.
Marginal note:Control, etc.
(1.2)For the purposes of this subsection and subsections 256(1), 256(1.1) and 256(1.3) to 256(5),
(a)a group of persons in respect of a corporation means any two or more persons each of whom owns shares of the capital stock of the corporation;
(b)for greater certainty,
(i)a corporation that is controlled by one or more members of a particular group of persons in respect of that corporation shall be considered to be controlled by that group of persons, and
(ii)a corporation may be controlled by a person or a particular group of persons notwithstanding that the corporation is also controlled or deemed to be controlled by another person or group of persons;
(c)a corporation shall be deemed to be controlled by another corporation, a person or a group of persons at any time where
(i)shares of the capital stock of the corporation having a fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the capital stock of the corporation, or
(ii)common shares of the capital stock of the corporation having a fair market value of more than 50% of the fair market value of all the issued and outstanding common shares of the capital stock of the corporation
are owned at that time by the other corporation, the person or the group of persons, as the case may be;
(d)where shares of the capital stock of a corporation are owned, or deemed by this subsection to be owned, at any time by another corporation (in this paragraph referred to as the “holding corporation”), those shares shall be deemed to be owned at that time by any shareholder of the holding corporation in a proportion equal to the proportion of all those shares that
(i)the fair market value of the shares of the capital stock of the holding corporation owned at that time by the shareholder
is of
(ii)the fair market value of all the issued shares of the capital stock of the holding corporation outstanding at that time;
(e)where, at any time, shares of the capital stock of a corporation are property of a partnership, or are deemed by this subsection to be owned by the partnership, those shares shall be deemed to be owned at that time by each member of the partnership in a proportion equal to the proportion of all those shares that
(i)the member’s share of the income or loss of the partnership for its fiscal period that includes that time
is of
(ii)the income or loss of the partnership for its fiscal period that includes that time
and for this purpose, where the income and loss of the partnership for its fiscal period that includes that time are nil, that proportion shall be computed as if the partnership had had income for that period in the amount of $1,000,000;
(f)where shares of the capital stock of a corporation are owned, or deemed by this subsection to be owned, at any time by a trust,
(i)[Repealed, 2014, c. 39, s. 76]
(ii)where a beneficiary’s share of the accumulating income or capital therefrom depends on the exercise by any person of, or the failure by any person to exercise, any discretionary power, those shares are deemed to be owned at that time by the beneficiary,
(iii)in any case where subparagraph (ii) does not apply, a beneficiary is deemed at that time to own the proportion of those shares that the fair market value of the beneficial interest in the trust of the beneficiary is of the fair market value of all beneficial interests in the trust, and
(iv)in the case of a trust referred to in subsection 75(2), the person referred to in that subsection from whom property of the trust or property for which it was substituted was directly or indirectly received shall be deemed to own those shares at that time; and
(g)in determining the fair market value of a share of the capital stock of a corporation, all issued and outstanding shares of the capital stock of the corporation shall be deemed to be non-voting.
Marginal note:Parent deemed to own shares
(1.3)Where at any time shares of the capital stock of a corporation are owned by a child who is under 18 years of age, for the purpose of determining whether the corporation is associated at that time with any other corporation that is controlled, directly or indirectly in any manner whatever, by a parent of the child or by a group of persons of which the parent is a member, the shares shall be deemed to be owned at that time by the parent unless, having regard to all the circumstances, it can reasonably be considered that the child manages the business and affairs of the corporation and does so without a significant degree of influence by the parent.
Marginal note:Options and rights
(1.4)For the purpose of determining whether a corporation is associated with another corporation with which it is not otherwise associated, where a person or any partnership in which the person has an interest has a right at any time under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently,
(a)to, or to acquire, shares of the capital stock of a corporation, or to control the voting rights of shares of the capital stock of a corporation, the person or partnership shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed to own the shares at that time, and the shares shall be deemed to be issued and outstanding at that time; or
(b)to cause a corporation to redeem, acquire or cancel any shares of its capital stock owned by other shareholders of a corporation, the person or partnership shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed at that time to have the same position in relation to control of the corporation and ownership of shares of its capital stock as if the shares were redeemed, acquired or cancelled by the corporation.
Marginal note:Person related to himself, herself or itself
(1.5)For the purposes of subsections 256(1) to 256(1.4) and 256(1.6) to 256(5), where a person owns shares in two or more corporations, the person shall as shareholder of one of the corporations be deemed to be related to himself, herself or itself as shareholder of each of the other corporations.
Marginal note:Exception
(1.6)For the purposes of subsection 256(1.2) and notwithstanding subsection 256(1.4), any share that is
(a)described in paragraph (e) of the definitionterm preferred sharein subsection 248(1) during the applicable time referred to in that paragraph, or
(b)a share of a specified class within the meaning of subsection 256(1.1)
shall be deemed not to have been issued and outstanding and not to be owned by any shareholder and an amount equal to the greater of the paid-up capital of the share and the amount, if any, that any holder of the share is entitled to receive on the redemption, cancellation or acquisition of the share by the corporation shall be deemed to be a liability of the corporation.
Marginal note:Corporations associated through a third corporation
(2)For the purposes of
(a)this Act, subject to paragraph (b), two corporations are deemed to be associated with each other at a particular time if
(i)they would, but for this subsection, not be associated with each other at the particular time, and
(ii)each corporation is associated with, or is deemed by this subsection to be associated with, the same corporation (in this subsection referred to as thethird corporation) at the particular time; and
(b)section 125,
(i)if the third corporation is not a Canadian-controlled private corporation at the particular time, the two corporations are deemed not to be associated with each other at the particular time, and
(ii)if the third corporation is a Canadian-controlled private corporation that elects in prescribed form to apply this subparagraph in its taxation year that includes the particular time, the two corporations are deemed not to be associated with each other at the particular time and the business limit of the third corporation for its taxation year that includes the particular time is deemed to be nil.
Marginal note:Anti-avoidance
(2.1)For the purposes of this Act, where, in the case of two or more corporations, it may reasonably be considered that one of the main reasons for the separate existence of those corporations in a taxation year is to reduce the amount of taxes that would otherwise be payable under this Act or to increase the amount of refundable investment tax credit under section 127.1, the two or more corporations shall be deemed to be associated with each other in the year.
Marginal note:Saving provision
(3)Where one corporation (in this subsection referred to as the “controlled corporation”) would, but for this subsection, be associated with another corporation in a taxation year by reason of being controlled, directly or indirectly in any manner whatever, by the other corporation or by reason of both of the corporations being controlled, directly or indirectly in any manner whatever, by the same person at a particular time in the year (which corporation or person so controlling the controlled corporation is in this subsection referred to as the “controller”) and it is established to the satisfaction of the Minister that
(a)there was in effect at the particular time an agreement or arrangement enforceable according to the terms thereof, under which, on the satisfaction of a condition or the happening of an event that it is reasonable to expect will be satisfied or happen, the controlled corporation will
(i)cease to be controlled, directly or indirectly in any manner whatever, by the controller, and
(ii)be or become controlled, directly or indirectly in any manner whatever, by a person or group of persons, with whom or with each of the members of which, as the case may be, the controller was at the particular time dealing at arm’s length, and
(b)the purpose for which the controlled corporation was at the particular time so controlled was the safeguarding of rights or interests of the controller in respect of
(i)any indebtedness owing to the controller the whole or any part of the principal amount of which was outstanding at the particular time, or
(ii)any shares of the capital stock of the controlled corporation that were owned by the controller at the particular time and that were, under the agreement or arrangement, to be redeemed by the controlled corporation or purchased by the person or group of persons referred to in subparagraph 256(3)(a)(ii),
the controlled corporation and the other corporation with which it would otherwise be so associated in the year shall be deemed, for the purpose of this Act, not to be associated with each other in the year.
Marginal note:Saving provision
(4)Where one corporation would, but for this subsection, be associated with another corporation in a taxation year by reason of both of the corporations being controlled by the same executor, liquidator of a succession or trustee and it is established to the satisfaction of the Minister
(a)that the executor, liquidator or trustee did not acquire control of the corporations as a result of one or more estates or trusts created by the same individual or two or more individuals not dealing with each other at arm’s length, and
(b)that the estate or trust under which the executor, liquidator or trustee acquired control of each of the corporations arose only on the death of the individual creating the estate or trust,
the two corporations are deemed, for the purposes of this Act, not to be associated with each other in the year.
Marginal note:Idem
(5)Where one corporation would, but for this subsection, be associated with another corporation in a taxation year, by reason only that the other corporation is a trustee under a trust pursuant to which the corporation is controlled, the two corporations shall be deemed, for the purposes of this Act, not to be associated with each other in the year unless, at any time in the year, a settlor of the trust controlled or is a member of a related group that controlled the other corporation that is the trustee under the trust.
Marginal note:Control in fact
(5.1)For the purposes of this Act, where the expression “controlled, directly or indirectly in any manner whatever,” is used, a corporation shall be considered to be so controlled by another corporation, person or group of persons (in this subsection referred to as the “controller”) at any time where, at that time, the controller has any direct or indirect influence that, if exercised, would result in control in fact of the corporation, except that, where the corporation and the controller are dealing with each other at arm’s length and the influence is derived from a franchise, licence, lease, distribution, supply or management agreement or other similar agreement or arrangement, the main purpose of which is to govern the relationship between the corporation and the controller regarding the manner in which a business carried on by the corporation is to be conducted, the corporation shall not be considered to be controlled, directly or indirectly in any manner whatever, by the controller by reason only of that agreement or arrangement.
Marginal note:Factual control — interpretation
(5.11)For the purposes of the Act, the determination of whether a taxpayer has, in respect of a corporation, any direct or indirect influence that, if exercised, would result in control in fact of the corporation, shall
(a)take into consideration all factors that are relevant in the circumstances; and
(b)not be limited to, and the relevant factors need not include, whether the taxpayer has a legally enforceable right or ability to effect a change in the board of directors of the corporation, or its powers, or to exercise influence over the shareholder or shareholders who have that right or ability.
Marginal note:Idem
(6)For the purposes of this Act, where a corporation (in this subsection referred to as the “controlled corporation”) would, but for this subsection, be regarded as having been controlled or controlled, directly or indirectly in any manner whatever, by a person or partnership (in this subsection referred to as the “controller”) at a particular time and it is established that
(a)there was in effect at the particular time an agreement or arrangement enforceable according to the terms thereof, under which, on the satisfaction of a condition or the happening of an event that it is reasonable to expect will be satisfied or happen, the controlled corporation will
(i)cease to be controlled, or controlled, directly or indirectly in any manner whatever, as the case may be, by the controller, and
(ii)be or become controlled, or controlled, directly or indirectly in any manner whatever, as the case may be, by a person or group of persons, with whom or with each of the members of which, as the case may be, the controller was at the particular time dealing at arm’s length, and
(b)the purpose for which the controlled corporation was at the particular time so controlled, or controlled, directly or indirectly in any manner whatever, as the case may be, was the safeguarding of rights or interests of the controller in respect of
(i)any indebtedness owing to the controller the whole or any part of the principal amount of which was outstanding at the particular time, or
(ii)any shares of the capital stock of the controlled corporation that were owned by the controller at the particular time and that were, under the agreement or arrangement, to be redeemed by the controlled corporation or purchased by the person or group of persons referred to in subparagraph 256(6)(a)(ii),
the controlled corporation is deemed not to have been controlled by the controller at the particular time.
Marginal note:Simultaneous control
(6.1)For the purposes of this Act and for greater certainty,
(a)where a corporation (in this paragraph referred to as the “subsidiary”) would be controlled by another corporation (in this paragraph referred to as the “parent”) if the parent were not controlled by any person or group of persons, the subsidiary is controlled by
(i)the parent, and
(ii)any person or group of persons by whom the parent is controlled; and
(b)where a corporation (in this paragraph referred to as the “subject corporation”) would be controlled by a group of persons (in this paragraph referred to as the “first-tier group”) if no corporation that is a member of the first-tier group were controlled by any person or group of persons, the subject corporation is controlled by
(i)the first-tier group, and
(ii)any group of one or more persons comprised of, in respect of every member of the first-tier group, either the member, or a person or group of persons by whom the member is controlled.
Marginal note:Application to control in fact
(6.2)In its application to subsection (5.1), subsection (6.1) shall be read as if the references in subsection (6.1) to “controlled” were references to “controlled, directly or indirectly in any manner whatever,”.
Marginal note:Acquiring control
(7)For the purposes of this subsection, of section 55, subsections 66(11), 66.5(3), 66.7(10) and (11), 85(1.2), 88(1.1) and (1.2), 110.1(1.2) and 111(5.4) and paragraph 251.2(2)(a) and of subsection 5905(5.2) of theIncome Tax Regulations,
(a)control of a particular corporation shall be deemed not to have been acquired solely because of
(i)the acquisition at any time of shares of any corporation by
(A)a particular person who acquired the shares from a person to whom the particular person was related (otherwise than because of a right referred to in paragraph 251(5)(b)) immediately before that time,
(B)a particular person who was related to the particular corporation (otherwise than because of a right referred to in paragraph 251(5)(b)) immediately before that time,
(C)an estate that acquired the shares because of the death of a person,
(D)a particular person who acquired the shares from an estate that arose on and as a consequence of the death of an individual, if the estate acquired the shares from the individual as a consequence of the death and the individual was related to the particular person immediately before the death,
(E)a corporation on a distribution (within the meaning assigned by subsection 55(1)) by a specified corporation (within the meaning assigned by that subsection) if a dividend, to which subsection 55(2) does not apply because of paragraph 55(3)(b), is received in the course of the reorganization in which the distribution occurs,
(ii)the redemption or cancellation at any particular time of, or a change at any particular time in the rights, privileges, restrictions or conditions attaching to, shares of the particular corporation or of a corporation controlling the particular corporation, where each person and each member of each group of persons that controls the particular corporation immediately after the particular time was related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the corporation
(A)immediately before the particular time, or
(B)immediately before the death of a person, where the shares were held immediately before the particular time by an estate that acquired the shares because of the person’s death, or
(iii)the acquisition at any time of shares of the particular corporation if
(A)the acquisition of those shares would otherwise result in the acquisition of control of the particular corporation at that time by a related group of persons, and
(B)each member of each group of persons that controls the particular corporation at that time was related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the particular corporation immediately before that time;
(b)where at any time 2 or more corporations (each of which is referred to in this paragraph as a “predecessor corporation”) have amalgamated to form one corporate entity (in this paragraph referred to as the “new corporation”),
(i)control of a corporation is deemed not to have been acquired by any person or group of persons solely because of the amalgamation unless it is deemed by subparagraph 256(7)(b)(ii) or 256(7)(b)(iii) to have been so acquired,
(ii)a person or group of persons that controls the new corporation immediately after the amalgamation and did not control a predecessor corporation immediately before the amalgamation is deemed to have acquired immediately before the amalgamation control of the predecessor corporation and of each corporation it controlled immediately before the amalgamation (unless the person or group of persons would not have acquired control of the predecessor corporation if the person or group of persons had acquired all the shares of the predecessor corporation immediately before the amalgamation), and
(iii)control of a predecessor corporation and of each corporation it controlled immediately before the amalgamation is deemed to have been acquired immediately before the amalgamation by a person or group of persons
(A)unless the predecessor corporation was related (otherwise than because of a right referred to in paragraph 251(5)(b)) immediately before the amalgamation to each other predecessor corporation,
(B)unless, if one person had immediately after the amalgamation acquired all the shares of the new corporation’s capital stock that the shareholders of the predecessor corporation, or of another predecessor corporation that controlled the predecessor corporation, acquired on the amalgamation in consideration for their shares of the predecessor corporation or of the other predecessor corporation, as the case may be, the person would have acquired control of the new corporation as a result of the acquisition of those shares, or
(C)unless this subparagraph would, but for this clause, deem control of each predecessor corporation to have been acquired on the amalgamation where the amalgamation is an amalgamation of
(I)two corporations, or
(II)two corporations (in this subclause referred to as the “parents”) and one or more other corporations (each of which is in this subclause referred to as a “subsidiary”) that would, if all the shares of each subsidiary’s capital stock that were held immediately before the amalgamation by the parents had been held by one person, have been controlled by that person;
(c)subject to paragraph 256(7)(a), where 2 or more persons (in this paragraph referred to as the “transferors”) dispose of shares of the capital stock of a particular corporation in exchange for shares of the capital stock of another corporation (in this paragraph referred to as the “acquiring corporation”), control of the acquiring corporation and of each corporation controlled by it immediately before the exchange is deemed to have been acquired at the time of the exchange by a person or group of persons unless
(i)the particular corporation and the acquiring corporation were related (otherwise than because of a right referred to in paragraph 251(5)(b)) to each other immediately before the exchange, or
(ii)if all the shares of the acquiring corporation’s capital stock that were acquired by the transferors on the exchange were acquired at the time of the exchange by one person, the person would not control the acquiring corporation;
(c.1)subject to paragraph (a), if, at any particular time, as part of a series of transactions or events, two or more persons acquire shares of a corporation (in this paragraph referred to as the “acquiring corporation”) in exchange for or upon a redemption or surrender of interests in, or as a consequence of a distribution from, a SIFT trust (determined without reference to subsection 122.1(2)), SIFT partnership (determined without reference to subsection 197(8)) or real estate investment trust (as defined in subsection 122.1(1)), control of the acquiring corporation and of each corporation controlled by it immediately before the particular time is deemed to have been acquired by a person or group of persons at the particular time unless
(i)in respect of each of the corporations, a person (in this subparagraph referred to as a “relevant person”) affiliated (within the meaning assigned by section 251.1 read without reference to the definitioncontrolledin subsection 251.1(3)) with the SIFT trust, SIFT partnership or real estate investment trust owned shares of the particular corporation having a total fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the particular corporation at all times during the period that
(A)begins on the latest of July 14, 2008, the date the particular corporation came into existence and the time of the last acquisition of control, if any, of the particular corporation by a relevant person, and
(B)ends immediately before the particular time,
(ii)if all the securities (in this subparagraph as defined in subsection 122.1(1)) of the acquiring corporation that were acquired as part of the series of transactions or events at or before the particular time were acquired by one person, the person would
(A)not at the particular time control the acquiring corporation, and
(B)have at the particular time acquired securities of the acquiring corporation having a fair market value of not more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation, or
(iii)this paragraph previously applied to deem an acquisition of control of the acquiring corporation upon an acquisition of shares that was part of the same series of transactions or events;
(c.2)subject to paragraph (a), if, at any particular time, as part of a series of transactions or events, two or more persons acquire shares of a corporation (in this paragraph referred to as the “acquiring corporation”) in exchange for or upon a redemption or surrender of interests in, or as a consequence of a distribution from, a partnership or trust, control of the acquiring corporation and of each corporation controlled by it immediately before the particular time is deemed to have been acquired by a person or group of persons at the particular time unless
(i)in respect of each of the corporations, a person affiliated with the partnership or trust owned immediately before the particular time shares of the particular corporation having a total fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the particular corporation immediately before the particular time,
(ii)if all thesecurities(in this subparagraph as defined in subsection 122.1(1)) of the acquiring corporation that were acquired at or before the particular time as part of the series were acquired by one person, the person would
(A)not at the particular time control the acquiring corporation, and
(B)have at the particular time acquired securities of the acquiring corporation having a fair market value of not more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation, or
(iii)paragraph (c.1) applies, or this paragraph or paragraph (c.1) previously applied, to deem an acquisition of control of the acquiring corporation upon an acquisition of shares that was part of the same series of transactions or events;
(d)where at any time shares of the capital stock of a particular corporation are disposed of to another corporation (in this paragraph referred to as the “acquiring corporation”) for consideration that includes shares of the acquiring corporation’s capital stock and, immediately after that time, the acquiring corporation and the particular corporation are controlled by a person or group of persons who
(i)controlled the particular corporation immediately before that time, and
(ii)did not, as part of the series of transactions or events that includes the disposition, cease to control the acquiring corporation,
control of the particular corporation and of each corporation controlled by it immediately before that time is deemed not to have been acquired by the acquiring corporation solely because of the disposition;
(e)control of a particular corporation and of each corporation controlled by it immediately before a particular time is deemed not to have been acquired at the particular time by a corporation (in this paragraph referred to as the “acquiring corporation”) if at the particular time, the acquiring corporation acquires shares of the particular corporation’s capital stock for consideration that consists solely of shares of the acquiring corporation’s capital stock, and if
(i)immediately after the particular time
(A)the acquiring corporation owns all the shares of each class of the particular corporation’s capital stock (determined without reference to shares of a specified class, within the meaning assigned by paragraph 88(1)(c.8)),
(B)the acquiring corporation is not controlled by any person or group of persons, and
(C)the fair market value of the shares of the particular corporation’s capital stock that are owned by the acquiring corporation is not less than 95% of the fair market value of all of the assets of the acquiring corporation, or
(ii)any of clauses (i)(A) to (C) do not apply and the acquisition occurs as part of a plan of arrangement that, on completion, results in
(A)the acquiring corporation (or a new corporation that is formed on an amalgamation of the acquiring corporation and a subsidiary wholly-owned corporation of the acquiring corporation) owning all the shares of each class of the particular corporation’s capital stock (determined without reference to shares of a specified class, within the meaning assigned by paragraph 88(1)(c.8)),
(B)the acquiring corporation (or the new corporation) not being controlled by any person or group of persons, and
(C)the fair market value of the shares of the particular corporation’s capital stock that are owned by the acquiring corporation (or the new corporation) being not less than 95% of the fair market value of all of the assets of the acquiring corporation (or the new corporation);
(f)if a particular trust is the only beneficiary of another trust, the particular trust is described in paragraph (c) of the definitionSIFT trust wind-up event, the particular trust would, in the absence of this paragraph, acquire control of a corporation solely because of a SIFT trust wind-up event that is a distribution of shares of the capital stock of the corporation by the other trust, and the other trust controlled the corporation immediately before the distribution, the particular trust is deemed not to acquire control of the corporation because of the distribution;
(g)a corporation (in this paragraph referred to as the “acquiring corporation”) that acquires shares of another corporation on a distribution that is a SIFT trust wind-up event of a SIFT wind-up entity is deemed not to acquire control of the other corporation because of that acquisition if the following conditions are met:
(i)the SIFT wind-up entity is a trust whose only beneficiary immediately before the distribution is the acquiring corporation,
(ii)the SIFT wind-up entity controlled the other corporation immediately before the distribution,
(iii)as part of a series of transactions or events under which the acquiring corporation became the only beneficiary under the trust, two or more persons acquired shares in the acquiring corporation in exchange for their interests as beneficiaries under the trust, and
(iv)if all the shares described in subparagraph (iii) had been acquired by one person, the person would
(A)control the acquiring corporation, and
(B)have acquired shares of the acquiring corporation having a fair market value of more than 50% of the fair market value of all the issued and outstanding shares of the acquiring corporation;
(h)if at any time after September 12, 2013 a trust is subject to a loss restriction event and immediately before that time the trust, or a group of persons a member of which is the trust, controls a corporation, control of the corporation and of each corporation controlled by it immediately before that time is deemed to have been acquired at that time by a person or group of persons; and
(i)if at any time after September 12, 2013 a trust controls a corporation, control of the corporation is deemed not to be acquired solely because of a change in the trustee or legal representative having ownership or control of the trust’s property if
(i)the change is not part of a series of transactions or events that includes a change in the beneficial ownership of the trust’s property, and
(ii)no amount of income or capital of the trust to be distributed, at any time at or after the change, in respect of any interest in the trust depends upon the exercise by any person or partnership, or the failure of any person or partnership, to exercise any discretionary power.
Marginal note:Deemed exercise of right
(8)Where at any time a taxpayer acquires a right referred to in paragraph 251(5)(b) in respect of a share and it can reasonably be concluded that one of the main purposes of the acquisition is
(a)to avoid any limitation on the deductibility of any non-capital loss, net capital loss, farm loss or any expense or other amount referred to in subsection 66(11), 66.5(3) or 66.7(10) or 66.7(11),
(b)to avoid the application of subsection 10(10) or 13(24), paragraph 37(1)(h) or subsection 55(2) or 66(11.4) or (11.5), paragraph 88(1)(c.3) or subsection 111(4), (5.1) or (5.3), 181.1(7), 190.1(6) or 251.2(2),
(c)to avoid the application of paragraph (j) or (k) of the definitioninvestment tax creditin subsection 127(9),
(d)to avoid the application of section 251.1, or
(e)to affect the application of section 80,
the taxpayer is deemed to be in the same position in relation to the control of the corporation as if the right were immediate and absolute and as if the taxpayer had exercised the right at that time for the purpose of determining whether control of a corporation has been acquired for the purposes of subsections 10(10) and 13(24), section 37, subsections 55(2), 66(11), (11.4) and (11.5), 66.5(3), 66.7(10) and (11), section 80, paragraph 80.04(4)(h), subparagraph 88(1)(c)(vi), paragraph 88(1)(c.3), subsections 88(1.1) and (1.2), sections 111 and 127, subsections 181.1(7), 190.1(6) and 249(4) and paragraph 251.2(2)(a) and in determining for the purposes of section 251.1, paragraph (b) of the definitioninvestment fundin subsection 251.2(1) and paragraphs 251.2(3)(c) and (d) and 256(7)(i) whether a corporation is controlled by any other person or group of persons.
Marginal note:Corporations without share capital
(8.1)For the purposes of subsections 256(7) and 256(8),
(a)a corporation incorporated without share capital is deemed to have a capital stock of a single class;
(b)each member, policyholder and other participant in the corporation is deemed to be a shareholder of the corporation; and
(c)the membership, policy or other interest in the corporation of each of those participants is deemed to be the number of shares of the corporation’s capital stock that the Minister considers reasonable in the circumstances, having regard to the total number of participants in the corporation and the nature of their participation.
Marginal note:Date of acquisition of control
(9)For the purposes of this Act, other than for the purposes of determining if a corporation is, at any time, a small business corporation or a Canadian-controlled private corporation, where control of a corporation is acquired by a person or group of persons at a particular time on a day, control of the corporation shall be deemed to have been acquired by the person or group of persons, as the case may be, at the beginning of that day and not at the particular time unless the corporation elects in its return of income under Part I filed for its taxation year that ends immediately before the acquisition of control not to have this subsection apply.
Marginal note:Definitions
256.1(1)The following definitions apply in this section.
attribute trading restrictionmeans a restriction on the use of a tax attribute arising on the application, either alone or in combination with other provisions, of any of this section, subsections 10(10) and 13(24), section 37, subsections 66(11.4) and (11.5), 66.7(10) and (11), 69(11) and 88(1.1) and (1.2), sections 111 and 127 and subsections 181.1(7), 190.1(6), 249(4) and 256(7). (restriction au commerce d’attributs)
personincludes a partnership. (personne)
specified provisionmeans any of subsections 10(10) and 13(24), paragraph 37(1)(h), subsections 66(11.4) and (11.5), 66.7(10) and (11), 69(11) and 111(4), (5), (5.1) and (5.3), paragraphs (j) and (k) of the definitioninvestment tax creditin subsection 127(9), subsections 181.1(7) and 190.1(6) and any provision of similar effect. (dispositions déterminées)
Marginal note:Application of subsection (3)
(2)Subsection (3) applies at a particular time in respect of a corporation if
(a)shares of the capital stock of the corporation held by a person, or the total of all shares of the capital stock of the corporation held by members of a group of persons, as the case may be, have at the particular time a fair market value that exceeds 75% of the fair market value of all the shares of the capital stock of the corporation;
(b)shares, if any, of the capital stock of the corporation held by the person, or the total of all shares, if any, of the capital stock of the corporation held by members of the group, have immediately before the particular time a fair market value that does not exceed 75% of the fair market value of all the shares of the capital stock of the corporation;
(c)the person or group does not control the corporation at the particular time; and
(d)it is reasonable to conclude that one of the main reasons that the person or group does not control the corporation is to avoid the application of one or more specified provisions.
Marginal note:Deemed acquisition of control
(3)If this subsection applies at a particular time in respect of a corporation, then for the purposes of the attribute trading restrictions,
(a)the person or group referred to in subsection (2)
(i)is deemed to acquire control of the corporation, and each corporation controlled by the corporation, at the particular time, and
(ii)is not deemed to have control of the corporation, and each corporation controlled by the corporation, at any time after the particular time solely because this paragraph applied at the particular time; and
(b)during the period that the condition in paragraph (2)(a) is satisfied, each corporation referred to in paragraph (a) — and any corporation incorporated or otherwise formed subsequent to that time and controlled by that corporation — is deemed not to be related to, or affiliated with, any person to which it was related to, or affiliated with, immediately before paragraph (a) applies.
Marginal note:Special rules
(4)For the purpose of applying paragraph (2)(a) in respect of a person or group of persons,
(a)if it is reasonable to conclude that one of the reasons that one or more transactions or events occur is to cause a person or group of persons not to hold shares having a fair market value that exceeds 75% of the fair market value of all the shares of the capital stock of a corporation, the paragraph is to be applied without reference to those transactions or events; and
(b)the person, or each member of the group, is deemed to have exercised each right that is held by the person or a member of the group and that is referred to in paragraph 251(5)(b) in respect of a share of the corporation referred to in paragraph (2)(a).
Marginal note:Deeming rules — if share value nil
(5)For the purposes of subsections (2) to (4), if the fair market value of the shares of the capital stock of a corporation is nil at any time, then for the purpose of determining the fair market value of those shares, the corporation is deemed, at that time, to have assets net of liabilities equal to $100,000 and to have $100,000 of income for the taxation year that includes that time.
Marginal note:Deemed acquisition of control
(6)If, at any time as part of a transaction or event or series of transactions or events, control of a particular corporation is acquired by a person or group of persons and it can reasonably be concluded that one of the main reasons for the acquisition of control is so that a specified provision does not apply to one or more corporations, the attribute trading restrictions are deemed to apply to each of those corporations as if control of each of those corporations were acquired at that time.
Marginal note:Negative amounts
257Except as specifically otherwise provided, where an amount or a number is required under this Act to be determined or calculated by or in accordance with an algebraic formula, if the amount or number when so determined or calculated would, but for this section, be a negative amount or number, it shall be deemed to be nil.
Marginal note:Deemed dividend on term preferred share
258(2)Notwithstanding subsection 15(3), an amount paid or payable after 1978 as interest on or as an amount in lieu of interest in respect of
(a)any interest or dividend payable after November 16, 1978 on an income bond or an income debenture issued before November 17, 1978 or pursuant to an agreement in writing made before that date, or
(b)a dividend that became payable or in arrears after November 16, 1978 on a share of the capital stock of a corporation that is not a term preferred share by reason of having been issued before November 17, 1978 or pursuant to an agreement in writing made before that date,
shall, for the purposes of subsections 112(2.1) and 138(6), be deemed to be a dividend received on a term preferred share.
Marginal note:Deemed interest on preferred shares
(3)Subject to subsection 258(4), for the purposes of paragraphs 12(1)(c) and 12(1)(k) and sections 113 and 126, each amount that is a dividend received in a taxation year on
(a)a term preferred share by a specified financial institution resident in Canada from a corporation not resident in Canada, or
(b)any other share that
(i)is a grandfathered share, or
(ii)was issued before 8:00 p.m