Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Marginal note:Tax payable in respect of advantage

• 207.05 (1) A tax is payable under this Part for a calendar year if, in the year, an advantage in relation to a registered plan is extended to, or is received or receivable by, the controlling individual of the registered plan, a trust governed by the registered plan, or any other person who does not deal at arm’s length with the controlling individual.

• Marginal note:Amount of tax payable

  (2) The amount of tax payable in respect of an advantage described in subsection (1) is

  • (a) in the case of a benefit, the fair market value of the benefit;

  • (b) in the case of a loan or an indebtedness, the amount of the loan or indebtedness; and

  • (c) in the case of an RRSP strip, the amount of the RRSP strip.

• Marginal note:Liability for tax

  (3) The controlling individual of a registered plan in connection with which a tax is imposed under subsection (1) is liable to pay the tax except that, if the advantage is extended by the issuer or carrier of the registered plan or by a person with whom the issuer or carrier is not dealing at arm’s length, the issuer or carrier, and not the controlling individual, is liable to pay the tax.

• Marginal note:Transitional rule

  (4) If an individual so elects before July 2012 in prescribed form, subsection (1) does not apply in respect of any advantage that is an amount included in the calculation of the transitional prohibited investment benefit of the individual for a taxation year provided that the transitional prohibited investment benefit

  • (a) is paid to the individual, from a RRIF or RRSP of the individual, within 90 days after the end of the taxation year; and

  • (b) is not paid by way of transfer to another RRIF or RRSP of the individual.

Marginal note:Waiver of tax payable

• 207.06 (1) If an individual would otherwise be liable to pay a tax under this Part because of section 207.02 or 207.03, the Minister may waive or cancel all or part of the liability if

  • (a) the individual establishes to the satisfaction of the Minister that the liability arose as a consequence of a reasonable error; and

  • (b) one or more distributions are made without delay under a TFSA of which the individual is the holder, the total amount of which is not less than the total of

    • (i) the amount in respect of which the individual would otherwise be liable to pay the tax, and

    • (ii) income (including a capital gain) that is reasonably attributable, directly or indirectly, to the amount described in subparagraph (i).

• Marginal note:Waiver of tax payable

  (2) If a person would otherwise be liable to pay a tax under this Part because of subsection 207.04(1) or section 207.05, the Minister may waive or cancel all or part of the liability where the Minister considers it just and equitable to do so having regard to all the circumstances, including

  • (a) whether the tax arose as a consequence of reasonable error; and

  • (b) the extent to which the transaction or series of transactions that gave rise to the tax also gave rise to another tax under this Act.

• Marginal note:Waiver of tax payable — advantage

  (3) The Minister shall not waive or cancel a liability imposed under subsection 207.05(3) on an individual in respect of a registered plan unless one or more payments are made without delay from the registered plan to the individual, the total amount of which is not less than the amount of the liability waived or cancelled.

• Marginal note:Other powers of Minister

  (4) The Minister may notify the controlling individual of a registered plan that the controlling individual must cause a payment to be made from the registered plan to the controlling individual within 90 days of receipt of the notice, the amount of which is not less than the amount of specified non-qualified investment income in respect of the registered plan.