Budget Implementation Act, 2008 (S.C. 2008, c. 28)
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Assented to 2008-06-18
PART 1AMENDMENTS RELATED TO INCOME TAX
R.S., c. 1 (5th Supp.)Income Tax Act
19. (1) Paragraph (a) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act is replaced by the following:
(a) that is a Canadian exploration expense incurred by a corporation after March 2008 and before 2010 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2010) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition “mineral resource” in subsection 248(1),
(2) Paragraphs (c) and (d) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act are replaced by the following:
(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2008 and before April 2009, and
(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2008 and before April 2009;
(3) Subsection 127(10.2) of the Act is replaced by the following:
Marginal note:Expenditure limit determined
(10.2) For the purpose of subsection (10.1), a particular corporation’s expenditure limit for a particular taxation year is the amount determined by the formula
($7 million - 10A) × [($40 million - B)/$40 million]
where
- A
- is the greater of
(a) $400,000, and
(b) the amount that is
(i) if the particular corporation is not associated with any other corporation in the particular taxation year, the particular corporation’s taxable income for its immediately preceding taxation year (determined before taking into consideration the specified future tax consequences for that preceding year), or
(ii) if the particular corporation is associated with one or more other corporations in the particular taxation year, the total of all amounts each of which is the taxable income of the particular corporation for its, or of one of the other corporations for its, last taxation year that ended in the last calendar year that ended before the end of the particular taxation year (determined before taking into consideration the specified future tax consequences for that last taxation year), and
- B
- is
(a) nil, if the following amount is less than or equal to $10 million:
(i) if the particular corporation is not associated with any other corporation in the particular taxation year, the amount that is its taxable capital employed in Canada (within the meaning assigned by section 181.2) for its immediately preceding taxation year, or
(ii) if the particular corporation is associated with one or more other corporations in the particular taxation year, the amount that is the total of all amounts, each of which is the taxable capital employed in Canada (within the meaning assigned by section 181.2) of the particular corporation for its, or of one of the other corporations for its, last taxation year that ended in the last calendar year that ended before the end of the particular taxation year, or
(b) in any other case, the lesser of $40 million and the amount by which the amount determined under subparagraph (a)(i) or (ii), as the case may be, exceeds $10 million.
(4) Subsections (1) and (2) apply to expenses renounced under a flow through share agreement made after March 2008.
(5) Subsection (3) applies to taxation years that end on or after February 26, 2008, except that for taxation years that include February 26, 2008, the expenditure limit of a corporation shall be determined by the formula
A + [(B - A) × (C/D)]
where
- A
- is the expenditure limit of the corporation for the taxation year determined in accordance with the formula in subsection 127(10.2) as that subsection read in its application to a taxation year that ended immediately before February 26, 2008;
- B
- is the expenditure limit of the corporation for the taxation year determined in accordance with the formula in subsection 127(10.2), as enacted by subsection (3);
- C
- is the number of days in the taxation year that are after February 25, 2008; and
- D
- is the number of days in the taxation year.
20. (1) Paragraph (a) of the definition “excluded right or interest” in subsection 128.1(10) of the Act is amended by adding the following after subparagraph (iii.1):
(iii.2) a TFSA,
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
21. (1) Paragraph 132.2(1)(k) of the Act is replaced by the following:
(k) if a share to which paragraph (j) applies would, but for this paragraph, cease to be a qualified investment (within the meaning assigned by subsection 146(1), 146.1(1) or 146.3(1), section 204 or subsection 205(1) or 207.01(1)) as a consequence of the qualifying exchange, the share is deemed to be a qualified investment until the earlier of the day that is 60 days after the transfer time and the time at which it is disposed of in accordance with paragraph (j);
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
22. (1) Subsection 138.1(7) of the Act is replaced by the following:
Marginal note:Where ss. (1) to (6) do not apply
(7) Subsections (1) to (6) do not apply to the holder of a segregated fund policy with respect to such a policy that is issued or effected as a registered retirement savings plan, registered retirement income fund or TFSA or that is issued under a registered pension plan.
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
23. (1) Paragraphs (b) and (c) of the definition “specified plan” in subsection 146.1(1) of the Act are replaced by the following:
(b) under which the beneficiary is an individual in respect of whom paragraphs 118.3(1)(a) to (b) apply for the beneficiary’s taxation year that ends in the 31st year following the year in which the plan was entered into, and
(c) that provides that, at all times after the end of the 35th year following the year in which the plan was entered into, no other individual may be designated as a beneficiary under the plan;
(2) Subparagraphs 146.1(2)(h)(i) and (ii) of the Act are replaced by the following:
(i) in the case of a specified plan, the 35th year following the year in which the plan was entered into, and
(ii) in any other case, the 31st year following the year in which the plan was entered into;
(3) Subparagraphs 146.1(2)(i)(i) and (ii) of the Act are replaced by the following:
(i) in the case of a specified plan, the 40th year following the year in which the plan was entered into, and
(ii) in any other case, the 35th year following the year in which the plan was entered into;
(4) Clause 146.1(2)(j)(ii)(A) of the Act is replaced by the following:
(A) the beneficiary had not attained 31 years of age before the time of the contribution, or
(5) Section 146.1 of the Act is amended by adding the following after subsection (2.2):
Marginal note:Extension for making educational assistance payments
(2.21) Notwithstanding paragraph (2)(g.1), an education savings plan may allow for the payment of an educational assistance payment to or for an individual at any time in the six-month period immediately following the particular time at which the individual ceases to be enrolled as a student in a qualifying educational program or a specified educational program, as the case may be, if the payment would have complied with the requirements of paragraph (2)(g.1) had the payment been made immediately before the particular time.
Marginal note:Timing of payment
(2.22) An educational assistance payment that is made at any time in accordance with subsection (2.21) but not in accordance with paragraph (2)(g.1) is deemed, for the purposes of applying that paragraph at and after that time, to have been made immediately before the particular time referred to in subsection (2.21).
(6) Subsections (1) to (5) apply to the 2008 and subsequent taxation years, except that subsection (5) does not apply in respect of cessations of enrolment that occur before 2008.
24. (1) Section 146.2 of the Act and the heading before it are replaced by the following:
Tax-free Savings Accounts
Marginal note:Definitions
146.2 (1) The following definitions apply in this section and in Part XI.01.
“distribution”
« distribution »
“distribution” under an arrangement of which an individual is the holder means a payment out of or under the arrangement in satisfaction of all or part of the holder’s interest in the arrangement.
“holder”
« titulaire »
“holder” of an arrangement means
(a) until the death of the individual who entered into the arrangement with the issuer, the individual; and
(b) at and after the death of the individual, the individual’s survivor, if the survivor acquires
(i) all of the individual’s rights as the holder of the arrangement, and
(ii) to the extent it is not included in the rights described in subparagraph (i), the unconditional right to revoke any beneficiary designation made, or similar direction imposed, by the individual under the arrangement or relating to property held in connection with the arrangement.
“issuer”
« émetteur »
“issuer” of an arrangement means the person described as the issuer in the definition “qualifying arrangement”.
“qualifying arrangement”
« arrangement admissible »
“qualifying arrangement”, at a particular time, means an arrangement
(a) that is entered into after 2008 between a person (in this definition referred to as the “issuer”) and an individual (other than a trust) who is at least 18 years of age;
(b) that is
(i) an arrangement in trust with an issuer that is a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee,
(ii) an annuity contract with an issuer that is a licensed annuities provider, other than a contract that is adjoined to another contract or arrangement, or
(iii) a deposit with an issuer that is
(A) a person who is, or is eligible to become, a member of the Canadian Payments Association, or
(B) a credit union that is a shareholder or member of a body corporate referred to as a “central” for the purposes of the Canadian Payments Act;
(c) that provides for contributions to be made under the arrangement to the issuer in consideration of, or to be used, invested or otherwise applied for the purpose of, the issuer making distributions under the arrangement to the holder;
(d) under which the issuer and the individual agree, at the time the arrangement is entered into, that the issuer will file with the Minister an election to register the arrangement as a TFSA; and
(e) that, at all times throughout the period that begins at the time the arrangement is entered into and that ends at the particular time, complies with the conditions in subsection (2).
“survivor”
« survivant »
“survivor” of an individual means another individual who is, immediately before the individual’s death, a spouse or common-law partner of the individual.
Marginal note:Qualifying arrangement conditions
(2) The conditions referred to in paragraph (e) of the definition “qualifying arrangement” in subsection (1) are as follows:
(a) the arrangement requires that it be maintained for the exclusive benefit of the holder (determined without regard to any right of a person to receive a payment out of or under the arrangement only on or after the death of the holder);
(b) the arrangement prohibits, while there is a holder of the arrangement, anyone that is neither the holder nor the issuer of the arrangement from having rights under the arrangement relating to the amount and timing of distributions and the investing of funds;
(c) the arrangement prohibits anyone other than the holder from making contributions under the arrangement;
(d) the arrangement permits distributions to be made to reduce the amount of tax otherwise payable by the holder under section 207.02 or 207.03;
(e) the arrangement provides that, at the direction of the holder, the issuer shall transfer all or any part of the property held in connection with the arrangement (or an amount equal to its value) to another TFSA of the holder;
(f) if the arrangement is an arrangement in trust, it prohibits the trust from borrowing money or other property for the purposes of the arrangement; and
(g) the arrangement complies with prescribed conditions.
Marginal note:TFSA
(3) If the issuer of an arrangement that is, at the time it is entered into, a qualifying arrangement files with the Minister, on or before the day that is 60 days after the end of the calendar year in which the arrangement was entered into, an election in prescribed form and manner to register the arrangement as a TFSA under the Social Insurance Number of the individual with whom the arrangement was entered into, the arrangement becomes a TFSA at the time the arrangement was entered into and ceases to be a TFSA immediately before the earliest of the following events:
(a) the death of the last holder of the arrangement,
(b) the arrangement ceasing to be a qualifying arrangement, and
(c) the arrangement not being administered in accordance with the conditions in subsection (2).
Marginal note:Trust not taxable
(4) No tax is payable under this Part by a trust that is governed by a TFSA on its taxable income for a taxation year, except that, if at any time in the taxation year, it carries on one or more businesses or holds one or more properties that are non-qualified investments (as defined in subsection 207.01(1)) for the trust, tax is payable under this Part by the trust on the amount that would be its taxable income for the taxation year if it had no incomes or losses from sources other than those businesses and properties, and no capital gains or capital losses other than from dispositions of those properties, and for that purpose,
(a) “income” includes dividends described in section 83; and
(b) the trust’s taxable capital gain or allowable capital loss from the disposition of a property is equal to its capital gain or capital loss, as the case may be, from the disposition.
Marginal note:Amount credited to a deposit
(5) An amount that is credited or added to a deposit that is a TFSA as interest or other income in respect of the TFSA is deemed not to be received by the holder of the TFSA solely because of that crediting or adding.
Marginal note:Trust ceasing to be a TFSA
(6) If an arrangement that governs a trust ceases, at a particular time, to be a TFSA,
(a) the trust is deemed
(i) to have disposed, immediately before the particular time, of each property held by the trust for proceeds equal to the property’s fair market value immediately before the particular time, and
(ii) to have acquired, at the particular time, each such property at a cost equal to that fair market value;
(b) the trust’s last taxation year that began before the particular time is deemed to have ended immediately before the particular time; and
(c) a taxation year of the trust is deemed to begin at the particular time.
Marginal note:Annuity contract ceasing to be a TFSA
(7) If an annuity contract ceases, at a particular time, to be a TFSA,
(a) the holder of the TFSA is deemed to have disposed of the contract immediately before the particular time for proceeds equal to its fair market value immediately before the particular time;
(b) the contract is deemed to be a separate annuity contract issued and effected at the particular time otherwise than pursuant to or as a TFSA; and
(c) each person who has an interest or, for civil law, a right in the separate annuity contract at the particular time is deemed to acquire the interest at the particular time at a cost equal to its fair market value at the particular time.
Marginal note:Deposit ceasing to be a TFSA
(8) If a deposit ceases, at a particular time, to be a TFSA,
(a) the holder of the TFSA is deemed to have disposed of the deposit immediately before the particular time for proceeds equal to its fair market value immediately before the particular time; and
(b) each person who has an interest or, for civil law, a right in the deposit at the particular time is deemed to acquire the interest at the particular time at a cost equal to its fair market value at the particular time.
Marginal note:Arrangement is TFSA only
(9) An arrangement that is a qualifying arrangement at the time it is entered into is deemed not to be a retirement savings plan, an education savings plan, a retirement income fund or a disability savings plan.
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
- Date modified: