• (ii) the first calendar year throughout which the beneficiary has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1).

• (d) if the failure consists of the plan not being terminated by the time set out in paragraph (4)(p) and the failure was due to the issuer being unaware of, or there being some uncertainty as to, the existence of circumstances requiring that the plan be terminated,

  • (i) the Minister may specify a later time by which the plan is to be terminated (but no later than is reasonably necessary for the plan to be terminated in an orderly manner), and

  • (ii) paragraph (4)(p) and the plan terms are, for the purposes of paragraphs (11)(a) and (b), to be read as though they required the plan to be terminated by the time so specified.

• (b.2) a TFSA,

• Marginal note:TFSA trust

  (u.2) a trust governed by a TFSA to the extent provided by section 146.2;

• (C) has a taxable capital gain (otherwise than from an excluded disposition), or

• (D) disposes of a taxable Canadian property (otherwise than in an excluded disposition), or

• (ii) tax under this Part

  • (A) is payable by the corporation for the year, or

  • (B) would be, but for a tax treaty, payable by the corporation for the year (otherwise than in respect of a disposition of taxable Canadian property that is treaty-protected property of the corporation);

• (iii) where the individual is non-resident throughout the year, the individual has a taxable capital gain (otherwise than from an excluded disposition) or disposes of a taxable Canadian property (otherwise than in an excluded disposition) in the year, or

• Marginal note:Excluded disposition

  (5) For the purposes of this section, a disposition of a property by a taxpayer at any time in a taxation year is an excluded disposition if

  • (a) the taxpayer is non-resident at that time;

  • (b) no tax is payable under this Part by the taxpayer for the taxation year;

  • (c) the taxpayer is, at that time, not liable to pay any amount under this Act in respect of any previous taxation year (other than an amount for which the Minister has accepted, and holds, adequate security under section 116 or 220); and

  • (d) each taxable Canadian property disposed of by the taxpayer in the taxation year is

    • (i) excluded property within the meaning assigned by subsection 116(6), or

    • (ii) a property in respect of the disposition of which the Minister has issued to the taxpayer a certificate under subsection 116(2), (4) or (5.2).

• Marginal note:Exception — remittance to designated financial institution

  (1.4) For the purpose of subsection (1), a prescribed person referred to in that subsection is deemed to have remitted an amount to the account of the Receiver General at a designated financial institution if the prescribed person has remitted the amount to the Receiver General at least one day before the day upon which the amount is due.

C

is the provincial SIFT tax rate of the SIFT partnership for the taxation year.

PART XI.01TAXES IN RESPECT OF TFSAs

Marginal note:Definitions

• 207.01 (1) The definitions in subsection 146.2(1) and the following definitions apply in this Part.

  “advantage”

  « avantage »

  “advantage”, in relation to a TFSA, means

  • (a) any benefit, loan or indebtedness that is conditional in any way on the existence of the TFSA, other than

    • (i) a benefit derived from the provision of administrative or investment services in respect of the TFSA, and

    • (ii) a loan or an indebtedness (including the use of the TFSA as security for a loan or an indebtedness) the terms and conditions of which are terms and conditions that persons dealing at arm’s length with each other would have entered into; and

  • (b) a prescribed benefit.

  “allowable refund”

  « remboursement admissible »

  “allowable refund” of a person for a calendar year means the total of all amounts each of which is a refund, for the year, to which the person is entitled under subsection 207.04(4).

  “excess TFSA amount”

  « excédent CÉLI »

  “excess TFSA amount” of an individual at a particular time in a calendar year means the amount, if any, determined by the formula

  A - B - C - D - E

  where

  A

  is the total of all amounts each of which is a contribution made under a TFSA by the individual in the calendar year and at or before the particular time, other than a contribution that is

  • (a) a qualifying transfer, or

  • (b) an exempt contribution;

  B

  is the individual’s unused TFSA contribution room at the end of the preceding calendar year;

  C

  is the total of all amounts each of which was a distribution made in the preceding calendar year under a TFSA of which the individual was the holder at the time of the distribution, other than a distribution that is

  • (a) a qualifying transfer, or

  • (b) a prescribed distribution;

  D

  is

  • (a) the TFSA dollar limit for the calendar year if, at any time in the calendar year, the individual is resident in Canada, and

  • (b) nil, in any other case; and

  E

  is the total of all amounts each of which is a distribution made in the calendar year and at or before the particular time under a TFSA of which the individual was the holder at the time of the distribution, other than a distribution that is

  • (a) a qualifying transfer, or

  • (b) a prescribed distribution.

  “non-qualified investment”

  « placement non admissible »

  “non-qualified investment” for a trust governed by a TFSA means property that is not a qualified investment for the trust.

  “prohibited investment”

  « placement interdit »

  “prohibited investment”, at any time, for a trust governed by a TFSA means property (other than prescribed property in relation to the trust) that is at that time

  • (a) a debt of the holder of the TFSA;

  • (b) a share of the capital stock of, an interest in, or a debt of

    • (i) a corporation, partnership or trust in which the holder has a significant interest, or

    • (ii) a person or partnership that does not deal at arm’s length with the holder or with a person or partnership described in subparagraph (i);

  • (c) an interest (or, for civil law, a right) in, or a right to acquire, a share, interest or debt described in paragraph (a) or (b); or

  • (d) restricted property.

  “qualified investment”

  « placement admissible »

  “qualified investment” for a trust governed by a TFSA means

  • (a) an investment that would be described by any of paragraphs (a) to (d), (f) and (g) of the definition “qualified investment” in section 204 if the reference in that definition to “a trust governed by a deferred profit sharing plan or revoked plan” were read as a reference to “a trust governed by a TFSA” and if that definition were read without reference to the words “with the exception of excluded property in relation to the trust”;

  • (b) a contract for an annuity issued by a licensed annuities provider if

    • (i) the trust is the only person who, disregarding any subsequent transfer of the contract by the trust, is or may become entitled to any annuity payments under the contract, and

    • (ii) the holder of the contract has a right to surrender the contract at any time for an amount that would, if reasonable sales and administration charges were ignored, approximate the value of funds that could otherwise be applied to fund future periodic payments under the contract; and

  • (c) a prescribed investment.

  “qualifying transfer”

  « transfert admissible »

  “qualifying transfer” means the transfer of an amount from a TFSA of which a particular individual is the holder if

  • (a) the amount is transferred directly to another TFSA, the holder of which is the particular individual; or

  • (b) the amount is transferred directly to another TFSA, the holder of which is a spouse or common-law partner or former spouse or common-law partner of the particular individual, and the following conditions are satisfied:

    • (i) the individuals are living separate and apart at the time of the transfer, and

    • (ii) the transfer is made under a decree, order or judgment of a competent tribunal, or under a written separation agreement, relating to a division of property between the individuals in settlement of rights arising out of, or on the breakdown of, their marriage or common-law partnership.

  “restricted property”

  « bien d’exception »

  “restricted property” has the meaning assigned by regulation.

  “TFSA dollar limit”

  « plafond CÉLI »

  “TFSA dollar limit” for a calendar year means,

  • (a) for 2009, $5,000; and

  • (b) for each year after 2009, the amount (rounded to the nearest multiple of $500, or if that amount is equidistant from two such consecutive multiples, to the higher multiple) that is equal to $5,000 adjusted for each year after 2009 in the manner set out in section 117.1.

  “unused TFSA contribution room”

  « droits inutilisés de cotisation à un CÉLI »

  “unused TFSA contribution room” of an individual at the end of a calendar year means,

  • (a) if the year is before 2009, nil; and

  • (b) in any other case, the positive or negative amount determined by the formula

    A + B + C - D

    where

    A

    is the individual’s unused TFSA contribution room at the end of the preceding calendar year,

    B

    is the total of all amounts each of which was a distribution made in the preceding calendar year under a TFSA of which the individual was the holder at the time of the distribution, other than a distribution that is

    • (i) a qualifying transfer, or

    • (ii) a prescribed distribution,

    C

    is

    • (i) the TFSA dollar limit for the calendar year, if at any time in the calendar year the individual is 18 years of age or older and resident in Canada, and

    • (ii) nil, in any other case, and

    D

    is the total of all amounts each of which is a contribution made under a TFSA by the individual in the calendar year, other than a contribution that is

    • (i) a qualifying transfer, or

    • (ii) an exempt contribution.

• Marginal note:Exempt contribution to survivor TFSA

  (2) A contribution made in a taxation year under a TFSA by the survivor of an individual is an exempt contribution if

  • (a) the contribution is made during the period (in this subsection referred to as the “rollover period”) that begins when the individual dies and that ends on the second anniversary of the individual’s death (or on any later day that is acceptable to the Minister);

  • (b) a payment (in this subsection referred to as the “survivor payment”) was made to the survivor during the rollover period, as a consequence of the individual’s death, directly or indirectly out of or under an arrangement that ceased, because of the individual’s death, to be a TFSA;

  • (c) the survivor designates, in prescribed form filed with the survivor’s return of income for the taxation year, the contribution in relation to the survivor payment; and

  • (d) the amount of the contribution does not exceed the least of

    • (i) the amount, if any, by which

      • (A) the amount of the survivor payment

      exceeds

      • (B) the total of all other contributions designated by the survivor in relation to the survivor payment,

    • (ii) the amount, if any, by which

      • (A) the total proceeds of disposition determined in respect of the arrangement under paragraph 146.2(6)(a), (7)(a) or (8)(a), as the case may be,

      exceeds

      • (B) the total of all other exempt contributions in respect of the arrangement made by the survivor at or before the time of the contribution, and

    • (iii) if the individual had, immediately before the individual’s death, an excess TFSA amount or if payments described in paragraph (b) are made to more than one survivor of the individual, nil or the greater amount, if any, allowed by the Minister in respect of the contribution.

• Marginal note:Survivor as successor holder

  (3) If an individual’s survivor becomes the holder of a TFSA as a consequence of the individual’s death and, immediately before the individual’s death, the individual had an excess TFSA amount, the survivor is deemed (other than for the purposes of subsection (2)) to have made, at the beginning of the month following the individual’s death, a contribution under a TFSA equal to the amount, if any, by which

  • (a) that excess TFSA amount

  exceeds

  • (b) the total fair market value immediately before the individual’s death of all property held in connection with arrangements that ceased, because of the individual’s death, to be TFSAs.

• Marginal note:Significant interest

  (4) An individual has a significant interest in a corporation, partnership or trust at any time if

  • (a) in the case of a corporation, the individual is a specified shareholder of the corporation at that time;

  • (b) in the case of a partnership, the individual, or the individual together with persons and partnerships with which the individual does not deal at arm’s length, holds at that time interests as a member of the partnership that have a fair market value of 10% or more of the fair market value of the interests of all members in the partnership; and

  • (c) in the case of a trust, the individual, or the individual together with persons and partnerships with which the individual does not deal at arm’s length, holds at that time interests as a beneficiary (in this paragraph, as defined in subsection 108(1)) under the trust that have a fair market value of 10% or more of the fair market value of the interests of all beneficiaries under the trust.

• Marginal note:Obligation of issuer

  (5) The issuer of a TFSA shall exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a trust governed by the TFSA holds a non-qualified investment.

Marginal note:Tax payable on excess TFSA amount

207.02 If, at any time in a calendar month, an individual has an excess TFSA amount, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of the highest such amount in that month.

Marginal note:Tax payable on non-resident contributions

207.03 If, at a particular time, a non-resident individual makes a contribution under a TFSA, the individual shall pay a tax under this Part equal to 1% of the amount of the contribution in respect of each month that ends after the particular time and before the earlier of

• (a) the first time after the particular time at which the amount of the contribution is equalled or exceeded by the total of all amounts each of which is a distribution

  • (i) that is made after the particular time under a TFSA of which the individual is the holder, and

  • (ii) that the individual designates in prescribed manner to be a distribution in connection with the contribution and not in connection with any other contribution, and

• (b) the time at which the individual becomes resident in Canada.

Marginal note:Tax payable on prohibited or non-qualified investment

• 207.04 (1) The holder of a TFSA that governs a trust shall pay a tax under this Part for a calendar year if, at any time in the year,

  • (a) the trust acquires property that is a prohibited investment, or a non-qualified investment, for the trust; or

  • (b) property held by the trust becomes a prohibited investment, or a non-qualified investment, for the trust.

• Marginal note:Amount of tax payable

  (2) The amount of tax payable in respect of each property described in subsection (1) is 50% of the fair market value of the property at the time referred to in that subsection.

• Marginal note:Where both prohibited and non-qualified investment

  (3) For the purposes of subsection 146.2(4) and this section, if a trust governed by a TFSA holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.

• Marginal note:Refund of tax on disposition of investment

  (4) If in a calendar year a trust governed by a TFSA disposes of a property in respect of which a tax is imposed under subsection (1) on the holder of the TFSA, the holder is entitled to a refund for the year of an amount equal to

  • (a) except where paragraph (b) applies, the amount of the tax so imposed; or

  • (b) nil,

    • (i) if it is reasonable to consider that the holder knew, or ought to have known, at the time the property was acquired by the trust, that it was, or would become, a property described in subsection (1), or

    • (ii) if the property is not disposed of by the trust before the end of the calendar year following the calendar year in which the tax arose, or any later time that the Minister considers reasonable in the circumstances.

• Marginal note:Deemed disposition and reacquisition

  (5) For the purposes of this Act, if property held by a trust in respect of which a tax was imposed under subsection (1) ceases, at any particular time after the tax is imposed, to be a prohibited investment, or a non-qualified investment, for the trust, the trust is deemed to have disposed of the property immediately before the particular time for proceeds of disposition equal to its fair market value at the particular time and to have reacquired it immediately after the particular time at a cost equal to that fair market value.

• Marginal note:Additional tax payable on prohibited investment

  (6) The holder of a TFSA that governs a trust shall pay a tax under this Part for a calendar year, in addition to any tax imposed under subsection (1) for the year, if at any time in the year the trust holds one or more properties that are prohibited investments for the trust.

• Marginal note:Amount of additional tax payable

  (7) The amount of tax payable under subsection (6) for a calendar year is the amount of tax that would be payable under Part I by the trust for the taxation year that ends in the calendar year if

  • (a) the Act were read without reference to paragraph 82(1)(b), section 121 and subsection 146.2(4); and

  • (b) the trust had no incomes or losses from sources other than the properties referred to in subsection (6), and no capital gains or capital losses other than from dispositions of those properties, and for that purpose,

    • (i) “income” includes dividends described in section 83, and

    • (ii) 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:Tax payable where advantage extended

• 207.05 (1) A tax is payable under this Part for a calendar year in connection with a TFSA if, in the year, an advantage in relation to the TFSA is extended to a person who is, or who does not deal at arm’s length with, the holder of the TFSA.

• 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; and

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

• Marginal note:Liability for tax

  (3) The holder of a TFSA 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 of the TFSA or by a person with whom the issuer is not dealing at arm’s length, the issuer, and not the holder, is liable to pay the tax.

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) the individual acts without delay to cause one or more distributions to be made, under one or more TFSAs, the total amount of which is not less than the amount in respect of which the individual would otherwise be liable to pay the tax.

• Marginal note:Waiver of tax payable

  (2) If a person would otherwise be liable to pay a tax under this Part because of section 207.04 or 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 that gave rise to the tax also gave rise to another tax under this Part.

Marginal note:Return and payment of tax

• 207.07 (1) A person who is liable to pay tax under this Part for all or any part of a calendar year shall within 90 days after the end of the year

  • (a) file with the Minister a return for the year under this subsection in prescribed form and containing prescribed information including

    • (i) an estimate of the amount of tax payable under this Part by the person in respect of the year, and

    • (ii) an estimate of the amount of the person’s allowable refund, if any, for the year; and

  • (b) pay to the Receiver General the amount, if any, by which the amount of the person’s tax payable under this Part in respect of the year exceeds the person’s allowable refund, if any, for the year.

• Marginal note:Refund

  (2) If a person has filed a return under this Part for a calendar year within three years after the end of the year, the Minister

  • (a) may, on mailing the notice of assessment for the year, refund without application any allowable refund of the person for the year, to the extent that it was not applied against the person’s tax payable under paragraph (1)(b); and

  • (b) shall, with all due dispatch, make the refund referred to in paragraph (a) after mailing the notice of assessment if an application for it has been made in writing by the person within three years after the mailing of an original notice of assessment for the year.

• Marginal note:Provisions applicable to Part

  (3) Subsections 150(2) and (3), sections 152 and 158 to 167 and Division J of Part I apply to this Part with any modifications that the circumstances require.