Economic Action Plan 2013 Act, No. 2 (S.C. 2013, c. 40)
Full Document:
Assented to 2013-12-12
37. (1) Paragraph 80.04(4)(h) of the Act is replaced by the following:
(h) if the transferee is a taxpayer that is subject to a loss restriction event after the time of issue and the transferee and the debtor were, if the transferee is a corporation, not related to each other — or, if the transferee is a trust, not affiliated with each other — immediately before the loss restriction event,
(i) the obligation referred to in paragraph (e) is deemed to have been issued after the loss restriction event, and
(ii) subparagraph (b)(ii) of the definition “relevant loss balance” in subsection 80(1), paragraph (f) of the definition “successor pool” in that subsection and paragraph (b) of the definition “unrecognized loss” in that subsection do not apply in respect of the loss restriction event,
(2) Subsection (1) is deemed to have come into force on March 21, 2013.
38. (1) The Act is amended by adding the following after section 80.5:
Marginal note:Synthetic disposition
80.6 (1) If a synthetic disposition arrangement is entered into in respect of a property owned by a taxpayer and the synthetic disposition period of the arrangement is one year or more, the taxpayer is deemed
(a) to have disposed of the property immediately before the beginning of the synthetic disposition period for proceeds equal to its fair market value at the beginning of the synthetic disposition period; and
(b) to have reacquired the property at the beginning of the synthetic disposition period at a cost equal to that fair market value.
Marginal note:Exception
(2) Subsection (1) does not apply in respect of a property owned by a taxpayer if
(a) the disposition referred to in subsection (1) would not result in the realization of a capital gain or income;
(b) the property is a mark-to-market property (as defined in subsection 142.2(1)) of the taxpayer;
(c) the synthetic disposition arrangement referred to in subsection (1) is a lease of tangible property or, for civil law, corporeal property;
(d) the arrangement is an exchange of property to which subsection 51(1) applies; or
(e) the property is disposed of as part of the arrangement, within one year after the day on which the synthetic disposition period of the arrangement begins.
(2) Subsection (1) applies to agreements and arrangements entered into after March 20, 2013. Subsection (1) also applies to an agreement or arrangement entered into before March 21, 2013, the term of which is extended after March 20, 2013, as if the agreement or arrangement were entered into at the time of the extension.
39. (1) Paragraph 87(2)(g.1) of the Act is replaced by the following:
Marginal note:Continuation
(g.1) for the purposes of sections 12.4 and 26, subsection 97(3) and section 256.1, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;
(2) Paragraph 87(2)(oo.1) of the Act is amended by striking out “and” at the end of subparagraph (ii), by adding “and” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):
(iv) a qualifying income limit for the particular year equal to the total of all amounts each of which is a predecessor corporation’s qualifying income limit for its taxation year that ended immediately before the amalgamation;
(3) Subsection (1) is deemed to have come into force on March 21, 2013.
(4) Subsection (2) applies to amalgamations that occur after February 25, 2008.
40. (1) Subparagraph 88(1)(c.2)(i) of the Act is replaced by the following:
(i) “specified person”, at any time, means
(A) the parent,
(B) each person who would be related to the parent at that time if
(I) this Act were read without reference to paragraph 251(5)(b), and
(II) each person who is the child of a deceased individual were related to each brother or sister of the individual and to each child of a deceased brother or sister of the individual, and
(C) if the time is before the incorporation of the parent, each person who is described in clause (B) throughout the period that begins at the time the parent is incorporated and ends at the time that is immediately before the beginning of the winding-up,
(i.1) a person described in clause (i)(B) or (C) is deemed not to be a specified person if it can reasonably be considered that one of the main purposes of one or more transactions or events is to cause the person to be a specified person so as to prevent a property that is distributed to the parent on the winding-up from being an ineligible property for the purposes of paragraph (c),
(2) Subparagraph 88(1)(c.2)(iii) of the Act is amended by striking out “and” at the end of clause (A) and by adding the following after clause (A):
(A.1) a corporation controlled by another corporation is, at any time, deemed not to own any shares of the capital stock of the other corporation if, at that time, the corporation does not have a direct or an indirect interest in any of the shares of the capital stock of the other corporation,
(A.2) the definition “specified shareholder” in subsection 248(1) is to be read without reference to its paragraph (a) in respect of any share of the capital stock of the subsidiary that the person would, but for this clause, be deemed to own solely because the person has a right described in paragraph 251(5)(b) to acquire shares of the capital stock of a corporation that
(I) is controlled by the subsidiary, and
(II) does not have a direct or an indirect interest in any of the shares of the capital stock of the subsidiary, and
(3) Paragraph 88(1)(c.2) of the Act is amended by striking out “and” at the end of subparagraph (ii), by adding “and” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):
(iv) property that is distributed to the parent on the winding-up is deemed not to be acquired by a person if the person acquired the property before the acquisition of control referred to in clause (c)(vi)(A) and the property is not owned by the person at any time after that acquisition of control;
(4) Subparagraph 88(1)(c.3)(i) of the Act is replaced by the following:
(i) property (other than a specified property) owned by the person at any time after the acquisition of control referred to in clause (c)(vi)(A) more than 10% of the fair market value of which is, at that time, attributable to the particular property or properties, and
(5) Subparagraph 88(1)(c.4)(ii) of the Act is replaced by the following:
(ii) an indebtedness that was issued
(A) by the parent as consideration for the acquisition of a share of the capital stock of the subsidiary by the parent, or
(B) for consideration that consists solely of money,
(6) Subparagraphs 88(1)(c.4)(v) and (vi) of the Act are replaced by the following:
(v) if the subsidiary was formed on the amalgamation of two or more predecessor corporations at least one of which was a subsidiary wholly-owned corporation of the parent,
(A) a share of the capital stock of the subsidiary that was issued on the amalgamation and that is, before the beginning of the winding-up,
(I) redeemed, acquired or cancelled by the subsidiary for consideration that consists solely of money or shares of the capital stock of the parent, or of any combination of the two, or
(II) exchanged for shares of the capital stock of the parent, or
(B) a share of the capital stock of the parent issued on the amalgamation in exchange for a share of the capital stock of a predecessor corporation, and
(vi) a share of the capital stock of a corporation issued to a person described in clause (c)(vi)(B) if all the shares of the capital stock of the subsidiary were acquired by the parent for consideration that consists solely of money;
(7) Paragraph 88(1)(c.4) of the Act, as amended by subsection (6), is amended by adding “and” at the end of subparagraph (iv), by striking out “and” at the end of subparagraph (v) and by repealing subparagraph (vi).
(8) Subsection 88(1) of the Act is amended by adding the following after paragraph (c.8):
(c.9) for the purposes of paragraph (c.4), a reference to a share of the capital stock of a corporation includes a right to acquire a share of the capital stock of the corporation;
(9) Subparagraph 88(1)(d)(ii) of the Act is replaced by the following:
(ii) the amount designated in respect of any such capital property may not exceed the amount determined by the formula
A – (B + C)
where
- A
- is the fair market value of the property at the time the parent last acquired control of the subsidiary,
- B
- is the greater of the cost amount to the subsidiary of the property at the time the parent last acquired control of the subsidiary and the cost amount to the subsidiary of the property immediately before the winding-up, and
- C
- is the prescribed amount, and
(10) Subparagraph 88(1)(e.9)(i) of the Act is amended by striking out “and” at the end of clause (A), by adding “and” at the end of clause (B) and by adding the following after clause (B):
(C) the parent’s qualifying income limit for that last year is deemed to be the total of
(I) its qualifying income limit (determined before applying this paragraph to the winding-up) for that last year, and
(II) the total of the subsidiary’s qualifying income limits (determined without reference to subparagraph (iii)) for its taxation years that ended in that preceding calendar year,
(11) Subparagraph 88(1)(e.9)(ii) of the Act is amended by striking out “and” at the end of clause (A), by adding “and” at the end of clause (B) and by adding the following after clause (B):
(C) the parent’s qualifying income limit for that preceding taxation year is deemed to be the total of
(I) its qualifying income limit (determined before applying this paragraph to the winding-up) for that preceding taxation year, and
(II) the total of the subsidiary’s qualifying income limits (determined without reference to subparagraph (iii)) for the subsidiary’s taxation years that end in the calendar year in which that preceding taxation year ended, and
(12) Subparagraph 88(1)(e.9)(iii) of the Act is replaced by the following:
(iii) where the parent and the subsidiary are associated with each other in the current year, the subsidiary’s taxable income, the subsidiary’s business limit and the subsidiary’s qualifying income limit for each taxation year that ends after the first time that the parent receives an asset of the subsidiary on the winding-up are deemed to be nil;
(13) Subsections (1) to (3), (5), (6) and (8) apply to windings-up that begin, and amalgamations that occur, after 2001.
(14) Subsection (4) applies to windings-up that begin, and amalgamations that occur, after December 20, 2012.
(15) Subsections (7) and (9) apply to windings-up that begin, and amalgamations that occur, after December 20, 2012 other than — if a taxable Canadian corporation (in this subsection referred to as the “parent corporation”) has acquired control of another taxable Canadian corporation (in this subsection referred to as the “subsidiary corporation”) — an amalgamation of the parent corporation and the subsidiary corporation that occurs, or a winding-up of the subsidiary corporation into the parent corporation that begins, before July 2013 if
(a) the parent corporation acquired control of the subsidiary corporation before December 21, 2012, or was obligated as evidenced in writing before December 21, 2012 to acquire control of the subsidiary corporation (except that the parent corporation shall not be considered to be obligated if, as a result of amendments to the Act, it may be excused from the obligation to acquire control); and
(b) the parent corporation had the intention as evidenced in writing before December 21, 2012 to amalgamate with, or wind up, the subsidiary corporation.
(16) Subsections (10) to (12) apply to windings-up that begin after February 25, 2008.
- Date modified: