Budget Implementation Act, 2017, No. 2 (S.C. 2017, c. 33)

Taxes in Respect of Registered Plans

Marginal note:Definitions

• 207.01 (1) The following definitions and the definitions in subsections 146(1) (other than the definition benefit), 146.1(1), 146.2(1), 146.3(1) and 146.4(1) apply in this Part and Part XLIX of the Income Tax Regulations.

controlling individual

controlling individual, of a registered plan, means

• (a) the holder of a TFSA;

• (b) a holder of a RDSP;

• (c) a subscriber of a RESP; or

• (d) the annuitant of a RRIF or RRSP. (particulier contrôlant)

registered plan

registered plan means a RDSP, RESP, RRIF, RRSP or TFSA. (régime enregistré)

transitional prohibited property

transitional prohibited property, at any time for a particular trust governed by a registered plan (other than a TFSA) of a controlling individual, means a property that is held by the particular trust at that time, that was held

• (a) on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual and that was a prohibited investment for that trust on March 23, 2011; or

• (b) on March 22, 2017 by a trust governed by a RDSP or RESP of the controlling individual and that was a prohibited investment for that trust on March 23, 2017. (bien interdit transitoire)

• (iii) a payment out of or under the registered plan in satisfaction of all or part of a beneficiary’s or controlling individual’s interest in the registered plan,

• (iv) the payment or allocation of any amount to the registered plan by the issuer, carrier or promoter,

• (iv.1) an amount paid under or because of the Canada Disability Savings Act, the Canada Education Savings Act or under a designated provincial program, and

• (ii) in the case of a registered plan that is not a TFSA, an amount received by the controlling individual of the registered plan, or by a person who does not deal at arm’s length with the controlling individual (if it is reasonable to consider, having regard to all the circumstances, that the amount was paid in relation to, or would not have been paid but for, property held in connection with the registered plan) and the amount was paid as, on account or in lieu of, or in satisfaction of, a payment

• (d) a registered plan strip in respect of the registered plan; and

• (b) a payment into the registered plan that is

  • (i) a contribution, a premium or an amount transferred in accordance with paragraph 146.3(2)(f),

  • (ii) described in paragraph (a) or (b) of the definition contribution in subsection 146.1(1), or

  • (iii) described in any of paragraphs (a) to (d) of the definition contribution in subsection 146.4(1);

• (iii) both registered plans are RDSPs, or

• (iv) both registered plans are RESPs;

registered plan strip

registered plan strip, in respect of a registered plan that is not a TFSA, means the amount of a reduction in the fair market value of property held in connection with the registered plan, if the value is reduced as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable the controlling individual of the registered plan, or a person who does not deal at arm’s length with the controlling individual, to obtain a benefit in respect of property held in connection with the registered plan or to obtain a benefit as a result of the reduction, but does not include an amount that is

• (a) included in the income of a person under section 146, 146.1, 146.3 or 146.4;

• (b) an excluded withdrawal under section 146.01 or 146.02;

• (c) described in subsection 146(16), 146.3(14.2) or 146.4(8);

• (d) a distribution to a trust governed by a RESP under circumstances to which subparagraph 204.9(5)(c)(i) or (ii) applies;

• (e) an accumulated income payment made to a RDSP under circumstances to which subsection 146.1(1.2) applies;

• (f) a refund of payments under a RESP; or

• (g) the non-taxable portion of a disability assistance payment made from a RDSP. (somme découlant d’un dépouillement de régime enregistré)

• Marginal note:Obligation of issuer

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

• Marginal note:Adjusted cost base

  (7) For the purpose of computing the adjusted cost base to a trust governed by a registered plan (other than a TFSA) of a property that is a transitional prohibited property for the trust, the cost to the trust of the property until the property is disposed of by the trust is deemed to be equal to the fair market value of the property,

  • (a) in the case of a RRIF or RRSP, at the end of March 22, 2011; and

  • (b) in the case of a RDSP or RESP, at the end of March 22, 2017.

• (a) the property would, in the absence of subsection (9), have ceased at any time (in this subsection and subsection (9) referred to as the “relevant time”) to be a prohibited investment for a trust governed by a registered plan (other than a TFSA) of a controlling individual;

• (c) in the case of a property held under a RRIF or RRSP, the controlling individual elected under subsection 207.05(4); and

• Marginal note:Prohibited investment status

  (9) If this subsection applies in respect of a property, the property is deemed to be a prohibited investment at and after the relevant time for every trust governed by a registered plan (other than a TFSA) of the controlling individual referred to in paragraph (8)(a).

• (a) the property is acquired at any time (in this subsection and subsection (13) referred to as the “exchange time”) by a trust (in this section and subsection (13) referred to as the “exchanging trust”) governed by a registered plan (other than a TFSA) of a controlling individual in exchange for another property (in this subsection referred to as the “exchanged property”) in a transaction to which any of section 51, subsection 85(1) and sections 85.1, 86 and 87 apply;

• (d) in the case of a property held under a RRIF or RRSP, the controlling individual elected under subsection 207.05(4).

• (a) other than for the purposes of subsection (7), the property is deemed to be, at and after the exchange time, a property,

  • (i) in the case of a trust governed by a RRIF or RRSP, that was

    • (A) held on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual referred to in subsection (12), and

    • (B) a prohibited investment for the trust on March 23, 2011, and

  • (ii) in the case of a trust governed by a RDSP or RESP, that was

    • (A) held on March 22, 2017 by a trust governed by a RDSP or RESP of the controlling individual referred to in subsection (12), and

    • (B) a prohibited investment for the trust on March 23, 2017; and

• (b) if the property would, in the absence of this paragraph, not be a prohibited investment for the exchanging trust immediately after the exchange time, the property is deemed to be a prohibited investment at and after the exchange time for every trust governed by a registered plan (other than a TFSA) of the controlling individual.

• Marginal note:Both prohibited and non-qualified investment

  (3) For the purposes of this section and subsections 146(10.1), 146.1(5), 146.2(6), 146.3(9), 146.4(5) and 207.01(6), if a trust governed by a registered plan 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:Apportionment of refund

  (5) If more than one person is entitled to a refund under subsection (4) for a calendar year in respect of the disposition of a property, the total of all amounts so refundable shall not exceed the amount that would be so refundable for the year to any one of those persons in respect of that disposition if that person were the only person entitled to a refund for the year under that subsection in respect of the disposition. If the persons cannot agree as to what portion of the refund each can so claim, the Minister may fix the portions.

• Marginal note:Liability for tax

  (6) Each person who is a holder of a RDSP or a subscriber of a RESP at the time that a tax is imposed under subsection (1) in connection with the plan is jointly and severally, or solidarily, liable to pay the tax.

• (c) in the case of a registered plan strip, the amount of the registered plan strip.

• Marginal note:Liability for tax

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

• Marginal note:Multiple holders or subscribers

  (1.1) If two or more holders of a RDSP, or two or more subscribers of a RESP, are jointly and severally, or solidarily, liable with each other to pay a tax under this Part for a calendar year in connection with the plan,

  • (a) a payment by any of the holders, or any of the subscribers, on account of that tax liability shall to the extent of the payment discharge the joint liability; and

  • (b) a return filed by one of the holders, or one of the subscribers, as required by this Part for the year is deemed to have been filed by each other holder, or each other subscriber, in respect of the joint liability to which the return relates.

Marginal note:Ecological gift — tax payable

• 207.31 (1) A charity, municipality in Canada or municipal or public body performing a function of government in Canada (each of which is referred to in this section as the “recipient”) shall, in respect of a property, pay a tax under this Part in respect of a taxation year if

  • (a) at any time in the year, the recipient

    • (i) disposes of the property, or

    • (ii) in the opinion of the Minister of the Environment, or a person designated by that Minister, changes the use of the property;

  • (b) the property is described in paragraph 110.1(1)(d) or in the definition total ecological gifts in subsection 118.1(1); and

  • (c) the disposition or change is made without the authorization of the Minister of the Environment or a person designated by that Minister.

• Marginal note:Ecological gift — amount of tax

  (2) The amount of tax to be paid under subsection (1) is equal to 50% of the amount that would be determined for the purposes of section 110.1 or 118.1, if this Act were read without reference to subsections 110.1(3) and 118.1(6), to be the fair market value of the property referred to in subsection (1) if the property were given to the recipient immediately before the disposition or change referred to in paragraph (1)(a).