Budget Implementation Act, 2017, No. 2 (S.C. 2017, c. 33)
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Assented to 2017-12-14
PART 1Amendments to the Income Tax Act and to Related Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
59 (1) Subparagraph 147.3(13.1)(a)(i) of the Act is replaced by the following:
(i) the total of all amounts each of which is an amount included under clause 56(1)(a)(i)(C), paragraph 56(1)(z.3), subsections 146(8), (8.3) or (12) or 146.3(5), (5.1) or (11) in computing the individual’s income for the year, to the extent that the amount is not a prescribed withdrawal,
(2) Subsection (1) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, subparagraph 147.3(13.1)(a)(i) of the Act, as enacted by subsection (1), is to be read without reference to “paragraph 56(1)(z.3)”.
60 (1) Subsection 147.5(12) of the English version of the Act is replaced by the following:
Marginal note:Member’s account
(12) For the purposes of paragraph 18(1)(u), subparagraph (a)(i) of the definition excluded right or interest in subsection 128.1(10), paragraph 146(8.2)(b), subsection 146(8.21), paragraphs 146(16)(a) and (b), subparagraph 146(21)(a)(i), paragraph (b) of the definition excluded premium in subsection 146.01(1), paragraph (c) of the definition excluded premium in subsection 146.02(1), subsections 146.3(14) and 147(19) to (21), section 147.3 and paragraphs 212(1)(j.1) and (m), and of regulations made under subsection 147.1(18), a member’s account under a PRPP is deemed to be a registered retirement savings plan under which the member is the annuitant.
(2) Section 147.5 of the Act is amended by adding the following after subsection (32):
Marginal note:Contribution deemed not paid
(32.1) Where a member of a PRPP or a participating employer in relation to the PRPP has, at any time in a taxation year, received a distribution from the member’s account under the PRPP that is a return of a contribution described in clause 147.5(3)(d)(ii)(A) or (B), the contribution is deemed not to have been a contribution made by the member or the participating employer, as the case may be, to the PRPP to the extent that the contribution is not deducted in computing the taxpayer’s income for the year or a preceding taxation year.
(3) Subsections (1) and (2) are deemed to have come into force on December 14, 2012.
61 (1) Paragraph 148(2)(e) of the Act is replaced by the following:
(e) a policyholder with an interest in a life insurance policy, issued after 2016, that gives rise to an entitlement (of the policyholder, beneficiary or assignee, as the case may be) to receive all or a portion of an excess described in subparagraph (iv) is deemed, at a particular time, to dispose of a part of the interest and to be entitled to receive proceeds of the disposition equal to that excess or portion, as the case may be, if
(i) the policy is an exempt policy,
(ii) a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) under the policy is paid at the particular time,
(iii) the payment results in the termination of the coverage but not the policy, and
(iv) the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) paid at the particular time in respect of the coverage exceeds the amount
(A) in the case where there is no policy anniversary (as defined in section 310 of the Income Tax Regulations) before the date of death of the individual whose life is insured under the coverage, that would be determined — on the policy anniversary that is on or that first follows that date of death and as though the coverage were not terminated — in respect of the coverage under subclause (A)(I) of the description of B in subparagraph 306(4)(a)(iii) of the Income Tax Regulations, and
(B) in any other case, that is determined — on the last policy anniversary before the date of the death of the individual whose life is insured under the coverage — in respect of the coverage under subclause (A)(I) of the description of B in subparagraph 306(4)(a)(iii) of the Income Tax Regulations as it applies for the purpose of subparagraph 306(1)(b)(ii) of the Income Tax Regulations.
(2) The portion of subsection 148(4.01) of the Act before paragraph (a) is replaced by the following:
Marginal note:Repayment of policy loan on partial surrender
(4.01) For the purposes of the definition adjusted cost basis in subsection (9) and paragraph 60(s), a particular amount is deemed to be a repayment made immediately before a particular time by a taxpayer in respect of a policy loan in respect of a life insurance policy if
(3) Paragraph 148(4.01)(b) of the Act is replaced by the following:
(b) the taxpayer disposes of a part of the taxpayer’s interest in the policy at the particular time;
(4) Subparagraph 148(4.01)(d)(ii) of the Act is replaced by the following:
(ii) described in subparagraph (i) of the description of C in paragraph (a) of the definition proceeds of the disposition in subsection (9); and
(5) Paragraph (b) of the description of E.1 in the definition adjusted cost basis in subsection 148(9) of the Act is replaced by the following:
(b) if the policy is issued after 2016 (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the repayment is at or after the particular time), the portion of the loan applied, immediately after the loan, to pay a premium under the policy as provided for under the terms and conditions of the policy (except to the extent that the portion is described in subparagraph (i) of the description of C in paragraph (a) of the definition proceeds of the disposition in this subsection), and
(6) The portion of the description of O in the definition adjusted cost basis in subsection 148(9) of the Act before the formula is replaced by the following:
- O
- is, in the case of a policy that is issued after 2016 and is not an annuity contract, the total of all amounts each of which is — if a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) under the policy is paid before that time as a consequence of the death of an individual whose life is insured under the coverage (and, in the case where the particular time at which the policy is issued is determined under subsection (11), at or after the particular time) and the payment results in the termination of the coverage — the amount, if any, determined with respect to the coverage by the formula
(7) The portion of the definition adjusted cost basis in subsection 148(9) of the Act after the description of P is replaced by the following:
- Q
- is the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy paid in respect of the coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) on the termination,
- R
- is the total of all amounts — each of which is in respect of a coverage (as defined in subsection 1401(3) of the Income Tax Regulations) in respect of a specific life or two or more specific lives jointly insured under the coverage referred to in the description of O — that would be the present value, determined for the purposes of section 307 of the Income Tax Regulations, on the last policy anniversary (as defined in section 310 of the Income Tax Regulations) on or before the termination, of the fund value of the coverage (as defined in subsection 1401(3) of the Income Tax Regulations) if the fund value of the coverage on that policy anniversary were equal to the fund value of the coverage on the termination,
- S
- is the total of all amounts — each of which is in respect of a coverage (as defined in subsection 1401(3) of the Income Tax Regulations and referred to in this description as a “particular coverage”) in respect of a specific life or two or more specific lives jointly insured under the coverage referred to in the description of O — that would be determined, on that policy anniversary, for paragraph (a) of the description of C in the definition net premium reserve in subsection 1401(3) of the Income Tax Regulations in respect of the particular coverage, if the benefit on death under the particular coverage, and the fund value of the coverage (as defined in subsection 1401(3) of the Income Tax Regulations), on that policy anniversary were equal to the benefit on death under the particular coverage and the fund value of the coverage, as the case may be, on the termination,
- T
- is the amount that would be, on that policy anniversary, the net premium reserve (as defined in subsection 1401(3) of the Income Tax Regulations) in respect of the policy for the purposes of section 307 of the Income Tax Regulations, if the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy, the benefit on death under each coverage (as defined in subsection 1401(3) of the Income Tax Regulations) and the fund value of each coverage (as defined in subsection 1401(3) of the Income Tax Regulations) on that policy anniversary were equal to the fund value benefit, the benefit on death under each coverage and the fund value of each coverage, as the case may be, under the policy on the termination, and
- U
- is the amount, if any, determined under subsection (4) in respect of a disposition before that time of the interest because of paragraph (2)(e) in respect of the payment in respect of the fund value benefit under the policy paid in respect of the coverage (as defined in section 310 of the Income Tax Regulations for the purposes of section 306 of the Income Tax Regulations) on the termination; (coût de base rajusté)
(8) The portion of subsection 148(11) of the Act before paragraph (b) is replaced by the following:
Marginal note:Loss of grandfathering
(11) For the purposes of determining at and after a particular time whether a life insurance policy (other than an annuity contract) issued before 2017 is treated as issued after 2016 under this section (other than this subsection) and sections 306 (other than subsections (9) and (10)), 307, 308, 310, 1401 and 1403 of the Income Tax Regulations (except as they apply for the purposes of subsection 211.1(3)), the policy is deemed to be a policy issued at the particular time if the particular time is the first time after 2016 at which life insurance — in respect of a life, or two or more lives jointly insured, and in respect of which a particular schedule of premium or cost of insurance rates applies — is
(a) if the insurance is term insurance, converted to permanent life insurance within the policy; or
62 (1) Subsection 152(4) of the Act is amended by adding the following after paragraph (b.2):
(b.3) the following conditions apply:
(i) the taxpayer, or a partnership of which the taxpayer is a member (directly or indirectly through one or more partnerships), disposes in the year of real or immovable property,
(ii) the taxpayer is not a real estate investment trust (as defined in subsection 122.1(1)) for the year,
(iii) if the disposition is by a corporation or partnership, the property is capital property of the corporation or partnership, as the case may be,
(iv) the disposition is not reported in
(A) if the disposition is by the taxpayer, the return of income of the taxpayer under this Part for the year, or
(B) if the disposition is by a partnership, the partnership’s return required to be filed for the year under section 229 of the Income Tax Regulations, and
(v) in the case that the disposition is not reported in the return described in clause (iv)(A) or (B) and the taxpayer subsequently reports the disposition by filing a prescribed form amending the taxpayer’s return of income under this Part for the year, the assessment, reassessment or additional assessment is made before the day that is three years after the day on which the prescribed form amending the return is filed;
(2) The portion of subsection 152(4.01) of the Act before paragraph (a) is replaced by the following:
Marginal note:Extended period assessment
(4.01) Notwithstanding subsections (4) and (5), an assessment, reassessment or additional assessment to which paragraph (4)(a), (b), (b.1), (b.3) or (c) applies in respect of a taxpayer for a taxation year may be made after the taxpayer’s normal reassessment period in respect of the year to the extent that, but only to the extent that, it can reasonably be regarded as relating to,
(3) Subsection 152(4.01) of the Act is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) if paragraph (4)(b.3) applies to the assessment, reassessment or additional assessment, the disposition referred to in that paragraph.
(4) Subsections (1) to (3) apply to taxation years that end after October 2, 2016.
63 (1) Paragraph 181.1(3)(b) of the Act is replaced by the following:
(b) that was a bankrupt at the end of the year;
(2) Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
64 (1) Paragraph 186.1(a) of the Act is replaced by the following:
(a) that was, at any time in the year, a bankrupt; or
(2) Subsection (1) applies in respect of bankruptcies that occur after April 26, 1995.
65 (1) Paragraph (a) of the description of J in subsection 204.2(1.2) of the Act is replaced by the following:
(a) the total of all amounts each of which is an amount (other than the portion of it that reduces the amount on which tax is payable by the individual under subsection 204.1(1)) received by the individual in the year and before that time out of or under a pooled registered pension plan, a registered retirement savings plan, a registered retirement income fund or a specified pension plan and included in computing the individual’s income for the year
(2) Subsection (1) is deemed to have come into force on January 1, 2010, except that in its application before December 14, 2012, paragraph (a) of the description of J in subsection 204.2(1.2) of the Act, as enacted by subsection (1), is to be read without reference to “a pooled registered pension plan”.
66 (1) Part XI of the Act is repealed.
(2) Subsection (1) applies to transactions and events occurring, income earned, capital gains accruing and investments acquired after March 22, 2017.
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