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Fall Economic Statement Implementation Act, 2022 (S.C. 2022, c. 19)

Assented to 2022-12-15

PART 1Amendments to the Income Tax Act and Other Legislation (continued)

C.R.C., c. 945Income Tax Regulations (continued)

  •  (1) Paragraphs 2401(2)(a) to (c) of the Regulations are replaced by the following:

    • (a) shall designate for a taxation year investment property of the insurer for the year with a total value for the year equal to the insurer’s mean Canadian reserve liabilities for the year in respect of its life insurance business in Canada;

    • (b) shall designate for a taxation year investment property of the insurer for the year with a total value for the year equal to the insurer’s mean Canadian reserve liabilities for the year in respect of its accident and sickness insurance business in Canada;

    • (c) shall designate for a taxation year in respect of the insurer’s insurance business in Canada (other than a life insurance business or an accident and sickness insurance business) investment property of the insurer for the year with a total value for the year equal to the amount of the insurer’s mean Canadian reserve liabilities for the year in respect of that business;

  • (2) Subsection (1) applies to taxation years that begin after 2022.

  •  (1) The portion of subsection 4802(1.1) of the Regulations before paragraph (a) is replaced by the following:

    • (1.1) For the purposes of subparagraph 127.55(f)(iii) and paragraphs 149(1)(o.4) and 150(1.2)(i) of the Act, a trust is prescribed at any particular time if, at all times after its creation and before the particular time,

  • (2) Subsection (1) applies to taxation years that end after December 30, 2023.

  •  (1) Subsection 4900(5) of the Regulations is replaced by the following:

    • (5) For the purposes of paragraph (e) of the definition qualified investment in subsection 146.1(1) of the Act, paragraph (d) of the definition qualified investment in subsection 146.4(1) of the Act and paragraph (c) of the definition qualified investment in subsection 207.01(1) of the Act, a property is prescribed as a qualified investment for a trust governed by a FHSA, a registered disability savings plan, a registered education savings plan or a TFSA at any time if at that time the property is an interest in a trust or a share of the capital stock of a corporation that was a registered investment for a trust governed by a registered retirement savings plan during the calendar year in which that time occurs or during the preceding year.

  • (2) The portion of subsection 4900(14) of the Regulations before paragraph (a) is replaced by the following:

    • (14) For the purposes of paragraph (d) of the definition qualified investment in subsection 146(1) of the Act, paragraph (e) of the definition qualified investment in subsection 146.1(1) of the Act, paragraph (c) of the definition qualified investment in subsection 146.3(1) of the Act and paragraph (c) of the definition qualified investment in subsection 207.01(1) of the Act, a property is prescribed as a qualified investment for a trust governed by a FHSA, RESP, RRIF, RRSP or TFSA at any time if, at the time the property was acquired by the trust, the property

  • (3) Subparagraph 4900(14)(a)(iii) of the Regulations is replaced by the following:

    • (iii) a qualifying share in respect of a specified cooperative corporation and the FHSA, RESP, RRIF, RRSP or TFSA; and

  • (4) Subsection 4900(15) of the Regulations is replaced by the following:

    • (15) For the purposes of the definition prohibited investment in subsection 207.01(1) of the Act, property that is a qualified investment for a trust governed by a FHSA, RESP, RRIF, RRSP or TFSA solely because of subsection (14) is prescribed property for the trust at any time if, at that time, the property is not described in any of subparagraphs (14)(a)(i) to (iii).

  • (5) Subsections (1) to (4) come into force on April 1, 2023.

  •  (1) Subparagraph (a)(i) of the definition qualified zero-emission technology manufacturing activities in section 5202 of the Regulations is amended by adding the following after clause (E):

    • (E.1) air-source heat pump equipment designed for space or water heating,

  • (2) Subsection (1) is deemed to have come into force on January 1, 2022.

  •  (1) The definition total reserve liabilities in section 8600 of the Regulations is replaced by the following:

    total reserve liabilities

    total reserve liabilities of an insurer as at the end of a taxation year means the amount determined by the formula

    A − A.1 + A.2 + A.3 − (0.9 × B) − (C − (0.9 × D))

    where

    A
    is the total of the insurer’s liabilities and reserves including liabilities for segregated fund guarantees (other than policyholders’ liabilities or a liability for an obligation to pay a benefit under a segregated fund policy in respect of which subparagraphs 1406(b)(i) and (ii) apply) as at the end of the year in respect of insurance policies, as determined for the purposes of the Superintendent of Financial Institutions, if the insurer is required by law to report to the Superintendent of Financial Institutions, or, in any other case, the superintendent of insurance or other similar officer or authority of the province under the laws of which the insurer is incorporated;
    A.1
    is the total of all amounts each of which is the amount of an item reported by the insurer as an insurance contract asset as at the end of the year;
    A.2
    is the total of all amounts each of which is an amount of funds withheld as at the end of the year by the insurer in respect of the reinsurance of a risk under an insurance policy;
    A.3
    is the total of all amounts each which is an amount recoverable as at the end of the year by the insurer under a funds withheld arrangement in respect of the reinsurance of a risk by the insurer under an insurance policy;
    B
    is the total of all amounts each of which is the contractual service margin for a group of insurance contracts (other than a group of segregated fund policies) of the insurer at the end of the year;
    C
    is the total of all amounts each of which is an amount, in respect of a group of reinsurance contracts held by the insurer at the end of the year, that is
    • (a) the reinsurance contract held amount for the group, if there is no reinsurance contract held amount for the group that is in respect of the reinsurance of an obligation to pay a benefit under a segregated fund policy in respect of which subparagraphs 1406(b)(i) and (ii) apply, and

    • (b) in any other case, the amount that would be the reinsurance contract held amount for the group if the reinsurance contract held amount were determined excluding any portion that is in respect of the reinsurance of an obligation to pay a benefit under a segregated fund policy in respect of which subparagraphs 1406(b)(i) and (ii) apply; and

    D
    is the total of all amounts each of which is the amount, in respect of a group of reinsurance contracts held by the insurer at the end of the year, that is
    • (a) if no portion of the contractual service margin for the group is in respect of a risk under a segregated fund policy, the contractual service margin for the group, and

    • (b) in any other case, the amount that would be the contractual service margin for the group if the contractual service margin were determined excluding any portion that is in respect of the reinsurance of a risk under a segregated fund policy; (passif total de réserve)

  • (2) Section 8600 of the Regulations is amended by adding the following in alphabetical order:

    contractual service margin

    contractual service margin for a group of insurance contracts of an insurer, or a group of reinsurance contracts held by the insurer, at the end of a taxation year, has the same meaning as in subsection 138(12) of the Act; (marge sur services contractuels)

    group of insurance contracts

    group of insurance contracts of an insurer has the same meaning as in subsection 138(12) of the Act; (groupe de contrats d’assurance)

    group of reinsurance contracts

    group of reinsurance contracts held by an insurer has the same meaning as in subsection 138(12) of the Act; (groupe de contrats de réassurance)

    group of segregated fund policies

    group of segregated fund policies of an insurer has the same meaning as in subsection 138(12) of the Act; (groupe de polices à fonds réservé)

    policyholders’ liabilities

    policyholders’ liabilities of an insurer at the end of a taxation year has the same meaning as in subsection 138(12) of the Act; (obligation envers les titulaires de polices)

    reinsurance contract held amount

    reinsurance contract held amount for a group of reinsurance contracts held by an insurer at the end of a taxation year has the same meaning as in subsection 138(12) of the Act; (montant au titre des contrats de réassurance détenus)

  • (3) Subsections (1) and (2) apply to taxation years that begin after 2022.

  •  (1) Subsections 8605(1) and (2) of the Regulations are replaced by the following:

    • 8605 (1) For the purposes of subclause 181.3(1)(c)(ii)(A)(II) and clause 190.11(b)(i)(B) of the Act, the amount prescribed in respect of a particular corporation for a taxation year ending at a particular time is the total of all amounts each of which is the amount determined in respect of a corporation that is, at the particular time, a foreign insurance subsidiary of the particular corporation, determined by the formula

      A − B

      where

      A
      is the amount determined by the formula

      C + D + (0.9 × E) − (0.9 × F) − G

      where

      C
      is the amount of the subsidiary’s long-term debt at the end of the subsidiary’s last taxation year ending at or before the particular time (in this subsection referred to as the “last taxation year”),
      D
      is the total amount at the end of the subsidiary’s last taxation year of the subsidiary’s
      • (a) capital stock (or, in the case of an insurance corporation incorporated without share capital, the amount of its members’ contributions),

      • (b) retained earnings,

      • (c) accumulated other comprehensive income,

      • (d) policyholders’ liabilities,

      • (e) contributed surplus, and

      • (f) any other surpluses,

      E
      is total of all amounts each of which is the contractual service margin for a group of insurance contracts of the subsidiary at the end of the subsidiary’s last taxation year other than a group of segregated fund policies,
      F
      is the total of all amounts each of which is the amount, in respect of a group of reinsurance contracts held by the subsidiary at the end of the subsidiary’s last taxation year, that is
      • (a) if no portion of the contractual service margin for the group is in respect of a risk under a segregated fund policy, the contractual service margin for the group, and

      • (b) in any other case, the amount that would be the contractual service margin for the group if the amount were determined excluding any portion that is in respect of the reinsurance of a risk under a segregated fund policy, and

      G
      is the amount of any deficit deducted in computing the subsidiary’s shareholders’ equity at the end of the subsidiary’s last taxation year; and
      B
      is the amount determined by the formula

      H + I

      where

      H
      is the total of all amounts each of which is the carrying value to its owner at the particular time for the taxation year that includes the particular time of a share of the subsidiary’s capital stock or its long-term debt that is owned at the particular time by
      • (a) the particular corporation,

      • (b) a subsidiary of the particular corporation,

      • (c) a corporation

        • (i) that is resident in Canada,

        • (ii) that carried on a life insurance business in Canada at any time in its taxation year ending at or before the particular time, and

        • (iii) that is

          • (A) a corporation of which the particular corporation is a subsidiary, or

          • (B) a subsidiary of a corporation described in clause (A), or

      • (d) a subsidiary of a corporation described in paragraph (c), and

      I
      is the total of all amounts each of which is an amount included under the description of A in respect of any surplus of the subsidiary contributed by a corporation described in paragraphs (a) to (d) of the description of H, other than an amount included under the description of H.
    • (2) For the purposes of subclause 181.3(1)(c)(ii)(A)(III) and clause 190.11(b)(i)(C) of the Act, the amount prescribed in respect of a particular corporation for a taxation year ending at a particular time is the total of all amounts each of which is the amount determined in respect of a corporation that is, at the particular time, a foreign insurance subsidiary of the particular corporation, determined by the formula

      A − B

      where

      A
      is the amount determined for B in subsection (1) in respect of the subsidiary, and
      B
      is the amount determined for A in subsection (1) in respect of the subsidiary.
  • (2) Subsection (1) applies to taxation years that begin after 2022.

  •  (1) Clause (d)(i)(A) of Class 43.1 in Schedule II to the Regulations is amended by striking out “or” at the end of subclause (I), by replacing “and” with “or” at the end of subclause (II) and by adding the following after subclause (II):

    • (III) equipment that is part of an air-source heat pump system that transfers heat from the outside air, including refrigerant piping, energy conversion equipment, thermal energy storage equipment, control equipment and equipment designed to enable the system to interface with other heating and cooling equipment, and

  • (2) Clause (d)(i)(B) of Class 43.1 in Schedule II to the Regulations is replaced by the following:

    • (B) it is not a building, part of a building (other than a solar collector that is not a window and that is integrated into a building), energy equipment that backs up equipment described in subclause (A)(I), (II) or (III) nor equipment that distributes heated or cooled air or water in a building,

  • (3) Subsections (1) and (2) apply to property acquired after April 6, 2022 that has not been used or acquired for use before April 7, 2022.

PART 2Amendments to the Excise Act, 2001 and Other Related Texts

2002, c. 22Excise Act, 2001

 The definition responsible in section 2 of the Excise Act, 2001 is replaced by the following:

responsible

responsible, in relation to a person, means that

  • (a) in the case of bulk alcohol, the person is responsible for the bulk alcohol in accordance with sections 104 to 121;

  • (b) in the case of a cannabis product, the person is responsible for the cannabis product in accordance with sections 158.17 and 158.18; and

  • (c) in the case of a vaping product, the person is responsible for the vaping product in accordance with sections 158.54 to 158.56. (responsable)

 Section 158.01 of the Act is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (c) and by adding the following after paragraph (c):

  • (d) cannabis products that are in the possession of a holder of a licence referred to in paragraph 8(1)(e) or (f) of the Cannabis Regulations, but only to the extent that those cannabis products are used by the holder of the licence in activities that are not prohibited for those cannabis products under the conditions of the licence or the Cannabis Act.

 

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