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Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Full Document:  

Act current to 2023-01-11 and last amended on 2023-01-01. Previous Versions

PART IIncome Tax (continued)

DIVISION IReturns, Assessments, Payment and Appeals (continued)

Payment of Tax (continued)

Marginal note:Definitions

  •  (1) The following definitions apply in this section.

    gross entitlements

    gross entitlements of a person at any time, in respect of a planning activity of the person, means all amounts to which the person, or another person not dealing at arm’s length with the person, is entitled, either before or after that time and either absolutely or contingently, to receive or obtain in respect of the activity. (droits à paiement)

    person

    person includes a partnership. (personne)

    planning activity

    planning activity has the same meaning as in subsection 163.2(1). (activité de planification)

    section 160 avoidance planning

    section 160 avoidance planning by a person, means planning activity in respect of a transaction or series of transactions that

    • (a) is, or is part of, a section 160 avoidance transaction; and

    • (b) one of the purposes of the transaction or series of transactions is to

      • (i) reduce a transferee’s joint and several, or solidary, liability for tax owing under this Act by the transferor (or that would be owing by the transferor if not for a tax attribute transaction), or

      • (ii) reduce the person’s or another person’s ability to pay any amount owing, or that may become owing, under this Act. (planification d’évitement en vertu de l’article 160)

    section 160 avoidance transaction

    section 160 avoidance transaction means a transaction or series of transactions in respect of which

    • (a) the conditions set out in paragraph 160(5)(a) or (b) are met; or

    • (b) if subsection 160(5) applied to the transaction or series of transactions, the amount determined under subparagraph 160(5)(c)(ii) would exceed the amount determined under subparagraph 160(5)(c)(i). (opération d’évitement en vertu de l’article 160)

    tax attribute

    tax attribute means a balance, pool or other amount determined under this Act that is or may be relevant in computing income or in determining a taxpayer’s liability for tax under this Act in any taxation year and includes

    • (a) a capital loss, non-capital loss, restricted farm loss, farm loss and limited partnership loss;

    • (b) an amount that is deductible in computing a person’s income;

    • (c) any balance of undeducted outlays, expenses or other amounts;

    • (d) paid-up capital in respect of a share of any class of the capital stock of a corporation;

    • (e) cost or capital cost of a property; 

    • (f) an amount deductible from an amount otherwise payable under this Act; and

    • (g) an amount that is deemed to have been remitted as an amount payable under this Act. (attribut fiscal)

    tax attribute transaction

    tax attribute transaction means a transaction or series of transactions in which a tax attribute – of a person that dealt at arm’s length with a transferor or transferee immediately before the transaction or series of transactions – is used, directly or indirectly, to provide a tax benefit for the transferor or transferee (or, if either the transferor or transferee is amalgamated with another corporation, the new corporation within the meaning assigned by subsection 87(1)). (opération d’attribut fiscal)

    tax benefit

    tax benefit has the same meaning as in subsection 163.2(1). (avantage fiscal)

    transferee

    transferee has the meaning assigned by subsections 160(1) and (5). (bénéficiaire du transfert)

    transferor

    transferor has the meaning assigned by subsections 160(1) and (5). (auteur du transfert)

  • Marginal note:Penalty

    (2) Every person that engages in, participates in, assents to or acquiesces in planning activity that they know is section 160 avoidance planning, or would reasonably be expected to know is section 160 avoidance planning, but for circumstances amounting to gross negligence is liable to a penalty that is the lesser of

    • (a) 50% of the amount payable under this Act (determined without reference to this subsection), the joint and several, or solidary, liability for which was sought to be avoided through the planning, and

    • (b) the total of $100,000 and the person’s gross entitlements at the time at which the notice of assessment of the penalty is sent to the person in respect of the planning.

  • Marginal note:Clerical or secretarial services

    (3) Subsection (2) does not apply to a person solely because the person provided clerical services or secretarial services with respect to the planning.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2022, c. 19, s. 39

Marginal note:Where excess refunded

  •  (1) Where at any time the Minister determines that an amount has been refunded to a taxpayer for a taxation year in excess of the amount to which the taxpayer was entitled as a refund under this Act, the following rules apply:

    • (a) the excess shall be deemed to be an amount that became payable by the taxpayer on the day on which the amount was refunded; and

    • (b) the taxpayer shall pay to the Receiver General interest at the prescribed rate on the excess (other than any portion thereof that can reasonably be considered to arise as a consequence of the operation of section 122.5, 122.61 or 122.8) from the day it became payable to the date of payment.

  • Marginal note:Liability for refund by reason of s. 122.5

    (1.1) If a person is a qualified relation of an individual (within the meaning assigned by subsection 122.5(1)), in relation to one or more months specified for a taxation year, the person and the individual are jointly and severally, or solidarily, liable to pay the lesser of

    • (a) any excess described in subsection (1) that was refunded in respect of the taxation year to, or applied to a liability of, the individual as a consequence of the operation of section 122.5, and

    • (b) the total of the amounts deemed by subsection 122.5(3) or (3.002) to have been paid by the individual during those specified months.

  • Marginal note:Liability for refund — Climate Action Incentive

    (1.2) If a person is a qualified relation of an individual (within the meaning assigned by subsection 122.8(1)), in relation to one or more months specified for a taxation year, the person and the individual are jointly and severally, or solidarily, liable to pay the lesser of

    • (a) any excess described in subsection (1) that was refunded in respect of the taxation year to, or applied to a liability of, the individual as a consequence of the operation of section 122.8; and

    • (b) the total of the amounts deemed by subsection 122.8(4) to have been paid by the individual during those specified months.

  • Marginal note:Liability under other provisions

    (2) Subsections (1.1) and (1.2) do not limit a person’s liability under any other provision of this Act.

  • Marginal note:Liability for refunds by reason of section 122.61

    (2.1) If a person was a cohabiting spouse or common-law partner (within the meaning assigned by section 122.6) of an individual at the end of a taxation year, the person and the individual are jointly and severally, or solidarily, liable to pay any excess described in subsection (1) that was refunded in respect of the year to, or applied to a liability of, the individual as a consequence of the operation of section 122.61 if the person was the individual’s cohabiting spouse or common-law partner at the time the excess was refunded, but nothing in this subsection is deemed to limit the liability of any person under any other provision of this Act.

  • Marginal note:Liability for excess refunds under section 126.1 to partners

    (2.2) Every taxpayer who, on the day on which an amount has been refunded to, or applied to the liability of, a member of a partnership as a consequence of the operation of subsection 126.1(7) or (13) in excess of the amount to which the member was so entitled, is a member of that partnership is jointly and severally, or solidarily, liable with each other taxpayer who on that day is a member of the partnership to pay the excess and to pay interest on the excess, but nothing in this subsection is deemed to limit the liability of any person under any other provision of this Act.

  • Marginal note:Assessment

    (3) The Minister may at any time assess a taxpayer in respect of any amount payable by the taxpayer because of any of subsections (1) to (1.2) or for which the taxpayer is liable because of subsection (2.1) or (2.2), and the provisions of this Division (including, for greater certainty, the provisions in respect of interest payable) apply, with any modifications that the circumstances require, in respect of an assessment made under this section, as though it were made under section 152 in respect of taxes payable under this Part, except that no interest is payable on an amount assessed in respect of an excess referred to in subsection (1) that can reasonably be considered to arise as a consequence of the operation of section 122.5, 122.61 or 122.8.

  • Marginal note:Where amount applied to liability

    (4) Where an amount is applied to a liability of a taxpayer to Her Majesty in right of Canada in excess of the amount to which the taxpayer is entitled as a refund under this Act, this section applies as though that amount had been refunded to the taxpayer on the day it was so applied.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 160.1
  • 1994, c. 7, Sch. II, s. 132, Sch. VII, s. 16, c. 8, s. 25
  • 2000, c. 12, s. 142
  • 2002, c. 9, s. 43
  • 2013, c. 34, ss. 142(E), 314
  • 2022, c. 10, s. 18
  • 2022, c. 13, s. 4

Marginal note:Joint and several liability in respect of amounts received out of or under RRSP

  •  (1) Where

    • (a) an amount is received out of or under a registered retirement savings plan by a taxpayer other than an annuitant (within the meaning assigned by subsection 146(1)) under the plan, and

    • (b) that amount or part thereof would, but for paragraph (a) of the definition benefit in subsection 146(1), be received by the taxpayer as a benefit (within the meaning assigned by that definition),

    the taxpayer and the last annuitant under the plan are jointly and severally, or solidarily, liable to pay a part of the annuitant’s tax under this Part for the year of the annuitant’s death equal to that proportion of the amount by which the annuitant’s tax for the year is greater than it would have been if it were not for the operation of subsection 146(8.8) that the total of all amounts each of which is an amount determined under paragraph (b) in respect of the taxpayer is of the amount included in computing the annuitant’s income because of that subsection, but nothing in this subsection limits the liability of the annuitant under any other provision of this Act or of the taxpayer for the interest that the taxpayer is liable to pay under this Act on an assessment in respect of the amount that the taxpayer is liable to pay because of this subsection.

  • Marginal note:Joint and several liability in respect of amounts received out of or under RRIF

    (2) Where

    • (a) an amount is received out of or under a registered retirement income fund by a taxpayer other than an annuitant (within the meaning assigned by subsection 146.3(1)) under the fund, and

    • (b) that amount or part thereof would, but for paragraph 146.3(5)(a), be included in computing the taxpayer’s income for the year of receipt pursuant to subsection 146.3(5),

    the taxpayer and the annuitant are jointly and severally, or solidarily, liable to pay a part of the annuitant’s tax under this Part for the year of the annuitant’s death equal to that proportion of the amount by which the annuitant’s tax for the year is greater than it would have been if it were not for the operation of subsection 146.3(6) that the amount determined under paragraph (b) is of the amount included in computing the annuitant’s income because of that subsection, but nothing in this subsection limits the liability of the annuitant under any other provision of this Act or of the taxpayer for the interest that the taxpayer is liable to pay under this Act on an assessment in respect of the amount that the taxpayer is liable to pay because of this subsection.

  • Marginal note:Joint and several liability in respect of a qualifying trust annuity

    (2.1) If a taxpayer is deemed by section 75.2 to have received at any time an amount out of or under an annuity that is a qualifying trust annuity with respect to the taxpayer, the taxpayer, the annuitant under the annuity and the policyholder are jointly and severally, or solidarily, liable to pay the part of the taxpayer’s tax under this Part for the taxation year of the taxpayer that includes that time that is equal to the amount, if any, determined by the formula

    A – B

    where

    A
    is the amount of the taxpayer’s tax under this Part for that taxation year; and
    B
    is the amount that would be the taxpayer’s tax under this Part for that taxation year if no amount were deemed by section 75.2 to have been received by the taxpayer out of or under the annuity in that taxation year.
  • Marginal note:No limitation on liability

    (2.2) Subsection (2.1) limits neither

    • (a) the liability of the taxpayer referred to in that subsection under any other provision of this Act; nor

    • (b) the liability of an annuitant or policyholder referred to in that subsection for the interest that the annuitant or policyholder is liable to pay under this Act on an assessment in respect of the amount that the annuitant or policyholder is liable to pay because of that subsection.

  • Marginal note:Assessment

    (3) The Minister may at any time assess a taxpayer in respect of any amount payable because of this section, and the provisions of this Division (including, for greater certainty, the provisions in respect of interest payable) apply, with any modifications that the circumstances require, in respect of an assessment made under this section as though it had been made under section 152 in respect of taxes payable under this Part.

  • Marginal note:Rules applicable

    (4) If a taxpayer and an annuitant have, by virtue of subsection (1) or (2), become jointly and severally, or solidarily, liable in respect of part or all of a liability of the annuitant under this Act, the following rules apply:

    • (a) a payment by the taxpayer on account of the taxpayer’s liability shall to the extent thereof discharge their liability; but

    • (b) a payment by the annuitant on account of the annuitant’s liability discharges the taxpayer’s liability only to the extent that the payment operates to reduce the annuitant’s liability to an amount less than the amount in respect of which the taxpayer was, by subsection (1) or (2), as the case may be, made jointly and severally, or solidarily, liable.

  • Marginal note:Rules applicable — qualifying trust annuity

    (5) If an annuitant or policyholder has, because of subsection (2.1), become jointly and severally, or solidarily, liable with a taxpayer in respect of part or all of a liability of the taxpayer under this Act, the following rules apply:

    • (a) a payment by the annuitant on account of the annuitant’s liability, or by the policyholder on account of the policyholder’s liability, shall to the extent of the payment discharge their liability, but

    • (b) a payment by the taxpayer on account of the taxpayer’s liability only discharges the annuitant’s and the policyholder’s liability to the extent that the payment operates to reduce the taxpayer’s liability to an amount less than the amount in respect of which the annuitant and the policyholder were, by subsection (2.1), made liable.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 160.2
  • 2013, c. 34, ss. 143, 315

Marginal note:Joint and several liability — registered disability savings plan

  •  (1) Where, in computing income for a taxation year, a taxpayer is required to include an amount in respect of a disability assistance payment (as defined in subsection 146.4(1)) that is deemed by subsection 146.4(10) to have been made at any particular time from a registered disability savings plan, the taxpayer and each holder (as defined in subsection 146.4(1)) of the plan immediately after the particular time are jointly and severally, or solidarily, liable to pay the part of the taxpayer’s tax under this Part for that taxation year that is equal to the amount, if any, determined by the formula

    A - B

    where

    A
    is the amount of the taxpayer’s tax under this Part for that taxation year; and
    B
    is the amount that would be the taxpayer’s tax under this Part for that taxation year if no disability assistance payment were deemed by subsection 146.4(10) to have been paid from the plan at the particular time.
  • Marginal note:No limitation on liability

    (2) Subsection (1) limits neither

    • (a) the liability of the taxpayer referred to in that subsection under any other provision of this Act, nor

    • (b) the liability of any holder referred to in that subsection for the interest that the holder is liable to pay under this Act on an assessment in respect of the amount that the holder is liable to pay because of that subsection.

  • Marginal note:Rules applicable — registered disability savings plans

    (3) Where a holder (as defined in subsection 146.4(1)) of a registered disability savings plan has, because of subsection (1), become jointly and severally, or solidarily, liable with a taxpayer in respect of part or all of a liability of the taxpayer under this Act, the following rules apply:

    • (a) a payment by the holder on account of the holder’s liability shall to the extent of the payment discharge the holder’s liability, but

    • (b) a payment by the taxpayer on account of the taxpayer’s liability only discharges the holder’s liability to the extent that the payment operates to reduce the taxpayer’s liability to an amount less than the amount in respect of which the holder was, by subsection (1), made liable.

  • Marginal note:Assessment

    (4) The Minister may at any time assess a taxpayer in respect of any amount payable because of this section, and the provisions of this Division (including, for greater certainty, the provisions in respect of interest payable) apply, with any modifications that the circumstances require, in respect of an assessment made under this section as though it had been made under section 152 in respect of taxes payable under this Part.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2007, c. 35, s. 118
 
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