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

PART VI.2Canada Recovery Dividend

Marginal note:Definition

• 191.5 (1) The following definition applies in this Part.

  bank or life insurer group member

  bank or life insurer group member means a corporation that is

  • (a) a bank;

  • (b) a life insurance corporation that carries on business in Canada; or

  • (c) a financial institution (as defined in subsection 190(1)) that is related to any corporation described in paragraph (a) or (b). (membre d’un groupe de banques ou d’assureurs-vie)

• Marginal note:Tax payable

  (2) Every corporation that is a bank or life insurer group member at any time during a 2021 taxation year shall pay a tax under this Part for its 2022 taxation year equal to the amount determined by the formula

  0.15 [(A ÷ 2) − B]

  where

  A

  is the corporation’s total taxable income (or taxable income earned in Canada if the corporation is non-resident) for

  • (a) 2020 taxation years of the corporation, determined under Part I, without regard to paragraphs 111(1)(a) and (b), and

  • (b) 2021 taxation years of the corporation, determined under Part I, without regard to paragraphs 111(1)(a) and (b); and

  B

  is

  • (a) if the corporation is not related to another bank or life insurer group member at the end of each 2021 taxation year of the corporation, $1 billion, and

  • (b) in any other case, the amount determined under subsection (7).

• Marginal note:Multiple 2022 taxation years

  (3) If a corporation has more than one 2022 taxation year, the latest 2022 taxation year is the 2022 taxation year for the purposes of subsection (2).

• Marginal note:Multiple 2020 and 2021 taxation years

  (4) For the purposes of subsection (2),

  • (a) if a corporation has more than one 2020 taxation year and the aggregate number of days in all its 2020 taxation years is greater than 365 days, the amount determined for the corporation under paragraph (a) of the description of A in subsection (2) shall be reduced to that proportion of that amount that 365 is of the aggregate number of days in all 2020 taxation years; and

  • (b) if a corporation has more than one 2021 taxation year and the aggregate number of days in all its 2021 taxation years is greater than 365 days, the amount determined for the corporation under paragraph (b) of the description of A in subsection (2) shall be reduced to that proportion of that amount that 365 is of the aggregate number of days in all 2021 taxation years.

• Marginal note:Related group

  (5) A corporation that is described in paragraph (a) or (b) of the definition bank or life insurer group member in subsection (1) at any time during a 2021 taxation year and that was related to any other bank or life insurer group member at the end of the year (in this section, the corporation and each such bank or life insurer group member are referred to together as a “related group”) may file with the Minister an agreement in prescribed form, with the prescribed form referred to in subsection (8), on behalf of the related group under which an amount that does not exceed $1 billion is allocated among the members of the related group for the taxation year.

• Marginal note:Allocation by Minister

  (6) The Minister may request a corporation that is member of a related group at any time during the 2021 taxation year to file with the Minister an agreement referred to in subsection (5) and, if the corporation does not file the agreement within 30 days after receiving the request, the Minister may allocate the amount referred to in subsection (5) among the members of the related group for the taxation year.

• Marginal note:Allocation

  (7) For the purposes of this Part, the least amount allocated for the taxation year to each bank or life insurer group member under an agreement described in subsection (5) or by the Minister under subsection (6) is the amount determined for B in subsection (2) for the taxation year of that member, but, if no such allocation is made, the amount determined for B in subsection (2) of each bank and life insurer group member for the year is nil.

• Marginal note:Return

  (8) A corporation that is a bank or life insurer group member shall file with the Minister, no later than the day on or before which the corporation is required by section 150 to file its return of income for the 2022 taxation year under Part I, a prescribed form containing prescribed information.

• Marginal note:Instalments

  (9) A corporation liable to pay tax for the 2022 taxation year under this Part shall pay 1/5 of the tax to the Receiver General on or before its balance-due day for the 2022 and each of the four subsequent taxation years.

Marginal note:Administrative provisions — Part VI.2

191.6 Sections 152, 158 and 159, subsection 161(11), sections 162 to 167 and Division J of Part I apply to this Part with such modifications as the circumstances require.

PART VIIRefundable Tax on Corporations Issuing Qualifying Shares

Marginal note:Corporation to pay tax

• 192 (1) Every corporation shall pay a tax under this Part for a taxation year equal to the total of all amounts each of which is an amount designated under subsection 192(4) in respect of a share issued by it in the year.

• Definition of Part VII refund

  (2) In this Part, the Part VII refund of a corporation for a taxation year means an amount equal to the lesser of

  • (a) the total of

    • (i) the amount, if any, by which the share-purchase tax credit of the corporation for the year exceeds the amount, if any, deducted in respect thereof by it for the year under subsection 127.2(1) from its tax otherwise payable under Part I for the year or the amount deemed by subsection 127.2(2) to have been paid on account of its tax payable under Part I for the year, as the case may be, and

    • (ii) such amount as the corporation may claim, not exceeding the amount that would, if paragraph (i) of the definition investment tax credit in subsection 127(9) were read without reference to the words “the year or”, be its investment tax credit at the end of the year in respect of property acquired, or an expenditure made, after April 19, 1983 and on or before the last day of the year, and

  • (b) the refundable Part VII tax on hand of the corporation at the end of the year.

• Definition of refundable Part VII tax on hand

  (3) In this Part, refundable Part VII tax on hand of a corporation at the end of a taxation year means the amount, if any, by which

  • (a) the total of the taxes payable by it under this Part for the year and all preceding taxation years

  exceeds the total of

  • (b) the total of its Part VII refunds for all preceding taxation years, and

  • (c) the total of all amounts each of which is an amount of tax included in the total described in paragraph 192(3)(a) in respect of a share that was issued by the corporation and that, at the time it was issued, was not a qualifying share.

• Marginal note:Corporation may designate amount

  (4) Every taxable Canadian corporation may, by filing a prescribed form with the Minister at any time on or before the last day of the month immediately following the month in which it issued a qualifying share of its capital stock (other than a share issued before July, 1983 or after 1986, or a share in respect of which the corporation has, on or before that day, designated an amount under subsection 194(4)), designate, for the purposes of this Part and Part I, an amount in respect of that share not exceeding 25% of the amount by which

  • (a) the amount of the consideration for which the share was issued

  exceeds

  • (b) the amount of any assistance (other than an amount included in computing the share-purchase tax credit of a taxpayer in respect of that share) provided or to be provided by a government, municipality or any other public authority in respect of, or for the acquisition of, the share.

• Marginal note:Computing paid-up capital after designation

  (4.1) Where a corporation has designated an amount under subsection 192(4) in respect of shares issued at any time after May 23, 1985, in computing, at any particular time after that time, the paid-up capital in respect of the class of shares of the capital stock of the corporation that includes those shares

  • (a) there shall be deducted the amount, if any, by which

    • (i) the increase as a result of the issue of those shares in the paid-up capital in respect of all shares of that class, determined without reference to this subsection as it applies to those shares,

    exceeds

    • (ii) the amount, if any, by which the total amount of consideration for which those shares were issued exceeds the total amount designated by the corporation under subsection 192(4) in respect of those shares; and

  • (b) there shall be added an amount equal to the lesser of

    • (i) the amount, if any, by which

      • (A) the total of all amounts each of which is an amount deemed by subsection 84(3), 84(4) or 84(4.1) to be a dividend on shares of that class paid by the corporation after May 23, 1985 and before the particular time

      exceeds

      • (B) the total that would be determined under clause 192(4.1)(b)(i)(A) if this Act were read without reference to paragraph 192(4.1)(a), and

    • (ii) the total of all amounts each of which is an amount required by paragraph 192(4.1)(a) to be deducted in computing the paid-up capital in respect of that class of shares after May 23, 1985 and before the particular time.

• Marginal note:Presumption

  (5) For the purposes of this Act, the Part VII refund of a corporation for a taxation year shall be deemed to be an amount paid on account of its tax under this Part for the year on the last day of the second month following the end of the year.

• Definition of qualifying share

  (6) In this Part, qualifying share, at any time, means a prescribed share of the capital stock of a taxable Canadian corporation issued after May 22, 1985 and before 1987.

• Marginal note:Effect of obligation to acquire shares

  (7) When determining under section 251 whether a corporation and any other person do not deal with each other at arm’s length for the purposes of any regulations made for the purposes of subsection 192(6), a person who has an obligation in equity, under a contract or otherwise, either immediately or in the future and either absolutely or contingently, to acquire shares in a corporation, shall be deemed to be in the same position in relation to the control of the corporation as if that person owned the shares.

• Marginal note:Late designation

  (8) Where a taxable Canadian corporation that issued a share does not designate an amount under subsection 192(4) in respect of the share on or before the day on or before which the designation was required by that subsection, the corporation shall be deemed to have made the designation on that day if

  • (a) the corporation has filed with the Minister a prescribed information return relating to the share-purchase tax credit in respect of the share within the time that it would have been so required to file the return had the designation been made on that day, and

  • (b) within 3 years after that day, the corporation has

    • (i) designated an amount in respect of the share by filing a prescribed form with the Minister, and

    • (ii) paid to the Receiver General, at the time the prescribed form referred to in subparagraph 192(8)(b)(i) is filed, an amount that is a reasonable estimate of the penalty payable by the corporation for the late designation in respect of the share,

  except that, where the Minister has mailed a notice to the corporation that a designation has not been made in respect of the share under subsection 192(4), the designation and payment described in paragraph 192(8)(b) must be made by the corporation on or before the day that is 90 days after the day of the mailing.

• Marginal note:Penalty for late designation

  (9) Where, pursuant to subsection 192(8), a corporation made a late designation in respect of a share issued in a month, the corporation shall pay, for each month or part of a month that elapsed during the period beginning on the last day on or before which an amount could have been designated by the corporation under subsection 192(4) in respect of the share and ending on the day that the late designation is made, a penalty for the late designation in respect of the share in an amount equal to 1% of the amount designated in respect of the share, except that the maximum penalty payable under this subsection by the corporation for a month shall not exceed $500.

• Marginal note:Deemed deduction

  (10) For the purposes of this Act, other than the definition investment tax credit in subsection 127(9), the amount, if any, claimed under subparagraph 192(2)(a)(ii) by a taxpayer for a taxation year shall be deemed to have been deducted by the taxpayer under subsection 127(5) for the year.

• Marginal note:Restriction

  (11) Where at any time a corporation has designated an amount under subsection 192(4) in respect of a share, no amount may be designated by the corporation at any subsequent time in respect of that share.

Marginal note:Corporation to file return

• 193 (1) Every corporation that is liable to pay tax under this Part for a taxation year shall, on or before the day on or before which it is required to file its return of income under Part I for the year, file with the Minister a return for the year under this Part in prescribed form.

• Marginal note:Corporation to make payment on account of tax

  (2) Where, in a particular month in a taxation year, a corporation issues a share in respect of which it designates an amount under section 192, the corporation shall, on or before the last day of the month following the particular month, pay to the Receiver General on account of its tax payable under this Part for the year an amount equal to the total of all amounts so designated.

• Marginal note:Interest

  (3) Where a corporation is liable to pay tax under this Part and has failed to pay all or any part or instalment thereof on or before the day on or before which the tax or instalment, as the case may be, was required to be paid, it shall pay to the Receiver General interest at the prescribed rate on the amount that it failed to pay computed from the day on or before which the amount was required to be paid to the day of payment.

• Marginal note:Idem

  (4) For the purposes of computing interest payable by a corporation under subsection 193(3) for any month or months in the period commencing on the first day of a taxation year and ending two months after the last day of the year in which period the corporation has designated an amount under section 192 in respect of a share issued by it in a particular month in the year, the corporation shall be deemed to have been liable to pay, on or before the last day of the month immediately following the particular month, a part or an instalment of tax for the year equal to that proportion of the amount, if any, by which its tax payable under this Part for the year exceeds its Part VII refund for the year that

  • (a) the total of all amounts so designated by it under section 192 in respect of shares issued by it in the particular month

  is of

  • (b) the total of all amounts so designated by it under section 192 in respect of shares issued by it in the year.

• Marginal note:Evasion of tax

  (5) Where a corporation that is liable to pay tax under this Part in respect of a share issued by it wilfully, in any manner whatever, evades or attempts to evade payment of the tax and a purchaser of the share or, where the purchaser is a partnership, a member of the partnership knew or ought to have known, at the time the share was acquired, that the corporation would wilfully evade or attempt to evade the tax, for the purposes of section 127.2, the share shall be deemed not to have been acquired.

• Marginal note:Undue deferral

  (6) Where, in a transaction or as part of a series of transactions, a taxpayer acquires a share of a corporation that the taxpayer controls (within the meaning assigned by subsection 186(2)) and it may reasonably be considered that one of the main purposes of the acquisition was to reduce for a period interest on the taxpayer’s liability for tax under this Part, the share shall, for the purposes of section 127.2 and this Part (other than this subsection), be deemed not to have been acquired by the taxpayer and not to have been issued by the corporation until the end of that period.

• Marginal note:Avoidance of tax

  (7) Where, as part of a series of transactions or events one of the main purposes of which may reasonably be considered to be the avoidance of tax that might otherwise have been or become payable under Part II by any corporation, a particular corporation has issued a share in a taxation year in respect of which it has designated an amount under subsection 192(4), the particular corporation shall, on or before the last day of the second month after the end of the year, pay a tax under this Part for the year equal to 125% of the amount of tax under Part II that is or may be avoided by reason of the series of transactions or events.

• Marginal note:Tax on excess

  (7.1) Where a corporation has in a taxation year made an election under subsection 127.2(10) in respect of any share that was part of a distribution of shares referred to in that subsection and, at the end of that year or any subsequent taxation year,

  • (a) the total of the amounts designated under subsection 192(4) in respect of those shares as evidenced by the prescribed information returns required by regulation to be filed with the Minister by a taxpayer other than the corporation

  exceeds

  • (b) the total of the amounts designated under subsection 192(4) in respect of those shares acquired by the taxpayer and in respect of which another taxpayer was required by regulation to provide the taxpayer with a prescribed information return relating to the designation under that subsection,

  the taxpayer is liable to pay a tax under this Part for the taxation year at the end of which there is such an excess equal to the amount of the excess, which tax is to be paid to the Receiver General within 60 days after the end of the taxation year, and the excess shall be included in determining the total under paragraph 193(7.1)(b) for any taxation year of the taxpayer subsequent to that year.

• Marginal note:Provisions applicable to Part

  (8) Sections 151, 152, 158 and 159, subsection 161(11), sections 162 to 167 and Division J of Part I are applicable to this Part with such modifications as the circumstances require.