Income Tax Application Rules (R.S.C., 1985, c. 2 (5th Supp.))

Short Title

Marginal note:Short title

7 This Act may be cited as the Income Tax Application Rules.

PART IIncome Tax Application Rules, 1971

Interpretation

Marginal note:Definitions

8 In this Act,

amended Act

amended Act means, according to the context in which that expression appears,

• (a) the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as amended by section 1 of chapter 63 of the Statutes of Canada, 1970-71-72, and by any subsequent Act, and

• (b) the Income Tax Act, as amended from time to time; (loi modifiée)

former Act

former Act means the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as it was before being amended by section 1 of chapter 63 of the Statutes of Canada, 1970-71-72. (ancienne loi)

Application of 1970-71-72, c. 63, s. 1

Marginal note:Application of 1970-71-72, c. 63, s. 1

9 Subject to the amended Act and this Act, section 1 of chapter 63 of the Statutes of Canada, 1970-71-72, applies to the 1972 and subsequent taxation years.

Application of Part XIII of Amended Act

Marginal note:Application of Part XIII of amended Act

• 10 (4) Where an amount is paid or credited by a person resident in Canada to a non-resident person

  • (a) who is resident in a prescribed country, and

  • (b) with whom the person resident in Canada was dealing at arm’s length,

  as, on account of, in lieu of payment of or in satisfaction of, interest payable on any bond, debenture, mortgage, note or similar obligation issued before 1976 by the person resident in Canada to the non-resident person, for the purposes of computing the tax under Part XIII of the amended Act payable by the non-resident person on the amount, the reference in subsection 212(1) of that Act to “25%” shall be read as a reference to “15%”.

• (5) [Repealed, 2007, c. 35, s. 69]

• Marginal note:Limitation on non-resident’s tax rate

  (6) Notwithstanding any provision of the amended Act, where an agreement or convention between the Government of Canada and the government of any other country that has the force of law in Canada provides that where an amount is paid or credited, or deemed to be paid or credited, to a resident of that other country the rate of tax imposed thereon shall not exceed a specified rate,

  • (a) any reference in Part XIII of the amended Act to a rate in excess of the specified rate shall, in respect of such an amount, be read as a reference to the specified rate; and

  • (b) except where the amount can reasonably be attributed to a business carried on by that person in Canada, that person shall, for the purpose of the agreement or convention in respect of the amount, be deemed not to have a permanent establishment in Canada.

References and Continuation of Provisions

Marginal note:Definitions

12 In this section and sections 13 to 18,

enactment

enactment has the meaning assigned by section 2 of the Interpretation Act; (texte)

old law

old law means the Income War Tax Act, The 1948 Income Tax Act, and the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as amended from time to time otherwise than by section 1 of chapter 63 of the Statutes of Canada, 1970-71-72, or any subsequent Act; (législation antérieure)

The 1948 Income Tax Act

The 1948 Income Tax Act means The Income Tax Act, chapter 52 of the Statutes of Canada, 1948, together with all Acts passed in amendment thereof. (Loi de l’impôt sur le revenu (1948))

Marginal note:References relating to same subject-matter

• 13 (1) Subject to this Act and unless the context otherwise requires, a reference in any enactment to a particular Part or provision of the amended Act shall be construed, as regards any transaction, matter or thing to which the old law applied, to include a reference to the Part or provision, if any, of the old law relating to, or that may reasonably be regarded as relating to, the same subject-matter.

Marginal note:Part IV of former Act

14 Part IV of the former Act is continued in force but does not apply in respect of gifts made after 1971.

Marginal note:Part VIII of former Act

15 Part VIII of the former Act is continued in force but as though the references in that Part that, according to the context in which they appear, are references to or to provisions of the Income Tax Act were read as references to or to provisions of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, as amended from time to time otherwise than by section 1 of chapter 63 of the Statutes of Canada, 1970-71-72, or any subsequent Act.

Marginal note:Construction of certain references

16 In any enactment, a reference by number to any provision of the Income Tax Act that, according to the context in which the reference appears, is a reference to

• (a) a provision of Part IV of the former Act,

• (b) a provision of Part VIII of the former Act, or

• (c) a provision of the amended Act having the same number as a provision described in paragraph (a) or (b),

shall, for greater certainty, be read as reference to the provision described in paragraph (a), (b) or (c), as the case may be, and not to any other provision of the Income Tax Act, or the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, having the same number.

Marginal note:Income War Tax Act, s. 8

• 17 (1) A taxpayer may deduct from the tax otherwise payable under Part I of the amended Act for a taxation year such amount as would, if the Income War Tax Act applied to the taxation year, be deductible from tax because of subsections 8(6), (7) and (7A) of the Income War Tax Act.

• Marginal note:S.C. 1947, c. 63, s. 16

  (2) There may be deducted in computing income for a taxation year under Part I of the amended Act an amount that would be deductible under section 16 of chapter 63 of the Statutes of Canada, 1947, from income as defined by the Income War Tax Act if that Act applied to the taxation year.

• Marginal note:Idem

  (3) There may be deducted from the tax for a taxation year otherwise payable under Part I of the amended Act an amount that would be deductible under section 16 of chapter 63 of the Statutes of Canada, 1947, from the total of taxes payable under the Income War Tax Act and The Excess Profits Tax Act, 1940, if those Acts applied to the taxation year.

• Marginal note:Retrospection

  (4) Where there is a reference in the amended Act to any act, matter or thing done or existing before a taxation year, it shall be deemed to include a reference to the act, matter or thing, even though it was done or existing before the commencement of that Act.

• Marginal note:Amount not previously included as income

  (5) Where, on the application of a method adopted by a taxpayer for computing income from a business, other than a business that is a profession, or farm or property for a taxation year to which the amended Act applies, an amount received in the year would not be included in computing the taxpayer’s income for the year because on the application of that method it would have been included in computing the taxpayer’s income for the purposes of the Income Tax Act or the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, for a preceding taxation year in respect of which it was receivable, if the amount was not included in computing the income for the preceding year, it shall be included in computing the income for the year in which it was received.

• Marginal note:S.C. 1949 (2nd S.), c. 25, s. 53

  (6) There may be deducted in computing income for a taxation year under Part I of the amended Act an amount that would be deductible under section 53 of chapter 25 of the Statutes of Canada, 1949 (Second Session), in computing income under The 1948 Income Tax Act if that Act applied to the taxation year.

• Marginal note:Idem

  (7) There may be deducted from the tax for a taxation year otherwise payable under Part I of the amended Act an amount that would be deductible under section 53 of chapter 25 of the Statutes of Canada, 1949 (Second Session), from the tax payable under Part I of The 1948 Income Tax Act if that Act applied to the taxation year.

• Marginal note:Registered pension plan

  (8) A reference in the amended Act to a registered pension plan shall, in respect of a period while the plan was an approved superannuation or pension fund or plan, be construed as a reference to that approved superannuation or pension fund or plan.

Marginal note:General depreciation provisions

• 18 (1) Where the capital cost to a taxpayer of any depreciable property that was acquired by the taxpayer before 1972 was required by any provision of the old law to be determined for the purpose of computing the amount of any deduction under any such provision in respect of that property, or would have been required by any provision of the old law to be determined for that purpose if any deduction under any such provision had been claimed by the taxpayer in respect of that property, the amount of the capital cost so required to be determined or that would have been so required to be determined, as the case may be, shall be deemed, for all purposes of the amended Act, to be the capital cost to the taxpayer of that property.

• Marginal note:Idem

  (2) Where a taxpayer acquired depreciable property before the beginning of the 1949 taxation year, for the purposes of section 13 of the amended Act and any regulations made under paragraph 20(1)(a) of that Act an amount equal to the total of

  • (a) all deductions allowed in computing the taxpayer’s income for the purpose of the Income War Tax Act as “special depreciation”, “extra depreciation” or allowances in lieu of depreciation for property the taxpayer had at the beginning of the 1949 taxation year (except deductions allowed under subparagraph 6(1)(n)(ii) of that Act), and

  • (b) ½ of all amounts allowed to the taxpayer under subparagraph 6(1)(n)(ii) of that Act for property that the taxpayer had at the beginning of the 1949 taxation year,

  shall be deemed to have been allowed to the taxpayer under regulations made under paragraph 20(1)(a) of the amended Act in computing income for a taxation year before the 1949 taxation year.

• Marginal note:Provisoes not applicable

  (3) The second and third provisoes to paragraph 6(1)(n) of the Income War Tax Act do not apply with respect to sales made after the beginning of the 1949 taxation year.

• Marginal note:Reference to depreciation

  (4) Reference in this section to depreciation shall be deemed to include a reference to allowances in respect of depreciable property of a taxpayer made under paragraph 5(1)(a) of the Income War Tax Act.

• Marginal note:Deduction deemed depreciation

  (5) An amount deducted under paragraph 5(1)(u) of the Income War Tax Act in respect of amounts of a capital nature shall, for the purpose of this section, be deemed to be depreciation taken into account in ascertaining the taxpayer’s income for the purpose of that Act or in ascertaining the taxpayer’s loss for the taxation year for which it was deducted.

Special Transitional Rules

Marginal note:Income maintenance payments

• 19 (1) Notwithstanding section 9, paragraph 6(1)(f) of the amended Act does not apply in respect of amounts received by a taxpayer in a taxation year that were payable to the taxpayer in respect of the loss, in consequence of an event occurring before 1974, of all or any part of the taxpayer’s income from an office or employment, under a plan, described in that paragraph, that was established before June 19, 1971.

• Marginal note:Effect of certain changes made in plan established before June 19, 1971

  (2) For the purposes of this section, a plan described in paragraph 6(1)(f) of the amended Act that was in existence before June 19, 1971 does not cease to be a plan established before that date solely because of changes made therein on or after that date for the purpose of ensuring that the plan qualifies as one entitling the employer of persons covered under the plan to a reduction, as provided for by subsection 50(2) of the Unemployment Insurance Act, in the amount of the employer’s premium payable under that Act in respect of insured persons covered under the plan.