C-52 1 39 55-56 Elizabeth II 2006-2007

An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007

Budget Implementation Act, 2007

2007 6 22 29 2007 90407

SUMMARY

Part 1 implements income tax measures proposed or referenced in Budget 2007 to

(

a) introduce a tax on distributions from certain publicly traded income trusts and limited partnerships, effective beginning with the 2007 taxation year;

(

b) reduce the general corporate income tax rate by one half of a percentage point, effective January 1, 2011;

(

c) increase the age credit amount by $1,000 from $4,066 to $5,066, effective January 1, 2006;

(

d) permit income splitting for pensioners, effective beginning in 2007;

(

e) introduce a new child tax credit of $2,000 multiplied by the appropriate percentage for a taxation year, effective beginning in 2007;

(

f) increase the spousal and other amounts to equal the basic personal amount, effective beginning in 2007;

(

g) increase the age limit for maturing registered retirement savings plans, registered pension plans and deferred profit sharing plans to 71 years of age, effective beginning in 2007;

(

h) expand the types of investments eligible for registered retirement savings plans and other deferred income plans, effective March 19, 2007; and

(

i) increase the contribution limits for registered education savings plans and expand eligible payments for part-time studies, effective beginning in 2007.

Part 1 also amends the Canada Education Savings Act to increase the maximum annual grant payable on contributions made to a registered education savings plan after 2006.

Part 2 amends the Excise Tax Act to clarify the legislative authority that allows the Canada Revenue Agency to pay refunds of excise tax directly to end-users, where fuel subject to excise has been used in tax-exempt circumstances. It also amends that Act to repeal the excise tax on heavy vehicles and to implement the Green Levy on vehicles with fuel consumption of 13 litres or more per 100 kilometres. It also provides an authority for the Canada Revenue Agency to pay a refund of the Green Levy for vans equipped for wheelchair access.

Part 3 implements goods and services tax/harmonized sales tax (GST/HST) measures proposed or referenced in Budget 2007. It amends the Excise Tax Act to exempt midwifery services from the GST/HST and to zero-rate certain supplies of intangible personal property made to non-GST/HST registered non-residents.

It also amends that Act to repeal the GST/HST Visitor Rebate Program and to implement a new Foreign Convention and Tour Incentive Program, which provides rebates of tax in respect of certain property and services used in the course of conventions held in Canada and the accommodation portion of tour packages for non-residents, and establishes new information requirements in the case where rebates are credited by the vendor.

Part 4 implements other measures relating to taxation. It amends the Customs Tariff to increase the duty-free exemption for returning Canadian residents, from $200 to $400, for absences from Canada of not less than 48 hours. It amends the Federal-Provincial Fiscal Arrangements Act to clarify that when a federal corporation listed in

Schedule I to that Act pays provincial taxes or fees, wholly-owned subsidiaries of that corporation also pay provincial taxes or fees. It also authorizes the Minister of Finance to make payments totaling $400 million out of the Consolidated Revenue Fund to the Province of Ontario to assist the province in the transition to a single corporate tax administration. This last measure is consequential to the October 6, 2006 Canada-Ontario Memorandum of Agreement Concerning a Single Administration of Ontario Corporate Tax.

Part 5 enacts the Tax-back Guarantee Act , which legislates the Government’s commitment to dedicate all effective interest savings from federal debt reduction each year to ongoing personal income tax reductions. That Part also commits the Minister of Finance to report publicly at least once a year on personal income tax relief provided under the Guarantee to Canadians.

Part 6 amends the Federal-Provincial Fiscal Arrangements Act to set out the amounts of the fiscal equalization payments to the provinces and the territorial formula financing payments to the territories for the fiscal year beginning on April 1, 2007 and to provide for the method by which those amounts will be calculated for subsequent fiscal years. It also authorizes certain deductions from those amounts that would otherwise be payable under that Act. In addition, it makes consequential amendments to other Acts.

Part 6 also amends that Act to provide increased funding for the Canada Social Transfer beginning on April 1, 2007, and to provide for the method by which the Canada Social Transfer and the Canada Health Transfer amounts will be calculated for subsequent fiscal years, including per capita cash allocations. It also provides for transition protection.

Part 7 amends the Financial Administration Act to modernize Crown borrowing authorities.

Part 8 amends the Canada Mortgage and Housing Corporation Act to permit the Minister of Finance to lend money to the Canada Mortgage and Housing Corporation.

Part 9 amends the Bankruptcy and Insolvency Act , the Canada Deposit Insurance Corporation Act , the Companies’ Creditors Arrangement Act , the Payment Clearing and Settlement Act and the Winding-up and Restructuring Act to allow the Governor in Council to prescribe the meaning of eligible financial contract . Those Acts are also amended to provide that, after an insolvency event occurs, a party to an eligible financial contract can deal with supporting collateral in accordance with the terms of the contract despite any stay of proceedings or court order to the contrary.

This Part also includes amendments to the Bankruptcy and Insolvency Act and the Winding-up and Restructuring Act to provide that collateral transactions executed in accordance with the terms of an eligible financial contract are not void only because they occurred in the prescribed pre-insolvency or winding-up period.

Part 10 authorizes payments to provinces and territories.

Part 11 authorizes payments to certain entities.

Part 12 extends the sunset provisions of financial institutions statutes by six months from April 24, 2007 to October 24, 2007.

Part 13 amends the Department of Public Works and Government Services Act to provide the Minister of Public Works and Government Services with the power to authorize another minister, to whom he or she has delegated powers under that Act, to subdelegate those powers to the chief executive of the relevant department. That Act is also amended with respect to the application of

section 9 to certain departments.

Part 14 amends the Financial Consumer Agency of Canada Act to allow the Minister of Finance to provide funding to the Agency for activities related to financial education.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Short title

This Act may be cited as the Budget Implementation Act, 2007 .

PART 1

AMENDMENTS RELATED TO INCOME TAX

R.S., c. 1 (5th Supp.)

Income Tax Act

(1) Subparagraph 53(2)( h )(i.1) of the Income Tax Act is amended by striking out the word “or” at the end of clause (

A) and by adding the following after that clause:

(A.1)

that was deemed by subsection 104(16) to be a dividend received by the taxpayer, or

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

(1) Subsection 56(1) of the Act is amended by adding the following after paragraph ( a.1 ):

Pension income reallocation

( a.2 )

where the taxpayer is a pension transferee (as defined in subsection 60.03(1)), any amount that is a split-pension amount (as defined in that subsection) in respect of the pension transferee for the taxation year;

(2) Subsection (1) applies to the 2007 and subsequent taxation years.

(1) Section 60 of the Act is amended by adding the following after paragraph ( b ):

Pension income reallocation

(

c) where the taxpayer is a pensioner (as defined in subsection 60.03(1)), any amount that is a split-pension amount (as defined in that subsection) in respect of the pensioner for the taxation year;

(2) Subsection (1) applies to the 2007 and subsequent taxation years.

(1) The Act is amended by adding the following after

section 60.02:

Definitions

60.03

(1) The following

definitions apply in this section.

eligible pension income

revenu de pension déterminé

eligible pension income has the same meaning as in subsection 118(7).

joint election

choix conjoint

joint election in respect of a pensioner and a pension transferee for a taxation year means an election made jointly in prescribed form by the pensioner and the pension transferee and filed with the Minister with both the pensioner’s and the pension transferee’s returns of income for the taxation year in respect of which the election is made, on or before their respective filing-due dates for the taxation year.

pensioner

pensionné

pensioner for a taxation year means an individual who

(

a) receives eligible pension income in the taxation year; and

(

b) is resident in Canada,

(

i) if the individual dies in the taxation year, at the time that is immediately before the individual’s death, or

(ii)

in any other case, at the end of the calendar year in which the taxation year ends.

pension income

revenu de pension

pension income has the meaning assigned by

section 118.

pension transferee

cessionnaire

pension transferee for a taxation year means an individual who

(

a) is resident in Canada,

(

i) if the individual dies in the taxation year, at the time that is immediately before the individual’s death, or

(ii)

in any other case, at the end of the calendar year in which the taxation year ends; and

(

b) at any time in the taxation year is married to, or in a common-law partnership with, a pensioner and is not, by reason of the breakdown of their marriage or common-law partnership, living separate and apart from the pensioner at the end of the taxation year and for a period of at least 90 days commencing in the taxation year.

qualified pension income

revenu de pension admissible

qualified pension income has the meaning assigned by

section 118.

split-pension amount

montant de pension fractionné

split-pension amount for a taxation year is the amount elected by a pensioner and a pension transferee in a joint election for the taxation year not exceeding the amount determined by the formula

0.5A × B/C where A

is the eligible pension income of the pensioner for the taxation year;

is the number of months in the pensioner’s taxation year at any time during which the pensioner was married to, or was in a common-law partnership with, the pension transferee; and

is the number of months in the pensioner’s taxation year.

Effect of pension income split

(2) For the purpose of subsection 118(3), if a pensioner and a pension transferee have made a joint election in a taxation year,

(

a) the pensioner is deemed not to have received the portion of the pensioner’s pension income or qualified pension income, as the case may be, for the taxation year that is equal to the amount of the pensioner’s split-pension amount for that taxation year; and

(

b) the pension transferee is deemed to have received the split-pension amount

(

i) as pension income, to the extent that the split-pension amount was pension income to the pensioner, and

(ii)

as qualified pension income, to the extent that the split-pension amount was qualified pension income to the pensioner.

Limitation

(3) A pensioner may file only one joint election for a particular taxation year.

False declaration

(4) A joint election is invalid if the Minister establishes that a pensioner or a pension transferee has knowingly or under circumstances amounting to gross negligence made a false declaration in the joint election.

(2) Subsection (1) applies to the 2007 and subsequent taxation years.

(1) The definition eligible dividend in subsection 89(1) of the Act is replaced by the following:

eligible dividend

dividende déterminé

eligible dividend means

(

a) a taxable dividend that is received by a person resident in Canada, paid after 2005 by a corporation resident in Canada and designated, as provided under subsection (14), to be an eligible dividend, and

(

b) in respect of a person resident in Canada, an amount that is deemed by subsection 96(1.11) or 104(16) to be a taxable dividend that is received by the person;

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

(1) Section 96 of the Act is amended by adding the following after subsection (1.1):

Deemed dividend of SIFT partnership

(1.11) If a SIFT partnership is liable to tax for a taxation year under

Part IX.1,

( a )

paragraph (1)(

f) is to be read as if the expression “the amount of the income of the partnership for a taxation year from any source or from sources in a particular place” were read as “the amount, if any, by which the income of the partnership for a taxation year from any source or from sources in a particular place exceeds, in respect of each such source, the portion of the partnership’s taxable non-portfolio earnings for the taxation year that is applicable to that source”; and

(

b) the partnership is deemed to have received a dividend in the taxation year from a taxable Canadian corporation equal to the amount by which the partnership’s taxable non-portfolio earnings for the taxation year exceeds the tax payable by the partnership for the taxation year under

Part IX.1.

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

(1) The portion of subparagraph 104(6)( b )(

i) of the Act before clause (

A) is replaced by the following:

(

i) such part (in this

section referred to as the trust’s adjusted distributions amount for the taxation year) of the amount that, but for

(2) Paragraph 104(6)(

b) of the Act is amended by striking out the word “and” at the end of subparagraph (ii.1), by adding the word “and” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

(iv)

where the trust is a SIFT trust for the taxation year, the amount, if any, by which

(

A) its adjusted distributions amount for the taxation year

exceeds

(

B) the amount, if any, by which

(

I) the amount that would, if this Act were read without reference to this subsection, be its income for the taxation year

exceeds

(II)

its non-portfolio earnings for the taxation year.

(3) Section 104 of the Act is amended by adding the following after subsection (15):

SIFT deemed dividend

(16) If an amount (in this subsection and

section 122 referred to as the trust’s non-deductible distributions amount for the taxation year) is determined under subparagraph (6)( b )(iv) in respect of a SIFT trust for a taxation year

(

a) each beneficiary under the SIFT trust to whom at any time in the taxation year an amount became payable by the trust is deemed to have received at that time a taxable dividend that was paid at that time by a taxable Canadian corporation;

(

b) the amount of a dividend described in paragraph (

a) as having been received by a beneficiary at any time in a taxation year is equal to the amount determined by the formula

A/B × C where A

is the amount that became payable at that time by the SIFT trust to the beneficiary,

is the total of all amounts, each of which became payable in the taxation year by the SIFT trust to a beneficiary under the SIFT trust, and

is the SIFT trust’s non-deductible distributions amount for the taxation year;

(

c) the amount of a dividend described in paragraph (

a) in respect of a beneficiary under the SIFT trust is deemed for the purpose of subsection (13) not to be an amount payable to the beneficiary; and

(

d) for the purposes of applying

Part XIII in respect of each dividend described in paragraph ( a ), the SIFT trust is deemed to be a corporation resident in Canada that paid the dividend.

(4) Subsection 104(24) of the Act is replaced by the following:

Amount payable

(24) For the purposes of subsections (6), (7), (13), (16) and (20) and subparagraph 53(2)( h )(i.1), an amount is deemed not to have become payable to a beneficiary in a taxation year unless it was paid in the year to the beneficiary or the beneficiary was entitled in the year to enforce payment of it.

(5) Subsections (1) to (4) are deemed to have come into force on October 31, 2006.

(1) Paragraph (

a) of the description of B in subsection 118(1) of the Act is replaced by the following:

Married or common-law partnership status

(

a) in the case of an individual who at any time in the year is a married person or a person who is in a common-law partnership who supports the individual’s spouse or common-law partner and is not living separate and apart from the spouse or common-law partner by reason of a breakdown of their marriage or common-law partnership, an amount equal to the total of

(i)

$7,131, and

(ii)

the amount determined by the formula

$6,055 - C where C

is the income of the individual’s spouse or common-law partner for the year or, where the individual and the individ-ual’s spouse or com­mon-law partner are living separate and apart at the end of the year because of a breakdown of their marriage or common-law partnership, the spouse’s income for the year while married to, or in a common-law partnership with, the individual and not so separated,

(2) The portion of paragraph 118(1)(

b) of the French version of the Act before subparagraph (

i) is replaced by the following:

Crédit équivalent pour personne entièrement à charge

b) le total de 7 131 $ et de la somme obtenue par la formule suivante :

6 055 $ - D où : D

représente le revenu d’une personne à charge pour l’année,

si le particulier ne demande pas de déduction pour l’année par l’effet de l’alinéa a ) et si, à un moment de l’année :

(3) Subparagraph ( b )(iv) of the description of B in subsection 118(1) of the English version of the Act is replaced by the following:

(iv)

the amount determined by the formula

$6,055 - D where D

is the dependent person’s income for the year,

(4) The description of B in subsection 118(1) of the Act is amended by adding the following after paragraph ( b ):

Child amount

( b.1 )

where

(

i) a child of the individual ordinarily resides throughout the taxation year with the individual together with another parent of the child, $2,000 for each such child who is under the age of 18 years at the end of the taxation year, or

(ii)

except where subparagraph (

i) applies, the individual may deduct an amount under paragraph (

b) in respect of the individual’s child who is under the age of 18 years at the end of the taxation year, or could deduct such an amount in respect of that child if paragraph 118(4)(

a) did not apply to the individual for the taxation year, $2,000 for each such child,

(5) The formula in subsection 118(2) of the Act is replaced by the following:

A × ($5,066 - B)

(6) The description of B in subsection 118(3) of the Act is replaced by the following:

is the lesser of $2,000 and the eligible pension income of the individual for the taxation year.

(7) Paragraphs 118(3.2)(

c) to (

e) of the Act are replaced by the following:

(

c) for the 2007 taxation year, to be replaced by $8,929;

(

d) for the 2008 taxation year, to be replaced by the amount that is the total of $200 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying

section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph ( c );

(

e) for the 2009 taxation year, to be replaced by the amount that is the greater of

(

i) the total of $600 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying

section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph ( d ), and

(ii)

$10,000; and

(8) Subsection 118(3.3) of the Act is repealed.

(9) Paragraph 118(4)(

b) of the Act is replaced by the following:

(

b) not more than one individual is entitled to a deduction under subsection (1) because of paragraph (

b) or ( b.1 ) of the description of B in that subsection for a taxation year in respect of the same person or the same domestic establishment and where two or more individuals otherwise entitled to such a deduction fail to agree as to the individual by whom the deduction may be made, no such deduction for the year shall be allowed to either or any of them;

(10) The portion of subsection 118(7) of the Act before the definition pension income is replaced by the following:

Definitions

(7) Subject to subsections (8) and (8.1), for the purposes of this subsection and subsection (3),

(11) Subsection 118(7) of the Act is amended by adding the following in alphabetical order:

eligible pension income

revenu de pension déterminé

eligible pension income of an individual for a taxation year means

(

a) if the individual has attained the age of 65 years before the end of the taxation year, the pension income received by the individ-ual in the taxation year, and

(

b) if the individual has not attained the age of 65 years before the end of the taxation year, the qualified pension income received by the individual in the taxation year;

(12) The portion of subsection 118(8) of the Act before paragraph (

a) is replaced by the following:

Interpretation

(8) For the purposes of subsection (7), pension income and qualified pension income received by an individual in a taxation year do not include any amount that is

(13) Paragraph 118(8)(

d) of the Act is replaced by the following:

(

d) the amount, if any, by which

(

i) an amount required to be included in computing the individual’s income for the year

exceeds

(ii)

the amount, if any, by which the amount referred to in subparagraph (

i) exceeds the total of all amounts deducted (other than under paragraph 60( c )) by the individual for the year in respect of that amount;

(14) Subsection 118(8) of the Act is amended by adding the word “or” at the end of paragraph (

e) and by adding the following after that paragraph:

(

f) a payment (other than a payment under the Judges Act or the Lieutenant Governors Superannuation Act ) received out of or under an unfunded supplemental plan or arrangement, being a plan or arrangement where

(

i) the payment was in respect of services rendered to an employer by the individual or the individual’s spouse or common-law partner or former spouse or common-law partner as an employee, and

(ii)

the plan or arrangement would have been a retirement compensation arrangement or an employee benefit plan had the employer made a contribution in respect of the payment to a trust governed by the plan or arrangement.

(15) Subsection 118(9) of the Act is replaced by the following:

Bridging benefits

(8.1) For the purposes of subsection (7), a payment in respect of a life annuity under a superannuation or pension plan is deemed to include a payment in respect of bridging benefits, being benefits payable under a registered pension plan on a periodic basis and not less frequently than annually to an individual where

(

a) the individual or the individual’s spouse or common-law partner or former spouse or common-law partner was a member (as defined in subsection 147.1(1)) of the registered pension plan;

(

b) the benefits are payable for a period ending no later than the end of the month following the month in which the member attains 65 years of age or would have attained that age if the member had survived to that day; and

(

c) the amount (expressed on an annualized basis) of the benefits payable to the individual for a calendar year does not exceed the total of the maximum amount of benefits payable for that year under

Part I of the Old Age Security Act and the maximum amount of benefits (other than disability, death or survivor benefits) payable for that year under either the Canada Pension Plan or a provincial pension plan as defined in

section 3 of that Act.

Rounding

(9) If an amount determined under any of paragraphs (3.1)(

a) to (

f) and (3.2)(

a) to (

f) is not a multiple of one dollar, it shall be rounded to the nearest multiple of one dollar or, where it is equidistant from two such consecutive multiples, to the greater multiple.

Child tax credit

(9.1) For greater certainty, in the case of a child who in a taxation year is born, adopted or dies, the reference to “throughout the taxation year” in subparagraph 118(1)( b.1 )(

i) is to be read as a reference to “throughout the portion of the taxation year that is after the child’s birth or adoption or before the child’s death”.

(16) Subsections (1) to (4) and (6) to (15) apply to the 2007 and subsequent taxation years.

(17) Subsection (5) applies to the 2006 and subsequent taxation years.

(1) The description of B in

section 118.8 of the Act is replaced by the following:

is the total of all amounts each of which is deductible under subsection 118(1), because of paragraph ( b.1 ) of the description of B in that subsection, or subsection 118(2) or (3) or 118.3(1) in computing the spouse’s or common-law partner’s tax payable under this Part for the year; and

(2) Subsection (1) applies to the 2007 and subsequent taxation years.

(1) Subsection 120(3) of the Act is amended by striking out the word “and” at the end of paragraph ( b ), by adding the word “and” at the end of paragraph (

c) and by adding the following after paragraph ( c ):

(

d) in the case of a SIFT trust, the amount, if any, by which its income for the year determined without reference to this paragraph exceeds its taxable SIFT trust distributions (as defined in subsection 122(3)) for the year.

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

(1) Subsection 122(1) of the Act is replaced by the following:

Tax payable by inter vivos trust

(1) Notwithstanding

section 117, the tax payable under this Part for a taxation year by an inter vivos trust is the total of

( a )

29% of its amount taxable for the taxation year, and

(

b) if the trust is a SIFT trust for the taxation year, the positive or negative amount determined by the formula

A × B where A

is the positive or negative decimal fraction determined by the formula

C + D - E where C

is the net corporate income tax rate in respect of the SIFT trust for the taxation year,

is the provincial SIFT tax factor for the taxation year, and

is the decimal fraction equivalent of the percentage rate of tax provided in paragraph (

a) for the taxation year, and

is the SIFT trust’s taxable SIFT trust distributions for the taxation year.

(2) Section 122 of the Act is amended by adding the following after subsection (2):

Definitions

(3) The following

definitions apply in this section.

non-deductible distributions amount

montant de distribution non déductible

non-deductible distributions amount for a taxation year has the meaning assigned by subsection 104(16).

taxable SIFT trust distributions

montant de distribution imposable

taxable SIFT trust distributions , of a SIFT trust for a taxation year, means the lesser of

(

a) its amount taxable for the taxation year, and

(

b) the amount determined by the formula

A/(1 - (B + C)) where A

is its non-deductible distributions amount for the taxation year,

is the net corporate income tax rate in respect of the SIFT trust for the taxation year, and

is the provincial SIFT tax factor for the taxation year.

(3) Subsections (1) and (2) are deemed to have come into force on October 31, 2006.

(1) The Act is amended by adding the following after

section 122:

Definitions

122.1

(1) The following

definitions apply in this

section and in sections 104 and 122.

entity

entité

entity means a corporation, trust or partnership.

equity value

valeur des capitaux propres

equity value , of an entity at any time, means the total fair market value at that time of

(

a) if the entity is a corporation, all of the issued and outstanding shares of the capital stock of the corporation;

(

b) if the entity is a trust, all of the income or capital interests in the trust; or

(

c) if the entity is a partnership, all of the interests in the partnership.

investment

placement

investment , in a trust or partnership, means

(

a) a property that is a security of the trust or partnership; or

(

b) a right which may reasonably be considered to replicate a return on, or the value of, a security of the trust or partnership.

non-portfolio earnings

gains hors portefeuille

non-portfolio earnings , of a SIFT trust for a taxation year, means the total of

(

a) the amount, if any, by which

(

i) the total of all amounts each of which is the SIFT trust’s income for the taxation year from a business carried on by it in Canada or from a non-portfolio property, other than income that is a taxable dividend received by the SIFT trust,

exceeds

(ii)

the total of all amounts each of which is the SIFT trust’s loss for the taxation year from a business carried on by it in Canada or from a non-portfolio property, and

(

b) the amount, if any, by which

(

i) the total of

(

A) all taxable capital gains of the SIFT trust from dispositions of non-portfolio properties during the taxation year, and

(

B) one-half of the total of all amounts each of which is deemed under subsection 131(1) to be a capital gain of the SIFT trust for the taxation year in respect of a non-portfolio property of the SIFT trust for the taxation year

exceeds

(ii)

the total of the allowable capital losses of the SIFT trust for the taxation year from dispositions of non-portfolio properties during the taxation year.

non-portfolio property

bien hors portefeuille

non-portfolio property of a trust or partnership for a taxation year means a property, held by the trust or partnership at any time in the taxation year, that is

(

a) a security of a subject entity, if at that time the trust or partnership holds

(

i) securities of the subject entity that have a total fair market value that is greater than 10% of the equity value of the subject entity, or

(ii)

securities of the subject entity that, together with all of the securities that the trust or partnership holds of entities affiliated with the subject entity, have a total fair market value that is greater than 50% of the equity value of the trust or partnership;

(

b) a Canadian real, immovable or resource property, if at any time in the taxation year the total fair market value of all properties held by the trust or partnership that are Canadian real, immovable or resource properties is greater than 50% of the equity value of the trust or partnership; or

(

c) a property that the trust or partnership, or a person or partnership with whom the trust or partnership does not deal at arm’s length, uses at that time in the course of carrying on a business in Canada.

public market

marché public

public market includes any trading system or other organized facility on which securities that are qualified for public distribution are listed or traded, but does not include a facility that is operated solely to carry out the issuance of a security or its redemption, acquisition or cancellation by its issuer.

qualified REIT property

bien admissible de FPI

qualified REIT property of a trust means a property, held by the trust, that is

(

a) a real or immovable property situated in Canada;

(

b) a security of a subject entity, if the entity derives all or substantially all of its revenues from maintaining, improving, leasing or managing real or immovable properties that are capital properties of the trust or of an entity of which the trust holds a share or an interest, including real or immovable properties that the trust, or an entity of which the trust holds a share or an interest, holds together with one or more other persons or partnerships;

(

c) a security of a subject entity, if the entity holds no property other than

(

i) legal title to real or immovable property of the trust (including real or immovable property that the trust holds together with one or more other persons or partnerships), and

(ii)

property described in paragraph ( d ); or

(

d) ancillary to the earning by the trust of the amounts described in subparagraphs ( b )(

i) and (iii) of the definition “real estate investment trust”.

real estate investment trust

fiducie de placement immobilier

real estate investment trust , for a taxation year, means a trust that is resident in Canada throughout the taxation year, if

(

a) the trust at no time in the taxation year holds any non-portfolio property other than qualified REIT properties;

(

b) not less than 95% of the trust’s revenues for the taxation year are derived from one or more of the following:

(

i) rent from real or immovable properties,

(ii)

interest,

(iii)

capital gains from dispositions of real or immovable properties,

(iv)

dividends, and

(

v) royalties;

(

c) not less than 75% of the trust’s revenues for the taxation year are derived from one or more of the following:

(

i) rent from real or immovable properties, to the extent that it is derived from real or immovable properties situated in Canada,

(ii)

interest from mortgages, or hypothecs, on real or immovable properties situated in Canada, and

(iii)

capital gains from dispositions of real or immovable properties situated in Canada; and

(

d) at no time in the taxation year is the total fair market value of all properties held by the trust, each of which is a real or immovable property situated in Canada, cash, or a prop-erty described in clause 212(1)( b )(ii)(C), less than 75% of the equity value of the trust at that time.

real or immovable property

bien immeuble ou réel

real or immovable property , of a taxpayer,

(

a) includes

(

i) a security held by the taxpayer, if the security is a security of a trust that satisfies (or of any other entity that would, if it were a trust, satisfy) the conditions set out in paragraphs (

a) to (

d) of the definition real estate investment trust , or

(ii)

an interest in real property or a real right in immovables (other than a right to a rental or royalty described in paragraph (

d) or (

e) of the definition “Canadian resource property” in subsection 66(15)); but

(

b) does not include any depreciable property, other than

(

i) a property included, otherwise than by an election permitted by regulation, in Class 1, 3 or 31 of

Schedule II to the Income Tax Regulations ,

(ii)

a property ancillary to the ownership or utilization of a property described in subparagraph (i), or

(iii)

a lease in, or a leasehold interest in respect of, land or property described in subparagraph (i).

rent from real or immovable properties

loyer de biens immeubles ou réels

rent from real or immovable properties

(

a) includes

(

i) rent or similar payments for the use of, or right to use, real or immovable properties,

(ii)

payment for services ancillary to the rental of real or immovable properties and customarily supplied or rendered in connection with the rental of real or im­movable properties; but

(

b) does not include

(

i) payment for services supplied or rendered, other than those described in subparagraph ( a )(ii), to the tenants of such properties,

(ii)

fees for managing or operating such properties,

(iii)

payment for the occupation of, use of, or right to use a room in a hotel or other similar lodging facility, or

(iv)

rent based on profits.

security

titre

security of a particular entity means any right, whether absolute or contingent, conferred by the particular entity or by an entity that is affiliated with the particular entity, to receive, either immediately or in the future, an amount that can reasonably be regarded as all or any part of the capital, of the revenue or of the income of the particular entity, or as interest paid or payable by the particular entity, and for greater certainty includes

(

a) a liability of the particular entity;

(

b) if the particular entity is a corporation,

(

i) a share of the capital stock of the corporation, and

(ii)

a right to control in any manner whatever the voting rights of a share of the capital stock of the corporation;

(

c) if the particular entity is a trust, an income or a capital interest in the trust;

(

d) if the particular entity is a partnership, an interest as a member of the partnership; and

(

e) a right to, or to acquire, anything described in this paragraph and any of paragraphs (

a) to ( d ).

SIFT trust

fiducie intermédiaire de placement déterminée

SIFT trust , being a specified investment flow-through trust, for a taxation year means a trust (other than a trust that is a real estate investment trust for the taxation year) that meets the following conditions at any time during the taxation year:

(

a) the trust is resident in Canada;

(

b) investments in the trust are listed or traded on a stock exchange or other public market; and

(

c) the trust holds one or more non-portfolio properties.

subject entity

entité déterminée

subject entity means a person or partnership that is

(

a) a corporation resident in Canada;

(

b) a trust resident in Canada;

(

c) a Canadian resident partnership; or

(

d) a non-resident person, or a partnership that is not described in paragraph ( c ), the principal source of income of which is one or any combination of sources in Canada.

Application of definition SIFT trust

(2) The definition SIFT trust applies to a trust for a taxation year of the trust that ends after 2006, except that if the trust would have been a SIFT trust on October 31, 2006 had that definition been in force and applied to the trust as of that date, that definition does not apply to the trust for a taxation year of the trust that ends before the earlier of

( a )

2011, and

(

b) the first day after December 15, 2006 on which the trust exceeds normal growth as determined by reference to the normal growth guidelines issued by the Department of Finance on December 15, 2006, as amended from time to time, unless that excess arose as a result of a prescribed transaction.

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

The definition general rate reduction percentage in subsection 123.4(1) of the Act is amended by striking out the word “and” at the end of paragraph (

c) and by replacing paragraph (

d) with the following:

(

d) that proportion of 9% that the number of days in the taxation year that are in 2010 is of the number of days in the taxation year, and

(

e) that proportion of 9.5% that the number of days in the taxation year that are after 2010 is of the number of days in the taxation year.

(1) Section 126 of the Act is amended by adding the following after subsection (7):

Deemed dividend — partnership

(8) If an amount is deemed by subsection 96(1.11) to be a taxable dividend received by a person in a taxation year of the person in respect of a partnership, and it is reasonable to consider that all or part of the amount (in this subsection referred to as the “foreign-source portion”) is attributable to income of the partnership from a source in a country other than Canada, the person is deemed for the purposes of this

section to have an amount of income from that source for that taxation year equal to the amount determined by the formula

A × B/C where A

is the total amount included under subsection 82(1) in computing the income of the person in respect of the taxable dividend for that taxation year;

is the foreign-source portion; and

is the amount of the taxable dividend deemed to be received by the person.

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

(1) Paragraph 132(7)(

a) of the Act is replaced by the following:

(

a) at that time, all or substantially all of its property consisted of property other than property that would be taxable Canadian property if the definition taxable Canadian property in subsection 248(1) were read without reference to paragraph (

b) of that definition; or

(2) Subsection (1) is deemed to have come into force on January 1, 2004.

(1) Paragraphs (

a) and (

b) of the definition qualified investment in subsection 146(1) of the Act are replaced by the following:

(

a) an investment that would be described by any of paragraphs (

a) to ( d ), (

f) and (

g) of the definition qualified investment in

section 204 if the reference in that definition to “a trust governed by a deferred profit sharing plan or revoked plan” were read as a reference to “a trust governed by a registered retirement savings plan” and if that definition were read without reference to the words “with the exception of excluded property in relation to the trust”,

(2) Subparagraph ( c.2 )(iv) of the definition qualified investment in subsection 146(1) of the Act is replaced by the following:

(iv)

the day on which the periodic payments began or are to begin (in this paragraph referred to as the “start date”) is not later than the end of the year in which the RRSP annuitant attains 72 years of age,

(3) Paragraph 146(2)( b.4 ) of the Act is replaced by the following:

( b.4 )

the plan does not provide for maturity after the end of the year in which the annuitant attains 71 years of age;

(4) Subsections 146(13.2) and (13.3) of the Act are repealed.

(5) Subsection (1) applies in determining whether a property is, at any time after March 18, 2007, a qualified investment.

(6) Subsections (2) to (4) apply after 2006, except that subsection (4) does not apply to retirement savings plans under which the annuitant attained 69 years of age before 2007.

(1) The definition RESP annual limit in subsection 146.1(1) of the Act is repealed.

(2) Paragraphs (

a) and (

b) of the definition qualified investment in subsection 146.1(1) of the Act are replaced by the following:

(

a) an investment that would be described by any of paragraphs (

a) to ( d ), (

f) and (

g) of the definition qualified investment in

section 204 if the reference in that definition to “a trust governed by a deferred profit sharing plan or revoked plan” were read as a reference to “a trust governed by a registered education savings plan” and if that definition were read without reference to the words “with the exception of excluded property in relation to the trust”,

(3) Subsection 146.1(1) of the Act is amended by adding the following in alphabetical order:

specified educational program

programme de formation déterminé

specified educational program means a program at a post-secondary school level of not less than three consecutive weeks duration that requires each student taking the program to spend not less than 12 hours per month on courses in the program;

(4) Subparagraphs 146.1(2)( g.1 )(

i) and (ii) of the Act are replaced by the following:

(

i) either

(

A) the individual is, at that time, enrolled as a student in a qualifying educational program at a post-secondary educational institution, or

(

B) the individual has, before that time, attained the age of 16 years and is, at that time, enrolled as a student in a specified educational program at a post-secondary educational institution, and

(ii)

either

(

A) the individual satisfies, at that time, the condition set out in clause (i)(A), and

(

I) has satisfied that condition throughout at least 13 consecutive weeks in the 12-month period that ends at that time, or

(II)

the total of the payment and all other educational assistance payments made under a registered education savings plan of the promoter to or for the individual in the 12-month period that ends at that time does not exceed $5,000 or any greater amount that the Minister designated for the purpose of the Canada Education Savings Act approves in writing with respect to the individual, or

(

B) the individual satisfies, at that time, the condition set out in clause (i)(

B) and the total of the payment and all other educational assistance payments made under a registered education savings plan of the promoter to or for the individual in the 13-week period that ends at that time does not exceed $2,500 or any greater amount that the Minister designated for the purpose of the Canada Education Savings Act approves in writing with respect to the individual;

(5) Paragraph 146.1(2)(

k) of the Act is repealed.

(6) Subsections (1) and (5) apply to contributions made after 2006.

(7) Subsection (2) applies in determining whether a property is, at any time after March 18, 2007, a qualified investment.

(8) Subsections (3) and (4) apply to the 2007 and subsequent taxation years.

(1) The definition retirement income fund in subsection 146.3(1) of the Act is replaced by the following:

retirement income fund

fonds de revenu de retraite

retirement income fund means an arrangement between a carrier and an annuitant under which, in consideration for the transfer to the carrier of property, the carrier undertakes to pay amounts to the annuitant (and, where the annuitant so elects, to the annuitant’s spouse or common-law partner after the annuitant’s death), the total of which is, in each year in which the minimum amount under the arrangement for the year is greater than nil, not less than the minimum amount under the arrangement for that year, but the amount of any such payment does not exceed the value of the property held in connection with the arrangement immediately before the time of the payment.

(2) The portion of the definition minimum amount in subsection 146.3(1) of the Act before the formula is replaced by the following:

minimum amount

minimum

minimum amount under a retirement income fund for a year means, for the year in which the fund was entered into, a nil amount, and, for any other year, the amount determined by the formula

(3) Paragraphs (

a) and (

b) of the definition qualified investment in subsection 146.3(1) of the Act are replaced by the following:

(

a) an investment that would be described by any of paragraphs (

a) to ( d ), (

f) and (

g) of the definition qualified investment in

section 204 if the reference in that definition to “a trust governed by a deferred profit sharing plan or revoked plan” were read as a reference to “a trust governed by a registered retirement income fund” and if that definition were read without reference to the words “with the exception of excluded property in relation to the trust”,

(4) Subsections (1) and (2) apply after 2006, except that

(

a) in applying subsection (2) in 2007 (other than for the purposes of subsection 146.3(5.1) of the Act, regulations made under subsection 153(1) of the Act and the definition periodic pension payment in

section 5 of the Income Tax Conventions

Interpretation Act ), the portion of the definition minimum amount in subsection 146.3(1) of the Act before the formula, as enacted by subsection (2), shall be read as follows:

minimum amount under a retirement income fund for a year means, for the year in which the fund was entered into (and for 2007, if the individual who was the annuitant under the fund on January 1, 2007 attained 69 or 70 years of age in 2006), a nil amount, and, for any other year, the amount determined by the formula”

(

b) in applying subsection (2) in 2008 (other than for the purposes of subsection 146.3(5.1) of the Act, regulations made under subsection 153(1) of the Act and the definition periodic pension payment in

section 5 of the Income Tax Conventions

Interpretation Act ), the portion of the definition minimum amount in subsection 146.3(1) of the Act before the formula, as enacted by subsection (2), shall be read as follows:

minimum amount under a retirement income fund for a year means, for the year in which the fund was entered into (and for 2008, if the individual who was the annuitant under the fund on January 1, 2008 attained 70 years of age in 2007), a nil amount, and, for any other year, the amount determined by the formula”

(5) Subsection (3) applies in determining whether a property is, at any time after March 18, 2007, a qualified investment.

(6) For the purpose of applying clause 60( l )(v)(B.2) of the Act for the 2007 and 2008 taxation years, an eligible amount of a taxpayer for a taxation year in respect of a registered retirement income fund (within the meaning assigned by subsection 146.3(6.11) of the Act) is deemed to include

(

a) if the taxation year is 2007, the taxpayer was the annuitant under the fund on January 1, 2007 and the taxpayer attained 69 or 70 years of age in 2006, the lesser of

(

i) the total amounts included because of subsection 146.3(5) of the Act in computing the income of the taxpayer for the taxation year in respect of amounts received out of or under the fund (other than an amount paid by direct transfer from the fund to another fund or a registered retirement savings plan), and

(ii)

the amount that would, but for paragraph (4)( a ), be the minimum amount under the fund for 2007; and

(

b) if the taxation year is 2008, the taxpayer was the annuitant under the fund on January 1, 2008 and the taxpayer attained 70 years of age in 2007, the lesser of

(

i) the total amounts included because of subsection 146.3(5) of the Act in computing the income of the taxpayer for the taxation year in respect of amounts received out of or under the fund (other than an amount paid by direct transfer from the fund to another fund or a registered retirement savings plan), and

(ii)

the amount that would, but for paragraph (4)( b ), be the minimum amount under the fund for 2008.

(1) Subparagraph 147(2)( k )(

i) of the French version of the Act is replaced by the following:

(

i) la fin de l’année dans laquelle le bénéficiaire atteint 71 ans,

(2) Subparagraph 147(2)( k )(iii) of the English version of the Act is replaced by the following:

(iii)

the end of the year in which the beneficiary attains 71 years of age, and

(3) Clause 147(2)( k )(iv)(

A) of the French version of the Act is replaced by the following:

(

A) dont le service doit commencer au plus tard à la fin de l’année dans laquelle le bénéficiaire atteint 71 ans,

(4) Clause 147(2)( k )(vi)(

A) of the English version of the Act is replaced by the following:

(

A) payment of the annuity is to begin not later than the end of the year in which the beneficiary attains 71 years of age, and

(5) Section 147 of the Act is amended by adding the following after subsection (10.4):

Amended contract

(10.5) Where an amendment is made to an annuity contract to which subparagraph (2)( k )(vi) applies, the sole effect of which is to defer annuity commencement to no later than the end of the calendar year in which the individual in respect of whom the contract was purchased attains 71 years of age, the annuity contract is deemed not to have been disposed of by the individual.

(6) Subsection 147(10.6) of the Act is repealed.

(7) Subsections (1) to (6) apply after 2006, except that subsection (6) does not apply to annuities under which the annuitant attained 69 years of age before 2007.

(1) Subparagraph 147.4(2)( a )(

i) of the Act is replaced by the following:

(

i) defer annuity commencement to no later than the end of the calendar year in which the individual in respect of whom the contract was purchased attains 71 years of age, or

(2) Subsection 147.4(4) of the Act is repealed.

(3) Subsections (1) and (2) apply after 2006, except that subsection (2) does not apply to annuities under which the annuitant attained 69 years of age before 2007.

(1) Section 153 of the Act is amended by adding the following after subsection (1.2):

Split-pension amount

(1.3) A joint election made or expected to be made under

section 60.03 is not to be considered a basis on which the Minister may determine a lesser amount under subsection (1.1).

Deemed withholding

(2) If a pensioner and a pension transferee (as those terms are defined in

section 60.03) make a joint election under

section 60.03 in respect of a split-pension amount (as defined in that section) for a taxation year, the portion of the amount deducted or withheld under subsection (1) that may be reasonably considered to be in respect of the split-pension amount is deemed to have been deducted or withheld on account of the pension transferee’s tax for the taxation year under this Part and not on account of the pensioner’s tax for the taxation year under this Part.

(2) Subsection (1) applies to the 2007 and subsequent taxation years.

(1) Section 160 of the Act is amended by adding the following after subsection (1.2):

Joint liability — tax on split-pension income

(1.3) Where a pensioner and a pension transferee (as those terms are defined in

section 60.03) make a joint election under

section 60.03 in respect of a split-pension amount (as defined in that section) for a taxation year, they are jointly and severally, or solidarily, liable for the tax payable by the pension transferee under this Part for the taxation year to the extent that that tax payable is greater than it would have been if no amount were required to be added because of paragraph 56(1)( a.2 ) in computing the income of the pension transferee under this Part for the taxation year.

(2) Subsection (1) applies to the 2007 and subsequent taxation years.

(1) The Act is amended by adding the following after

section 196:

PART IX.1

TAX ON SIFT PARTNERSHIPS

Definitions

(1) The following

definitions apply in this Part and in

section 96.

non-portfolio earnings

gains hors portefeuille

non-portfolio earnings , of a SIFT partnership for a taxation year, means the total of

(

a) the amount, if any, by which

(

i) the total of all amounts each of which is the SIFT partnership’s income for the taxation year from a business carried on by it in Canada or from a non-portfolio property, other than income that is a taxable dividend received by the SIFT partnership,

exceeds

(ii)

the total of all amounts each of which is the SIFT partnership’s loss for the taxation year from a business carried on by it in Canada or from a non-portfolio property, and

(

b) the amount, if any, by which all taxable capital gains of the SIFT partnership from dispositions of non-portfolio properties during the taxation year exceeds the total of the allowable capital losses of the SIFT partnership for the taxation year from dispositions of non-portfolio properties during the taxation year.

SIFT partnership

société de personnes intermédiaire de placement déterminée

SIFT partnership , being a specified investment flow-through partnership, for any taxation year, means a partnership that meets the following conditions at any time during the taxation year:

(

a) the partnership is a Canadian resident partnership;

(

b) investments (as defined in subsection 122.1(1)) in the partnership are listed or traded on a stock exchange or other public market; and

(

c) the partnership holds one or more non-portfolio properties.

taxable non-portfolio earnings

gains hors portefeuille imposables

taxable non-portfolio earnings of a SIFT partnership, for a taxation year, means the lesser of

(

a) the amount that would, if the SIFT partnership were a taxpayer for the purposes of

Part I and if subsection 96(1) were read without reference to its paragraph ( d ), be its income for the taxation year as determined under

section 3; and

(

b) its non-portfolio earnings for the taxation year.

Tax on partnership income

(2) Every partnership that is a SIFT partnership for a taxation year is liable to a tax under this Part equal to the amount determined by the formula

A × (B +

C) where A

is the taxable non-portfolio earnings of the SIFT partnership for the taxation year;

is the net corporate income tax rate in respect of the SIFT partnership for the taxation year; and

is the provincial SIFT tax factor for the taxation year.

Ordering

(3) This Part and

section 122.1 are to be applied as if this Act were read without reference to subsection 96(1.11).

Partnership to file return

(4) Every member of a partnership that is liable to pay tax under this Part for a taxation year shall — on or before the day on or before which the partnership return is required to be filed for the year under

section 229 of the Income Tax Regulations — file with the Minister a return for the taxation year under this

Part in prescribed form containing an estimate of the tax payable by the partnership under this Part for the taxation year.

Authority to file return

(5) For the purposes of subsection (4), if, in respect of a taxation year of a partnership, a particular member of the partnership has authority to act for the partnership,

(

a) if the particular member has filed a return as required by this Part for a taxation year, each other person who was a member of the partnership during the taxation year is deemed to have filed the return; and

(

b) a return that has been filed by any other member of the partnership for the taxation year is not valid and is deemed not to have been filed by any member of the partnership.

Provisions applicable to Part

(6) Subsection 150(2), sections 152, 156, 156.1, 158, 159 and 161 to 167 and Division J of

Part I apply to this Part, with any modifications that the circumstances require, and for greater certainty,

(

a) a notice of assessment referred to in subsection 152(2) in respect of tax payable under this

Part is valid notwithstanding that a partnership is not a person; and

(

b) notwithstanding subsection 152(4), the Minister may at any time make an assessment or reassessment of tax payable under this Part or

Part I to give effect to a determination made by the Minister under subsection 152(1.4), including the assessment or reassessment of

Part I tax payable in respect of the disposition of an interest in a SIFT partnership by a member of the partnership.

Payment

(7) Every SIFT partnership shall pay to the Receiver General, on or before its SIFT partnership balance-due day for each taxation year, its tax payable under this Part for the taxation year.

Application of definition SIFT partnership

(8) The definition SIFT partnership applies to a partnership for a taxation year of the partnership that ends after 2006, except that if the partnership would have been a SIFT partnership on October 31, 2006 had that definition been in force and applied to the partnership as of that date, that definition does not apply to the partnership for a taxation year of the partnership that ends before the earlier of

( a )

2011, and

(

b) the first day after December 15, 2006 on which the partnership exceeds normal growth as determined by reference to the normal growth guidelines issued by the Department of Finance on December 15, 2006, as amended from time to time, unless that excess arose as a result of a prescribed transaction.

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

(1) Paragraph 198(6)(

d) of the Act is replaced by the following:

(

d) the cash surrender value of the policy (exclusive of accumulated dividends) is or will be, at or before the end of the year in which the insured person attains 71 years of age, if all premiums under the policy are paid, not less than the maximum total amount (exclusive of accumulated dividends) payable by the insurer under the policy, and

(2) Subsection (1) applies after 2006.

(1) The portion of the definition qualified investment in

section 204 of the Act before paragraph (

a) is replaced by the following:

qualified investment

placement admissible

qualified investment for a trust governed by a deferred profit sharing plan or revoked plan means, with the exception of excluded property in relation to the trust,

(2) Paragraphs (

b) to (

d) of the definition qualified investment in

section 204 of the Act are replaced by the following:

(

b) debt obligations described in clause 212(1)( b )(ii)(C),

(

c) debt obligations issued by

(

i) a corporation, mutual fund trust or limited partnership the shares or units of which are listed on a prescribed stock exchange in Canada,

(ii)

a corporation the shares of which are listed on a prescribed stock exchange outside Canada, or

(iii)

an authorized foreign bank and payable at a branch in Canada of the bank,

( c.1 )

debt obligations that, at the time of acquisition by the trust, met the following criteria, namely,

(

i) the debt obligations had an investment grade rating with a prescribed credit rating agency, and

(ii)

either

(

A) the debt obligations were issued as part of a single issue of debt of at least $25 million, or

(

B) in the case of debt obligations that are issued on a continuous basis, the issuer of the debt obligations had issued and outstanding debt of that type of at least $25 million,

(

d) securities (other than futures contracts or other derivative instruments in respect of which the holder’s risk of loss may exceed the holder’s cost) that are listed on a prescribed stock exchange,

(3) The definition qualified investment in

section 204 of the Act is amended by adding the word “and” at the end of paragraph (

g) and by replacing paragraphs (

h) and (

i) with the following:

(

h) prescribed investments;

(4) Section 204 of the Act is amended by adding the following in alphabetical order:

debt obligation

titre de créance

debt obligation means a bond, debenture, note or similar obligation;

excluded property

bien exclu

excluded property , in relation to a trust governed by a deferred profit sharing plan or revoked plan, means a debt obligation or bankers’ acceptance issued by

(

a) an employer by whom payments are made in trust to a trustee under the plan for the benefit of beneficiaries under the plan, or

(

b) a corporation with whom that employer does not deal at arm’s length;

(5) Subsections (1) to (4) apply in determining whether a property is, at any time after March 18, 2007, a qualified investment.

(1) The

definitions excess amount and RESP lifetime limit in subsection 204.9(1) of the Act are replaced by the following:

excess amount

excédent

excess amount for a year at any time in respect of an individual means

(

a) for years before 2007, the amount, if any, by which the total of all contributions made after February 20, 1990 in the year and before that time into all registered education savings plans by or on behalf of all subscribers in respect of the individual exceeds the lesser of

(

i) the RESP annual limit for the year, and

(ii)

the amount, if any, by which the RESP lifetime limit for the year exceeds the total of all contributions made into registered education savings plans by or on behalf of all subscribers in respect of the individual in all preceding years; and

(

b) for years after 2006, the amount, if any, by which the total of all contributions made in the year and before that time into all registered education savings plans by or on behalf of all subscribers in respect of the individual exceeds the amount, if any, by which

(

i) the RESP lifetime limit for the year

exceeds

(ii)

the total of all contributions made into registered education savings plans by or on behalf of all subscribers in respect of the individual in all preceding years.

RESP lifetime limit

plafond cumulatif de REEE

RESP lifetime limit for a year means

(

a) for 1990 to 1995, $31,500;

(

b) for 1996 to 2006, $42,000; and

(

c) for 2007 and subsequent years, $50,000.

(2) Subsection (1) applies for the purpose of determining tax under

Part X.4 of the Act for months that are after 2006.

(1) Subsection 248(1) of the Act is amended by adding the following in alphabetical order:

Canadian real, immovable or resource property

bien canadien immeuble, réel ou minier

Canadian real, immovable or resource property means

(

a) a property that would, if this Act were read without reference to the definition real or immovable property in subsection 122.1(1), be a real or immovable property situated in Canada,

(

b) a Canadian resource property,

(

c) a timber resource property,

(

d) a share of the capital stock of a corporation, an income or a capital interest in a trust or an interest in a partnership, if more than 50% of the fair market value of the share or interest is derived directly or indirectly from one or any combination of properties described in paragraphs (

a) to ( c ), or

(

e) any right to or interest in — or, for civil law, any right to or in — any property described in any of paragraphs (

a) to ( d );

Canadian resident partnership

société de personnes résidant au Canada

Canadian resident partnership means a partnership that, at any time in respect of which the expression is relevant,

(

a) is a Canadian partnership,

(

b) would, if it were a corporation, be resident in Canada (including, for greater certainty, a partnership that has its central management and control in Canada), or

(

c) was formed under the laws of a province;

net corporate income tax rate

taux net d’imposition du revenu des sociétés

net corporate income tax rate in respect of a SIFT trust or SIFT partnership for a taxation year means the amount, expressed as a decimal fraction, by which

(

a) the percentage rate of tax provided under paragraph 123(1)(

a) for the taxation year

exceeds

(

b) the total of

(

i) the percentage that would, if the SIFT trust or SIFT partnership were a corporation, be its general rate reduction percent- age, within the meaning assigned by subsection 123.4(1), for the taxation year, and

(ii)

the percentage deduction from tax provided under subsection 124(1) for the taxation year;

non-portfolio property

bien hors portefeuille

non-portfolio property has the same meaning as in subsection 122.1(1);

provincial SIFT tax factor

facteur fiscal provincial

provincial SIFT tax factor for a taxation year means the decimal fraction 0.13;

public market

marché public

public market has the same meaning as in subsection 122.1(1);

SIFT partnership

société de personnes intermédiaire de placement déterminée

SIFT partnership has the meaning assigned by

section 197;

SIFT partnership balance-due day

date d’échéance du solde

SIFT partnership balance-due day , in respect of a taxation year of a SIFT partnership, means the day on or before which the partnership is required to file a return for the taxation year under

section 229 of the Income Tax Regulations ;

SIFT trust

fiducie intermédiaire de placement déterminée

SIFT trust has the meaning assigned by

section 122.1;

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

(1) Paragraph 249(1)(

a) of the Act is replaced by the following:

(

a) in the case of a corporation or Canadian resident partnership, a fiscal period, and

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

C.R.C., c. 945

Income Tax Regulations

(1) The portion of subsection 229(1) of the Income Tax Regulations before paragraph (

a) is replaced by the following:

(1) Every member of a partnership that carries on a business in Canada, or that is a Canadian partnership or a SIFT partnership, at any time in a fiscal period of the partnership shall make for that period an information return in prescribed form containing the following information:

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

(1) Part XXVI of the Regulations is amended by adding the following after

section 2607:

Sift Trusts

For the purposes of this Part, if the individual is a SIFT trust, a reference to income earned in a taxation year shall be read as a reference to the amount that would, if this Part were read without reference to this section, be the amount, if any, by which its income for the taxation year exceeds its taxable SIFT trust distributions for the taxation year.

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

(1) The portion of subsection 4900(1) of the Regulations before paragraph (

a) is replaced by the following:

(1) 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 (

h) of the definition qualified investment in

section 204 of the Act, each of the following investments is prescribed as a qualified investment for a plan trust at a particular time if at that time it is

(2) Paragraph 4900(1)( d.1 ) of the Regulations is repealed.

(3) Paragraph 4900(1)( e.01 ) of the Regulations is repealed.

(4) Paragraphs 4900(1)(

m) to ( n.1 ) of the Regulations are repealed.

(5) Paragraphs 4900(1)(

p) and ( p.1 ) of the Regulations are repealed.

(6) Subsection 4900(2) of the Regulations is replaced by the following:

(2) For the purposes of paragraph ( c.1 ) of the definition qualified investment in

section 204 of the Act, each of the following is a prescribed credit rating agency:

(

a) A.M. Best Company, Inc.;

(

b) Dominion Bond Rating Service Limited;

(

c) Fitch, Inc.;

(

d) Moody’s Investors Service, Inc.; and

(

e) the Standard and Poor’s Division of the McGraw-Hill Companies, Inc.

(7) Subsection 4900(3) of the Regulations is replaced by the following:

(3) For the purpose of paragraph (

h) of the definition qualified investment in

section 204 of the Act, a contract with a licensed annuities provider for an annuity payable to an employee who is a beneficiary under a deferred profit sharing plan beginning not later than the end of the year in which the employee attains 71 years of age, the guaranteed term of which, if any, does not exceed 15 years, is prescribed as a qualified investment for a trust governed by such a plan or revoked plan.

(8) The portion of subsection 4900(7) of the Regulations before paragraph (

a) is replaced by the following:

(7) Subject to subsection (11), for the purposes of paragraph (

h) of the definition qualified investment in

section 204 of the Act, a property is prescribed as a qualified investment for a trust governed by a deferred profit sharing plan or revoked plan at any time if at that time the property is an interest

(9) Subsections (1) to (6) and (8) apply in determining whether a property is, at any time after March 18, 2007, a qualified investment.

(10) Subsection (7) applies after 2006 except that, for the period before March 19, 2007, the reference in subsection 4900(3) of the Regulations, as enacted by subsection (7), to “paragraph ( h )” shall be read as a reference to “paragraph ( i )”.

(1) Paragraph 8308.3(1)(

c) of the Regulations is replaced by the following:

(

c) a plan or arrangement that does not provide in any circumstances for payments to be made to or for the benefit of the individual after the later of the last day of the calendar year in which the individual attains 71 years of age and the day that is 5 years after the day of termination of the individual’s employment with the employer;

(2) Subsection (1) applies after 2006.

(1) Subparagraph 8502( e )(

i) of the Regulations is replaced by the following:

(

i) requires that the retirement benefits of a member under each benefit provision of the plan begin to be paid not later than the end of the calendar year in which the member attains 71 years of age except that,

(

A) in the case of benefits provided under a defined benefit provision, the benefits may begin to be paid at any later time that is acceptable to the Minister, if the amount of benefits (expressed on an annualized basis) payable does not exceed the amount of benefits that would be payable if payment of the benefits began at the end of the calendar year in which the member attains 71 years of age, and

(

B) in the case of benefits provided under a money purchase provision in accordance with paragraph 8506(1)( e.1 ), the benefits may begin to be paid not later than the end of the calendar year in which the member attains 72 years of age, and

(2) Subsection (1) applies after 2006.

(1) Clause 8503(2)( f )(iii)(

B) of the Regulations is replaced by the following:

(

B) the end of the calendar year in which the beneficiary attains 71 years of age,

(2) Section 8503 of the Regulations is amended by adding the following after subsection (11):

Special Rules for Member Aged 70 or 71 in 2007

(11.1) Where

(

a) a member of a registered pension plan attained 69 years of age in 2005 or 2006,

(

b) the member’s retirement benefits under a defined benefit provision of the plan commenced to be paid to the member in the year in which the member attained 69 years of age,

(

c) the member’s retirement benefits are suspended as of any particular time in 2007, and

(

d) the member was employed with a participating employer from the time the member’s retirement benefits commenced to be paid to the particular time,

the following rules apply:

( e )

subsections (9) and (11) shall apply with respect to the member as though the member became an employee of the participating employer at the particular time, and

(

f) for the purpose of subsection (10), retirement benefits paid under the provision to the member before the particular time shall be disregarded.

(3) Subsections (1) and (2) apply after 2006.

(1) Subparagraph 8506(1)( e )(iii) of the Regulations is replaced by the following:

(iii)

the retirement benefits are payable to the beneficiary beginning no later than on the later of one year after the day of death of the member and the end of the calendar year in which the beneficiary attains 71 years of age;

(2) The portion of paragraph 8506(2)( c.1 ) of the Regulations before subparagraph (

i) is replaced by the following:

( c.1 )

no contribution is made under the provision with respect to a member, and no amount is transferred for the benefit of a member to the provision from another benefit provision of the plan, at any time after the calendar year in which the member attains 71 years of age, other than an amount that is transferred for the benefit of the member to the provision

(3) Paragraph 8506(7)(

b) of the Regulations is replaced by the following:

(

b) that individual had not attained 71 years of age at the end of the preceding calendar year.

(4) Subsections (1) to (3) apply after 2006.

2004, c. 26

Canada Education Savings Act

(1) Subparagraph 5(2)( b )(

i) of the Canada Education Savings Act is replaced by the following:

(i)

$1,000, unless the particular year is any of 1998 to 2006, in which case, $800, and

(2) Paragraph 5(3)(

b) of the Act is replaced by the following:

(

b) in any other case, determined by the formula

$400A + $500B - C where A

is the number of years after 1997 and before 2007 in which the beneficiary was alive, other than a year throughout which the beneficiary was

(

i) an ineligible beneficiary in accord-ance with the regulations, or

(ii)

not resident in Canada,

is the number of years after 2006 in which the beneficiary was alive, up to and including the particular year, other than a year throughout which the beneficiary was

(

i) an ineligible beneficiary in accord-ance with the regulations, or

(ii)

not resident in Canada, and

is the total of all CES grants paid before that time — other than those amounts paid under subsection (4) — in respect of contributions made in a preceding year in respect of the beneficiary.

SOR/2005-151

Canada Education Savings Regulations

Paragraph 4(1)(

d) of the Canada Education Savings Regulations is replaced by the following:

(

d) the total of the contribution and all other contributions to RESPs made, or deemed to have been made for the purpose of

Part X.4 of the Income Tax Act , in respect of the beneficiary does not exceed the RESP lifetime limit (as defined in subsection 204.9(1) of the Income Tax Act ) for the year in which the contribution is made;

Coordinating Amendments

Bill C-33

Sections 40 to 42 apply if Bill C-33 (in those sections referred to as the “other Act”), introduced in the 1st session of the 39th Parliament and entitled Income Tax Amendments Act, 2006, receives royal assent.

(1) Subsection 104(24) of the Act, having been amended by subsection 8 (4) of this Act and 23(8) of the other Act, is replaced by the following:

Amount payable

(24) For the purposes of subparagraph 53(2)( h )(i.1), paragraph (

c) of the definition specified charity in subsection 94(1), subsection 94(8) and subsections (6), (7), (7.01), (13), (16) and (20), an amount is deemed not to have become payable to a beneficiary in a taxation year unless it was paid in the year to the beneficiary or the beneficiary was entitled in the year to enforce payment of it.

(2) Subsection (1) applies in respect of taxation years of a trust that begin after 2006.

If the other Act is assented to on the same day as or after the day on which this Act is assented to, subsections 106(1) and (3) of the other Act are deemed to have come into force before subsections 9 (1) and (16) of this Act.

(1) Subsection 249(1) of the Act, having been amended by subsection 188(1) of the other Act and subsection 29 (1) of this Act, is replaced by the following:

Definition of taxation year

(1) Except as expressly otherwise provided in this Act, a taxation year is

(

a) in the case of a corporation, a fiscal period;

(

b) in the case of an individual (other than a testamentary trust), a calendar year;

(

c) in the case of a testamentary trust, the period for which the accounts of the trust are made up for purposes of assessment under this Act; and

(

d) in the case of a Canadian resident partnership, a fiscal period.

(2) Subsection (1) is deemed to have come into force on October 31, 2006.

PART 2

R.S., c. E-15

AMENDMENTS TO THE EXCISE TAX ACT (OTHER THAN WITH RESPECT TO THE GOODS AND SERVICES TAX/HARMONIZED SALES TAX)

R.S., c. 7 (2nd Supp.), s. 34(1)

(1) Section 68 of the Excise Tax Act is replaced by the following:

Payment where error

(1) If a person, otherwise than pursuant to an assessment, has paid any moneys in error in respect of any goods, whether by reason of mistake of fact or law or otherwise, and the moneys have been taken into account as taxes, penalties, interest or other sums under this Act, an amount equal to the amount of the moneys shall, subject to this Part, be paid to the person if the person applies for the payment of the amount within two years after the payment of the moneys.

Exception

(2) Subsection (1) does not apply if an application for a payment in respect of the goods can be made by any person under

section 68.01.

Payment for end-users — diesel fuel

68.01

(1) If tax under this Act has been paid in respect of diesel fuel, the Minister may pay an amount equal to the amount of that tax

(

a) in the case where a vendor delivers the diesel fuel to a purchaser

(

i) to the vendor, if the vendor applies for the payment, the purchaser certifies that the diesel fuel is for use exclusively as heating oil and the vendor reasonably believes that the purchaser will use it exclusively as heating oil,

(ii)

to the purchaser, if the purchaser applies for the payment, the purchaser uses the diesel fuel as heating oil and no application in respect of the diesel fuel can be made by the vendor under subparagraph (i); or

(

b) to a purchaser who applies for the payment and who uses the diesel fuel to generate electricity, except if the electricity so generated is used primarily in the operation of a vehicle.

Payment for end-users — fuel used as ships’ stores

(2) If tax under this Act has been paid in respect of fuel and no application is made in respect of the fuel by any person under

section 68.17 or 70, the Minister may pay an amount equal to the amount of that tax to a purchaser who applies for the payment and who uses the fuel as ships’ stores.

Timing of application

(3) No payment shall be made under this

section unless

(

a) the vendor described in subparagraph (1)( a )(

i) applies for it within two years after the vendor sells the diesel fuel to the purchaser described in paragraph (1)( a ); or

(

b) the purchaser described in subparagraph (1)( a )(ii), paragraph (1)(

b) or subsection (2) applies for it within two years after the purchase.

Conditions

(4) The Minister is not required to make a payment under this

section unless the Minister is satisfied that all the conditions for the payment have been met.

Deemed tax payable

(5) If, under this section, the Minister pays an amount to a person to which that person is not entitled, or pays an amount to a person in excess of the amount to which that person is entitled, the amount of the payment or the excess is deemed to be a tax payable by that person under this Act on the day on which the Minister made the payment.

Payment to end-users — specially equipped van

68.02

(1) If tax under this Act has been paid in respect of a van to which

section 6 of

Schedule I applies, the Minister may pay an amount equal to the amount of the tax paid at the rate set out in that

section

(

a) if the van was manufactured or produced in Canada, to a person who is the first final consumer of the van if, at the time of the acquisition of the van by the person or within six months after that time, the van has been equipped with a device designed exclusively to assist in placing a wheelchair in the van without having to collapse the wheelchair; or

(

b) if the van was imported, to a person who is the first final consumer of the van after the importation if, at the time of importation, the van was equipped with a device designed exclusively to assist in placing a wheelchair in the van without having to collapse the wheelchair.

Timing of application

(2) No payment in respect of a van shall be made under this

section unless the person to whom the payment can be made applies for it within two years after the person acquires the van.

Deemed tax payable

(3) If, under this section, the Minister pays an amount to a person to which that person is not entitled, or pays an amount to a person in excess of the amount to which that person is entitled, the amount of the payment or the excess is deemed to be a tax payable by that person under this Act on the day on which the Minister made the payment.

(2) Sections 68 and 68.01 of the Act, as enacted by subsection (1), are deemed to have come into force on September 3, 1985 except that, before March 20, 2007,

( a )

subsection 68(2) of the Act, as enacted by subsection (1), shall be read as follows:

(2) Subsection (1) does not apply if an application for a payment in respect of the goods is made by any person under

section 68.01.

(

b) subparagraph 68.01(1)( a )(ii) of the Act, as enacted by subsection (1), shall be read as follows:

(ii)

to the purchaser, if the purchaser applies for the payment, the purchaser uses the diesel fuel as heating oil and no application in respect of the diesel fuel is made by the vendor under subparagraph (i); or

(3) Section 68.02 of the Act, as enacted by subsection (1), applies in respect of each van to which

section 6 of

Schedule I to the Act, as enacted by

section 44 of this Act, applies.

(4) If, before this Act is assented to, an application under

section 68 of the Act has been made by a person who could have made an application under

section 68.01 of the Act had that

section been in force at that time, the application made under

section 68 of the Act is deemed to have been made under subsection 68.01(1) or (2) of the Act, as the case may be.

(1) Section 6 of

Schedule I to the Act is replaced by the following:

(1) Automobiles (including station wag- ons, vans and sport utility vehicles) designed primarily for use as passenger vehicles but not including pickup trucks, vans equipped to accommodate 10 or more passengers, ambulances and hearses, at the following rates:

( a )

$1,000, in the case of an automobile that has a weighted fuel consumption rating of 13 litres or more per 100 kilometres but less than 14 litres per 100 kilometres;

( b )

$2,000, in the case of an automobile that has a weighted fuel consumption rating of 14 litres or more per 100 kilometres but less than 15 litres per 100 kilometres;

( c )

$3,000, in the case of an automobile that has a weighted fuel consumption rating of 15 litres or more per 100 kilometres but less than 16 litres per 100 kilometres; and

( d )

$4,000, in the case of an automobile that has a weighted fuel consumption rating of 16 litres or more per 100 kilometres.

(2) For the purposes of subsection (1), the weighted fuel consumption rating of an automobile shall be the amount determined by the formula

0.55A + 0.45B where A

is the city fuel consumption rating (based on the number of litres of fuel, other than E85, per 100 kilometres) for automobiles of the same model with the same attributes as the automobile, as determined by reference to data published by the Government of Canada under the EnerGuide mark, or, if no rating can be so determined that would apply to the automobile, by reference to the best available data, which may include the city fuel consumption rating for the most similar model and attributes; and

is the highway fuel consumption rating (based on the number of litres of fuel, other than E85, per 100 kilometres) for automobiles of the same model with the same attributes as the automobile, as determined by reference to data published by the Government of Canada under the EnerGuide mark, or, if no rating can be so determined that would apply to the automobile, by reference to the best available data, which may include the highway fuel consumption rating for the most similar model and attributes.

(2) Subsection (1) applies to each automobile delivered by a manufacturer or producer to a purchaser after March 19, 2007, and each automobile imported into Canada after that day unless the automobile had been put into service before March 20, 2007, but does not apply to an automobile for which an agreement in writing has been entered into before March 20, 2007 between a person in the business of selling vehicles to consumers and a final consumer, and for which possession is taken by the final consumer before October 2007.

PART 3

AMENDMENTS IN RESPECT OF THE GOODS AND SERVICES TAX/HARMONIZED SALES TAX

R.S., c. E-15

Excise Tax Act

(1) Section 234 of the Excise Tax Act is amended by adding the following after subsection (2):

Late filing of information and adjustment for failure to file

(2.1) If a registrant is required to file prescribed information in accordance with subsection 252.1(10) or 252.4(5) in respect of an amount claimed as a deduction under subsection (2) in respect of an amount paid or credited on account of a rebate,

(

a) in the case where the registrant files the information on a day (in this subsection referred to as the “filing day”) that is after the day on or before which the registrant is required to file its return under Division V for the reporting period in which the registrant claimed the deduction under subsection (2) in respect of the amount paid or credited and before the particular day that is the earlier of

(

i) the day that is four years after the day on or before which the registrant was required under

section 238 to file a return for the period, and

(ii)

the day stipulated by the Minister in a demand to file the information,

the registrant shall, in determining the net tax for the reporting period of the registrant that includes the filing day, add an amount equal to interest, at the prescribed rate, on the amount claimed as a deduction under subsection (2) computed for the period beginning on the day on or before which the registrant was required to file the prescribed information under subsection 252.1(10) or 252.4(5) and ending on the filing day; and

(

b) in the case where the registrant fails to file the information before the particular day, the registrant shall, in determining the net tax for the reporting period of the registrant that includes the particular day, add an amount equal to the total of the amount claimed as a deduction under subsection (2) and interest, at the prescribed rate, on that amount computed for the period beginning on the day on or before which the registrant was required to file the information under subsection 252.1(10) or 252.4(5) and ending on the day on or before which the registrant is required under

section 238 to file a return for the reporting period of the registrant that includes the particular day.

(2) Subsection (1) applies in respect of any amount claimed as a deduction under subsection 234(2) of the Act in respect of an amount that is paid to, or credited in favour of, a person after March 2007 and that relates to a supply for which tax under

Part IX of the Act becomes payable after March 2007.

1993, c. 27, s. 107(1); 1997, c. 10, s. 58(1)

(1) The portion of subsection 252(1) of the Act before paragraph (

c) is replaced by the following:

Non-resident rebate in respect of exported goods

(1) If a non-resident person is the recipient of a supply of tangible personal property acquired by the person for use primarily outside Canada, the person is not a consumer of the property, the property is not

(

a) excisable goods, or

(2) Subsection (1) applies to any supply of property in respect of which tax under

Part IX of the Act becomes payable after March 2007.

1997, c. 10, s. 59(2); 2000, c. 30, s. 68(2)

(1) Subsection 252.1(2) of the Act is replaced by the following:

Accommodation rebate for tour packages

(2) (

a) a non-resident person is the recipient of a supply made by a registrant of a tour package that includes short-term accommodation or camping accommodation,

(

b) the tour package is acquired by the person otherwise than for supply in the ordinary course of a business of the person of making such supplies, and

(

c) the accommodation is made available to a non-resident individual,

the Minister shall, subject to subsection (8) and

section 252.2, pay a rebate to the person equal to the tax paid by the person in respect of the accommodation.

1993, c. 27, s. 107(1); 1997, c. 10, s. 59(3)

(2) The portion of subsection 252.1(3) of the Act after paragraph (

a) is replaced by the following:

(

b) if the supply is a supply of a tour package, the tour package is acquired by the person for supply in the ordinary course of a business of the person of making supplies of tour packages,

( b.1 )

if the supply is a supply of accommodation, the accommodation is acquired by the person in the ordinary course of a business of the person for the purpose of making a supply (in this subsection referred to as the “subsequent supply”) of a tour package that includes the accommodation,

(

c) a supply of the tour package or the subsequent supply is made to another non-resident person and payment of the consideration for the supply of the tour package or the subsequent supply, as the case may be, is made at a place outside Canada at which the supplier, or an agent of the supplier, is conducting business, and

(

d) the accommodation is made available to a non-resident individual,

the Minister shall, subject to subsection (8) and

section 252.2, pay a rebate to the particular person equal to the tax paid by the particular person in respect of the accommodation.

2000, c. 30, s. 68(4)

(3) Subsection 252.1(4) of the Act is repealed.

1993, c. 27, s. 107(1); 1997, c. 10, s. 59(6)F; 2000, c. 30, s. 68(7)

(4) The descriptions of A and B in paragraph 252.1(5)(

a) of the Act are replaced by the following:

is the total number of nights for which short-term accommodation included in that tour package is made available in Canada under the agreement for the supply, and

is the total number of nights for which camping accommodation included in that tour package is made available in Canada under the agreement for the supply; and

2000, c. 30, s. 68(8)

(5) The description of C in paragraph 252.1(5)(

b) of the Act is replaced by the following:

is the total number of nights for which short-term accommodation, or camping accommodation, included in that tour package is made available in Canada under the agreement for the supply of that tour package,

2000, c. 30, s. 68(9)

(6) Subsection 252.1(6) of the Act is repealed.

1993, c. 27, s. 107(1); 2000, c. 30, s. 68(10)

(7) The portion of subsection 252.1(8) of the Act before paragraph (

b) is replaced by the following:

Rebate paid by registrant

(8) (

a) a registrant makes a supply of a tour package that includes short-term accommodation or camping accommodation to a non-resident recipient who either is an individual or is acquiring the tour package for use in the course of a business of the recipient or for supply in the ordinary course of a business of the recipient of making supplies of tour packages,

1993, c. 27, s. 107(1); 2000, c. 30, s. 68(11)

(8) Paragraph 252.1(8)(

c) of the Act is replaced by the following:

(

c) the amount paid or credited is equal to the amount that would be determined in respect of the supply under paragraph (5)( b ), and

1993, c. 27, s. 107(1)

(9) The portion of subparagraph 252.1(8)( d )(ii) of the Act before clause (

A) is replaced by the following:

(ii)

if the supply of the tour package includes the short-term accommodation or camping accommodation and also includes other property or services (other than meals or property or services that are provided or rendered by the person who provides the accommodation and in connection with it), a deposit of at least 20% of the total consideration for the tour package is paid

(10) Section 252.1 of the Act is amended by adding the following after subsection (9):

Filing of information

(10) If, in accordance with subsection (8), a registrant

(

a) pays to, or credits in favour of, a person an amount on account of a rebate, and

(

b) in determining the registrant’s net tax for a reporting period, claims a deduction under subsection 234(2) in respect of the amount paid or credited,

the registrant shall file with the Minister prescribed information in respect of the amount in prescribed form and in prescribed manner on or before the day on or before which the registrant’s return under Division V for the reporting period in which the amount is deducted is required to be filed.

(11) Subsections (1) to (9) apply in respect of any supply of short-term accommodation, camping accommodation or a tour package that includes short-term accommodation or camping accommodation, for which accommodation is first made available after March 2007, unless

(

a) the accommodation is not included in a tour package, is first made available before April 2009 and is supplied under an agreement in writing entered into before September 25, 2006; or

(

b) the accommodation is included in a tour package, the first night of accommodation in Canada included in the tour package is made available before April 2009 and the tour package is supplied under an agreement in writing entered into before September 25, 2006.

(12) Subsection (10) applies in respect of any supply of a tour package

(

a) for which tax under

Part IX of the Act becomes payable after March 2007; and

(

b) for which the supplier claimed an amount as a deduction under subsection 234(2) of the Act in respect of an amount that the supplier paid to, or credited in favour of, a non-resident person after March 2007.

2000, c. 30, s. 69(2)

(1) Section 252.2 of the Act is amended by adding the word “and” at the end of paragraph (

e) and by repealing paragraph ( f ).

(2) Subsection (1) applies for the purpose of determining any rebate under

section 252 or 252.1 of the Act, unless the rebate is in respect of short-term accommodation, or camping accommodation, not included in a tour package and the rebate is determined in accordance with the formula in subsection 252.1(4) of the Act.

1993, c. 27, s. 107(1)

(1) Paragraph 252.4(1)(

a) of the French version of the Act is replaced by the following:

a) la fourniture de biens ou de services relatifs au congrès, effectué par un inscrit qui est l’organisateur du congrès;

2000, c. 30, s. 70(3)

(2) Paragraphs 252.4(3)(

a) and (

b) of the Act are replaced by the following:

(

a) the tax paid by the organizer calculated on that part of the consideration for the supply or on that part of the value of property that is reasonably attributable to the convention facility or related convention supplies other than property or services that are food or beverages or are supplied under a contract for catering, and

( b )

50% of the tax paid by the organizer calculated on that part of the consideration for the supply or on that part of the value of property that is reasonably attributable to related convention supplies that are food or beverages or are supplied under a contract for catering.

(3) Section 252.4 of the Act is amended by adding the following after subsection (4):

Filing of information

(5) If, in accordance with subsection (2) or (4), a registrant

(

a) pays to, or credits in favour of, a person an amount on account of a rebate, and

(

b) in determining the registrant’s net tax for a reporting period, claims a deduction under subsection 234(2) in respect of the amount paid or credited,

the registrant shall file with the Minister prescribed information in respect of the amount in prescribed form and in prescribed manner on or before the day on or before which the registrant’s return under Division V for the reporting period in which the amount is deducted is required to be filed.

(4) Subsections (1) and (2) apply in respect of the supply, importation or bringing into a participating province of property or services in relation to, or in connection with, a convention that begins after March 2007, except that those subsections do not apply in respect of a supply of property or services in relation to, or in connection with, a convention that begins before April 2009 if the supply is made under an agreement in writing entered into before September 25, 2006.

(5) Subsection (3) applies in respect of any supply relating to a foreign convention

(

a) for which tax under

Part IX of the Act becomes payable after March 2007; and

(

b) for which the supplier claimed an amount as a deduction under subsection 234(2) of the Act in respect of an amount that the supplier paid to, or credited in favour of, a person after March 2007.

2001, c. 15, s. 23(1)

(1) The portion of the definition practitioner in

section 1 of

Part II of

Schedule V to the Act before paragraph (

b) is replaced by the following:

practitioner , in respect of a supply of optom- etric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational therapy, psychological, midwifery or dietetic services, means a person who

(

a) practises the profession of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, psychology, midwifery or dietetics, as the case may be,

(2) Subsection (1) applies to supplies made after December 28, 2006.

(1) Section 7 of

Part II of

Schedule V to the Act is amended by striking out the word “and” at the end of paragraph ( i ), by adding the word “and” at the end of paragraph (

j) and by adding the following after paragraph ( j ):

(

k) midwifery services.

(2) Subsection (1) applies to supplies made after December 28, 2006.

(1) Part V of

Schedule VI to the Act is amended by adding the following after

section 10:

10.1

A supply of intangible personal property made to a non-resident person who is not registered under Subdivision d of Division V of

Part IX of the Act at the time the supply is made, but not including

(

a) a supply made to an individual unless the individual is outside Canada at that time;

(

b) a supply of intangible personal property that relates to

(

i) real property situated in Canada,

(ii)

tangible personal property ordinarily situated in Canada, or

(iii)

a service the supply of which is made in Canada and is not a zero-rated supply described by any

section of this Part or

Part VII or IX;

(

c) a supply that is the making available of a telecommunications facility that is intangible personal property for use in providing a service described in paragraph (

a) of the definition telecommunication service in subsection 123(1) of the Act;

(

d) a supply of intangible personal property that may only be used in Canada; or

(

e) a prescribed supply.

(2) Subsection (1) is deemed to have come into force on December 17, 1990 except that

section 10.1 of

Part V of

Schedule VI to the Act, as enacted by subsection (1), does not apply to any supply in respect of which the supplier, before March 20, 2007, charged or collected any amount as or on account of tax under

Part IX of the Act.

(3) For the purposes of applying

section 10.1 of

Part V of

Schedule VI to the Act, as enacted by subsection (1), the

definitions telecommunication service and telecommunications facility in subsection 123(1) of the Act are deemed to have come into force on December 17, 1990.

(4) If an amount was taken into account in assessing the net tax of a person under

section 296 of the Act for a reporting period of the person as tax that became collectible by the person in respect of a supply made by the person before March 20, 2007 and, by reason of the application of

section 10.1 of

Part V of

Schedule VI to the Act, as enacted by subsection (1), no tax was collectible by the person in respect of the supply,

(

a) the person shall be entitled until the day that is two years after the day on which this Act receives royal assent to request in writing that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that no tax was collectible by the person in respect of the supply; and

(

b) on receipt of a request under paragraph ( a ), the Minister shall with all due dispatch

(

i) consider the request, and

(ii)

under

section 296 of the Act and despite

section 298 of the Act, assess, reassess or make an additional assessment of the net tax of the person for any reporting period of the person and of any interest, penalty or other obligation of the person, but only to the extent that the assessment, reassessment or additional assessment may reasonably be regarded as relating to the supply.

Coordinating Amendments

Bill C-40

If Bill C-40, introduced in the 1st session of the 39th Parliament and entitled the Sales Tax Amendments Act, 2006 (the “other Act”), receives royal assent and the day of that assent is later than or the same day as the day on which this Act receives royal assent, then

( a )

subsections 34(1) and (4) of the other Act are deemed to have come into force on the day before the day on which subsection 47 (1) of this Act comes into force;

( b )

subsections 34(2) and (4) of the other Act are deemed to have come into force on the day before the day on which subsection 47 (2) of this Act comes into force;

( c )

subsections 34(3) and (4) of the other Act are deemed to have come into force on the day before the day on which subsection 47 (8) of this Act comes into force;

( d )

subsections 34(3) and (4) of the other Act are deemed to have come into force on the day before the day on which subsection 47 (9) of this Act comes into force; and

( e )

subsections 52(1) and (4) of the other Act are deemed to have come into force on the day before the day on which subsection 50 (1) of this Act comes into force.

PART 4

OTHER MEASURES RELATING TO TAXATION

1997, c. 36

Customs Tariff

(1) The Description of Goods of tariff item No. 9804.10.00 in the List of Tariff Provisions set out in the

schedule to the Customs Tariff is amended by replacing the reference to “two hundred dollars” with a reference to “four hundred dollars”.

(2) Subsection (1) is deemed to have come into force on March 20, 2007.

R.S., c. F-8; 1995, c. 17, s. 45(1)

Federal-Provincial Fiscal Arrangements Act

Section 34 of the Federal-Provincial Fiscal Arrangements Act is replaced by the following:

Payments in respect of provincial tax or fee imposed by participating province

Where, in respect of any transaction, matter or thing, a provincial tax or fee is imposed or levied under a law of a participating province and the provincial tax or fee would be payable by a corporation included in

Schedule I if that law were applicable to the corporation, the corporation shall, in respect of any such transaction, matter or thing, pay the provincial tax or fee so imposed or levied as and when it would be required to do so if that law were applicable to it.

Schedule I to the Act is amended by adding the following at the end of that Schedule:

Any corporation that is a wholly-owned subsidiary, as defined in subsection 83(1) of the Financial Administration Act , of a corporation listed in this Schedule.

Toute personne morale qui est la filiale à cent pour cent, au sens du paragraphe 83(1) de la

Loi sur la gestion des finances publiques , d’une personne morale figurant à la présente annexe.

Coming into force

Sections 55 and 56 are deemed to have come into force on July 1, 2000.

Payments to Ontario

Payment of $250,000,000

For the fiscal year beginning on April 1, 2007, from and out of the Consolidated Revenue Fund, there may be paid, on the requisition of the Minister of Finance, an amount of $250,000,000 to the Province of Ontario, to assist the province in the transition to a single corporate tax administration.

Payment of $150,000,000

For the fiscal year beginning on April 1, 2008, from and out of the Consolidated Revenue Fund, there may be paid, on the requisition of the Minister of Finance, an amount of $150,000,000 to the Province of Ontario, to assist the province in the transition to a single corporate tax administration.

PART 5

TAX-BACK GUARANTEE ACT

Enactment of Act

The Tax-back Guarantee Act is enacted as follows:

An Act to dedicate to personal tax relief imputed interest savings resulting from reductions of federal debt

Short title

This Act may be cited as the Tax-back Guarantee Act .

Direction to provide personal tax relief

The Government of Canada shall apply any imputed interest savings resulting from reductions of federal debt to measures that provide tax relief for individuals.

Meaning of federal debt

In this Act, federal debt means the accumulated deficit as stated in the Public Accounts prepared in accordance with sections 63 and 64 of the Financial Administration Act in respect of a fiscal year.

Imputed interest savings

The imputed interest savings in respect of a fiscal year of the Government of Canada is the amount determined by the Minister of Finance to be the product of multiplying the total amount by which federal debt was reduced in the year by the effective interest rate for the year.

Effective interest rate

The effective interest rate for a fiscal year is the ratio of the amount of public debt charges related to unmatured debt (as stated in the Public Accounts for the year) to the average amount of unmatured debt for the year (determined by dividing by two the sum of the amount of unmatured debt at the beginning of the year and the amount of unmatured debt at the end of the year, as those amounts are stated in the Public Accounts for the year).

Public announcement

At least once every fiscal year, the Minister of Finance shall report, by way of a statement tabled in the House of Commons or other public announcement,

(

a) the finalized determination of the imputed interest savings in respect of the previous fiscal year; and

(

b) an accounting of the measures to which those savings have been applied in accord-ance with

section 2.

PART 6

R.S., c. F-8; 1995, c. 17, s. 45(1)

FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS ACT

Amendments to Act

2002, c. 7, s. 170

Subsection 2(2) of the Federal-Provincial Fiscal Arrangements Act is replaced by the following:

Definition of province

(2) In Parts I, I.1 and II, province does not include Yukon, the Northwest Territories or Nunavut.

1999, c. 11, s. 2(7); 2004, c. 22, s. 3(1); 2005, c. 7, s. 1(1); 2006, c. 4, ss. 182 to 188

Parts I and I.1 of the Act are replaced by the following:

PART I

FISCAL EQUALIZATION PAYMENTS

Fiscal Equalization Payments to Provinces

Fiscal equalization payment

Subject to the other provisions of this Act, there may be paid to a province a fiscal equalization payment not exceeding the amounts determined under this Part for each fiscal year in the period beginning on April 1, 2007 and ending on March 31, 2014.

Fiscal year 2007-2008

3.1

The fiscal equalization payment that may be paid to a province for the fiscal year beginning on April 1, 2007 is equal to,

(

a) for Ontario, $0;

(

b) for Quebec, $7,160,352,000;

(

c) for Nova Scotia, $1,307,982,000;

(

d) for New Brunswick, $1,476,523,000;

(

e) for Manitoba, $1,825,796,000;

(

f) for British Columbia, $0;

(

g) for Prince Edward Island, $293,958,000;

(

h) for Saskatchewan, $226,146,000;

(

i) for Alberta, $0; and

(

j) for Newfoundland and Labrador, $477,374,000.

General rule

3.2

(1) Subject to the other provisions of this Part, the fiscal equalization payment that may be paid to a province for a fiscal year beginning after March 31, 2008 is the amount, as determined by the Minister, equal to the greater of

(

a) the amount determined by the formula

(A + B) × C where A

is the aggregate of the amounts obtained by subtracting, for each revenue source except the one referred to in paragraph (

e) of the definition revenue source in subsection 3.5(1), the average annual per capita yield in that province for the revenue source for that fiscal year from the average annual per capita national yield for the revenue source for that fiscal year,

is 50% of the amount obtained by subtracting, for the revenue source referred to in paragraph (

e) of the definition revenue source in subsection 3.5(1), the average annual per capita revenue to be equalized for that province for that fiscal year from the average annual per capita national revenue to be equalized for that fiscal year, and

is the average annual population of that province for that fiscal year, and

(

b) the amount determined by the formula

A × C where A

and C have the same meaning as in paragraph ( a ).

Province may elect otherwise

(2) Despite subsection (1), a province may elect, at the prescribed time and in the prescribed manner, that the fiscal equalization payment that may be paid to that province for a fiscal year be equal to the amount determined by the formula set out in paragraph (1)( a ).

Negative amount

(3) For the purposes of this Part, if the amount of a fiscal equalization payment computed in accordance with subsection (1) or (2) is negative, that amount is considered to be zero.

Transitional payments — British Columbia

3.3

The Minister may pay to British Columbia a transitional fiscal equalization payment, for any fiscal year in the period beginning on April 1, 2008 and ending on March 31, 2010, that is equal to the amount by which

(

a) the amount of the fiscal equalization payment that would be computed for that province for that fiscal year in accordance with subsection 3.2(1) — or subsection 3.2(2) if the election described in that subsection is made — if, in computing the amount of that payment, that province’s revenue base in respect of the revenue source referred to in paragraph (

d) of the definition revenue source in subsection 3.5(1) were determined in the manner set out in the regulations made for the purposes of this

section

is greater than

(

b) the amount of the fiscal equalization payment that is computed for that province for that fiscal year in accordance with subsection 3.2(1) or subsection 3.2(2), as the case may be.

Maximum fiscal equalization payment

3.4

(1) The fiscal equalization payment that may be paid to a province for a fiscal year shall be reduced if the amount that may be paid to that province for that fiscal year in accordance with

section 3.2 — or, in the case of British Columbia, the aggregate of the amounts that may be paid to that province for that fiscal year in accordance with sections 3.2 and 3.3 — would, if paid, result in that province having, in that fiscal year, a total per capita fiscal capacity that is greater than the per capita fiscal capacity of any province that would not receive a fiscal equalization payment for that fiscal year if the amount of that payment were determined by the formula set out in paragraph 3.2(1)( a ).

Computation of reduction

(2) The reduction of the fiscal equalization payment with respect to a province under subsection (1) is equal to the amount determined by the formula

(A - B) × C where A

is the total per capita fiscal capacity of that province in that fiscal year;

is the per capita fiscal capacity of the province that has the lowest per capita fiscal capacity in that fiscal year and that would not receive a fiscal equalization payment for that fiscal year if the amount of that payment were determined by the formula set out in paragraph 3.2(1)( a ); and

is the average annual population of that province for that fiscal year.

Definition of per capita fiscal capacity

(3) For the purposes of this section, per capita fiscal capacity means, in respect of a province for a fiscal year, the amount determined by the formula

A + B where A

and B have the same meaning as in the definition total per capita fiscal capacity in subsection 3.5(1).

Interpretation

3.5

(1) The following

definitions apply in this

section and in sections 3 to 3.4.

average annual per capita national revenue to be equalized

revenu national annuel moyen sujet à péréquation par habitant

average annual per capita national revenue to be equalized means, for a fiscal year for a revenue source, the amount determined by the formula

(A/2 + B/4 + C/4) / D where A

is the national revenue to be equalized for that revenue source for the fiscal year that is two years prior to that fiscal year;

is the national revenue to be equalized for that revenue source for the fiscal year that is three years prior to that fiscal year;

is the national revenue to be equalized for that revenue source for the fiscal year that is four years prior to that fiscal year; and

is the aggregate of the average annual population of all provinces for that fiscal year.

average annual per capita national yield

rendement national annuel moyen par habitant

average annual per capita national yield means, for a revenue source for a fiscal year, the amount determined by the formula

(A/2 + B/4 + C/4) / D where A

is the national yield for that revenue source for the fiscal year that is two years prior to that fiscal year;

is the national yield for that revenue source for the fiscal year that is three years prior to that fiscal year;

is the national yield for that revenue source for the fiscal year that is four years prior to that fiscal year; and

is the aggregate of the average annual population of all provinces for that fiscal year.

average annual per capita revenue to be equalized

revenu annuel moyen sujet à péréquation par habitant

average annual per capita revenue to be equalized means, in respect of a province for a revenue source for a fiscal year, the amount determined by the formula

(A/2 + B/4 + C/4) / D where A

is the revenue to be equalized for that revenue source for the fiscal year that is two years prior to that fiscal year;

is the revenue to be equalized for that revenue source for the fiscal year that is three years prior to that fiscal year;

is the revenue to be equalized for that revenue source for the fiscal year that is four years prior to that fiscal year; and

is the average annual population of that province for that fiscal year.

average annual per capita yield

rendement annuel moyen par habitant

average annual per capita yield means, in respect of a province for a revenue source for a fiscal year, an amount determined by the formula

(A/2 + B/4 + C/4) / D where A

is the yield for that revenue source for the fiscal year that is two years prior to that fiscal year;

is the yield for that revenue source for the fiscal year that is three years prior to that fiscal year;

is the yield for that revenue source for the fiscal year that is four years prior to that fiscal year; and

is the average annual population of that province for that fiscal year.

average annual population

population annuelle moyenne

average annual population means, in respect of a province for a fiscal year, the amount determined by the formula

A/2 + B/4 + C/4 where A

is the population of that province for the fiscal year that is two years prior to that fiscal year;

is the population of that province for the fiscal year that is three years prior to that fiscal year; and

is the population of that province for the fiscal year that is four years prior to that fiscal year.

national average rate of tax

taux d’imposition national moyen

national average rate of tax means, in respect of a revenue source, the rate equal to the quotient obtained by dividing the aggregate of the revenue to be equalized for a revenue source for a fiscal year for all provinces by the revenue base in respect of that revenue source for that fiscal year for all provinces.

national revenue to be equalized

revenu national sujet à péréquation

national revenue to be equalized means, in respect of a revenue source for a fiscal year, the amount equal to the aggregate of the revenue to be equalized for that revenue source for that fiscal year for all provinces.

national yield

rendement national

national yield means, for a reven