C-9 3 40 59 Elizabeth II 2010

An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures

Jobs and Economic Growth Act

Jobs and Economic Growth 2010 7 12 12 2010 90551

SUMMARY

Part 1 of this enactment implements income tax measures proposed in the March 4, 2010 Budget. In particular, it

(

a) introduces amendments to allow a recipient of Universal Child Care Benefit amounts to designate that the amounts be included in the income of the dependant in respect of whom the recipient has claimed an Eligible Dependant Credit, or if the credit is not claimed by the recipient, a child of the recipient who is a qualified dependant under the Universal Child Care Benefit Act ;

(

b) clarifies rules relating to the Medical Expense Tax Credit to exclude expenses for purely cosmetic procedures;

(

c) clarifies rules relating to payments made to a Registered Education Savings Plan or a Registered Disability Savings Plan through a program funded, directly or indirectly, by a province or administered by a province;

(

d) implements amendments to the family income thresholds used to determine eligibility for Canada Education Savings Grants, Canada Disability Savings Grants and Canada Disability Savings Bonds;

(

e) reinstates the 50% inclusion rate for Canadian residents who have been in receipt of U.S. social security benefits since before January 1, 1996;

(

f) extends the mineral exploration tax credit for one year;

(

g) reduces the rate of interest payable by the Minister of National Revenue on tax overpayments made by corporations;

(

h) modifies the definition taxable Canadian property to exclude certain shares and other interests that do not derive their value principally from real or immovable property situated in Canada, Canadian resource property, or timber resource property;

(

i) introduces amendments to allow the issuance of a refund of an overpayment of tax under

Part I of the Income Tax Act to certain non-residents in circumstances where an assessment of such amounts has been made outside the usual period during which a refund may be made;

(

j) repeals the exclusion for indictable tax offences from the proceeds of crime and money laundering regime; and

(

k) increases the pension surplus threshold for employer contributions to registered pension plans to 25%.

Part 2 amends the Excise Act, 2001 and the Customs Act to implement an enhanced stamping regime for tobacco products by introducing new controls over the production, distribution and possession of a new excise stamp for tobacco products.

Part 2 also amends the Excise Tax Act and certain related regulations in respect of the Goods and Services Tax/Harmonized Sales Tax (GST/HST) to:

(

a) simplify the operation of the GST/HST for the direct selling industry using a commission-based model;

(

b) clarify the application of the GST/HST to purely cosmetic procedures and to devices or other goods used or provided with cosmetic procedures, and to services related to cosmetic procedures;

(

c) reaffirm the policy intent and provide certainty respecting the scope of the definition of “financial service” in respect of certain administrative, management and promotional services;

(

d) address advantages that currently exist in favour of imported financial services over comparable domestic services;

(

e) streamline the application of the input tax credit rules to financial institutions;

(

f) provide a new, uniform GST/HST rebate system that will apply fairly and equitably to employer-sponsored pension plans;

(

g) introduce a new annual information return for financial institutions to improve GST/HST reporting in the financial services sector; and

(

h) extend the due date for filing annual GST/HST returns from three months to six months after year-end for certain financial institutions.

In addition,

Part 2 amends regulations made under the Excise Tax Act and the Excise Act, 2001 to reduce the interest rate payable by the Minister of National Revenue in respect of overpaid taxes and duties by corporations.

Part 3 amends the Air Travellers Security Charge Act to increase the air travellers security charge that is applicable to air travel that includes a chargeable emplanement on or after April 1, 2010 and for which any payment is made on or after that date. It also reduces the interest payable by the Minister of National Revenue to corporations under that Act.

Part 4 amends the Softwood Lumber Products Export Charge Act, 2006 to provide for a higher rate of charge on the export of certain softwood lumber products from the regions of Ontario, Quebec, Manitoba or Saskatchewan. It also amends that Act to reduce the rate of interest payable by the Minister of National Revenue on tax overpayments made by corporations.

Part 5 amends the Customs Tariff to implement measures announced in the March 4, 2010 Budget to reduce Most-Favoured-Nation rates of duty and, if applicable, rates of duty under other tariff treatments on a number of tariff items relating to manufacturing inputs and machinery and equipment imported on or after March 5, 2010.

Part 6 amends the Federal-Provincial Fiscal Arrangements Act to provide additional payments to certain provinces and to correct a cross-reference in that Act.

Part 7 amends the Expenditure Restraint Act to impose a freeze on the allowances and salaries to be paid to members of the Senate and the House of Commons for the 2010–2011, 2011–2012 and 2012–2013 fiscal years.

Part 8 amends a number of Acts to reduce or eliminate Governor in Council appointments, including the North American Free Trade Agreement Implementation Act . This Part also amends that Act to establish the Canadian

Section of the NAFTA Secretariat within the Department of Foreign Affairs and International Trade. In addition, this Part repeals The Intercolonial and Prince Edward Island Railways Employees’ Provident Fund Act . Finally, this Part makes consequential and related amendments to other Acts.

Part 9 amends the Pension Benefits Standards Act, 1985 . In particular, the Act is amended to

(

a) require an employer to fully fund benefits if the whole of a pension plan is terminated;

(

b) authorize an employer to use a letter of credit, if certain conditions are met, to satisfy solvency funding obligations in respect of a pension plan that has not been terminated in whole;

(

c) permit a pension plan to provide for variable benefits, similar to those paid out of a Life Income Fund, in respect of a defined contribution provision of the pension plan;

(

d) establish a distressed pension plan workout scheme, under which the employer and representatives of members and retirees may negotiate changes to the plan’s funding requirements, subject to the approval of the Minister of Finance;

(

e) permit the Superintendent of Financial Institutions to replace an actuary if the Superintendent is of the opinion that it is in the best interests of members or retirees;

(

f) provide that only the Superintendent may declare a pension plan to be partially terminated;

(

g) provide for the immediate vesting of members’ benefits;

(

h) require the administrator to make additional information available to members and retirees following the termination of a pension plan; and

(

i) repeal spent provisions.

Part 10 provides for the retroactive coming into force in Canada of the Agreement on Social Security between Canada and the Republic of Poland.

Part 11 amends the Export Development Act to grant Export Development Canada the authority to establish offices outside Canada. It also clarifies that Corporation’s authority with respect to asset management and the forgiveness of certain debts and obligations.

Part 12 enacts the Payment Card Networks Act , the purpose of which is to regulate national payment card networks and the commercial practices of payment card network operators. Among other things, that Act confers a number of regulation-making powers. This Part also makes related amendments to the Financial Consumer Agency of Canada Act to expand the mandate of the Agency so that it may supervise payment card network operators to determine whether they are in compliance with the provisions of the Payment Card Networks Act and its regulations and monitor the implementation of voluntary codes of conduct.

Part 13 amends the Financial Consumer Agency of Canada Act to provide the Financial Consumer Agency of Canada with a broader oversight role to allow it to verify compliance with ministerial undertakings and directions. The amendments also increase the Agency’s ability to undertake research, including research on trends and emerging consumer protection issues. Finally, the Part makes consequential amendments to other Acts.

Part 14 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to confer on the Minister of Finance the power to issue directives imposing measures with respect to certain financial transactions. The amendments also confer on the Governor in Council the power to make regulations that limit or prohibit certain financial transactions. This Part also makes a consequential amendment to another Act.

Part 15 amends the Canada Post Corporation Act to modify the exclusive privilege of the Canada Post Corporation so as to permit letter exporters to collect letters in Canada for transmittal and delivery outside Canada.

Part 16 amends the Canada Deposit Insurance Corporation Act to allow the Governor in Council to specify when a bridge institution will assume a federal member institution’s deposit liabilities and allow the Canada Deposit Insurance Corporation to make by-laws with respect to information and capabilities it can require of its member institutions. This Part also amends that Act to establish the rules that apply to the assignment, by the Canada Deposit Insurance Corporation to a bridge institution, of eligible financial contracts to which a federal member institution is a party.

Part 17 amends the Bank Act and other related statutes to provide a framework enabling credit unions to incorporate and continue as banks. The model is based on the framework applicable to other federally regulated financial institutions, adjusted to give effect to cooperative principles and governance.

Part 18 authorizes the taking of a number of measures with respect to the reorganization and divestiture of all or any part of Atomic Energy of Canada Limited’s business.

Part 19 amends the National Energy Board Act in order to give the National Energy Board the power to create a participant funding program to facilitate the participation of the public in hearings that are held under

section 24 of that Act. It also amends the Nuclear Safety and Control Act to give the Canadian Nuclear Safety Commission the power to create a participant funding program to facilitate the participation of the public in proceedings under that Act and the power to prescribe fees for that program.

Part 20 amends the Canadian Environmental Assessment Act to streamline certain process requirements for comprehensive studies, to give the Canadian Environmental Assessment Agency authority to conduct most comprehensive studies and to give the Minister of the Environment the power to establish the scope of any project in relation to which an environmental assessment is to be conducted. It also amends that Act to provide, in legislation rather than by regulations, that an environmental assessment is not required for certain federally funded infrastructure projects and repeals sunset clauses in the Regulations Amending the Exclusion List Regulations, 2007 .

Part 21 amends the Canada Labour Code with respect to the appointment of appeals officers and the appeal hearing procedures.

Part 22 authorizes payments to be made out of the Consolidated Revenue Fund for various purposes.

Part 23 amends the Telecommunications Act to make a carrier that is not a Canadian-owned and controlled corporation eligible to operate as a telecommunications common carrier if it owns or operates certain transmission facilities.

Part 24 amends the Employment Insurance Act to establish an account in the accounts of Canada to be known as the Employment Insurance Operating Account and to close the Employment Insurance Account and remove it from the accounts of Canada. It also repeals sections 76 and 80 of that Act and makes consequential amendments in relation to the creation of the new Account. This Part also makes technical amendments to clarify provisions of the Budget Implementation Act, 2008 and the Canada Employment Insurance Financing Board Act that deal with the Canada Employment Insurance Financing Board.

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 Jobs and Economic Growth Act .

PART 1

AMENDMENTS TO THE INCOME TAX ACT AND RELATED ACTS AND REGULATIONS

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

Income Tax Act

(1) Paragraph 44.1(2)(

c) of the Act is replaced by the following:

(

c) where the qualifying disposition was a disposition of a share that was taxable Canadian property of the individual, the replacement share of the individual in respect of the qualifying disposition is deemed to be, at any time that is within 60 months after the disposition, taxable Canadian property of the individual.

(2) Subsection (1) applies in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

(1) Paragraph 51(1)(

f) of the Act is replaced by the following:

(

f) where the convertible property is taxable Canadian property of the taxpayer, the share acquired by the taxpayer on the exchange is deemed to be, at any time that is within 60 months after the exchange, taxable Canadian property of the taxpayer.

(2) Subsection (1) applies in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

(1) Subsection 56(6) of the Act is replaced by the following:

Child care benefit

(6) There shall be included in computing the income of a taxpayer for a taxation year the total of all amounts each of which is a benefit paid under

section 4 of the Universal Child Care Benefit Act that is received in the taxation year by

(

a) the taxpayer, if

(

i) the taxpayer does not have a cohabiting spouse or common-law partner (within the meaning assigned by

section 122.6) at the end of the year and the taxpayer does not make a designation under subsection (6.1) for the taxation year, or

(ii)

the income, for the taxation year, of the person who is the taxpayer’s cohabiting spouse or common-law partner at the end of the taxation year is equal to or greater than the income of the taxpayer for the taxation year;

(

b) the taxpayer’s cohabiting spouse or common-law partner at the end of the taxation year, if the income of the cohabiting spouse or common-law partner for the taxation year is greater than the taxpayer’s income for the taxation year; or

(

c) an individual who makes a designation under subsection (6.1) in respect of the taxpayer for the taxation year.

Designation

(6.1) If, at the end of the taxation year, a taxpayer does not have a cohabiting spouse or common-law partner (within the meaning assigned by

section 122.6), the taxpayer may designate, in the taxpayer’s return of income for the taxation year, the total of all amounts, each of which is a benefit received in the taxation year by the taxpayer under

section 4 of the Universal Child Care Benefit Act , to be income of

(

a) if the taxpayer deducts an amount for the taxation year under subsection 118(1) because of paragraph (

b) of the description of B in that subsection in respect of an individual, the individual; or

(

b) in any other case, a child who is a qualified dependant (as defined in

section 2 of the Universal Child Care Benefit Act ) of the taxpayer.

(2) Subsection (1) applies to 2010 and subsequent years.

(1) Paragraph 60(

z) of the Act is replaced by the following:

Repayment under the Canada Disability Savings Act

(

z) the total of all amounts each of which is an amount paid in the taxation year as a repayment, under or because of the Canada Disability Savings Act or a designated provincial program as defined in subsection 146.4(1), of an amount that was included because of

section 146.4 in computing the taxpayer’s income for the taxation year or a preceding taxation year.

(2) Subsection (1) applies to the 2009 and subsequent taxation years.

(1) Paragraph 85(1)(

i) of the Act is replaced by the following:

(

i) where the property so disposed of is taxable Canadian property of the taxpayer, all of the shares of the capital stock of the Canadian corporation received by the taxpayer as consideration for the property are deemed to be, at any time that is within 60 months after the disposition, taxable Canadian property of the taxpayer.

(2) Subsection (1) applies in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

(1) The portion of paragraph 85.1(1)(

a) of the Act after subparagraph (ii) is replaced by the following:

and where the exchanged shares were taxable Canadian property of the vendor, the shares of the purchaser so acquired by the vendor are deemed to be, at any time that is within 60 months after the exchange, taxable Canadian property of the vendor; and

(2) The portion of subsection 85.1(5) of the Act after paragraph (

b) is replaced by the following:

and where the exchanged foreign shares were taxable Canadian property of the vendor, the issued foreign shares so acquired by the vendor are deemed to be, at any time that is within 60 months after the exchange, taxable Canadian property of the vendor.

(3) Paragraph 85.1(8)(

b) of the Act is replaced by the following:

(

b) if the particular unit was immediately before the disposition taxable Canadian property of the taxpayer, the exchange share is deemed to be, at any time that is within 60 months after the disposition, taxable Canadian property of the taxpayer;

(4) Subsections (1) to (3) apply in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

(1) The portion of subsection 87(4) of the Act after paragraph (

e) is replaced by the following:

and where the old shares were taxable Canadian property of the shareholder, the new shares are deemed to be, at any time that is within 60 months after the amalgamation, taxable Canadian property of the shareholder.

(2) The portion of subsection 87(5) of the Act after paragraph (

b) is replaced by the following:

and where the old option was taxable Canadian property of the taxpayer, the new option is deemed to be, at any time that is within 60 months after the amalgamation, taxable Canadian property of the taxpayer.

(3) Subsections (1) and (2) apply in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

(1) Paragraph 97(2)(

c) of the Act is replaced by the following:

(

c) where the property so disposed of by the taxpayer to the partnership is taxable Canadian property of the taxpayer, the interest in the partnership received by the taxpayer as consideration for the property is deemed to be, at any time that is within 60 months after the disposition, taxable Canadian property of the taxpayer.

(2) Subsection (1) applies in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

(1) Subparagraph 107(2)( d.1 )(iii) of the Act is replaced by the following:

(iii)

the property was deemed by paragraph 51(1)( f ), 85(1)(

i) or 85.1(1)( a ), subsection 85.1(5) or 87(4) or (5) or paragraph 97(2)(

c) to be taxable Canadian property of the trust; and

(2) Paragraph 107(2)( d.1 ) of the Act, as amended by subsection (1), is repealed.

(3) Paragraph 107(3.1)(

d) of the Act is replaced by the following:

(

d) if the taxpayer’s interest as a beneficiary under the trust was immediately before the disposition taxable Canadian property of the taxpayer, the property is deemed to be, at any time that is within 60 months after the distribution, taxable Canadian property of the taxpayer; and

(4) Subsection (1) applies in determining after October 1, 1996 whether a property is taxable Canadian property of a taxpayer.

(5) Subsections (2) and (3) apply in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

(1) Paragraph 107.4(3)(

f) of the Act is replaced by the following:

(

f) if, as a result of a transaction or event, the property was deemed to be taxable Canadian property of the transferor by this paragraph or any of paragraphs 44.1(2)( c ), 51(1)( f ), 85(1)(

i) and 85.1(1)( a ), subsection 85.1(5), paragraph 85.1(8)( b ), subsections 87(4) and (5) and paragraphs 97(2)(

c) and 107(3.1)( d ), the property is also deemed to be, at any time that is within 60 months after the transaction or event, taxable Canadian property of the transferee trust;

(2) Subsection (1) applies in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

(1) Subsection 110(1) of the Act is amended by adding the following after paragraph ( g ):

( h )

35 per cent of the total of all benefits (in this paragraph referred to as “U.S. social security benefits”) that are received by the taxpayer in the taxation year and to which paragraph 5 of

Article XVIII of the Convention between Canada and the United States of America with respect to Taxes on Income and on Capital as set out in

Schedule I to the Canada-United States Tax Convention Act, 1984 , S.C. 1984, c. 20, applies, if

(

i) the taxpayer has continuously during a period that begins before 1996 and ends in the taxation year, been resident in Canada, and has received U.S. social security benefits in each taxation year that ends in that period, or

(ii)

in the case where the benefits are payable to the taxpayer in respect of a deceased individual,

(

A) the taxpayer was, immediately before the deceased individual’s death, the deceased individual’s spouse or common-law partner,

(

B) the taxpayer has continuously during a period that begins at the time of the deceased individual’s death and ends in the taxation year, been resident in Canada,

(

C) the deceased individual was, in respect of the taxation year in which the deceased individual died, a taxpayer described in subparagraph (i), and

(

D) in each taxation year that ends in a period that begins before 1996 and that ends in the taxation year, the taxpayer, the deceased individual, or both of them, received U.S. social security benefits.

(2) Subsection (1) applies to the 2010 and subsequent taxation years.

(1) Section 118.2 of the Act is amended by adding the following after subsection (2):

Cosmetic purposes

(2.1) The medical expenses referred to in subsection (2) do not include amounts paid for medical or dental services, nor any related expenses, provided purely for cosmetic purposes, unless necessary for medical or reconstructive purposes.

(2) Subsection (1) applies to expenses incurred after March 4, 2010.

(1) Paragraph (

a) of the definition flow-through mining expenditure in subsection 127(9) of the Act is replaced by the following:

(

a) that is a Canadian exploration expense incurred by a corporation after March 2010 and before 2012 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2012) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (

a) or (

d) of the definition mineral resource in subsection 248(1),

(2) Paragraphs (

c) and (

d) of the definition flow-through mining expenditure in subsection 127(9) of the Act are replaced by the following:

(

c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2010 and before April 2011, and

(

d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2010 and before April 2011;

(3) Subsections (1) and (2) apply to expenses renounced under a flow-through share agreement made after March 2010.

(1) Section 128.1 of the Act is amended by adding the following after subsection (6):

Deemed taxable Canadian property

(6.1) For the purposes of paragraph (6)( a ), a property is deemed to be taxable Canadian property of the individual throughout the period that began at the emigration time and that ends at the particular time if

(

a) the emigration time is before March 5, 2010; and

(

b) the property was taxable Canadian property of the individual on March 4, 2010.

(2) Subsection (1) applies in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

(1) The definition contribution in subsection 146.1(1) of the Act is replaced by the following:

contribution

cotisation

contribution to an education savings plan does not include an amount paid into the plan under or because of

(

a) the Canada Education Savings Act or a designated provincial program, or

(

b) any other program that has a similar purpose to a designated provincial program and that is funded, directly or indirectly, by a province (other than an amount paid into the plan by a public primary caregiver in its capacity as subscriber under the plan);

(2) Paragraph (

b) of the definition designated provincial program in subsection 146.1(1) of the Act is replaced by the following:

(

b) a program established under the laws of a province to encourage the financing of children’s post-secondary education through savings in registered education savings plans.

(3) Subsection (1) applies to the 2009 and subsequent taxation years.

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

(1) The definition contribution in subsection 146.4(1) of the Act is replaced by the following:

contribution

cotisation

contribution to a disability savings plan does not include (other than for the purpose of paragraph (

b) of the definition disability savings plan )

(

a) an amount paid into the plan under or because of the Canada Disability Savings Act or a designated provincial program;

(

b) an amount paid into the plan under or because of any other program that has a similar purpose to a designated provincial program and that is funded, directly or indirectly, by a province (other than an amount paid into the plan by an entity described in subparagraph ( a )(iii) of the definition qualifying person in its capacity as holder of the plan); or

(

c) an amount transferred to the plan in accordance with subsection (8).

(2) Subsection 146.4(1) of the Act is amended by adding the following in alphabetical order:

designated provincial program

programme provincial désigné

designated provincial program means a program that is established under the laws of a province and that supports savings in registered disability savings plans.

(3) Paragraph 146.4(4)(

g) of the Act is replaced by the following:

(

g) the plan prohibits a contribution from being made to the plan at any time if

(

i) the beneficiary attained the age of 59 years before the calendar year that includes that time,

(ii)

the beneficiary is not resident in Canada at that time, or

(iii)

the total of the contribution and all other contributions made at or before that time to the plan or to any other registered disability savings plan of the beneficiary would exceed $200,000;

(4) Subparagraph 146.4(4)( i )(iii) of the Act is replaced by the following:

(iii)

repayments under the Canada Disability Savings Act or a designated provincial program;

(5) The portion of paragraph 146.4(4)(

n) of the Act before subparagraph (

i) is replaced by the following:

(

n) the plan provides that when the total of all amounts paid under the Canada Disability Savings Act before the beginning of a calendar year to any registered disability savings plan of the beneficiary exceeds the total of all contributions made before the beginning of the calendar year to any registered disability savings plan of the beneficiary,

(6) The portion of paragraph 146.4(4)(

p) of the Act before subparagraph (

i) is replaced by the following:

(

p) the plan provides for any amounts remaining in the plan (after taking into consideration any repayments under the Canada Disability Savings Act or a designated provincial program) to be paid to the beneficiary or the beneficiary’s estate, as the case may be, and for the plan to be terminated, by the end of the calendar year following the earlier of

(7) Paragraph (

a) of the description of B in subsection 146.4(7) of the Act is replaced by the following:

(

a) the total of all amounts each of which is the amount of a contribution made before the particular time to any registered disability savings plan of the beneficiary

(8) Subsections (1) to (7) apply to the 2009 and subsequent taxation years.

(1) Paragraph 147.2(2)(

d) of the Act is replaced by the following:

(

d) a recommendation with respect to the contributions required to be made by an employer in respect of the defined benefit provisions of a pension plan may be prepared without regard to such portion of the assets of the plan apportioned to the employer in respect of the employer’s employees and former employees as does not exceed the lesser of

(

i) the amount of actuarial surplus in respect of the employer, and

(ii)

25% of the amount of actuarial liabilities apportioned to the employer in respect of the employer’s employees and former employees.

(2) Subsection (1) applies to contributions made after 2009 to fund benefits provided in respect of periods of pensionable service after 2009.

(1) Subsection 164(1.5) of the Act is amended by striking out “or” at the end of paragraph ( a ), by adding “or’’ at the end of paragraph (

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

(

c) to the extent that the overpayment relates to an assessment of another taxpayer under subsection 227(10) or (10.1) (in this paragraph referred to as the “other assessment”), if the taxpayer’s return of income under this Part for the taxation year is filed on or before the day that is two years after the date of the other assessment and if the other assessment relates to

(

i) in the case of an amount assessed under subsection 227(10), a payment to the taxpayer of a fee, commission or other amount in respect of services rendered in Canada by a non-resident person or partnership, and

(ii)

in the case of an amount assessed under subsection 227(10.1), an amount payable under subsection 116(5) or (5.3) in respect of a disposition of property by the taxpayer.

(2) Subsection (1) applies to overpayments in respect of which applications for refunds are made after March 4, 2010.

(1) Paragraph (

d) of the definition advantage in subsection 205(1) of the Act is replaced by the following:

(

d) an amount paid under or because of the Canada Disability Savings Act or a designated provincial program as defined in subsection 146.4(1);

(2) Subsection (1) applies to the 2009 and subsequent taxation years.

(1) Subparagraph 241(4)( d )(vii.1) of the Act is replaced by the following:

(vii.1)

to an official solely for the purpose of the administration or enforcement of the Canada Education Savings Act or a designated provincial program as defined in subsection 146.1(1),

(2) Subparagraph 241(4)( d )(vii.5) of the Act is replaced by the following:

(vii.5)

to an official solely for the purposes of the administration or enforcement of the Canada Disability Savings Act or a designated provincial program as defined in subsection 146.4(1),

(3) Subsections (1) and (2) apply to the 2009 and subsequent taxation years.

(1) The definition taxable Canadian property in subsection 248(1) of the Act is replaced by the following:

taxable Canadian property

bien canadien imposable

taxable Canadian property of a taxpayer at any time in a taxation year means a property of the taxpayer that is

(

a) real or immovable property situated in Canada,

(

b) property used or held by the taxpayer in, eligible capital property in respect of, or property described in an inventory of, a business carried on in Canada, other than

(

i) property used in carrying on an insurance business, and

(ii)

where the taxpayer is non-resident, ships and aircraft used principally in international traffic and personal or movable property pertaining to their operation if the country in which the taxpayer is resident does not impose tax on gains of persons resident in Canada from dispositions of such property,

(

c) if the taxpayer is an insurer, its designated insurance property for the year,

(

d) a share of the capital stock of a corporation (other than a mutual fund corporation) that is not listed on a designated stock exchange, an interest in a partnership or an interest in a trust (other than a unit of a mutual fund trust or an income interest in a trust resident in Canada), if, at any particular time during the 60-month period that ends at that time, more than 50% of the fair market value of the share or interest, as the case may be, was derived directly or indirectly from one or any combination of

(

i) real or immovable property situated in Canada,

(ii)

Canadian resource properties,

(iii)

timber resource properties, and

(iv)

options in respect of, or interests in, or for civil law rights in, property described in any of subparagraphs (

i) to (iii), whether or not the property exists,

(

e) a share of the capital stock of a corporation that is listed on a designated stock exchange, a share of the capital stock of a mutual fund corporation or a unit of a mutual fund trust, if, at any particular time during the 60-month period that ends at that time,

(i)

25% or more of the issued shares of any class of the capital stock of the corporation, or 25% or more of the issued units of the trust, as the case may be, were owned by or belonged to one or any combination of

(

A) the taxpayer, and

(

B) persons with whom the taxpayer did not deal at arm’s length, and

(ii)

more than 50% of the fair market value of the share or unit, as the case may be, was derived directly or indirectly from one or any combination of properties described under subparagraphs ( d )(

i) to (iv), or

(

f) an option in respect of, or an interest in, or for civil law a right in, a property described in any of paragraphs (

a) to ( e ), whether or not the property exists,

and, for the purposes of

section 2, subsection 107(2.001) and sections 128.1 and 150, and for the purpose of applying paragraphs 85(1)(

i) and 97(2)(

c) to a disposition by a non-resident person, includes

(

g) a Canadian resource property,

(

h) a timber resource property,

(

i) an income interest in a trust resident in Canada,

(

j) a right to a share of the income or loss under an agreement referred to in paragraph 96(1.1)( a ), and

(

k) a life insurance policy in Canada;

(2) Subsection 248(25.1) of the Act is replaced by the following:

Trust-to-trust transfers

(25.1) If, at any time, a particular trust transfers property to another trust (other than a trust governed by a registered retirement savings plan or by a registered retirement income fund) in circumstances to which paragraph (

f) of the definition disposition in subsection (1) applies, without affecting the personal liabilities under this Act of the trustees of either trust or the application of subsection 104(5.8) and paragraph 122(2)( f ),

(

a) the other trust is deemed to be after that time the same trust as, and a continuation of, the particular trust; and

(

b) for greater certainty, if, as a result of a transaction or event, the property was deemed to be taxable Canadian property of the particular trust by any of paragraphs 51(1)( f ), 85(1)(

i) and 85.1(1)( a ), subsection 85.1(5), paragraph 85.1(8)( b ), subsections 87(4) and (5) and paragraphs 97(2)(

c) and 107(3.1)( d ), the property is also deemed to be, at any time that is within 60 months after the transaction or event, taxable Canadian property of the other trust.

(3) Subsections (1) and (2) apply in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

C.R.C., c. 945

Income Tax Regulations

(1) Subparagraph 4301( b )(ii) of the Income Tax Regulations is replaced by the following:

(ii)

if the taxpayer is a corporation, zero per cent, and in any other case, 2 per cent; and

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010.

(1) Subparagraph 8510(9)( c )(

i) of the Regulations is replaced by the following:

(

i) the contribution is a current service contribution that would be an eligible contribution under subsection 147.2(2) of the Act if no contributions were prescribed for the purposes of that subsection and if that subsection were read without reference to its subparagraph ( d )(ii), and

(2) Clause 8510(9)( c )(ii)(

A) of the Regulations is replaced by the following:

(

A) where the amount of actuarial surplus in respect of the employer is greater than the amount determined under subparagraph 147.2(2)( d )(ii) of the Act, 50% of the current service contribution that would be required to be made by the employer if there were no actuarial surplus under the provisions, and

(3) Subsections (1) and (2) apply to contributions made after 2009 to fund benefits provided in respect of periods of pensionable service after 2009.

(1) Subsection 8516(1) of the Regulations is replaced by the following:

(1) For the purposes of subsection 147.2(2) of the Act, a contribution described in subsection (2) or (3) is a prescribed contribution.

(2) Subsection 8516(4) of the Regulations and the heading before it are repealed.

(3) Subsections (1) and (2) apply to contributions made after 2009 to fund benefits provided in respect of periods of pensionable service after 2009.

2007, c. 35, s. 136

Canada Disability Savings Act

(1) The definition contribution in subsection 2(1) of the Canada Disability Savings Act is repealed.

(2) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:

first threshold

premier seuil

first threshold for a particular year means the dollar amount referred to in paragraph 117(2)(

a) of the Income Tax Act , as adjusted under that Act for the particular year;

phase-out income

revenu de transition

phase-out income for a particular year means the amount determined by the formula

A – (B/0.122) where A

is the first threshold for the particular year, and

is the amount referred to in paragraph (

a) of the description of F in subsection 122.61(1) of the Income Tax Act , as adjusted under that Act for the particular year;

second threshold

deuxième seuil

second threshold for a particular year means the higher dollar amount referred to in paragraph 117(2)(

b) of the Income Tax Act , as adjusted under the Act for the particular year.

(3) Paragraph 2(2)(

b) of the Act is replaced by the following:

(

b) the expressions contribution , designated provincial program , holder , issuer and registered disability savings plan have the same meanings as in

section 146.4 of that Act; and

(4) Subsections (1) to (3) apply to the 2009 and subsequent years.

(1) Subparagraphs 6(2)( a )(

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

(

i) an individual who is at least 18 years of age on December 31 of the year preceding the particular year and whose family income for the particular year is less than or equal to the second threshold for the particular year,

(ii)

a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is less than or equal to the second threshold for the particular year, or

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

(3) Subsections (1) and (2) apply to the 2009 and subsequent years.

(1) Subparagraphs 7(2)( a )(

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

(

i) an individual who is at least 18 years of age on December 31 of the year preceding the particular year and whose family income for the particular year is less than or equal to the phase-out income for the particular year,

(ii)

a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is less than or equal to the phase-out income for the particular year, or

(2) Subparagraphs 7(2)( b )(

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

(

i) an individual who is at least 18 years of age on December 31 of the year preceding the particular year and whose family income for the particular year is more than the phase-out income for the particular year but less than the first threshold for the particular year, or

(ii)

a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is more than the phase-out income for the particular year but less than the first threshold for the particular year.

(3) The descriptions of B and C in subsection 7(4) of the Act are replaced by the following:

is the phase-out income for the particular year; and

is the first threshold for the particular year.

(4) Subsection 7(8) of the Act is repealed.

(5) Subsections (1) to (4) apply to the 2009 and subsequent years.

SOR/2008-186

Canada Disability Savings Regulations

(1) Subparagraph 4( d )(

i) of the Canada Disability Savings Regulations is replaced by the following:

(

i) all contributions, payments and transfers to, and all payments and transfers from, an RDSP,

(2) Subsection (1) applies to the 2009 and subsequent years.

2004, c. 26

Canada Education Savings Act

(1) Subsection 2(1) of the Canada Education Savings Act is amended by adding the following in alphabetical order:

first threshold

premier seuil

first threshold for a particular year means the dollar amount referred to in paragraph 117(2)(

a) of the Income Tax Act , as adjusted under that Act for the particular year;

second threshold

deuxième seuil

second threshold for a particular year means the higher dollar amount referred to in paragraph 117(2)(

b) of the Income Tax Act , as adjusted under that Act for the particular year.

(2) Paragraph 2(2)(

b) of the Act is replaced by the following:

(

b) the expressions beneficiary , contribution , designated provincial program , promoter , registered education savings plan , subscriber and trust have the meanings assigned by

section 146.1 of the Income Tax Act ; and

(3) Subsection (1) applies to 2009 and subsequent years.

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

(1) Clause 5(4)( a )(i)(

A) of the Act is replaced by the following:

(

A) is a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is the first threshold for the particular year or less, or

(2) Subparagraph 5(4)( a )(ii) of the Act is replaced by the following:

(ii)

10% of the contribution, if the beneficiary is a qualified dependant of an eligible individual whose adjusted income used to determine the amount of a child tax benefit in respect of January in the particular year is more than the first threshold for the particular year but not more than the second threshold for the particular year, and

(3) Subsection 5(8) of the Act is repealed.

(4) Subsections (1) to (3) apply to 2009 and subsequent years.

SOR/2005-151

Canada Education Savings Regulations

(1) The description of G in paragraph 10(1)(

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

is the total of all amounts paid into the RESP under a designated provincial program.

(2) The description of G in paragraph 10(2)(

b) of the Regulations is replaced by the following:

is the total of all amounts paid into the RESP under a designated provincial program, and

(3) Subsections (1) and (2) apply to the 2007 and subsequent years.

(1) Subsection 16(2) of the Regulations is replaced by the following:

(2) If less than all of the property, other than the property in a CLB account, held in connection with an RESP is transferred to another RESP, the assisted contributions, unassisted contributions, CES grants, any amount paid under a designated provincial program and accumulated income are considered to be transferred in the same proportion as the value of the property transferred is to the total value of the property, other than the value of the property in a CLB account, in the RESP at the time of the transfer.

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

C.R.C., c. 385

Canada Pension Plan Regulations

(1) Subparagraph 36(2)( b )(ii) of the Canada Pension Plan Regulations is replaced by the following:

(ii)

if the amount is payable to a corporation, zero per cent, and in any other case, 2 per cent.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010.

SOR/97-33

Insurable Earnings and Collection of Premiums Regulations

(1) Subparagraph 18(2)( b )(ii) of the Insurable Earnings and Collection of Premiums Regulations is replaced by the following:

(ii)

if the amount is payable to a corporation, zero per cent, and in any other case, 2 per cent.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010.

SOR/2002-63

Regulations Excluding Certain Indictable Offences from the Definition of “Designated Offence”

(1) Paragraph 1(

a) of the Regulations Excluding Certain Indictable Offences from the Definition of “Designated Offence” is repealed.

(2) Paragraphs 1(

d) and (

e) of the Regulations are repealed.

(3) Paragraph 1(

j) of the Regulations is repealed.

PART 2

AMENDMENTS IN RESPECT OF EXCISE DUTIES AND SALES AND EXCISE TAXES

R.S., c. E-14

Excise Act

1996, c. 21, s. 62(1)

(1) Paragraph 110.1(1)(

b) of the Excise Act is replaced by the following:

(

b) interest at such rates per annum prescribed under the Income Tax Act for amounts payable by the Minister under that Act as refunds of overpayments of tax to a person that is not a corporation, as are in effect from time to time, in respect of each day between the expiration of that time and the day on which the total duty, penalty and interest outstanding is paid, calculated on the total duty, penalty and interest outstanding on that day.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2010.

Amendments in Respect of the Excise Act, 2001

2002, c. 22

Excise Act, 2001

(1) The definition stamped in

section 2 of the Excise Act, 2001 is replaced by the following:

stamped

estampillé

stamped , in respect of a tobacco product, means that an excise stamp, and all prescribed information in a prescribed format, are stamped, impressed, printed or marked on, indented into or affixed to the product or its container in the prescribed manner to indicate that duty, other than special duty, has been paid on the product.

(2) Section 2 of the Act is amended by adding the following in alphabetical order:

excise stamp

timbre d’accise

excise stamp means a stamp that is issued by the Minister under subsection 25.1(1) and that has not been cancelled under

section 25.5.

2008, c. 28, s. 51(1)

(1) Subsection 5(1) of the Act is replaced by the following:

Constructive possession

(1) For the purposes of

section 25.2, subsections 25.3(1), 30(1), 32(1) and 32.1(1),

section 61, subsections 70(1) and 88(1), sections 230 and 231 and subsection 238.1(1), if one of two or more persons, with the knowledge and consent of the rest of them, has anything in the person’s possession, it is deemed to be in the custody and possession of each and all of them.

2008, c. 28, s. 51(2)

(2) The portion of subsection 5(2) of the Act before paragraph (

a) is replaced by the following:

Meaning of possession

(2) In this

section and in

section 25.2, subsections 25.3(1), 30(1), 32(1) and 32.1(1),

section 61 and subsections 70(1), 88(1) and 238.1(1), possession means not only having in one’s own personal possession but also knowingly

The Act is amended by adding the following after

section 25:

Issuance of excise stamps

25.1

(1) On application in the prescribed form and manner, the Minister may issue, to a tobacco licensee or a prescribed person who is importing tobacco products, stamps the purpose of which is to indicate that duty, other than special duty, has been paid on a tobacco product.

Quantity of excise stamps

(2) The Minister may limit the quantity of excise stamps that may be issued to a person under subsection (1).

Security

(3) No person shall be issued an excise stamp unless the person has provided security in a form satisfactory to the Minister and in an amount determined in accordance with the regulations.

Supply of excise stamps

(4) The Minister may authorize a producer of excise stamps to supply, on the direction of the Minister, excise stamps to a person who is issued those stamps under subsection (1).

Design and construction

(5) The design and construction of excise stamps shall be subject to the approval of the Minister.

Counterfeiting excise stamps

25.2

No person shall produce, possess, sell or otherwise supply, or offer to supply, without lawful justification or excuse the proof of which lies on the person, anything that is intended to resemble or pass for an excise stamp.

Unlawful possession of excise stamps

25.3

(1) No person shall possess an excise stamp that has not been affixed to a tobacco product or its container in the manner prescribed for the purposes of the definition stamped in

section 2 to indicate that duty, other than special duty, has been paid on the product.

Exceptions — possession

(2) Subsection (1) does not apply to the possession of an excise stamp by

(

a) the person who lawfully produced the excise stamp;

(

b) the person who is issued the excise stamp;

(

c) a sufferance warehouse licensee who possesses the excise stamp in their sufferance warehouse on behalf of a person described under paragraph ( b ); or

(

d) a prescribed person.

Unlawful supply of excise stamps

25.4

No person shall dispose of, sell or otherwise supply, or offer to supply, an excise stamp otherwise than in accordance with this Act.

Cancellation, return and destruction of excise stamps

25.5

The Minister may

(

a) cancel an excise stamp that has been issued; and

(

b) direct that it be returned or destroyed in a manner specified by the Minister.

The Act is amended by adding the following after subsection 206(2.1):

Keeping records — excise stamps

(2.2) Every person who has been issued an excise stamp shall keep all records that are necessary to determine the receipt, retention, location, use or disposition of the stamp.

2008, c. 28, s. 60

The portion of

section 214 of the Act before paragraph (

a) is replaced by the following:

Unlawful production, sale, etc., of tobacco or alcohol

Every person who contravenes any of sections 25, 25.2 to 25.4, 27 and 29, subsection 32.1(1) and sections 60 and 62 is guilty of an offence and liable

2007, c. 18, s. 121

Section 234 of the Act is replaced by the following:

Contravention of

section 38, 40, 49, 61, 62.1, 99, 149 or 151

(1) Every person who contravenes

section 38, 40, 49, 61, 62.1, 99, 149 or 151 is liable to a penalty of not more than $25,000.

Failure to comply

(2) Every person who fails to return or destroy stamps as directed by the Minister under paragraph 25.5( b ), or who fails to re-work or destroy a tobacco product in the manner authorized by the Minister under

section 41, is liable to a penalty of not more than $25,000.

The Act is amended by adding the following after

section 238:

Penalty in respect of unaccounted excise stamps

238.1

(1) Every person who is issued excise stamps is liable to a penalty if the person cannot account for the stamps as being in their possession unless

(

a) the person can demonstrate that the stamps were affixed to tobacco products or their containers in the manner prescribed for the purposes of the definition stamped in

section 2 and that duty, other than special duty, has been paid on the products; or

(

b) in the case of stamps that were cancelled, the person can demonstrate that the stamps were returned or destroyed as directed by the Minister.

Amount of the penalty

(2) The amount of the penalty for each excise stamp that cannot be accounted for is equal to the duty that would be imposed on a tobacco product for which the stamp was issued under subsection 25.1(1).

2007, c. 18, s. 127(1)

Section 264 of the Act is replaced by the following:

Certain things not to be returned

Despite this Act, any alcohol, specially denatured alcohol, restricted formulation, raw leaf tobacco, excise stamp or tobacco product that is seized under

section 260 must not be returned to the person from whom it was seized or any other person unless it was seized in error.

Section 266 of the Act is amended by adding the following after subsection (1):

Excise stamps not to be sold

(1.1) Despite subsection (1), the Minister shall not sell excise stamps that have been seized under

section 260.

(1) Paragraph 304(1)(

c) of the Act is replaced by the following:

(

c) respecting the types of security that are acceptable for the purposes of paragraph 23(3)(

b) or subsection 25.1(3), and the manner by which the amount of the security is to be determined but that amount must not be less than $5,000;

(2) Paragraph 304(1)(

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

d) régir la durée, la modification, la suspension, le renouvellement, la révocation, le retrait et le rétablissement des licences, agréments et autorisations;

(3) Subsection 304(1) of the Act is amended by adding the following after paragraph ( f ):

( f.1 )

respecting the issuance of excise stamps;

(4) Paragraph 304(1)(

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

i) régir le dépôt de produits du tabac et d’alcool dans un entrepôt d’accise ou un entrepôt d’accise spécial et leur sortie d’un tel entrepôt;

2007, c. 18, s. 130(1)

(5) Paragraph 304(1)(

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

n) régir la vente, en vertu de l’article 266, d’alcool, de produits du tabac, de tabac en feuilles, d’alcool spécialement dénaturé ou de préparations assujetties à des restrictions saisis en vertu de l’article 260;

R.S., c. 1 (2nd Supp.)

Customs Act

Subsection 2(1) of the Customs Act is amended by adding the following in alphabetical order:

excise stamp

timbre d’accise

excise stamp means a stamp that is issued by the Minister under subsection 25.1(1) of the Excise Act, 2001 and that has not been cancelled under

section 25.5 of that Act;

Section 97.25 of the Act is amended by adding the following after subsection (3):

Excise stamps not to be sold

(3.1) Despite subsection (3), the Minister shall not direct that detained excise stamps be sold.

2007, c. 18, s. 137(1)

Subsection 117(2) of the Act is replaced by the following:

No return of certain goods

(2) Despite subsection (1), if spirits, wine, specially denatured alcohol, restricted formulations, raw leaf tobacco, excise stamps or tobacco products are seized under this Act, they shall not be returned to the person from whom they were seized or any other person unless they were seized in error.

Section 119.1 of the Act is amended by adding the following after subsection (1):

Excise stamps not to be sold

(1.01) Despite subsection (1), the Minister shall not authorize an officer to sell excise stamps that have been seized under this Act.

2007, c. 18, s. 139(1)

The portion of subsection 142(1) of the Act before paragraph (

a) is replaced by the following:

Disposal of things abandoned or forfeit

(1) Unless the thing is spirits, specially denatured alcohol, a restricted formulation, wine, raw leaf tobacco, an excise stamp or a tobacco product, anything that has been abandoned to Her Majesty in right of Canada under this Act and anything the forfeiture of which is final under this Act shall

Section 142.1 of the Act is amended by adding the following after subsection (1):

Dealing with abandoned or forfeited excise stamps

(1.1) If an excise stamp is abandoned or finally forfeited under this Act, the Minister may destroy or otherwise deal with it.

Application

Meaning of implementation date

(1) In this section, implementation date means the first day of the month that follows the thirtieth day after the day on which this Act receives Royal Assent.

Application

(2) Sections 38 to 46 , subsections 47 (1) and (3) and sections 48 to 53 apply as of the implementation date, except that, for the purposes of

section 34 or 35 of the Excise Act, 2001 , a tobacco product may, on or after the implementation date but before April 2011, be entered into the duty-paid market or be released under the Customs Act for entry into the duty-paid market, as the case may be, if it is stamped in one of the following manners:

(

a) in accordance with the rules applicable under the Excise Act, 2001 as those rules read on the day before the day on which this Act receives Royal Assent;

(

b) in accordance with the rules applicable under the Excise Act, 2001 as those rules read on the implementation date or as they are amended from time to time after that date; or

(

c) in the manner described in paragraphs (

a) and ( b ).

Effect — paragraph (2)( a )

(3) If a tobacco product is stamped in the manner described in paragraph (2)( a ), the rules applicable under the Excise Act, 2001 as those rules read on the day before the day on which this Act receives Royal Assent apply in respect of the tobacco product.

Effect — paragraph (2)(

b) or ( c )

(4) If a tobacco product is stamped in the manner described in paragraph (2)(

b) or ( c ), the rules applicable under the Excise Act, 2001 as those rules read on the implementation date, or as they are amended from time to time after that date, apply in respect of the tobacco product.

R.S., c. E-15

Excise Tax Act

1990, c. 45, s. 12(1)

(1) Paragraph (

l) of the definition financial service in subsection 123(1) of the Excise Tax Act is replaced by the following:

(

l) the agreeing to provide, or the arranging for, a service that is

(

i) referred to in any of paragraphs (

a) to ( i ), and

(ii)

not referred to in any of paragraphs (

n) to ( t ), or

(2) The definition financial service in subsection 123(1) of the Act is amended by adding the following after paragraph ( q ):

( q.1 )

an asset management service,

(3) The definition financial service in subsection 123(1) of the Act is amended by adding the following after paragraph ( r.2 ):

( r.3 )

a service (other than a prescribed service) of managing credit that is in respect of credit cards, charge cards, credit accounts, charge accounts, loan accounts or accounts in respect of any advance and is provided to a person granting, or potentially granting, credit in respect of those cards or accounts, including a service provided to the person of

(

i) checking, evaluating or authorizing credit,

(ii)

making decisions on behalf of the person in relation to a grant, or an application for a grant, of credit,

(iii)

creating or maintaining records for the person in relation to a grant, or an application for a grant, of credit or in relation to the cards or accounts, or

(iv)

monitoring another person’s payment record or dealing with payments made, or to be made, by the other person,

( r.4 )

a service (other than a prescribed service) that is preparatory to the provision or the potential provision of a service referred to in any of paragraphs (

a) to (

i) and ( l ), or that is provided in conjunction with a service referred to in any of those paragraphs, and that is

(

i) a service of collecting, collating or providing information, or

(ii)

a market research, product design, document preparation, document processing, customer assistance, promotional or advertising service or a similar service,

( r.5 )

property (other than a financial instrument or prescribed property) that is delivered or made available to a person in conjunction with the rendering by the person of a service referred to in any of paragraphs (

a) to (

i) and ( l ),

(4) Subsection 123(1) of the Act is amended by adding the following in alphabetical order:

asset management service

service de gestion des actifs

asset management service means a service (other than a prescribed service) rendered by a particular person in respect of the assets or liabilities of another person that is a service of

(

a) managing or administering the assets or liabilities, irrespective of the level of discretionary authority the particular person has to manage some or all of the assets or liabilities,

(

b) providing research, analysis, advice or reports in respect of the assets or liabilities,

(

c) determining which assets or liabilities are to be acquired or disposed of, or

(

d) acting to realize performance targets or other objectives in respect of the assets or liabilities;

management or administrative service

service de gestion ou d’administration

management or administrative service includes an asset management service;

(5) Subsections (1) to (4) are deemed to have come into force on December 17, 1990, except that, for the purposes of

Part IX of the Act, other than Division IV of that Part, those subsections do not apply in respect of a service rendered under an agreement, evidenced in writing, for a supply if

(

a) all of the consideration for the supply became due or was paid on or before December 14, 2009;

(

b) the supplier did not, on or before December 14, 2009, charge, collect or remit any amount as or on account of tax under

Part IX of the Act in respect of the supply; and

(

c) the supplier did not, on or before December 14, 2009, charge, collect or remit any amount as or on account of tax under

Part IX of the Act in respect of any other supply that is made under the agreement and that includes the provision of a service referred to in any of paragraphs ( q ), ( q.1 ) and ( r.3 ) to ( r.5 ) of the definition financial service in subsection 123(1) of the Act, as amended by subsections (1) to (4).

(6) Despite

section 298 of the Act, the Minister of National Revenue may assess, reassess or make an additional assessment of any amount payable or remittable by a person in respect of a supply of a service referred to in any of paragraphs ( q ), ( q.1 ) and ( r.3 ) to ( r.5 ) of the definition financial service in subsection 123(1) of the Act, as amended by subsections (2) to (4), at any time on or before the later of the day that is one year after the day on which this Act is assented to and the last day of the period otherwise allowed under that

section for making the assessment, reassessment or additional assessment.

1994, c. 9, s. 4(1)

(1) The portion of subsection 141.01(5) of the Act before paragraph (

a) is replaced by the following:

Method of determining extent of use, etc.

(5) Subject to

section 141.02, the methods used by a person in a fiscal year to determine

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

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

section 141.01:

Definitions

141.02

(1) The

definitions in this subsection apply in this section.

adjusted tax credit amount

montant de crédit de taxe rajusté

adjusted tax credit amount means the amount determined, for a fiscal year of a person, by the formula

A × 365/B where A

is the tax credit amount of the person for the fiscal year; and

is the number of days in the fiscal year.

adjusted total tax amount

montant total de taxe rajusté

adjusted total tax amount means the amount determined, for a fiscal year of a person, by the formula

A × 365/B where A

is the total tax amount of the person for the fiscal year; and

is the number of days in the fiscal year.

business input

intrant d’entreprise

business input means an excluded input, an exclusive input or a residual input.

direct attribution method

méthode d’attribution directe

direct attribution method means a method, conforming to criteria, rules, terms and conditions specified by the Minister, of determining in the most direct manner the operative extent and the procurative extent of property or a service.

direct input

intrant direct

direct input means property or a service, other than

(

a) an excluded input;

(

b) an exclusive input; or

(

c) a non-attributable input.

excluded input

intrant exclu

excluded input of a person means

(

a) property that is for use by the person as capital property;

(

b) property or a service that is acquired, imported or brought into a participating province by the person for use as an improvement to property described in paragraph ( a ); or

(

c) a prescribed property or service.

exclusive input

intrant exclusif

exclusive input of a person means property or a service (other than an excluded input) that is acquired, imported or brought into a participating province by the person for consumption or use directly and exclusively for the purpose of making taxable supplies for consideration or directly and exclusively for purposes other than making taxable supplies for consideration.

non-attributable input

intrant non attribuable

non-attributable input of a person means property or a service that is

(

a) not an excluded input or an exclusive input of the person;

(

b) acquired, imported or brought into a participating province by the person; and

(

c) not attributable to the making of any particular supply by the person.

operative extent

mesure d’utilisation

operative extent of property or a service means, as the case may be, the extent to which the consumption or use of the property or service is for the purpose of making taxable supplies for consideration or the extent to which the consumption or use of the property or service is for purposes other than making taxable supplies for consideration.

procurative extent

mesure d’acquisition

procurative extent of property or a service means, as the case may be, the extent to which the property or service is acquired, imported or brought into a participating province for the purpose of making taxable supplies for consideration or the extent to which the property or service is acquired, imported or brought into a participating province for purposes other than making taxable supplies for consideration.

qualifying institution

institution admissible

qualifying institution for a particular fiscal year means a person that

(

a) is a financial institution of a prescribed class throughout the particular fiscal year of the person; and

(

b) has two fiscal years immediately preceding the particular fiscal year and, for each of those two fiscal years,

(

i) the adjusted tax credit amount of the person equals or exceeds the prescribed amount for that prescribed class for the particular fiscal year, and

(ii)

the tax credit rate of the person equals or exceeds the prescribed percentage for that prescribed class for the particular fiscal year.

requested information

renseignement demandé

requested information means any information, additional information or document in respect of an application made by a person under subsection (18) that the Minister requests in writing from the person.

residual input

intrant résiduel

residual input means a direct input or a non-attributable input.

residual input tax amount

montant de taxe pour intrant résiduel

residual input tax amount of a person for a fiscal year means

(

a) if the person is a selected listed financial institution at any time in the fiscal year, an amount of tax under any of subsection 165(1) and sections 212, 218 and 218.01 in respect of a supply or importation of a residual input that became payable by the person during the fiscal year without having been paid before the fiscal year or was paid by the person during the fiscal year without having become payable; and

(

b) in any other case, an amount of tax in respect of a supply, importation or bringing into a participating province of a residual input that became payable by the person during the fiscal year without having been paid before the fiscal year or was paid by the person during the fiscal year without having become payable.

specified method

méthode déterminée

specified method means a method, conforming to criteria, rules, terms and conditions specified by the Minister, of determining the operative extent and the procurative extent of property or a service.

tax credit amount

montant de crédit de taxe

tax credit amount of a person for a fiscal year of the person means

(

a) if the person has made an election under subsection (9) in respect of the fiscal year, the total of all amounts each of which is an input tax credit for the fiscal year in respect of a residual input tax amount of the person for the fiscal year that the person would, in the absence of that subsection, be entitled to claim under this Part;

(

b) if the person is a qualifying institution for the fiscal year, has not made an election under subsection (7) or (27) in respect of the fiscal year and has not received an authorization from the Minister to use for the fiscal year the particular methods set out in an application made under subsection (18), the total of all amounts each of which is an input tax credit for the fiscal year in respect of a residual input tax amount of the person for the fiscal year that the person would, if the person were not a qualifying institution for the fiscal year and did not make an election under subsection (9) in respect of the fiscal year, be entitled to claim under this Part; and

(

c) in any other case, the total of all amounts each of which is an input tax credit for the fiscal year in respect of a residual input tax amount of the person for the fiscal year that the person is entitled to claim under this Part.

tax credit rate

taux de crédit de taxe

tax credit rate of a person for a fiscal year of the person means the quotient, expressed as a percentage, determined by dividing the tax credit amount of the person for the fiscal year by the total tax amount of the person for the fiscal year.

total tax amount

montant total de taxe

total tax amount of a person for a fiscal year of the person means the total of all amounts each of which is a residual input tax amount of the person for the fiscal year.

Meaning of “consideration”

(2) In this section, “consideration” does not include nominal consideration.

Financial institution throughout a year

(3) For the purposes of this section, a person is a financial institution of a prescribed class throughout a particular fiscal year of the person if the person is a financial institution of that class at any time in the particular fiscal year.

Mergers and amalgamations

(4) If two or more corporations (each of which is referred to in this subsection as a “predecessor”) are merged or amalgamated to form one corporation (in this subsection referred to as the “new corporation”), otherwise than as the result of the acquisition of property of one corporation by another corporation pursuant to the purchase of the property by the other corporation or as the result of the distribution of the property to the other corporation on the winding-up of the corporation, despite

section 271 and for the purposes of determining the tax credit amount and the tax credit rate of the new corporation for a fiscal year of the new corporation, the following rules apply:

(

a) the new corporation is deemed to have had two fiscal years, each of 365 days, immediately preceding the first fiscal year of the new corporation;

(

b) the tax credit amount of the new corporation for the fiscal year of the new corporation (in this subsection referred to as the “prior year of the new corporation”) immediately preceding the first fiscal year of the new corporation is deemed to be equal to the total of all amounts each of which is the adjusted tax credit amount of a predecessor for the last fiscal year, if any, of the predecessor (in this subsection referred to as the “prior year of the predecessor”) ending before the time of the merger or amalgamation otherwise than as a result of the merger or amalgamation;

(

c) the tax credit amount of the new corporation for the fiscal year of the new corporation (in this subsection referred to as the “second prior year of the new corporation”) immediately preceding the prior year of the new corporation is deemed to be equal to the total of all amounts each of which is the adjusted tax credit amount of a predecessor for the fiscal year, if any, of the predecessor (in this subsection referred to as the “second prior year of the predecessor”) immediately preceding the prior year of the predecessor;

(

d) the total tax amount of the new corporation for the prior year of the new corporation is deemed to be the total of all amounts, each of which is the adjusted total tax amount of a predecessor for the prior year of the predecessor, if any; and

(

e) the total tax amount of the new corporation for the second prior year of the new corporation is deemed to be the total of all amounts, each of which is the adjusted total tax amount of a predecessor for the second prior year of the predecessor, if any.

Winding-up

(5) If at any time a particular corporation is wound up and not less than 90% of the issued shares of each class of the capital stock of the particular corporation were, immediately before that time, owned by another corporation, despite

section 272 and for the purposes of determining the tax credit amount and the tax credit rate of the other corporation for a fiscal year of the other corporation, the following rules apply:

(

a) the tax credit amount of the other corporation for the fiscal year of the other corporation (in this subsection referred to as the “specified year of the other corporation”) that includes the day on which the particular corporation is wound up is deemed to be equal to the total of

(

i) the amount that would, if this subsection did not apply to the winding-up of the particular corporation, be the adjusted tax credit amount of the other corporation for the specified year of the other corporation, and

(ii)

the amount that is the adjusted tax credit amount of the particular corporation for the last fiscal year, if any, of the particular corporation (in this subsection referred to as the “prior year of the particular corporation”) ending before the day on which the particular corporation is wound up;

(

b) the tax credit amount of the other corporation for the fiscal year, if any, of the other corporation (in this subsection referred to as the “prior year of the other corporation”) immediately preceding the specified year of the other corporation is deemed to be equal to the total of

(

i) the amount that would, if this subsection did not apply to the winding-up of the particular corporation, be the adjusted tax credit amount of the other corporation for the prior year of the other corporation, and

(ii)

the amount that is the adjusted tax credit amount of the particular corporation for the fiscal year, if any, of the particular corporation (in this subsection referred to as the “second prior year of the particular corporation”) immediately preceding the prior year of the particular corporation;

(

c) the total tax amount of the other corporation for the specified year of the other corporation is deemed to be the total of

(

i) the amount that would, if this subsection did not apply to the winding-up of the particular corporation, be the adjusted total tax amount of the other corporation for the specified year of the other corporation, and

(ii)

the amount that is the adjusted total tax amount of the particular corporation for the prior year of the particular corporation, if any; and

(

d) the total tax amount of the other corporation for the prior year of the other corporation, if any, is deemed to be the total of

(

i) the amount that would, if this subsection did not apply to the winding-up of the particular corporation, be the adjusted total tax amount of the other corporation for the prior year of the other corporation, and

(ii)

the amount that is the adjusted total tax amount of the particular corporation for the second prior year of the particular corporation, if any.

Allocation of exclusive inputs

(6) For the purposes of this Part, the following rules apply in respect of any exclusive input of a financial institution:

(

a) if the exclusive input is acquired, imported or brought into a participating province for consumption or use directly and exclusively for the purpose of making taxable supplies for consideration, the financial institution is deemed to have acquired, imported or brought into the participating province the exclusive input for consumption or use exclusively in the course of commercial activities of the financial institution; and

(

b) if the exclusive input is acquired, imported or brought into a participating province for consumption or use directly and exclusively for purposes other than making taxable supplies for consideration, the financial institution is deemed to have acquired, imported or brought into the participating province the exclusive input for consumption or use exclusively otherwise than in the course of commercial activities of the financial institution.

Residual inputs — election for transitional year

(7) If a person is a qualifying institution for the first fiscal year of the person that begins after March 2007, the Minister has assessed the net tax of the person for any reporting period included in any of the four fiscal years immediately preceding that first fiscal year, the notice of assessment, subsequent assessment or reassessment in respect of the reporting period does not reflect any inappropriateness in respect of the methods used by the person for the purpose of determining input tax credits in respect of residual inputs of the person and those methods would be fair and reasonable if used in the same manner by the person in that first fiscal year for the purposes of determining the operative extent and the procurative extent of all residual inputs of the person, the person may elect to use those methods in that same manner for that first fiscal year to determine, for the purposes of this Part, the operative extent and the procurative extent of all residual inputs of the person.

Residual inputs — prescribed extent of use

(8) For the purposes of this Part, if a financial institution is a qualifying institution for a fiscal year of the financial institution and has not made an election under subsection (7) for the fiscal year, the following rules apply for the fiscal year in respect of each residual input of the financial institution:

(

a) the extent to which the consumption or use of the residual input is for the purpose of making taxable supplies for consideration is deemed to be equal to the prescribed percentage for the prescribed class of the financial institution;

(

b) the extent to which the consumption or use of the residual input is for purposes other than making taxable supplies for consideration is deemed to be equal to the difference between 100% and the prescribed percentage for the prescribed class of the financial institution;

(

c) the extent to which the residual input is acquired, imported or brought into a participating province by the qualifying institution for the purpose of making taxable supplies for consideration is deemed to be equal to the prescribed percentage for the prescribed class of the financial institution;

(

d) the extent to which the residual input is acquired, imported or brought into a participating province by the qualifying institution for purposes other than making taxable supplies for consideration is deemed to be equal to the difference between 100% and the prescribed percentage for the prescribed class of the financial institution; and

(

e) for the purpose of determining an input tax credit in respect of the residual input, the description of B in the formula in subsection 169(1) is deemed to be equal to the prescribed percentage for the prescribed class of the financial institution.

Residual inputs — elected extent of use

(9) For the purposes of this Part, if a person is a financial institution (other than a qualifying institution) of a prescribed class throughout a particular fiscal year of the person and the tax credit rate of the person for each of the two fiscal years immediately preceding the particular fiscal year equals or exceeds the prescribed percentage for the prescribed class of financial institutions of the person for the particular fiscal year, the person may elect to have the following rules apply for the particular fiscal year in respect of each residual input of the person:

(

a) the extent to which the consumption or use of the residual input is for the purpose of making taxable supplies for consideration is deemed to be equal to the prescribed percentage for the prescribed class;

(

b) the extent to which the consumption or use of the residual input is for purposes other than making taxable supplies for consideration is deemed to be equal to the difference between 100% and the prescribed percentage for the prescribed class;

(

c) the extent to which the residual input is acquired, imported or brought into a participating province by the person for the purpose of making taxable supplies for consideration is deemed to be equal to the prescribed percentage for the prescribed class;

(

d) the extent to which the residual input is acquired, imported or brought into a participating province by the person for purposes other than making taxable supplies for consideration is deemed to be equal to the difference between 100% and the prescribed percentage for the prescribed class; and

(

e) for the purpose of determining an input tax credit in respect of the residual input, the description of B in the formula in subsection 169(1) is deemed to be equal to the prescribed percentage for the prescribed class.

Non-attributable inputs — specified method

(10) For the purposes of this Part, if a financial institution (other than a qualifying institution) has not made an election under subsection (9) in respect of a fiscal year of the financial institution, the financial institution shall use a specified method to determine for the fiscal year the operative extent and the procurative extent of each non-attributable input of the financial institution.

Non-attributable inputs — exception

(11) For the purposes of this Part, despite subsection (10), if a financial institution (other than a qualifying institution) has not made an election under subsection (9) in respect of a fiscal year of the financial institution and no specified method applies during the fiscal year to a particular non-attributable input of the financial institution, the financial institution shall use another attribution method to determine for the fiscal year the operative extent and the procurative extent of the particular non-attributable input.

Direct inputs — direct attribution method

(12) For the purposes of this Part, if a financial institution (other than a qualifying institution) has not made an election under subsection (9) in respect of a fiscal year of the financial institution, the financial institution shall use a direct attribution method to determine for the fiscal year the operative extent and the procurative extent of each direct input of the financial institution.

Direct inputs — exception

(13) For the purposes of this Part, despite subsection (12), if a financial institution (other than a qualifying institution) has not made an election under subsection (9) in respect of a fiscal year of the financial institution and no direct attribution method applies during the fiscal year to a particular direct input of the financial institution, the financial institution shall use another attribution method to determine in the most direct manner for the fiscal year the operative extent and the procurative extent of the particular direct input.

Excluded inputs — specified method

(14) For the purposes of this Part, a financial institution shall use a specified method to determine for a fiscal year of the financial institution the operative extent and the procurative extent of each excluded input of the financial institution.

Excluded inputs — exception

(15) For the purposes of this Part, despite subsection (14), if no specified method applies during a fiscal year of a financial institution to a particular excluded input of the financial institution, the financial institution shall use another attribution method to determine for the fiscal year the operative extent and the procurative extent of the particular excluded input.

Attribution method — conditions

(16) Any method that a financial institution is required in accordance with any of subsections (10) to (15) to use in respect of a fiscal year of the financial institution shall be

(

a) fair and reasonable;

(

b) used consistently by the financial institution throughout the fiscal year; and

(

c) subject to subsection (17), determined by the financial institution no later than the day on or before which the financial institution is required to file a return under Division V with the Minister for the first reporting period in the fiscal year.

Alteration or substitution of method

(17) Any method used by a financial institution under any of subsections (10) to (15) in respect of a fiscal year of the financial institution shall not, after the day on or before which the financial institution is required to file a return under Division V with the Minister for the first reporting period in the fiscal year, be altered or be substituted with another method by the financial institution for the fiscal year without the written consent of the Minister.

Application for pre-approved method

(18) A person that is, or is reasonably expected to be, a qualifying institution for a fiscal year may apply to the Minister to use particular methods to determine for the fiscal year the operative extent and the procurative extent of each business input of the person.

Form and manner of application

(19) An application made by a person under subsection (18) shall

(

a) be made in prescribed form containing prescribed information, including the particular method to be used in respect of each direct input, excluded input, exclusive input and non-attributable input of the person; and

(

b) be filed by the person with the Minister in prescribed manner on or before

(

i) the day that is 180 days before the first day of the fiscal year to which the application applies, or

(ii)

any later day that the Minister may allow on application by the person.

Authorization

(20) On receipt of an application made under subsection (18), the Minister shall

(

a) consider the application and authorize or deny the use of the particular methods; and

(

b) notify the person in writing of the decision on or before

(

i) the later of

(

A) the day that is 180 days after that receipt, and

(

B) the day that is 180 days before the first day of the fiscal year to which the application applies, or

(ii)

any later day that the Minister may specify, if the day is set out in a written application filed by the person with the Minister.

Effect of authorization

(21) For the purposes of this Part, if the Minister under subsection (20) authorizes the use of particular methods for a fiscal year of the person,

(

a) the particular methods shall be used consistently, and as indicated in the application, by the person throughout the fiscal year to determine the operative extent and the procurative extent of each business input of the person; and

( b )

subsections (6) to (15) and (27) do not apply, for the fiscal year, in respect of any business input of the person.

Reasons for denial

(22) If the Minister denies under subsection (20) the use of the particular methods specified in an application made under subsection (18) and the person has, in respect of the application, complied with the requirements set out in subsection (19) and provided to the Minister all requested information within any reasonable time set out in the written notice requesting the information, the Minister shall notify the person in writing of the reasons for not authorizing the use of the particular methods on or before the particular day that is the later of

(

a) the day that is 60 days after the day the person last provided any requested information to the Minister; and

(

b) the day on or before which the notification of the decision is required to be given to the person under subsection (20).

Revocation

(23) An authorization granted under subsection (20) to a person in respect of a fiscal year of the person ceases to have effect on the first day of the fiscal year and, for the purposes of this Part, is deemed never to have been granted, if

(

a) the Minister revokes the authorization and sends a notice of revocation to the person on or before the day that is 60 days before the day that is the first day of the fiscal year;

(

b) the person files in prescribed manner with the Minister a notice of revocation in prescribed form containing prescribed information on or before the day that is 60 days before the first day of the fiscal year; or

(

c) the person is not a qualifying institution for the fiscal year.

Application to be designated a qualifying institution

(24) A person may apply to the Minister, in prescribed form containing prescribed information, to be designated as a qualifying institution for a particular fiscal year of the person if

(

a) the person is, or is reasonably expected to be, a financial institution of a prescribed class throughout the particular fiscal year; and

(

b) it is the case that

(

i) the person has two fiscal years immediately preceding the particular fiscal year and, for each of those two fiscal years, the adjusted tax credit amount of the person equals or exceeds, or is reasonably expected to equal or exceed, the prescribed amount for that class for the particular fiscal year, or

(ii)

an authorization under subsection (20) for the particular fiscal year has ceased to have effect only because of the application of paragraph (23)( c ).

Effect of approval

(25) On receipt of the application made under subsection (24) in respect of a fiscal year of a person, the Minister shall, with all due dispatch, consider the application and notify the person in writing of the decision and, if the Minister makes the designation, the person is deemed for the purposes of subsection (18) and paragraph (23)(

c) to be a qualifying institution for the fiscal year.

Revocation of designation as a qualifying institution

(26) A designation made under subsection (25) in respect of a fiscal year of a person ceases to have effect on the first day of the fiscal year and is deemed, for the purposes of this Part, to have never been granted if, on or before the day that is 60 days before the first day of the fiscal year

(

a) the Minister revokes the designation and sends a notice of revocation to the person; or

(

b) the person files in prescribed manner with the Minister a notice of revocation of the designation in prescribed form containing prescribed information.

Qualifying institution’s own methods

(27) Despite subsections (6), (8), (14) and (15), a qualifying institution for a fiscal year may elect to use particular methods for the fiscal year to determine, for the purposes of this Part, the operative extent and the procurative extent of every business input of the qualifying institution, if

(

a) the particular methods were specified in an application filed under subsection (18) by the qualifying institution for the fiscal year that

(

i) complies with the requirements set out in subsection (19), and

(ii)

is the last such application filed by the qualifying institution for the fiscal year;

(

b) the use of the particular methods was not authorized by the Minister under paragraph (20)( a );

(

c) the qualifying institution has provided all requested information within the time set out in the written notice requesting the information;

(

d) the Minister has not complied with the notification requirements set out in paragraph (20)(

b) and subsection (22) in respect of the application; and

(

e) if the Minister has provided modifications in writing to the particular methods on or before the particular day described in subsection (22), the particular methods with those modifications (in this

section referred to as the “modified methods”) are not fair and reasonable for the purpose of determining the operative extent and the procurative extent of the business inputs of the qualifying institution for the fiscal year.

Elected method — conditions

(28) If a qualifying institution makes an election under subsection (27), the particular methods shall be

(

a) fair and reasonable for the purpose of determining the operative extent and the procurative extent of the business inputs of the qualifying institution for the fiscal year; and

(

b) used consistently, and as indicated in the application referred to in paragraph (27)( a ), by the qualifying institution throughout the fiscal year.

Making of election

(29) An election under subsection (7), (9) or (27) in respect of a fiscal year of a person shall be

(

a) made in prescribed form containing prescribed information; and

(

b) filed by the person with the Minister in prescribed manner on or before the day that is

(

i) the day on or before which a return under Division V for the first reporting period of the fiscal year is required to be filed, or

(ii)

any later day that the Minister may allow on application by the person.

Revocation of election

(30) An election under subsection (7), (9) or (27) in respect of a fiscal year of a person ceases to have effect on the first day of the fiscal year and is deemed, for the purposes of this Part, never to have been made if

(

a) a notice of revocation of the election in prescribed form containing prescribed information is filed in prescribed manner with the Minister on or before the day on or before which the return under Division V is required to be filed for the first reporting period of the fiscal year;

(

b) in the case of an election under subsection (7) to use methods for the fiscal year to determine, for the purposes of this Part, the operative extent and the procurative extent of all residual inputs of the person,

(

i) the person is not a qualifying institution for the fiscal year, or

(ii)

the methods are

(

A) not fair and reasonable for the purpose of determining the operative extent and the procurative extent of those residual inputs, or

(

B) not used consistently by the financial institution throughout the fiscal year;

(

c) in the case of an election made under subsection (9),

(

i) the person is not a financial institution of a prescribed class throughout the fiscal year, or

(ii)

the tax credit rate of the person for each of the two fiscal years immediately preceding the fiscal year does not equal or exceed the prescribed percentage for the prescribed class of financial institutions of the person for the fiscal year; or

(

d) in the case of an election made under subsection (27),

(

i) any of the requirements to make the election that are set out in that subsection is not met, or

(ii)

the particular methods referred to in that subsection are

(

A) not fair and reasonable for the purpose of determining the operative extent and the procurative extent of the business inputs of the qualifying institution for the fiscal year, or

(

B) not used consistently, or as indicated in the application referred to in paragraph (27)( a ), by the financial institution throughout the fiscal year.

Burden of proof

(31) If a financial institution appeals an assessment under this Part for a reporting period in a fiscal year of the financial institution in respect of an issue relating to the determination, under any of subsections (7), (10) to (15), (21) and (27), of the operative extent or the procurative extent of a business input, the financial institution must establish on a balance of probabilities in any court proceeding relating to the assessment that

(

a) in the case of the determination, under subsection (7), of the operative extent or the procurative extent of the business input, the methods used by the financial institution to determine the operative extent and the procurative extent of all residual inputs of the financial institution for the fiscal year were

(

i) fair and reasonable, and

(ii)

used consistently by the financial institution throughout the fiscal year;

(

b) in the case of the determination, under subsection (10) or (14), of the operative extent or the procurative extent of the business input, the financial institution used a specified method consistently throughout the fiscal year to determine that extent;

(

c) in the case of the determination, under subsection (11) or (15), of the operative extent or the procurative extent of the business input, no specified method applied to the business input and the other attribution method used by the financial institution to determine that extent was fair and reasonable and used consistently by the financial institution throughout the fiscal year;

(

d) in the case of the determination, under subsection (12), of the operative extent or the procurative extent of the business input, the financial institution used a direct attribution method consistently throughout the fiscal year to determine that extent;

(

e) in the case of the determination, under subsection (13), of the operative extent or the procurative extent of the business input, no direct attribution method applied to the business input and the other attribution method used by the financial institution to determine that extent was fair and reasonable and used consistently by the financial institution throughout the fiscal year; and

(

f) in the case of the determination, under subsection (21), of the operative extent or the procurative extent of the business input, the particular methods referred to in that subsection were used consistently, and as indicated in the application referred to in that subsection, throughout the fiscal year.

(

g) in the case of the determination, under subsection (27), of the operative extent or the procurative extent of the business input,

(

i) the methods specified by the financial institution in the application referred to in that subsection were

(

A) fair and reasonable, and

(

B) used consistently, and as indicated in the application referred to in paragraph (27)( a ), by the financial institution throughout the fiscal year, and

(ii)

if the Minister has provided modifications to those methods as described in paragraph (27)( e ), the modified methods are not fair and reasonable for the purpose of determining the operative extent and the procurative extent of the business inputs of the financial institution for the fiscal year.

Ministerial direction

(32) If a financial institution is required to use a method (in this subsection referred to as the “previous method”) in accordance with any of subsections (10) to (15) in respect of a fiscal year of the financial institution, the Minister may at any time, by notice in writing, direct the financial institution to use, for the purposes of determining for the fiscal year, and any subsequent fiscal year, the operative extent and the procurative extent of each business input referred to in that subsection, another method that is fair and reasonable and, if the Minister so directs, the other method, and not the previous method, shall apply for those purposes.

Method directed by the Minister — appeals

(33) If under subsection (32) the Minister directs a financial institution to use a method in respect of a business input for a fiscal year, the Minister assesses the net tax of the financial institution for a reporting period included in the fiscal year and the financial institution appeals the assessment under this

Part in respect of an issue relating to the application of that subsection,

(

a) the Minister shall establish on a balance of probabilities that the method is fair and reasonable; and

(

b) if the final determination of the courts is that the method is not fair and reasonable, the Minister shall not direct the financial institution under subsection (32) to use another method for the fiscal year in respect of the business input.

(2) Subsections 141.02(1) to (17) and (29), (30) and (32) of the Act, as enacted by subsection (1), apply for the purpose of determining the net tax of a person for any reporting period of the person included in a fiscal year of the person beginning after March 2007, except that, for the purposes of the definition qualifying institution in subsection 141.02(1) of the Act and of subsection 141.02(9) of the Act, as enacted by subsection (1), paragraph (

b) of that definition and subsection 141.02(9) of the Act shall be read as if subsections (1) and 56 (1) had come into force on April 1, 2005.

(3) Subsections 141.02(18) to (28) of the Act, as enacted by subsection (1), apply for the purpose of determining the net tax of a person for any reporting period of the person included in a fiscal year of the person beginning after March 2008.

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

section 172:

Pension Plans

Definitions

172.1

(1) The following

definitions apply in this section.

active member

participant actif

active member has the meaning assigned by subsection 8500(1) of the Income Tax Regulations .

employer resource

ressource d’employeur

employer resource of a person means

(

a) all or part of a labour activity of the person, other than the part of the labour activity consumed or used by the person in the process of creating, developing or bringing into existence property;

(

b) all or part of property or a service supplied to the person, other than the part of the property or service consumed or used by the person in the process of creating, developing or bringing into existence property;

(

c) all or part of property created, developed or brought into existence by the person; or

(

d) any combination of the items referred to in paragraphs (

a) to ( c ).

excluded activity

activité exclue

excluded activity , in respect of a pension plan, means an activity undertaken exclusively for

(

a) compliance by a participating employer of the pension plan as an issuer, or prospective issuer, of securities with reporting requirements under a law of Canada or of a province in respect of the regulation of securities;

(

b) evaluating the feasibility or financial impact on a participating employer of the pension plan of establishing, altering or winding-up the pension plan, other than an activity that relates to the preparation of an actuarial report in respect of the plan required under a law of Canada or of a province;

(

c) evaluating the financial impact of the pension plan on the assets and liabilities of a participating employer of the pension plan;

(

d) negotiating changes to the benefits under the pension plan with a union or similar organization of employees; or

(

e) prescribed purposes.

labour activity

activité de main-d’oeuvre

labour activity of a person means anything done by an individual who is or agrees to become an employee of the person in the course of, or in relation to, the office or employment of that individual.

participating employer

employeur participant

participating employer of a pension plan means an employer that has made, or is required to make, contributions to the pension plan in respect of the employer’s employees or former employees, or payments under the pension plan to the employer’s employees or former employees, and includes an employer prescribed for the purposes of the definition participating employer in subsection 147.1(1) of the Income Tax Act .

pension activity

activité de pension

pension activity , in respect of a pension plan, means an activity (other than an excluded activity) that relates to

(

a) the establishment, management or administration of the pension plan or a pension entity of the pension plan; or

(

b) the management or administration of assets in respect of the pension plan.

pension entity

entité de gestion

pension entity of a pension plan means a person in respect of the pension plan that is

(

a) a person referred to in paragraph (

a) of the definition pension plan ;

(

b) a corporation referred to in paragraph (

b) of that definition; or

(

c) a prescribed person.

pension plan

régime de pension

pension plan means a registered pension plan (as defined in subsection 248(1) of the Income Tax Act )

(

a) that governs a person that is a trust or that is deemed to be a trust for the purposes of that Act;

(

b) in respect of which a corporation is

(

i) incorporated and operated either

(

A) solely for the administration of the registered pension plan, or

(

B) for the administration of the registered pension plan and for no other purpose other than acting as trustee of, or administering, a trust governed by a retirement compensation arrangement (as defined in subsection 248(1) of that Act), where the terms of the arrangement provide for benefits only in respect of individuals who are provided with benefits under the registered pension plan, and

(ii)

accepted by the Minister, under subparagraph 149(1)( o.1 )(ii) of that Act, as a funding medium for the purpose of the registration of the registered pension plan; or

(

c) in respect of which a person is prescribed for the purposes of the definition pension entity .

provincial factor

facteur provincial

provincial factor in respect of a pension plan and a participating province, for a fiscal year of a person that is a participating employer of the pension plan, means the amount (expressed as a percentage) determined by the formula

A × B where A

is the tax rate for the participating province on the last day of the fiscal year; and

(

a) if the person made contributions to the pension plan during the fiscal year that may be deducted by the person under paragraph 20(1)(

q) of the Income Tax Act in computing its income (in this paragraph referred to as “pension contributions”) and the number of active members of the pension plan who were employees of the person on the particular day that is the last day of the last calendar year ending on or before the last day of the fiscal year is greater than zero, the amount determined by the formula

[(C/D) + (E/F)]/2 where C

is the total of all pension contributions made to the pension plan by the person during the fiscal year in respect of employees of the person who were resident in the participating province on the particular day,

is the total of all pension contributions made to the pension plan by the person during the fiscal year in respect of employees of the person,

is the number of active members of the pension plan who were, on the particular day, employees of the person and resident in the participating province, and

is the number of active members of the pension plan who were, on the particular day, employees of the person;

(

b) if paragraph (

a) does not apply and the number of active members of the pension plan who were employees of the person on the particular day that is the last day of the last calendar year ending on or before the last day of the fiscal year is greater than zero, the amount determined by the formula

G/H where G

is the number of active members of the pension plan who were, on the particular day, employees of the person and resident in the participating province, and

is the number of active members of the pension plan who were, on the particular day, employees of the person; or

(

c) in any other case, zero.

Excluded resource

(2) For the purposes of this section, property or a service that is supplied to a particular person that is a participating employer of a pension plan by another person is an excluded resource of the particular person in respect of the pension plan if

(

a) for each pension entity of the pension plan, no tax would become payable under this

Part in respect of the supply if

(

i) the supply were made by the other person to the pension entity and not to the particular person, and

(ii)

the pension entity and the other person were dealing at arm’s length; and

(

b) where the supply is a supply of tangible personal property made outside Canada, the supply would not be an imported taxable supply (as defined in

section 217) if the particular person were a registrant not engaged exclusively in commercial activities.

Time of acquisition

(3) For the purposes of this section, if, at a particular time, a supply of property described in paragraph 142(2)(

a) or (

b) is made to a person who is a participating employer of a pension plan and, at a later time, tax under

section 212 becomes payable by the person in respect of the property

(

a) the supply is deemed to have been made to the person at the later time and not at the particular time; and

(

b) tax is deemed to have been payable in respect of the supply at the later time.

Specified pension entity

(4) If a person is a participating employer of a pension plan and the pension plan has,

(

a) at all times in a fiscal year of the person, no more than one pension entity, that pension entity is the specified pension entity of the pension plan in respect of the person for the fiscal year; and

(

b) in the fiscal year, two or more pension entities, the person and one of those pension entities may jointly elect, in prescribed form containing prescribed information, for that pension entity to be the specified pension entity of the pension plan in respect of the person for the fiscal year.

Acquisition of property or a service for supply

(5) If a person that is a registrant and a participating employer of a pension plan acquires property or a service (in this subsection referred to as the “specified resource”) for the purpose of making a supply of all or part of the specified resource to a pension entity of the pension plan for consumption, use or supply by the pension entity in the course of pension activities in respect of the pension plan and the specified resource is not an excluded resource of the person in respect of the pension plan, the following rules apply:

(

a) for the purposes of this Part, the person is deemed to have made a taxable supply of the specified resource or part on the last day of the particular fiscal year of the person in which the person acquired the specified resource;

(

b) for the purposes of this Part, tax in respect of the taxable supply is deemed to have become payable on the last day of the particular fiscal year and the person is deemed to have collected that tax on that day;

(

c) for the purposes of this Part, the tax referred to in paragraph (

b) is deemed to be equal to the amount determined by the formula

A + B where A

is the amount determined by the formula

C × D where C

is the fair market value of the specified resource or part at the time it was acquired by the person, and

is the rate set out in subsection 165(1), and

is the total of all amounts, each of which is determined for a participating province by the following formula

E × F where E

is the fair market value of the specified resource or part at the time it was acquired by the person, and

is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year; and

(

d) for the purpose of determining an input tax credit of the pension entity under this Part and for the purposes of sections 232.01, 232.02 and 261.01, the pension entity is deemed

(

i) to have received a supply of the specified resource or part on the last day of the particular fiscal year,

(ii)

to have paid tax in respect of that supply on that day equal to

(

A) if the pension entity is a selected listed financial institution on that day, the amount determined for A in the formula in paragraph (

c) in determining the amount of tax under that paragraph, and

(

B) in any other case, the amount of tax determined under paragraph ( c ), and

(iii)

to have acquired the specified resource or part for consumption, use or supply in the course of its commercial activities to the same extent that the specified resource or part was acquired by the person for the purpose of making a supply of the specified resource or part to the pension entity for consumption, use or supply by the pension entity in the course of pension activities in respect of the pension plan that are commercial activities of the pension entity.

Consumption or use of employer resource for supply

(6) If a person is both a registrant and a participating employer of a pension plan at any time in a particular fiscal year of the person, the person consumes or uses at that time an employer resource of the person for the purpose of making a supply of property or a service (in this subsection referred to as the “pension supply”) to a pension entity of the pension plan for consumption, use or supply by the pension entity in the course of pension activities in respect of the pension plan, and the employer resource is not an excluded resource of the person in respect of the pension plan, the following rules apply:

(

a) for the purposes of this Part, the person is deemed to have made a taxable supply of the employer resource (in this subsection referred to as the “employer resource supply”) on the last day of the particular fiscal year;

(

b) for the purposes of this Part, tax in respect of the employer resource supply is deemed to have become payable on the last day of the particular fiscal year and the person is deemed to have collected that tax on that day;

(

c) for the purposes of this Part, the tax referred to in paragraph (

b) is deemed to be equal to the amount determined by the formula

A + B where A

is the amount determined by the formula

C × D where C

(

i) if the employer resource was consumed by the person during the particular fiscal year for the purpose of making the pension supply, the product obtained when the fair market value of the employer resource at the time the person began consuming it in the particular fiscal year is multiplied by the extent to which that consumption (expressed as a percentage of the total consumption of the employer resource by the person during the particular fiscal year) occurred when the person was both a registrant and a participating employer of the pension plan, or

(ii)

otherwise, the product obtained when the fair market value of the use of the employer resource during the particular fiscal year as determined on the last day of the particular fiscal year is multiplied by the extent to which the employer resource was used during the particular fiscal year (expressed as a percentage of the total use of the employer resource by the person during the particular fiscal year) for the purpose of making the pension supply when the person was both a registrant and a participating employer of the pension plan, and

is the rate set out in subsection 165(1), and

is the total of all amounts, each of which is determined for a participating province by the following formula

E × F where E

is the amount determined for C, and

is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year; and

(

d) for the purpose of determining an input tax credit of the pension entity under this Part and for the purposes of sections 232.01, 232.02 and 261.01, the pension entity is deemed

(

i) to have received a supply of the employer resource on the last day of the particular fiscal year,

(ii)

to have paid tax in respect of that supply on that day equal to

(

A) if the pension entity is a selected listed financial institution on that day, the amount determined for A in the formula in paragraph (

c) in determining the amount of tax under that paragraph, and

(

B) in any other case, the amount of tax determined under paragraph ( c ), and

(iii)

to have acquired the employer resource for consumption, use or supply in the course of its commercial activities to the same extent that the property or service supplied in the pension supply was acquired by the pension entity for consumption, use or supply by the pension entity in pension activities in respect of the pension plan that are commercial activities of the pension entity.

Consumption or use of employer resource otherwise than for supply

(7) If a person is both a registrant and a participating employer of a pension plan at any time in a particular fiscal year of the person, the person consumes or uses at that time an employer resource of the person in the course of pension activities in respect of the pension plan, the employer resource is not an excluded resource of the person in respect of the pension plan, and subsection (6) does not apply to that consumption or use, the following rules apply:

(

a) for the purposes of this Part, the person is deemed to have made a taxable supply of the employer resource (in this subsection referred to as the “employer resource supply”) on the last day of the particular fiscal year;

(

b) for the purposes of this Pa