Bill C-45

1st Session, 41st Parliament,

60-61 Elizabeth II, 2011-2012

house of commons of canada

BILL C-45

A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures

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

SHORT TITLE

1. This Act may be cited as the Jobs and Growth Act, 2012.

PART 1

AMENDMENTS TO THE INCOME TAX ACT AND RELATED REGULATIONS

Income Tax Act

2. (1) Subparagraph 6(1)(a)(i) of the Income Tax Act is replaced by the following:

(i) derived from the contributions of the taxpayer’s employer to or under a deferred profit sharing plan, an employee life and health trust, a group sickness or accident insurance plan, a group term life insurance policy, a pooled registered pension plan, a private health services plan, a registered pension plan or a supplementary unemployment benefit plan,

(2) Subsection 6(1) of the Act is amended by adding the following after paragraph (e):

(3) Paragraph 6(1)(e.1) of the Act, as enacted by subsection (2), is replaced by the following:

(e.1) the total of all amounts contributed in the year in respect of the taxpayer by the taxpayer’s employer to a group sickness or accident insurance plan, except to the extent that the contributions are attributable to benefits under the plan that, if received by the taxpayer, would be included in the taxpayer’s income under paragraph (f) in the year the benefits are received if that paragraph were read without regard to its subparagraph (v);

(4) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

(5) Subsection (2) applies to the 2013 taxation year.

(6) Subsection (3) applies to the 2014 and subsequent taxation years.

3. (1) Subsection 8(1) of the Act is amended by adding the following after paragraph (o.1):

(2) Subsection (1) applies to the 2012 and subsequent taxation years.

4. (1) Subsection 12(1) of the Act is amended by adding the following after paragraph (l):

(2) Subsection (1) applies to taxation years that begin after March 28, 2012.

5. (1) Subsection 15(2) of the French version of the Act is replaced by the following:

(2) The portion of subsection 15(2) of the Act after paragraph (c) is replaced by the following:

and the person or partnership has in a taxation year received a loan from or become indebted to (otherwise than by way of a pertinent loan or indebtedness) the particular corporation, any other corporation related to the particular corporation or a partnership of which the particular corporation or a corporation related to the particular corporation is a member, the amount of the loan or indebtedness is included in computing the income for the year of the person or partnership.

(3) Section 15 of the Act is amended by adding the following after subsection (2.1):

(4) Subsection (1) applies to loans made and indebtedness arising in the 1990 and subsequent taxation years.

(5) Subsection (2) and subsections 15(2.11) to (2.14) of the Act, as enacted by subsection (3), apply to loans received and indebtedness incurred after March 28, 2012. However, any election referred to in paragraph 15(2.11)(d) of the Act, as enacted by subsection (3), that would otherwise be required to be filed with the Minister of National Revenue on or before the day that is 120 days after the day on which this Act receives royal assent is deemed to have been filed with the Minister on a timely basis if it is filed with the Minister on or before the day that is 365 days after the day on which this Act receives royal assent.

(6) Subsection 15(2.15) of the Act, as enacted by subsection (3), applies to amal-gamations that occur, and windings-up that begin, after March 28, 2012.

6. (1) The Act is amended by adding the following after section 17:

(2) Subsection (1) applies to taxation years and fiscal periods that end after March 28, 2012. However, in respect of acquisitions of control of a corporation resident in Canada that occur before the day on which the ways and means motion to implement this subsection is tabled in the House of Commons, subsection 17.1(2) of the Act, as enacted by subsection (1), is to be read as follows:

(2) If at any time a parent referred to in section 212.3 acquires control of a CRIC and the CRIC was not controlled by a non-resident corporation immediately before that time, no amount is to be included under subsection (1) in computing the income of the CRIC in respect of a pertinent loan or indebtedness (as defined in subsection 212.3(11)) for the period that begins on March 29, 2012 and ends on the day that is 180 days after the day on which the ways and means motion to implement this subsection is tabled in the House of Commons.

7. (1) Subparagraph 18(1)(k)(iii) of the Act is replaced by the following:

(iii) a pooled registered pension plan or registered pension plan;

(2) The portion of subsection 18(4) of the Act before paragraph (a) is replaced by the following:

(4) Notwithstanding any other provision of this Act (other than subsection (8)), in computing the income for a taxation year of a corporation resident in Canada from a business or property, no deduction shall be made in respect of that proportion of any amount otherwise deductible in computing its income for the year in respect of interest paid or payable by it on outstanding debts to specified non-residents that

(3) The portion of subparagraph 18(4)(a)(ii) of the Act before clause (A) is replaced by the following:

(ii) 1.5 times the total of

(4) Clause 18(4)(a)(ii)(B) of the Act is replaced by the following:

(B) the average of all amounts each of which is the corporation’s contributed surplus (other than any portion of that contributed surplus that arose in connection with an investment, as defined in subsection 212.3(10), to which subsection 212.3(2) applies) at the beginning of a calendar month that ends in the year, to the extent that it was contributed by a specified non-resident shareholder of the corporation, and

(5) The portion of subsection 18(5) of the Act before the definition “outstanding debts to specified non-residents” is replaced by the following:

(5) Notwithstanding any other provision of this Act (other than subsection (5.1)), in this subsection and subsections (4) to (7),

(6) Subsection 18(5) of the Act is amended by adding the following in alphabetical order:

(7) Section 18 of the Act is amended by adding the following after subsection (6):

(8) The portion of paragraph 18(11)(c) of the Act before subparagraph (i) is replaced by the following:

(c) making a contribution to a deferred profit sharing plan, a pooled registered pension plan or a registered pension plan, other than

(9) Subsections (1) and (8) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

(10) Subsection (2) applies to taxation years that end after March 28, 2012.

(11) Subsection (3) applies to taxation years that begin after 2012.

(12) Subsection (4) is deemed to have come into force on March 29, 2012.

(13) Subsections (5) and (6) and subsection 18(7) of the Act, as enacted by subsection (7), apply to taxation years that begin after March 28, 2012.

(14) Subsection 18(8) of the Act, as enacted by subsection (7), applies to taxation years that end after 2004.

8. (1) Paragraph 20(1)(q) of the Act is replaced by the following:

(q) such amount in respect of employer contributions to registered pension plans or pooled registered pension plans as is permitted under subsection 147.2(1) or 147.5(10);

(2) Paragraph 20(2.2)(a) of the Act is replaced by the following:

(a) that is or is issued pursuant to a pooled registered pension plan, a registered pension plan, a registered retirement savings plan, an income-averaging annuity contract or a deferred profit sharing plan;

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

9. (1) Subparagraph 37(1)(a)(i) of the Act is replaced by the following:

(i) on scientific research and experimental development related to a business of the taxpayer, carried on in Canada and directly undertaken by the taxpayer,

(2) Paragraph 37(1)(b) of the Act is re-pealed.

(3) Paragraph 37(1)(d) of the Act is replaced by the following:

(d) the total of all amounts each of which is the amount of any government assistance or non-government assistance (as defined in subsection 127(9)) in respect of an expenditure described in paragraph (a) or (b), as paragraph (a) or (b), as the case may be, read in its application in respect of the expenditure, that at the taxpayer’s filing-due date for the year the taxpayer has received, is entitled to receive or can reasonably be expected to receive,

(4) Subsection 37(6) of the Act is replaced by the following:

(6) For the purposes of section 13, an amount claimed under subsection (1) that may reasonably be considered to be in respect of a property described in paragraph (1)(b), as that paragraph read in its application in respect of the property, is deemed to be an amount allowed to the taxpayer in respect of the property under regulations made under paragraph 20(1)(a), and for that purpose the property is deemed to be of a separate prescribed class.

(5) Clause 37(6.1)(a)(i)(B) of the Act is replaced by the following:

(B) the lesser of the amounts determined immediately before that time in respect of the corporation under subparagraphs (1)(b)(i) and (ii), as those subparagraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the corporation before 2014, or

(6) Clause 37(8)(a)(ii)(A) of the Act is amended by adding “or” at the end of subclause (I), by replacing “or” with “and” at the end of subclause (II) and by repealing subclause (III).

(7) Subclause 37(8)(a)(ii)(B)(I) of the Act is repealed.

(8) Subclause 37(8)(a)(ii)(B)(II) of the Act is replaced by the following:

(II) an expenditure of a current nature in respect of the prosecution of scientific research and experimental development in Canada directly undertaken on behalf of the taxpayer,

(9) Subclause 37(8)(a)(ii)(B)(III) of the Act is repealed.

(10) Clause 37(8)(a)(ii)(B) of the Act is amended by adding “or” at the end of subclause (IV), by striking out “or” at the end of subclause (V) and by repealing subclause (VI).

(11) Paragraph 37(8)(d) of the Act is replaced by the following:

(12) Section 37 of the Act is amended by adding the following after subsection (13):

(13) Subsection (1) applies in respect of expenditures made after 2012.

(14) Subsections (2) and (6) to (12) apply in respect of expenditures made after 2013 and expenditures that subsection 37(1.2) of the Act deems not to have been made before 2014.

(15) Subsections (3) to (5) come into force on January 1, 2014.

10. (1) Paragraph 53(2)(c) of the Act is amended by striking out “and” at the end of subparagraph (xi), by adding “and” at the end of subparagraph (xii) and by adding the following after subparagraph (xii):

(2) Subsection (1) is deemed to have come into force on March 29, 2012.

11. (1) Subsection 56(1) of the Act is amended by striking out “and” at the end of paragraph (z.1), by adding “and” at the end of paragraph (z.2) and by adding the following after paragraph (z.2):

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

12. (1) Subparagraph 60(l)(v) of the Act is amended by adding the following after clause (A):

(2) Clause 60(l)(v)(B.01) of the Act is replaced by the following:

(B.01) the amount included in computing the taxpayer’s income for the year as a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) received by the taxpayer out of or under a pooled registered pension plan, a registered pension plan or a specified pension plan as a consequence of the death of an individual of whom the taxpayer was a child or grandchild, if the taxpayer was, immediately before the death, financially dependent on the individual for support because of mental or physical infirmity,

(3) Sub-subclause 60(l)(v)(B.1)(II)1 of the Act is replaced by the following:

1. a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) received by the taxpayer out of or under a pooled registered pension plan, a registered pension plan or a specified pension plan,

(4) Subsections (1) to (3) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

13. (1) The definition “eligible individual” in subsection 60.02(1) of the Act is replaced by the following:

“eligible individual” means a child or grandchild of a deceased annuitant under a registered retirement savings plan or a registered retirement income fund, or of a deceased member of a pooled registered pension plan, a registered pension plan or a specified pension plan, who was financially dependent on the deceased for support, at the time of the deceased’s death, by reason of mental or physical infirmity.

(2) Paragraph (c) of the definition “eligible proceeds” in subsection 60.02(1) of the Act is replaced by the following:

(c) a payment (other than a payment that is part of a series of periodic payments or that relates to an actuarial surplus) out of or under a pooled registered pension plan, a registered pension plan or a specified pension plan.

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

14. (1) The definition “eligible pension income” in subsection 60.03(1) of the Act is replaced by the following:

(2) Subsection (1) applies to the 2013 and subsequent taxation years.

15. (1) Paragraph 75(3)(a) of the Act is replaced by the following:

(a) by a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a pooled registered pension plan, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan, a registered supplementary unemployment benefit plan, a retirement compensation arrangement or a TFSA;

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

16. (1) Paragraphs 84(1)(c.1) and (c.2) of the Act are replaced by the following:

(c.1) if the corporation is an insurance corporation, any action by which it converts contributed surplus related to its insurance business (other than any portion of that contributed surplus that arose in connection with an investment, as defined in subsection 212.3(10), to which subsection 212.3(2) applies) into paid-up capital in respect of the shares of its capital stock,

(c.2) if the corporation is a bank, any action by which it converts any of its contributed surplus that arose on the issuance of shares of its capital stock (other than any portion of that contributed surplus that arose in connection with an investment, as defined in subsection 212.3(10), to which subsection 212.3(2) applies) into paid-up capital in respect of shares of its capital stock, or

(2) The portion of paragraph 84(1)(c.3) of the Act before subparagraph (i) is replaced by the following:

(c.3) if the corporation is neither an insurance corporation nor a bank, any action by which it converts into paid-up capital in respect of a class of shares of its capital stock any of its contributed surplus that arose after March 31, 1977 (other than any portion of that contributed surplus that arose in connection with an investment, as defined in subsection 212.3(10), to which subsection 212.3(2) applies)

(3) Subsections (1) and (2) are deemed to have come into force on March 29, 2012.

17. (1) Paragraph 87(2)(g.1) of the Act is replaced by the following:

(g.1) for the purposes of sections 12.4 and 26 and subsection 97(3), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

(2) Subsection (1) applies in respect of amalgamations that occur, and windings-up that begin, after March 28, 2012.

18. (1) Paragraph 88(1)(d) of the Act is amended by striking out “and” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

(2) Subsection 88(1) of the Act is amended by adding the following after paragraph (d.3):

(3) Subsection (1) applies to amalgamations that occur and windings-up that begin after March 28, 2012, other than — if a taxable Canadian corporation (in this subsection referred to as the “parent corporation”) has acquired control of another taxable Canadian corporation (in this subsection referred to as the “subsidiary corporation”) — an amalgamation of the parent corporation and the subsidiary corporation that occurs before 2013, or a winding-up of the subsidiary corporation into the parent corporation that begins before 2013, if

(a) the parent corporation acquired control of the subsidiary corporation before March 29, 2012 or was obligated as evidenced in writing before March 29, 2012 to acquire control of the subsidiary (except that the parent corporation shall not be considered to be obligated if, as a result of amendments to the Act, it may be excused from the obligation to acquire control); and

(b) the parent corporation had the intention as evidenced in writing before March 29, 2012 to amalgamate with, or wind up, the subsidiary corporation.

(4) Subsection (2) applies to dispositions made after August 13, 2012 other than a disposition made before 2013 pursuant to an obligation under a written agreement entered into before August 14, 2012 by parties that deal with each other at arm’s length. The parties shall not be considered to be obligated if any party may be excused from the obligation as a result of amendments to the Act.

19. (1) Subparagraph (b)(iii) of the definition “paid-up capital” in subsection 89(1) of the Act is replaced by the following:

(iii) where the particular time is after March 31, 1977, an amount equal to the paid-up capital in respect of that class of shares at the particular time, computed without reference to the provisions of this Act except subsections 51(3) and 66.3(2) and (4), sections 84.1 and 84.2, subsections 85(2.1), 85.1(2.1) and (8), 86(2.1), 87(3) and (9), paragraph 128.1(1)(c.3), subsections 128.1(2) and (3), 138(11.7), 139.1(6) and (7), 192(4.1) and 194(4.1) and sections 212.1 and 212.3,

(2) Subsection (1) is deemed to have come into force on March 29, 2012.

20. (1) The portion of subsection 93.1(1) of the Act before paragraph (a) is replaced by the following:

93.1 (1) For the purposes of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2) and 20(12), sections 93 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3 and subsection 219.1(2), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that

(2) Subsection (1) is deemed to have come into force on March 29, 2012.

21. (1) The portion of subsection 97(2) of the Act before paragraph (a) is replaced by the following:

(2) Notwithstanding any other provision of this Act other than subsections (3) and 13(21.2), where a taxpayer at any time disposes of any property that is a capital property, Canadian resource property, foreign resource property, eligible capital property or inventory of the taxpayer to a partnership that immediately after that time is a Canadian partnership of which the taxpayer is a member, if the taxpayer and all the other members of the partnership jointly so elect in prescribed form within the time referred to in subsection 96(4),

(2) Section 97 of the Act is amended by adding the following after subsection (2):

(3) Subsections (1) and (2) apply in respect of dispositions made after March 28, 2012.

22. (1) The portion of subsection 100(1) of the Act before paragraph (b) is replaced by the following:

100. (1) If, as part of a transaction or event or series of transactions or events, a taxpayer disposes of an interest in a partnership and an interest in the partnership is acquired by a person or partnership described in any of paragraphs (1.1)(a) to (d), then notwithstanding paragraph 38(a), the taxpayer’s taxable capital gain for a taxation year from the disposition of the interest is deemed to be the total of

(a) 1/2 of such portion of the taxpayer’s capital gain for the year from the disposition as may reasonably be regarded as attributable to increases in the value of any partnership property of the partnership that is capital property other than depreciable property held directly by the partnership or held indirectly by the partnership through one or more other partnerships, and

(2) Section 100 of the Act is amended by adding the following after subsection (1):

(3) Subsection (1) applies in respect of any disposition made after March 28, 2012, except that

(a) in respect of any disposition made before August 14, 2012, the portion of subsection 100(1) of the Act before paragraph (b), as enacted by subsection (1), is to be read as follows:

100. (1) If, as part of a transaction or event or series of transactions or events, a taxpayer disposes of an interest in a partnership and that interest is acquired by a person exempt from tax under section 149 or by a non-resident person, notwithstanding paragraph 38(a), the taxpayer’s taxable capital gain for a taxation year from the disposition of the interest is deemed to be

(a) 1/2 of such portion of the taxpayer’s capital gain for the year therefrom as may reasonably be regarded as attributable to increases in the value of any partnership property of the partnership that is capital property other than depreciable property,

plus

(b) subsection (1) does not apply in respect of a disposition of an interest in a partnership by a taxpayer before 2013 to a person with whom the taxpayer deals at arm’s length if the taxpayer is obligated to dispose of the interest to the person pursuant to a written agreement entered into by the taxpayer before March 29, 2012. A taxpayer is not considered to be obligated if, as a result of amendments to the Act, the taxpayer may be excused from the obligation.

(4) Subsection (2) is deemed to have come into force on March 29, 2012, except that subsections 100(1.1), (1.2), (1.4) and (1.5) of the Act, as enacted by subsection (2), do not apply

(a) before August 14, 2012; or

(b) in respect of a disposition, dilution, reduction or alteration of an interest in a partnership if the disposition, dilution, reduction or alteration occurs before 2013 pursuant to an obligation under a written agreement entered into before August 14, 2012 by parties that deal with each other at arm’s length and no party to the agreement may be excused from the obligation as a result of amendments to the Act.

23. (1) Paragraph (a) of the definition “trust” in subsection 108(1) of the Act is replaced by the following:

(a) an amateur athlete trust, an employee life and health trust, an employee trust, a trust described in paragraph 149(1)(o.4) or a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a foreign retirement arrangement, a pooled registered pension plan, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan, a registered supplementary unemployment benefit plan or a TFSA,

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

24. (1) Clause (a)(i)(C) of the definition “investment expense” in subsection 110.6(1) of the Act is replaced by the following:

(C) to make a contribution to a pooled registered pension plan, registered pension plan or deferred profit sharing plan, or

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

25. (1) Subparagraph (a)(i) of the definition “pension income” in subsection 118(7) of the Act is replaced by the following:

(i) a payment in respect of a life annuity out of or under a superannuation or pension plan (other than a pooled registered pension plan) or a specified pension plan,

(2) Paragraph (a) of the definition “pension income” in subsection 118(7) of the Act is amended by adding the following before subparagraph (iv):

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

26. (1) The portion of paragraph 122.3(1)(c) of the Act before subparagraph (i) is replaced by the following:

(c) an amount equal to that proportion of the specified amount for the year that the number of days

(2) Paragraph 122.3(1)(d) of the Act is replaced by the following:

(d) the specified percentage for the year of the individual’s income for the year from that employment that is reasonably attributable to duties performed on the days referred to in paragraph (c)

(3) Section 122.3 of the Act is amended by adding the following after subsection (1):

(4) Subsections (1) to (3) apply to the 2013 and subsequent taxation years.

27. (1) Subparagraph (a)(i) of the definition “contract payment” in subsection 127(9) of the Act is replaced by the following:

(i) for or on behalf of a person or partnership entitled to a deduction in respect of the amount because of subparagraph 37(1)(a)(i.01) or (i.1), and

(2) Paragraph (b) of the definition “contract payment” in subsection 127(9) of the Act is replaced by the following:

(b) an amount in respect of an expenditure of a current nature (within the meaning assigned by paragraph 37(8)(d)) of a taxpayer, other than a prescribed amount, payable by a Canadian government or municipality or other Canadian public authority or by a person exempt, because of section 149, from tax under this Part on all or part of the person’s taxable income for scientific research and experimental development to be performed for it or on its behalf;

(3) The definition “first term shared-use-equipment” in subsection 127(9) of the Act is replaced by the following:

“first term shared-use-equipment”, of a taxpayer, means depreciable property of the taxpayer (other than prescribed depreciable property of a taxpayer) acquired before 2014 that is used by the taxpayer, during its operating time in the period (in this subsection and subsection (11.1) referred to as the “first period”) beginning at the time the property was acquired by the taxpayer and ending at the end of the taxpayer’s first taxation year ending at least 12 months after that time, primarily for the prosecution of scientific research and experimental development in Canada, but does not include general purpose office equipment or furniture;

(4) Paragraph (a) of the definition “investment tax credit” in subsection 127(9) of the Act is replaced by the following:

(a) the total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of qualified property or qualified resource property acquired by the taxpayer in the year,

(5) Paragraph (a.1) of the definition “investment tax credit” in subsection 127(9) of the Act is replaced by the following:

(a.1) 15% of the amount by which the taxpayer’s SR&ED qualified expenditure pool at the end of the year exceeds the total of all amounts each of which is the super-allowance benefit amount for the year in respect of the taxpayer in respect of a province,

(6) Paragraph (a.3) of the definition “investment tax credit” in subsection 127(9) of the Act is replaced by the following:

(a.3) if the taxpayer is a taxable Canadian corporation, the total of

(i) the specified percentage of the portion of the taxpayer’s pre-production mining expenditure described in subparagraph (a)(i) of the definition “pre-production mining expenditure”, and

(7) Paragraph (a) of the definition “pre-production mining expenditure” in subsection 127(9) of the Act is replaced by the following:

(a) is a Canadian exploration expense and would be

(i) described in paragraph (f) of the definition “Canadian exploration expense” in subsection 66.1(6) if the expression “mineral resource” in that paragraph were defined to mean a mineral deposit from which the principal mineral to be extracted is diamond, a base or precious metal deposit, or a mineral deposit from which the principal mineral to be extracted is an industrial mineral that, when refined, results in a base or precious metal, or

(8) Paragraphs (a) and (b) of the definition “qualified expenditure” in subsection 127(9) of the Act are replaced by the following:

(a) an amount that is an expenditure incurred in the year by the taxpayer in respect of scientific research and experimental development and is

(i) an expenditure described in subparagraph 37(1)(a)(i),

(iii) an expenditure for first term shared-use-equipment or second term shared-use-equipment, or

(iv) an expenditure described in subparagraph 37(1)(b)(i), or

(b) a prescribed proxy amount of the taxpayer for the year,

(9) Paragraph (a) of the definition “qualified expenditure” in subsection 127(9) of the Act, as enacted by subsection (8), is amended by adding “or” at the end of subparagraph (ii) and by repealing subparagraph (iv).

(10) Paragraph (a) of the definition “qual-ified expenditure” in subsection 127(9) of the Act, as amended by subsection (9), is amended by adding “or” at the end of subparagraph (i) and by repealing subparagraph (iii).

(11) The portion of the definition “qualified property” in subsection 127(9) of the Act before paragraph (a) is replaced by the following:

“qualified property”, of a taxpayer, means property (other than a qualified resource property) that is

(12) The definition “qualified property” in subsection 127(9) 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):

(13) Subparagraphs (c)(iv) to (xiii) of the definition “qualified property” in subsection 127(9) of the Act are replaced by the following:

(iv) storing grain, or

(v) harvesting peat,

(14) The portion of paragraph (c.1) of the definition “qualified property” in subsection 127(9) of the Act before subparagraph (i) is replaced by the following:

(c.1) property (other than property described in paragraph (b.1)) to be used by the taxpayer in Canada primarily for the purpose of producing or processing electrical energy or steam in a prescribed area, if

(15) The portion of paragraph (d) of the definition “qualified property” in subsection 127(9) of the Act before subparagraph (i) is replaced by the following:

(d) to be leased by the taxpayer to a lessee (other than a person exempt from tax under this Part because of section 149) who can reasonably be expected to use the property in Canada primarily for any of the purposes referred to in paragraph (c), but this paragraph does not apply to property that is prescribed for the purposes of paragraph (b) or (b.1) unless

(16) The definition “specified percentage” in subsection 127(9) of the Act is amended by adding the following after paragraph (a):

(17) The definition “specified percentage” in subsection 127(9) of the Act is amended by striking out “and” at the end of paragraph (i) and by replacing paragraph (j) with the following:

(j) in respect of a pre-production mining expenditure of the taxpayer that is described in subparagraph (a)(i) of the definition “pre-production mining expenditure” and that is incurred

(18) Subsection 127(9) of the Act is amended by adding the following in alphabetical order:

(19) The portion of subsection 127(10.1) of the Act before paragraph (a) is replaced by the following:

(10.1) For the purposes of paragraph (e) of the definition “investment tax credit” in subsection (9), if a corporation was throughout a taxation year a Canadian-controlled private corporation, there shall be added in computing the corporation’s investment tax credit at the end of the year the amount that is 20% of the least of

(20) The portion of subsection 127(11) of the Act before paragraph (a) is replaced by the following:

(11) For the purposes of the definitions “qualified property” and “qualified resource property” in subsection (9),

(21) The portion of paragraph 127(11)(b) of the Act before subparagraph (i) is replaced by the following:

(b) for greater certainty, the purposes referred to in paragraph (c) of the definition “qualified property” and paragraph (a) of the definition “qualified resource property” in subsection (9) do not include

(22) Paragraph 127(11.2)(a) of the Act is replaced by the following:

(a) qualified property, qualified resource property and first term shared-use-equipment are deemed not to have been acquired, and

(23) Paragraph 127(11.2)(a) of the Act, as enacted by subsection (22), is replaced by the following:

(a) qualified property and qualified resource property are deemed not to have been acquired, and

(24) Paragraph 127(11.2)(b) of the Act is replaced by the following:

(b) expenditures included in an eligible child care space expenditure are deemed not to have been incurred

(25) Paragraph 127(11.5)(a) of the Act is replaced by the following:

(a) the amount of an expenditure (other than a prescribed proxy amount or an amount described in paragraph (b)) incurred by a taxpayer in a taxation year is deemed to be the amount of the expenditure determined under subsection (11.6); and

(26) Subsection 127(11.5) of the Act, as amended by subsection (25), is replaced by the following:

(11.5) For the purposes of the definition “qualified expenditure” in subsection (9), the amount of an expenditure (other than a prescribed proxy amount) incurred by a taxpayer in a taxation year is deemed to be the amount of the expenditure determined under subsection (11.6).

(27) The portion of subsection 127(11.6) of the Act after paragraph (b) and before paragraph (c) is replaced by the following:

the amount of the expenditure incurred by the taxpayer for the service or property and the cost to the taxpayer of the property are deemed to be

(28) Subparagraph 127(11.6)(d)(i) of the Act is replaced by the following:

(i) the cost to the taxpayer of the property otherwise determined, and

(29) Subsection 127(11.8) of the Act is amended by adding “and” at the end of paragraph (a), by striking out “and” at the end of paragraph (b) and by repealing paragraph (c).

(30) Subsection 127(33) of the Act is replaced by the following:

(33) Subsections (27) to (29), (34) and (35) do not apply to a taxpayer or partnership (in this subsection referred to as the “transferor”) that disposes of a property to a person or partnership (in this subsection and subsections (34) and (35) referred to as the “purchaser”), that does not deal at arm’s length with the transferor, if the purchaser acquired the property in circumstances where the cost of the property to the purchaser would have been an expenditure of the purchaser described in subclause 37(8)(a)(ii)(A)(III) or (B)(III) (as those subclauses read on March 29, 2012) but for subparagraph 2902(b)(iii) of the Income Tax Regulations.

(31) Subsections (1) and (8) apply in respect of expenditures made after 2012.

(32) Subsections (2), (9), (24), (25) and (29) apply in respect of expenditures made after 2013.

(33) Subsections (3), (18), (20) to (22) and (30) are deemed to have come into force on March 29, 2012.

(34) Subsections (4) and (6) apply to taxation years ending after March 28, 2012.

(35) Subsections (5) and (19) apply to taxation years that end after 2013, except that for taxation years that include January 1, 2014

(a) the reference to “15%” in paragraph (a.1) of the definition “investment tax credit” in subsection 127(9) of the Act, as enacted by subsection (5), is to be read as a reference to the percentage that is the total of

(i) 20% multiplied by the proportion that the number of days that are in the taxation year and before 2014 is of the number of days in the taxation year, and

(ii) 15% multiplied by the proportion that the number of days that are in the taxation year and after 2013 is of the number of days in the taxation year; and

(b) the reference to “20%” in the portion of subsection 127(10.1) of the Act before paragraph (a), as enacted by subsection (19), is to be read as a reference to the percentage that is the total of

(i) 15% multiplied by the proportion that the number of days that are in the taxation year and before 2014 is of the number of days in the taxation year, and

(ii) 20% multiplied by the proportion that the number of days that are in the taxation year and after 2013 is of the number of days in the taxation year.

(36) Subsections (7) and (17) apply in respect of expenditures incurred after March 28, 2012.

(37) Subsections (10), (23) and (26) to (28) come into force on February 1, 2017.

(38) Subsections (11) to (16) apply in respect of property acquired after March 28, 2012.

28. (1) Subparagraph (f)(i) of the definition “refundable investment tax credit” in subsection 127.1(2) of the Act is replaced by the following:

(i) the portion of the amount required by subsection 127(10.1) to be added in computing the taxpayer’s investment tax credit at the end of the year that is in respect of qualified expenditures incurred by the taxpayer in the year, and

(2) Subsection 127.1(2.01) of the Act is replaced by the following:

(2.01) In the case of a taxpayer that is a Canadian-controlled private corporation other than a qualifying corporation or an excluded corporation, the refundable investment tax credit of the taxpayer for a taxation year is the amount, if any, by which

(a) the total of

(i) the portion of the amount required by subsection 127(10.1) to be added in computing the taxpayer’s investment tax credit at the end of the year that is in respect of qualified expenditures incurred by the taxpayer in the year, and

(ii) all amounts determined under paragraph (a.1) of the definition “investment tax credit” in subsection 127(9) in respect of expenditures for which an amount is included in subparagraph (i)

exceeds

(b) the total of

(i) the portion of the total of all amounts deducted by the taxpayer under subsection 127(5) for the year or a preceding taxation year (other than an amount deemed by subsection (3) to have been so deducted for the year) that can reasonably be considered to be in respect of the total determined under paragraph (a), and

(ii) the portion of the total of all amounts required by subsection 127(6) to be deducted in computing the taxpayer’s investment tax credit at the end of the year that can reasonably be considered to be in respect of the total determined under paragraph (a).

(3) Subsections (1) and (2) come into force on February 1, 2017.

29. (1) Paragraph 128(2)(d.1) of the Act is replaced by the following:

(d.1) where, by reason of paragraph (d), a taxation year of the individual is not a calendar year,

(i) paragraph 146(5)(b) shall, for the purpose of the application of subsection 146(5) to the taxation year, be read as follows:

“(b) the amount, if any, by which

(i) the amount, if any, by which the taxpayer’s RRSP deduction limit for the particular calendar year in which the taxation year ends exceeds the total of all contributions made by an employer in the particular calendar year to a pooled registered pension plan in respect of the taxpayer

exceeds

(ii) the total of the amounts deducted under this subsection and subsection (5.1) in computing the taxpayer’s income for any preceding taxation year that ends in the particular calendar year.”,

and

(ii) paragraph 146(5.1)(b) shall, for the purpose of the application of subsection 146(5.1) to the taxation year, be read as follows:

“(b) the amount, if any, by which

(i) the amount, if any, by which the taxpayer’s RRSP deduction limit for the particular calendar year in which the taxation year ends exceeds the total of all contributions made by an employer in the particular calendar year to a pooled registered pension plan in respect of the taxpayer

exceeds

(ii) the total of the amount deducted under subsection (5) in computing the taxpayer’s income for the year and the amounts deducted under this subsection and subsection (5) in computing the taxpayer’s income for any preceding taxation year that ends in the particular calendar year.”;

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

30. (1) Subsection 128.1(1) of the Act is amended by striking out “and” at the end of paragraph (c.2) and by adding the following after paragraph (c.2):

(2) Subsection 128.1(3) of the Act is replaced by the following:

(3) In computing the paid-up capital at any time in respect of a class of shares of the capital stock of a corporation

(a) there is to be deducted an amount equal to the lesser of A and B, and added an amount equal to the lesser of A and C, where

A      is the absolute value of the difference between

(i) the total of all amounts deemed by subsection 84(3), (4) or (4.1) to be a dividend on shares of the class paid before that time by the corporation, and

(ii) the total that would be determined under subparagraph (i) if this Act were read without reference to subsection (2),

B      is the total of all amounts required by subsection (2) to be added in computing the paid-up capital in respect of the class before that time, and

C      is the total of all amounts required by subsection (2) to be deducted in computing the paid-up capital in respect of the class before that time; and

(3) Subsection (1) applies in respect of corporations that become resident in Canada after March 28, 2012.

(4) Subsection (2) is deemed to have come into force on March 29, 2012.

31. (1) Subsection 138.1(7) of the Act is replaced by the following:

(7) Subsections (1) to (6) do not apply to the holder of a segregated fund policy with respect to such a policy that is issued or effected as or under a pooled registered pension plan, registered pension plan, registered retirement income fund, registered retirement savings plan or TFSA.

(2) Subsection (1) comes into force or is deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

32. (1) The description of D in paragraph (b) of the definition “unused RRSP deduction room” in subsection 146(1) of the Act is replaced by the following:

D      is the total of all amounts each of which is

(i) an amount deducted by the taxpayer under any of subsections (5) to (5.2), in computing the taxpayer’s income for the year,

(ii) an amount deducted by the taxpayer under paragraph 10 of Article XVIII of the Canada-United States Tax Convention signed at Washington on September 26, 1980 or a similar provision in another tax treaty, in computing the taxpayer’s taxable income for the year,

(2) The portion of subsection 146(1.1) of the Act before the formula is replaced by the following:

(1.1) For the purposes of paragraph (b) of the definition “refund of premiums” in subsection (1), clause 60(l)(v)(B.01), the definition “eligible individual” in subsection 60.02(1), subparagraph 104(27)(e)(i) and section 147.5, it is assumed, unless the contrary is established, that an individual’s child or grandchild was not financially dependent on the individual for support immediately before the individual’s death if the income of the child or grandchild for the taxation year preceding the taxation year in which the individual died exceeded the amount determined by the formula

(3) Paragraph 146(5)(a) of the Act is amended by adding the following after subparagraph (iii):

(4) Paragraph 146(5)(b) of the Act is replaced by the following:

(b) the amount, if any, by which the taxpayer’s RRSP deduction limit for the year exceeds the total of all contributions made by an employer in the year to a pooled registered pension plan in respect of the taxpayer.

(5) Paragraph 146(5.1)(b) of the Act is replaced by the following:

(b) the amount, if any, by which the taxpayer’s RRSP deduction limit for the year exceeds the total of all amounts each of which is

(i) the amount deducted under subsection (5) in computing the taxpayer’s income for the year, or

(6) Subparagraph 146(8.2)(b)(iii) of the Act is replaced by the following:

(iii) was not paid by way of a transfer of an amount to a registered retirement savings plan from

(B) a specified pension plan in circumstances to which subsection (21) applied,

(7) Subsection 146(21.2) of the Act is replaced by the following:

(21.2) For the purposes of paragraph (8.2)(b), subsection (8.21), paragraphs (16)(a) and (b) and 18(1)(u), subparagraph (a)(i) of the definition “excluded right or interest” in subsection 128.1(10), paragraph (b) of the definition “excluded premium” in subsection 146.01(1), paragraph (c) of the definition “excluded premium” in subsection 146.02(1), subsections 146.3(14) and 147(19), section 147.3 and paragraph 147.5(21)(c), and for the purposes of any regulations made under subsection 147.1(18), an individual’s account under a specified pension plan is deemed to be a registered retirement savings plan under which the individual is the annuitant.

(8) Subsections (1) to (7) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

33. (1) The portion of the definition “reg-istered education savings plan” in subsection 146.1(1) of the Act before paragraph (a) is replaced by the following:

“registered education savings plan” or “RESP” means

(2) Section 146.1 of the Act is amended by adding the following after subsection (1):

(3) Paragraph 146.1(2)(i.1) of the Act is replaced by the following:

(i.1) if the plan allows accumulated income payments, the plan provides that it must be terminated before March of the year following the year in which the first such payment is made out of the plan;

(4) Paragraph 146.1(7.1)(a) of the Act is replaced by the following:

(a) each accumulated income payment (other than an accumulated income payment made under subsection (1.2)) received in the year by the taxpayer under a registered education savings plan; and

(5) Subsections (2) to (4) come into force on January 1, 2014.

34. (1) Paragraph 146.3(2)(f) of the Act is amended by striking out “or” at the end of subparagraph (vi), by adding “or” at the end of subparagraph (vii) and by adding the following after subparagraph (vii):

(2) Subsection 146.3(14.1) of the Act is replaced by the following:

(14.1) An amount is transferred from a registered retirement income fund of an annuitant in accordance with this subsection if the amount

(b) is transferred at the direction of the annuitant directly to a registered pension plan of which, at any time before the transfer, the annuitant was a member (within the meaning assigned by subsection 147.1(1)) or to a prescribed registered pension plan and is allocated to the annuitant under a money purchase provision (within the meaning assigned by subsection 147.1(1)) of the plan.

(3) Subsections (1) and (2) come into force or are deemed to have come into force on the day on which the Pooled Registered Pension Plans Act comes into force.

35. (1) The definition “registered disability savings plan” in subsection 146.4(1) of the Act is replaced by the following:

“registered disability savings plan” or “RDSP” means a disability savings plan that satisfies the conditions in subsection (2), but does not include a plan to which subsection (3) or (10) applies.

(2) Paragraph (d) of the definition “contribution” in subsection 146.4(1) of the Act is replaced by the following:

(d) other than for the purposes of paragraphs (4)(f) to (h) and (n) and paragraph (b) of the definition “advantage” in subsection 205(1),

(i) a specified RDSP payment as defined in subsection 60.02(1), or

(3) Paragraph (c) of the definition “holder” in subsection 146.4(1) of the Act is replaced by the following:

(c) the beneficiary if, at that time, the beneficiary is not an entity described in paragraph (a) or (b) and has rights under the plan to make decisions (either alone or with other holders of the plan) concerning the plan, except where the only such right is a right to direct that disability assistance payments be made as provided for in subparagraph (4)(n)(ii).

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

(5) Paragraphs 146.4(1.2)(b) to (f) of the Act are replaced by the following:

(b) the time that is immediately before the earliest time in a calendar year when the total disability assistance payments, other than non-taxable portions, made from the plan in the year and while it was a specified disability savings plan exceeds $10,000 (or such greater amount as is required to satisfy the condition in subparagraph (d)(i));

(c) the time that is immediately before the time that

(i) a contribution is made to the plan,

(ii) an amount described in any of paragraphs (a) and (b) and subparagraph (d)(ii) of the definition “contribution” in subsection (1) is paid into the plan,

(6) Subsection 146.4(3) of the Act is replaced by the following:

(3) A disability savings plan is deemed never to have been a registered disability savings plan unless

(a) the issuer of the plan provides without delay notification of the plan’s establishment in prescribed form containing prescribed information to the specified Minister; and

(b) if the beneficiary is the beneficiary under another registered disability savings plan at the time the plan is established, that other plan is terminated without delay.

(7) Subparagraphs 146.4(4)(n)(i) to (iii) of the Act are replaced by the following:

(i) if the calendar year is not a specified year for the plan, the total amount of disability assistance payments made from the plan to the beneficiary in the calendar year shall not exceed the specified maximum amount for the calendar year, except that, in calculating that total amount, any payment made following a transfer in the calendar year from another plan in accord-ance with subsection (8) is to be disregarded if it is made

(A) to satisfy an undertaking described in paragraph (8)(d), or

(B) in lieu of a payment that would otherwise have been permitted to be made from the other plan in the calendar year had the transfer not occurred, and

(ii) if the beneficiary attained the age of 27 years, but not the age of 59 years, before the calendar year, the beneficiary has the right to direct that, within the constraints imposed by subparagraph (i) and paragraph (j), one or more disability assistance payments be made from the plan to the beneficiary in the calendar year;

(8) Subsection 146.4(4) of the Act is amended by adding the following after paragraph (n):

(9) Paragraph 146.4(4)(o) of the Act is replaced by the following:

(o) the plan provides that, at the direction of the holders of the plan, the issuer shall transfer all of the property held by the plan trust (or an amount equal to its value) to another registered disability savings plan of the beneficiary, together with all information in its possession (other than information provided to the issuer of the other plan by the specified Minister) that may reasonably be considered necessary for compliance, in respect of the other plan, with the requirements of this Act and with any conditions and obligations imposed under the Canada Disability Savings Act; and

(10) Subparagraph 146.4(4)(p)(ii) of the Act is replaced by the following:

(ii) the first calendar year

(B) in any other case, throughout which the beneficiary has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1).

(11) Section 146.4 of the Act is amended by adding the following after subsection (4):

(12) Paragraph 146.4(8)(c) of the Act is replaced by the following:

(c) the issuer of the prior plan provides the issuer of the new plan with all information in its possession concerning the prior plan (other than information provided to the issuer of the new plan by the specified Minister) as may reasonably be considered necessary for compliance, in respect of the new plan, with the requirements of this Act and with any conditions and obligations imposed under the Canada Disability Savings Act; and

(13) Subsections (2) to (5), (7), (8) and (10) and subsections 146.4(4.1) and (4.2) of the Act, as enacted by subsection (11), come into force on January 1, 2014.

(14) Subsection 146.4(4.3) of the Act, as enacted by subsection (11), is deemed to have come into force on March 29, 2012, except that before 2014 it is to be read as follows:

(4.3) If 2011 or 2012 is the first calendar year throughout which the beneficiary of a registered disability savings plan has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1) and the plan has not been terminated, then notwithstanding subparagraph (4)(p)(ii) as it read on March 28, 2012 and any terms of the plan required by that subparagraph, the plan must be terminated no later than December 31, 2014.

36. (1) The Act is amended by adding the following after section 147.4: