Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures”.

Part 1 implements certain income tax measures proposed or referenced in the February 27, 2018 budget by

Part 2 implements certain excise measures proposed in the February 27, 2018 budget by

Part 3 implements a new federal excise duty framework for cannabis products proposed in the February 27, 2018 budget by

Part 4 amends the Pension Act to authorize the Minister of Veterans Affairs to waive, in certain cases, the requirement for an application for an award under that Act.

It also amends the Veterans Well-being Act to, among other things,

Finally, it makes consequential amendments to other Acts.

Part 5 enacts the Greenhouse Gas Pollution Pricing Act and makes the Fuel Charge Regulations.

Part 1 of that Act sets out the regime for a charge on fossil fuels. The fuel charge regime provides that a charge applies, at rates set out in Schedule 2 to that Act, to fuels that are produced, delivered or used in a listed province, brought into a listed province from another place in Canada, or imported into Canada at a location in a listed province. The fuel charge regime also provides relief from the fuel charge, through rebate and exemption certificate mechanisms, in certain circumstances. The fuel charge regime also sets out the registration requirements for persons that carry out certain activities relating to fuels subject to the charge. Part 1 of that Act also contains administrative provisions and enforcement provisions, including penalties, offences and collection provisions. Part 1 of that Act also sets out a mechanism for distributing revenues from the fuel charge. Part 1 of that Act also provides the Governor in Council with authority to make regulations for purposes of that Part, including the authority to determine which province, territory or area is a listed province for purpose of that Part.

Part 2 of that Act sets out the regime for pricing industrial greenhouse gas emissions. The industrial emissions pricing regime requires the registration of any facility that is located in a province or area that is set out in Part 2 of Schedule 1 to that Act and that either meets criteria specified by regulation or voluntarily joins the regime. The industrial emissions pricing regime requires compliance reporting with respect to any facility that is covered by the regime and the provision of compensation for any amount of a greenhouse gas that the facility emits above the applicable emissions limit during a compliance period. Part 2 of that Act also sets out an information gathering regime, administrative powers, duties and functions, enforcement tools, offences and related penalties, and a mechanism for distributing revenues from the industrial emissions pricing regime. Part 2 of that Act also provides the Governor in Council with the authority to make regulations for the purposes of that Part and the authority to make orders that amend Part 2 of Schedule 1 by adding, deleting or amending the name of a province or the description of an area.

Part 3 of that Act authorizes the Governor in Council to make regulations that provide for the application of provincial laws concerning greenhouse gas emissions to works, undertakings, lands and waters under federal jurisdiction.

Part 4 of that Act requires the Minister of the Environment to prepare an annual report on the administration of the Act and to cause it to be tabled in each House of Parliament.

Part 6 amends several Acts in order to implement various measures.

Division 1 of Part 6 amends the Financial Administration Act to establish the office of the Chief Information Officer of Canada and to provide that the President of the Treasury Board is responsible for the coordination of that Officer’s activities with those of the other deputy heads of the Treasury Board Secretariat. It also amends the Act to ensure Crown corporations with no borrowing authority are able to continue to enter into leases and to specify that leases are not considered to be transactions to borrow money for the purposes of Crown corporations’ statutory borrowing limits.

Division 2 of Part 6 amends the Canada Deposit Insurance Corporation Act in order to modernize and enhance the Canadian deposit insurance framework to ensure it continues to meet its objectives, including financial stability.

Division 3 of Part 6 amends the Federal-Provincial Fiscal Arrangements Act to renew Fiscal Equalization Payments to the provinces and Territorial Formula Financing Payments to the territories for a five-year period beginning on April 1, 2019 and ending on March 31, 2024, and to authorize annual transition payments of $1,270,000 to Yukon and $1,744,000 to the Northwest Territories for that period. It also amends the Act to allow Canada Health Transfer deductions to be reimbursed when provinces and territories have taken the steps necessary to eliminate extra-billing and user fees in the delivery of public health care.

Division 4 of Part 6 amends the Bank of Canada Act to ensure that the Bank of Canada may continue to buy and sell securities issued or guaranteed by the government of the United Kingdom if that country ceases to be a member state of the European Union.

Division 5 of Part 6 amends the Currency Act to expand the objectives of the Exchange Fund Account to include providing a source of liquidity for the government of Canada. It also amends that Act to authorize the payment of funds from the Exchange Fund Account into the Consolidated Revenue Fund.

Division 6 of Part 6 amends the Bank of Canada Act to require the Bank of Canada to make adequate arrangements for the removal from circulation in Canada of its bank notes that are worn or mutilated or that are the subject of an order made under paragraph 9(1)‍(b) of the Currency Act. It also amends the Currency Act to provide, among other things, that

Division 7 of Part 6 amends the Payment Clearing and Settlement Act in order to implement a framework for resolution of clearing and settlement systems and clearing houses, and to protect information related to oversight, by the Bank of Canada, of clearing and settlement systems.

Division 8 of Part 6 amends the Canadian International Trade Tribunal Act to, among other things,

Division 9 of Part 6 amends the Canadian High Arctic Research Station Act to, among other things, provide that the Canadian High Arctic Research Station is to be considered an agent corporation for the purpose of the transfer of the administration of federal real property and federal immovables under the Federal Real Property and Federal Immovables Act. It also provides that the Order entitled Game Declared in Danger of Becoming Extinct is deemed to have continued in force and to have continued to apply in Nunavut, as of April 1, 2014.

Division 10 of Part 6 amends the Canadian Institutes of Health Research Act in order to separate the roles of President of the Canadian Institutes of Health Research and Chairperson of the Governing Council, to merge the responsibility to establish policies and to limit delegation of certain Governing Council powers, duties and functions to its members or committees or to the President.

Division 11 of Part 6 amends the Red Tape Reduction Act to permit an administrative burden imposed by regulations to be offset by the reduction of another administrative burden imposed by another jurisdiction if the reduction is the result of regulatory cooperation agreements.

Division 12 of Part 6 provides for the transfer of certain employees and disclosure of information to the Communications Security Establishment to improve cyber security.

Division 13 of Part 6 amends the Department of Employment and Social Development Act to provide the Minister of Employment and Social Development with legislative authority respecting service delivery to the public and to make related amendments to Parts 4 and 6 of that Act.

Division 14 of Part 6 amends the Employment Insurance Act to modify the treatment of earnings received by claimants while they are in receipt of benefits.

Division 15 of Part 6 amends the Judges Act to authorize the salaries for the following new judges, namely, six judges for the Ontario Superior Court of Justice, one judge for the Saskatchewan Court of Appeal, 39 judges for the unified family courts (as of April 1, 2019), one judge for the Federal Court and a new Associate Chief Justice for the Federal Court. This division also makes consequential amendments to the Federal Courts Act.

Division 16 of Part 6 amends certain Acts governing federal financial institutions and related Acts to, among other things,

Division 17 of Part 6 amends the Western Economic Diversification Act to remove the requirement of the Governor in Council’s approval for the Minister of Western Economic Diversification to enter into an agreement with the government of a province, or with a provincial agency, respecting the exercise of the Minister’s powers and the carrying out of the Minister’s duties and functions.

Division 18 of Part 6 amends the Parliament of Canada Act to give each House of Parliament the power to make regulations related to maternity and parental arrangements for its own members.

Division 19 of Part 6 amends the Canada Pension Plan to, among other things,

Division 20 of Part 6 amends the Criminal Code to establish a remediation agreement regime. Under this regime, the prosecutor may negotiate a remediation agreement with an organization that is alleged to have committed an offence of an economic character referred to in the schedule to Part XXII.‍1 of that Act and the proceedings related to that offence are stayed if the organization complies with the terms of the agreement.

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

• Canadian Forces members and veterans amounts

  (f.‍1) the total of all amounts received by the taxpayer in the year on account of

  • (i) an earnings loss benefit, an income replacement benefit (other than an amount determined under subsection 19.‍1(1), paragraph 23(1)‍(b) or subsection 26.‍1(1) of the Veterans Well-being Act, as modified, where applicable, under Part 5 of that Act), a supplementary retirement benefit or a career impact allowance payable to the taxpayer under Part 2 of the Veterans Well-being Act, or

  • (ii) an amount payable under any of subsections 99(6), 109(1) and 115(5) and sections 124 to 126 of the Veterans Well-being Act;

• (viii) an income replacement benefit payable to the taxpayer under Part 2 of the Veterans Well-being Act, if the amount is determined under subsection 19.‍1(1), paragraph 23(1)‍(b) or subsection 26.‍1(1) of that Act (as modified, where applicable, under Part 5 of that Act);

• (i) the total of all amounts received by the individual in the year on account of

  • (A) a retirement income security benefit payable to the individual under Part 2 of the Veterans Well-being Act, or

  • (B) an income replacement benefit payable to the individual under Part 2 of the Veterans Well-being Act, if the amount is determined under subsection 19.‍1(1), paragraph 23(1)‍(b) or subsection 26.‍1(1) of that Act (as modified, where applicable, under Part 5 of that Act), and

• Canadian Forces members and veterans amounts

  (d.‍1) the total of all amounts received by the taxpayer in the year on account of

  • (i) a Canadian Forces income support benefit payable to the taxpayer under Part 2 of the Veterans Well-being Act,

  • (ii) pain and suffering compensation, additional pain and suffering compensation or a critical injury benefit, disability award, death benefit, clothing allowance or detention benefit payable to the taxpayer under Part 3 of the Veterans Well-being Act,

  • (iii) a family caregiver relief benefit or caregiver recognition benefit payable to the taxpayer under Part 3.‍1 of the Veterans Well-being Act, or

  • (iv) an amount payable to the taxpayer under subsection 132(1) of the Veterans Well-being Act;

• (iii) a caregiver recognition benefit payable to the taxpayer under Part 3.‍1 of the Veterans Well-being Act, or

• Memorial grant

  (j) an amount received under the Memorial Grant Program for First Responders established under the authority of the Department of Public Safety and Emergency Preparedness Act in respect of individuals who die in the course of, or as a result of, their duties or as a result of an occupational illness or psychological impairment;

• (i) the product of the amount determined under paragraph (a) in respect of the taxpayer for the taxation year multiplied by

  • (A) for the 2018 taxation year, 16%, and

  • (B) for taxation years after 2018, 15%, and

• Refundable dividend tax on hand

  (aa) if the new corporation was a private corporation immediately after the amalgamation, the following rules apply:

  • (i) for the purpose of computing the eligible refundable dividend tax on hand and non-eligible refundable dividend tax on hand (as defined in subsection 129(4)) of the new corporation at the end of its first taxation year there shall be added to the total determined under those definitions in respect of the new corporation for the year

    • (A) in respect of the new corporation’s eligible refundable dividend tax on hand, the total of all amounts each of which is the amount, if any, by which the eligible refundable dividend tax on hand of a predecessor corporation at the end of its last taxation year exceeds the total of all amounts each of which is the portion, if any, of its dividend refund for its last taxation year from its eligible refundable dividend tax on hand determined under subparagraph 129(1)‍(a)‍(i) or clause 129(1)‍(a)‍(ii)‍(B), and

    • (B) in respect of the new corporation’s non-eligible refundable dividend tax on hand, the total of all amounts each of which is the amount, if any, by which the non-eligible refundable dividend tax on hand of a predecessor corporation at the end of its last taxation year exceeds the portion, if any, of its dividend refund for its last taxation year from its non-eligible refundable dividend tax on hand determined under clause 129(1)‍(a)‍(ii)‍(A), and

  • (ii) no amount shall be added under this paragraph in respect of a predecessor corporation

    • (A) that was not a private corporation at the end of its last taxation year, or

    • (B) where subsection 129(1.‍2) would have applied to deem a dividend paid by the predecessor corporation immediately before the amalgamation not to be a taxable dividend for the purpose of subsection 129(1);

• (b) the beneficiary is, for the purposes of section 120.‍4 and for the purposes of sections 3, 74.‍3 and 111 as they apply for the purposes of section 110.‍6,

• (A) the employment income earned by the taxpayer as a member of the Canadian Forces, or as a police officer, while serving on a deployed international operational mission (as determined by the Minister of National Defence or by a person designated by that Minister), and

• (B) the employment income that would have been so earned by the taxpayer if the taxpayer had been paid at the maximum rate of pay that applied, from time to time during the mission, to a Lieutenant-Colonel (General Service Officers) of the Canadian Forces,

Annual adjustment

117.‍1 (1) The amount of $1,000 referred to in the formula in paragraph 8(1)‍(s), each of the amounts expressed in dollars in subparagraph 6(1)‍(b)‍(v.‍1), subsection 117(2), the description of B in subsection 118(1), subsection 118(2), paragraph (a) of the description of B in subsection 118(10), subsection 118.‍01(2), the descriptions of C and F in subsection 118.‍2(1) and subsections 118.‍3(1), 122.‍5(3) and 122.‍51(1) and (2), the amount of $400,000 referred to in the formula in paragraph 110.‍6(2)‍(a), the amounts of $1,355 and $2,335 referred to in the description of A, and the amounts of $12,820 and $17,025 referred to in the description of B, in the formula in subsection 122.‍7(2), the amount of $700 referred to in the description of C, and the amounts of $24,111 and $36,483 referred to in the description of D, in the formula in subsection 122.‍7(3), and each of the amounts expressed in dollars in Part I.‍2 in relation to tax payable under this Part or Part I.‍2 for a taxation year shall be adjusted so that the amount to be used under those provisions for the year is the total of

• (ii) the total of all amounts received by the individual in the year on account of a retirement income security benefit under Part 2 of the Veterans Well-being Act, and

• (iii) the total of all amounts received by the individual in the year on account of an income replacement benefit payable to the individual under Part 2 of the Veterans Well-being Act, if the amount is determined under subsection 19.‍1(1), paragraph 23(1)‍(b) or subsection 26.‍1(1) of that Act (as modified, where applicable, under Part 5 of that Act).

• (a.‍2) a reference to income for a year is to be read as a reference to that income determined as if, in computing that income, no amount were deductible under paragraph 20(1)‍(ww);

• (l) on behalf of the patient who is blind or profoundly deaf or has severe autism, severe diabetes, severe epilepsy, severe mental impairment or a severe and prolonged impairment that markedly restricts the use of the patient’s arms or legs,

  • (i) for an animal that is

    • (A) specially trained to

      • (I) in the case of severe mental impairment, perform specific tasks (excluding, for greater certainty, the provision of emotional support) that assist the patient in coping with the impairment, and

      • (II) in all other cases, assist the patient in coping with the impairment, and

    • (B) provided by a person or organization one of whose main purposes is such training of animals,

excluded amount, in respect of an individual for a taxation year, means an amount that is the individual’s income for the year from, or the individual’s taxable capital gain or profit for the year from the disposition of, a property to the extent that the amount

• (a) if the individual has not attained the age of 24 years before the year, is from a property that was acquired by, or for the benefit of, the individual as a consequence of the death of a person who is

  • (i) a parent of the individual, or

  • (ii) any person, if the individual is

    • (A) enrolled as a full-time student during the year at a post-secondary educational institution (as defined in subsection 146.‍1(1)), or

    • (B) an individual in respect of whom an amount may be deducted under section 118.‍3 in computing a taxpayer’s tax payable under this Part for the year;

• (b) is from a property acquired by the individual under a transfer described in subsection 160(4);

• (c) is a taxable capital gain that arises because of subsection 70(5);

• (d) is a taxable capital gain for the year from the disposition by the individual of property that is, at the time of the disposition, qualified farm or fishing property or qualified small business corporation shares (as those terms are defined in subsection 110.‍6(1)), unless the amount would be deemed to be a dividend under subsection 120.‍4(4) or (5) if this definition were read without reference to this paragraph;

• (e) if the individual has attained the age of 17 years before the year, is

  • (i) not derived directly or indirectly from a related business in respect of the individual for the year, or

  • (ii) derived directly or indirectly from an excluded business of the individual for the year;

• (f) if the individual has attained the age of 17 years but not the age of 24 years before the year, is

  • (i) a safe harbour capital return of the individual, or

  • (ii) a reasonable return in respect of the individual, having regard only to the contributions of arm’s length capital by the individual; or

• (g) if the individual has attained the age of 24 years before the year, is

  • (i) income from, or a taxable capital gain from the disposition of, excluded shares of the individual, or

  • (ii) a reasonable return in respect of the individual. (montant exclu)

specified individual, for a taxation year, means an individual (other than a trust) who

• (a) is resident in Canada

  • (i) in the case where the individual dies in the year, immediately before the death, and

  • (ii) in any other case, at the end of the year; and

• (b) if the individual has not attained the age of 17 years before the year, has a parent resident in Canada at any time in the year. (particulier déterminé)

• (ii) can reasonably be considered to be income derived directly or indirectly from

• (A) one or more related businesses in respect of the individual for the year, or

• (B) the rental of property by a particular partnership or trust, if a person who is related to the individual at any time in the year

• (I) is actively engaged on a regular basis in the activities of the particular partnership or trust related to the rental of property, or

• (II) in the case of a particular partnership, has an interest in the particular partnership directly or indirectly through one or more other partnerships,

• (C) to be income derived directly or indirectly from one or more related businesses in respect of the individual for the year, or

• (D) to be income derived from the rental of property by a particular partnership or trust, if a person who is related to the individual at any time in the year is actively engaged on a regular basis in the activities of the particular partnership or trust related to the rental of property,

• (d) an amount included in computing the individual’s income for the year to the extent that the amount is in respect of a debt obligation that

  • (i) is of a corporation (other than a mutual fund corporation or a corporation shares of a class of the capital stock of which are listed on a designated stock exchange), partnership or trust (other than a mutual fund trust), and

  • (ii) is not

    • (A) described in paragraph (a) of the definition fully exempt interest in subsection 212(3),

    • (B) listed or traded on a public market, or

    • (C) a deposit, standing to the credit of the individual,

      • (I) within the meaning assigned by the Canada Deposit Insurance Corporation Act, or

      • (II) with a credit union or a branch in Canada of a bank, and

• (e) an amount in respect of a property, to the extent that

  • (i) the amount

    • (A) is a taxable capital gain, or a profit, of the individual for the year from the disposition after 2017 of the property, or

    • (B) is included under subsection 104(13) or 105(2) in computing the individual’s income for the year and can reasonably be considered to be attributable to a taxable capital gain, or a profit, of any person or partnership for the year from the disposition after 2017 of the property, and

  • (ii) the property is

    • (A) a share of the capital stock of a corporation (other than a share of a class listed on a designated stock exchange or a share of the capital stock of a mutual fund corporation), or

    • (B) a property in respect of which the following conditions are met:

      • (I) the property is

        • 1 an interest in a partnership,

        • 2 an interest as a beneficiary under a trust (other than a mutual fund trust or a trust that is deemed to be in existence by subsection 143(1)), or

        • 3 a debt obligation (other than a debt obligation described in any of clauses (d)‍(ii)‍(A) to (C)), and

      • (II) either

        • 1 in respect of the property an amount is included in the individual’s split income for the year or an earlier taxation year, or

        • 2 all or any part of the fair market value of the property, immediately before the disposition referred to in clause (i)‍(A) or (B), as the case may be, is derived, directly or indirectly, from a share described in clause (A). (revenu fractionné)

arm’s length capital, of a specified individual, means property of the individual if the property, or property for which it is a substitute, was not

• (a) acquired as income from, or a taxable capital gain or profit from the disposition of, another property that was derived directly or indirectly from a related business in respect of the specified individual;

• (b) borrowed by the specified individual under a loan or other indebtedness; or

• (c) transferred, directly or indirectly by any means whatever, to the specified individual from a person who was related to the specified individual (other than as a consequence of the death of a person). (capital indépendant)

excluded business, of a specified individual for a taxation year, means a business if the specified individual is actively engaged on a regular, continuous and substantial basis in the activities of the business in either

• (a) the taxation year, except in respect of an amount described in paragraph (e) of the definition split income; or

• (b) any five prior taxation years of the specified individual. (entreprise exclue)

excluded shares, of a specified individual at any time, means shares of the capital stock of a corporation owned by the specified individual if

• (a) the following conditions are met:

  • (i) less than 90% of the business income of the corporation for the last taxation year of the corporation that ends at or before that time (or, if no such taxation year exists, for the taxation year of the corporation that includes that time) was from the provision of services, and

  • (ii) the corporation is not a professional corporation;

• (b) immediately before that time, the specified individual owns shares of the capital stock of the corporation that

  • (i) give the holders thereof 10% or more of the votes that could be cast at an annual meeting of the shareholders of the corporation, and

  • (ii) have a fair market value of 10% or more of the fair market value of all of the issued and outstanding shares of the capital stock of the corporation; and

• (c) all or substantially all of the income of the corporation for the relevant taxation year in subparagraph (a)‍(i) is income that is not derived, directly or indirectly, from one or more related businesses in respect of the specified individual other than a business of the corporation. (actions exclues)

reasonable return, in respect of a specified individual for a taxation year, means a particular amount derived directly or indirectly from a related business in respect of the specified individual that

• (a) would, if this subsection were read without reference to subparagraph (f)‍(ii) or (g)‍(ii) of the definition excluded amount, be an amount described in the definition split income in respect of the specified individual for the year; and

• (b) is reasonable having regard to the following factors relating to the relative contributions of the specified individual, and each source individual in respect of the specified individual, in respect of the related business:

  • (i) the work they performed in support of the related business,

  • (ii) the property they contributed, directly or indirectly, in support of the related business,

  • (iii) the risks they assumed in respect of the related business,

  • (iv) the total of all amounts that were paid or that became payable, directly or indirectly, by any person or partnership to, or for the benefit of, them in respect of the related business, and

  • (v) such other factors as may be relevant. (rendement raisonnable)

related business, in respect of a specified individual for a taxation year, means

• (a) a business carried on by

  • (i) a source individual in respect of the specified individual at any time in the year, or

  • (ii) a partnership, corporation or trust if a source individual in respect of the specified individual at any time in the year is actively engaged on a regular basis in the activities of the partnership, corporation or trust related to earning income from the business;

• (b) a business of a particular partnership, if a source individual in respect of the specified individual at any time in the year has an interest — including directly or indirectly — in the particular partnership; and

• (c) a business of a corporation, if the following conditions are met at any time in the year:

  • (i) a source individual in respect of the specified individual owns

    • (A) shares of the capital stock of the corporation, or

    • (B) property that derives, directly or indirectly, all or part of its fair market value from shares of the capital stock of the corporation, and

  • (ii) it is the case that

    0.‍1A ≤ B + C

    where

    A

    is the total fair market value of all of the issued and outstanding shares of the capital stock of the corporation,

    B

    is the total fair market value of property described in clause (i)‍(A), and

    C

    is the portion of the total fair market value of property described in clause (i)‍(B) that is derived from shares of the capital stock of the corporation. (entreprise liée)

safe harbour capital return, of a specified individual for a taxation year, means an amount that does not exceed the amount determined by the formula

source individual, in respect of a specified individual for a taxation year, means an individual (other than a trust) who, at any time in the year, is

• (a) resident in Canada; and

• (b) related to the specified individual. (particulier source)

Additional rules — specified individual

(1.‍1) For the purpose of applying this section in respect of a specified individual in respect of a taxation year,

• (a) an individual is deemed to be actively engaged on a regular, continuous and substantial basis in the activities of a business in a taxation year of the individual if the individual works in the business at least an average of 20 hours per week during the portion of the year in which the business operates;

• (b) if an amount would — if this section were read without reference to this paragraph — be split income of a specified individual who has attained the age of 17 years before the year in respect of a property, and that property was acquired by, or for the benefit of, the specified individual as a consequence of the death of another person, then

  • (i) for the purpose of applying paragraph (b) of the definition reasonable return in subsection (1), to the extent that the particular amount referred to in that paragraph is in respect of the property, then the factors referred to in that paragraph in respect of the other person are to be included for the purpose of determining a reasonable return in respect of the individual,

  • (ii) for the purposes of this subparagraph and the definition excluded business in subsection (1), if the other person was actively engaged on a regular, substantial and continuous basis in the activities of a business throughout five previous taxation years, then the individual is deemed to have been actively engaged on a regular, substantial and continuous basis in the business throughout those five years, and

  • (iii) for the purpose of applying paragraph (g) of the definition excluded amount in subsection (1) in respect of that property, the individual is deemed to have attained the age of 24 years before the year if the other person had attained the age of 24 years before the year;

• (c) an amount that is a specified individual’s income for a taxation year from, or the specified individual’s taxable capital gain or profit for the year from the disposition of, a property is deemed to be an excluded amount in respect of the specified individual for the taxation year if

  • (i) the following conditions are met:

    • (A) the amount would be an excluded amount in respect of the specified individual’s spouse or common-law partner for the year, if the amount were included in computing the spouse or common-law partner’s income for the year, and

    • (B) the spouse or common law partner has attained the age of 64 years before the year, or

  • (ii) the amount would have been an excluded amount in respect of an individual who was, immediately before their death, the specified individual’s spouse or common-law partner, if the amount were included in computing the spouse or common-law partner’s income for their last taxation year (determined as if this section applies in respect of that year);

• (d) for greater certainty, an amount derived directly or indirectly from a business includes

  • (i) an amount that

    • (A) is derived from the provision of property or services to, or in support of, the business, or

    • (B) arises in connection with the ownership or disposition of an interest in the person or partnership carrying on the business, and

  • (ii) an amount derived from an amount described in this paragraph; and

• (e) for the purposes of this section, an individual is deemed not to be related to their spouse or common-law partner at any time in a year if, at the end of the year, the individual is living separate and apart from their spouse or common-law partner because of a breakdown of their marriage or common-law partnership.

Tax payable by a specified individual

(3) Notwithstanding any other provision of this Act, if an individual is a specified individual for a taxation year, the individual’s tax payable under this Part for the year shall not be less than the amount by which the amount added under subsection (2) to the individual’s tax payable under this Part for the year exceeds the amount determined by the formula

Taxable capital gain

(4) If a specified individual who has not attained the age of 17 years before a taxation year would have for the taxation year, if this Act were read without reference to this section, a taxable capital gain (other than an excluded amount) from a disposition of shares (other than shares of a class listed on a designated stock exchange or shares of a mutual fund corporation) that are transferred, either directly or indirectly, in any manner whatever, to a person with whom the specified individual does not deal at arm’s length, then the amount of that taxable capital gain is deemed not to be a taxable capital gain and twice the amount is deemed to be received by the specified individual in the year as a taxable dividend that is not an eligible dividend.

Taxable capital gain of trust

(5) If a specified individual who has not attained the age of 17 years before a the taxation year would be, if this Act were read without reference to this section, required under subsection 104(13) or 105(2) to include an amount in computing the specified individual’s income for the taxation year, then to the extent that the amount can reasonably be considered to be attributable to a taxable capital gain (other than an excluded amount) of a trust from a disposition of shares (other than shares of a class listed on a designated stock exchange or shares of a mutual fund corporation) that are transferred, either directly or indirectly, in any manner whatever, to a person with whom the specified individual does not deal at arm’s length, subsections 104(13) and 105(2) do not apply in respect of the amount and twice the amount is deemed to be received by the specified individual in the year as a taxable dividend that is not an eligible dividend.

• (a) the product of the amount, if any, that is required by subparagraph 82(1)‍(b)‍(i) to be included in computing the individual’s income for the year multiplied by

  • (i) for the 2018 taxation year, 8/11, and

  • (ii) for taxation years after 2018, 9/13, and

• (b) deductible under paragraph 20(1)‍(ww) or 60(y) or (z). (revenu rajusté)

• (b) deductible under paragraph 20(1)‍(ww) or 60(y) or (z); (revenu modifié)

Annual adjustment

(5) Each amount expressed in dollars in subsection (1) shall be adjusted so that, where the base taxation year in relation to a particular month is after 2016, the amount to be used under that subsection for the month is the total of

Canada Workers Benefit

• (c) in computing that income, no amount were deductible under paragraph 20(1)‍(ww) or 60(y) or (z). (revenu net rajusté)

• (a) that proportion of 17.‍5% that the number of days in the taxation year that are before 2018 is of the number of days in the taxation year,

• (b) that proportion of 18% that the number of days in the taxation year that are in 2018 is of the number of days in the taxation year, and

• (c) that proportion of 19% that the number of days in the taxation year that are after 2018 is of the number of days in the taxation year.

Business limit reduction

(5.‍1) Notwithstanding subsections (2), (3), (4) and (5), a Canadian-controlled private corporation’s business limit for a particular taxation year ending in a calendar year is the amount, if any, by which its business limit otherwise determined for the particular taxation year exceeds the greater of

• (a) the amount determined by the formula

  A × B/$11,250

  where

  A

  is the amount that would, but for this subsection, be the corporation’s business limit for the particular taxation year, and

  B

  is the amount determined by the formula

  0.‍225% × (C – $10 million)

  where

  C

  is

  (i) if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the taxable capital employed in Canada (within the meaning assigned by subsection 181.‍2(1) or 181.‍3(1) or section 181.‍4, as the case may be) of the corporation for the preceding taxation year,

  (ii) if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the taxable capital employed in Canada (within the meaning assigned by subsection 181.‍2(1) or 181.‍3(1) or section 181.‍4, as the case may be) of the corporation for the particular taxation year, or

  (iii) if, in the particular taxation year, the corporation is associated with one or more particular corporations, the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.‍2(1) or 181.‍3(1) or section 181.‍4, as the case may be) of the corporation or of any of the particular corporations for its last taxation year that ended in the preceding calendar year, and

• (b) the amount determined by the formula

  D/$500,000 × 5(E − $50,000)

  where

  D

  is the amount determined for A in paragraph (a), and

  E

  is the total of all amounts each of which is the adjusted aggregate investment income of the corporation, or of any corporation with which it is associated at any time in the particular taxation year, for each taxation year of the corporation, or associated corporation, as the case may be, that ended in the preceding calendar year.

Anti-avoidance

(5.‍2) A particular corporation and another corporation are deemed to be associated with each other at a particular time for the purposes of paragraph (5.‍1)‍(b) if

• (a) the particular corporation lends or transfers property at any time, either directly or indirectly, by means of a trust or by any other means whatever, to the other corporation;

• (b) the other corporation is, at the particular time, related to the particular corporation but is not associated with it; and

• (c) it may reasonably be considered that one of the reasons the loan or transfer was made was to reduce the amount determined for E in paragraph (5.‍1)‍(b) in respect of the particular corporation, or of any corporation with which it is associated, for a taxation year.

active asset, of a particular corporation at any time, means property that is

• (a) used at that time principally in an active business carried on primarily in Canada by the particular corporation or by a Canadian-controlled private corporation that is related to the particular corporation,

• (b) a share of the capital stock of another corporation if, at that time,

  • (i) the other corporation is connected with the particular corporation (within the meaning assigned by subsection 186(4) on the assumption that the other corporation is at that time a payer corporation within the meaning of that subsection), and

  • (ii) the share would be a qualified small business corporation share (as defined in subsection 110.‍6(1)) if

    • (A) the references in that definition to an “individual” were references to the particular corporation, and

    • (B) that definition were read without reference to “the individual’s spouse or common law partner”, or

• (c) an interest in a partnership, if

  • (i) at that time, the fair market value of the particular corporation’s interest in the partnership is equal to or greater than 10% of the total fair market value of all interests in the partnership,

  • (ii) throughout the 24–month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b), and

  • (iii) at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b); (bien actif)

adjusted aggregate investment income, of a corporation (other than a corporation that is deemed not to be a private corporation by subsection 136(1) or 137(7) or section 141.‍1) for a taxation year, means the amount that would be the aggregate investment income (as defined in subsection 129(4)) of the corporation for the year, if

• (a) paragraph (a) of that definition read as follows:

  • (a) the amount, if any, by which

    • (i) the eligible portion of the corporation’s taxable capital gains (other than taxable capital gains from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year

  • exceeds

    • (ii) the eligible portion of its allowable capital losses (other than allowable capital losses from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year, or

• (b) subparagraph (b)‍(iii) of that definition read as follows:

  • (iii) a dividend from a corporation connected with it (within the meaning assigned by subsection 186(4) on the assumption that the corporation is at that time a payer corporation within the meaning of that subsection), and

• (c) paragraph (a) of the definition income or loss in subsection 129(4) read as follows:

  • (a) includes

  • (i) the income or loss from a specified investment business carried on by it, and

  • (ii) amounts in respect of a life insurance policy that are included in computing the corporation’s income for the year, to the extent that the amounts would not otherwise be included in the computation of the corporation’s aggregate investment income, but

and

• (d) no amount were deducted under subsection 91(4) by the corporation in computing its income for the year; (revenu de placement total ajusté)

• (a) that is a Canadian exploration expense incurred by a corporation after March 2018 and before 2020 (including, for greater certainty, an expense that is deemed by subsection 66(12.‍66) to be incurred before 2020) 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),

• (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 2018 and before April 2019, 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 2018 and before April 2019; (dépense minière déterminée)

• (a) may, on sending the notice of assessment for the year, refund without application an amount (in this Act referred to as its “dividend refund” for the year) in respect of taxable dividends paid by the corporation on shares of its capital stock in the year, and at a time when it was a private corporation, equal to the total of

  • (i) in respect of eligible dividends, an amount equal to the lesser of

    • (A) 38 1/3% of the total of all eligible dividends paid by it in the year, and

    • (B) its eligible refundable dividend tax on hand at the end of the year, and

  • (ii) in respect of taxable dividends (other than eligible dividends), an amount equal to the total of

    • (A) the lesser of

      • (I) 38 1/3% of the total of all taxable dividends (other than eligible dividends) paid by it in the year, and

      • (II) its non-eligible refundable dividend tax on hand at the end of the year, and

    • (B) either

      • (I) if the amount determined under subclause (A)‍(I) exceeds the amount determined under subclause (A)‍(II), the lesser of

        • 1 the amount of the excess, and

        • 2 the amount by which the corporation’s eligible refundable dividend tax on hand at the end of the year exceeds the amount, if any, determined under subparagraph (i) for the year, and

      • (II) in any other case, nil; and

Dividends paid to bankrupt controlling corporation

(1.‍1) In determining the dividend refund for a taxation year ending after 1977 of a particular corporation, no amount may be included under clause (1)‍(a)‍(i)‍(A), subclause (1)‍(a)‍(ii)‍(A)‍(I) or sub-subclause (1)‍(a)‍(ii)‍(B)‍(I)1 in respect of a taxable dividend paid to a shareholder that

eligible refundable dividend tax on hand, of a particular corporation at the end of a taxation year, means the amount, if any, by which the total of

• (a) the total of the taxes payable under Part IV by the particular corporation for the year in respect of

  • (i) eligible dividends received by the particular corporation in the year from corporations other than corporations with which the particular corporation is connected (in this paragraph, within the meaning assigned by subsection 186(4) on the assumption that the other corporation is at that time a payer corporation within the meaning of that subsection), and

  • (ii) taxable dividends received by the particular corporation in the year from corporations that are connected with the particular corporation to the extent that such dividends caused a dividend refund to those corporations from their eligible refundable dividend tax on hand, and

• (b) where the particular corporation was a private corporation at the end of its preceding taxation year, the particular corporation’s eligible refundable dividend tax on hand at the end of that preceding year

exceeds

• (c) the total of all amounts each of which is the portion, if any, of the particular corporation’s dividend refund from its eligible refundable dividend tax on hand determined, for its preceding taxation year, under

  • (i) subparagraph (1)‍(a)‍(i), and

  • (ii) clause (1)‍(a)‍(ii)‍(B). (impôt en main remboursable au titre de dividendes déterminés)

non-eligible refundable dividend tax on hand, of a corporation at the end of a taxation year, means the amount, if any, by which the total of

• (a) if the corporation was a Canadian-controlled private corporation throughout the year, the least of

  • (i) the amount determined by the formula

    A − B

    where

    A

    is 30 2/3% of the corporation’s aggregate investment income for the year, and

    B

    is the amount, if any, by which

    (A) the amount deducted under subsection 126(1) from the tax for the year otherwise payable by it under this Part

    exceeds

    (B) 8% of its foreign investment income for the year,

  • (ii) 30 2/3% of the amount, if any, by which the corporation’s taxable income for the year exceeds the total of

    • (A) the least of the amounts determined under paragraphs 125(1)‍(a) to (c) in respect of the corporation for the year,

    • (B) 100/(38 2/3) of the total of amounts deducted under subsection 126(1) from its tax for the year otherwise payable under this Part, and

    • (C) the amount determined by multiplying the total of amounts deducted under subsection 126(2) from its tax for the year otherwise payable under this Part, by the relevant factor for the year, and

  • (iii) the corporation’s tax for the year payable under this Part,

• (b) the total of the taxes payable under Part IV by the corporation for the year less the amount determined under paragraph (a) of the definition eligible refundable dividend tax on hand in respect of the corporation for the year, and

• (c) if the corporation was a private corporation at the end of its preceding taxation year, the corporation’s non-eligible refundable dividend tax on hand at the end of that preceding year

exceeds

• (d) the portion, if any, of the corporation’s dividend refund from its non-eligible refundable dividend tax on hand determined, for its preceding taxation year, under clause (1)‍(a)‍(ii)‍(A). (impôt en main remboursable au titre de dividendes non déterminés)

2019 transitional RDTOH

(5) The following rules apply to a corporation’s first taxation year in respect of which the definition eligible refundable dividend tax on hand in subsection (4) applies:

• (a) if the corporation is a Canadian-controlled private corporation throughout the taxation year and its preceding taxation year and is not a corporation in respect of which an election under subsection 89(11) applies to the taxation year or the preceding taxation year,

  • (i) for the purpose of applying paragraph (b) of the definition eligible refundable dividend tax on hand in respect of the corporation at the end of the taxation year, the corporation’s eligible refundable dividend tax on hand at the end of its preceding taxation year is deemed to be the amount, if any, that is the lesser of

    • (A) the amount determined by the formula

      A − B

      where

      A

      is the corporation’s refundable dividend tax on hand at the end of its preceding taxation year, and

      B

      is the corporation’s dividend refund for its preceding taxation year, and

    • (B) the amount determined by the formula

      (C − D) × E

      where

      C

      is the corporation’s general rate income pool at the end of its preceding taxation year,

      D

      is the amount, if any, by which

      (I) the total of all amounts each of which is an eligible dividend paid by the corporation in its preceding taxation year

      exceeds

      (II) the total of all amounts each of which is an excessive eligible dividend designation made by the corporation in its preceding taxation year, and

      E

      is 38 1/3%, and

  • (ii) for the purpose of applying paragraph (c) of the definition non-eligible refundable dividend tax on hand in respect of the corporation at the end of the taxation year, the corporation’s non-eligible refundable dividend tax on hand at the end of its preceding taxation year is deemed to be the amount determined by the formula

    A − B

    where

    A

    is the amount determined under clause (a)‍(i)‍(A) in respect of the corporation at the end of the preceding taxation year, and

    B

    is the amount determined under clause (a)‍(i)‍(B) in respect of the corporation at the end of the preceding taxation year; and

• (b) in any other case, for the purpose of applying paragraph (b) of the definition eligible refundable dividend tax on hand in respect of the corporation at the end of the taxation year, the corporation’s eligible refundable dividend tax on hand at the end of its preceding taxation year is deemed to be the amount that would be determined for clause (a)‍(i)‍(A) if paragraph (a) applied to the corporation in respect of the taxation year.

2019 transitional RDTOH — amalgamations

(5.‍1) Subsection (5) applies with such modifications as are necessary for the purpose of applying paragraph 87(2)‍(aa) in respect of a corporation if

• (a) the corporation is a predecessor corporation (within the meaning assigned by subsection 87(1)) in respect of an amalgamation (within the meaning assigned by subsection 87(1));

• (b) the corporation has an amount of refundable dividend tax on hand at the end of its taxation year that ends because of paragraph 87(2)‍(a); and

• (c) the first taxation year of the new corporation (within the meaning assigned by subsection 87(1)) in respect of the amalgamation is one to which the definition eligible refundable dividend tax on hand in subsection (4) applies.

• (a) is deemed for the purposes of paragraph 87(2)‍(aa) and section 129 to have been a private corporation throughout the year, except that its non-eligible refundable dividend tax on hand (as defined in subsection 129(4)) at the end of the year shall be determined without reference to paragraph (a) of that definition; and

• (a) for the purposes of subparagraphs (a)‍(i) and (ii) of the definition non-eligible refundable dividend tax on hand in subsection 129(4), the amount deducted under paragraph 111(1)‍(b) from the corporation’s income for each taxation year ending after that time shall be deemed to be nil;

• (B.‍1) if the arrangement is entered into before 2024, a qualifying family member in relation to the beneficiary who, at the time the arrangement is entered into, is a qualifying person in relation to the beneficiary,

• (iv) a university outside Canada, the student body of which ordinarily includes students from Canada, that has applied for registration, or

Joint and several, or solidary, liability — tax on split income

(1.‍2) If an amount is required to be added because of subsection 120.‍4(2) in computing a specified individual’s tax payable under this Part for a taxation year and the specified individual has not attained the age of 24 years before the start of the year, the following rules apply:

• (a) subject to paragraph (b), a particular individual is jointly and severally, or solidarily, liable with the specified individual for the amount if

  • (i) where the specified individual has not attained the age of 17 years before the year, the particular individual is a parent of the specified individual, and

  • (ii) where the specified individual has attained the age of 17 years before the year,

    • (A) the particular individual is a source individual in respect of the specified individual,

    • (B) the amount was derived directly or indirectly from a related business (within the meaning of paragraph 120.‍4(1.‍1)‍(d)) in respect of the specified individual, and

    • (C) the particular individual meets the conditions in any of paragraphs (a) to (c) in the definition related business in subsection 120.‍4(1) in respect of the related business;

• (b) the particular individual’s liability under paragraph (a) in respect of the specified individual for the year is to be determined as though the only amounts included in the specified individual’s split income for the year are amounts derived from the related business referred to in subparagraph (a)‍(ii); and

• (c) nothing in this subsection limits the liability of

  • (i) the specified individual under any other provision of this Act, or

  • (ii) the particular individual for the interest that the particular individual is liable to pay under this Act on an assessment in respect of the amount that the particular individual is liable to pay because of this subsection.

Failure to provide identification number

(6) Every person or partnership who fails to provide on request their business number, their Social Insurance Number, their trust account number or their U.‍S. federal taxpayer identifying number to a person required under this Act or the Regulations to make an information return requiring the number is liable to a penalty of $100 for each such failure, unless

• (b) deductible under paragraph 20(1)‍(ww) or 60(w), (y) or (z); (revenu modifié)

Deemed private corporation

(5) A corporation that is at any time in a taxation year a subject corporation shall, for the purposes of paragraph 87(2)‍(aa) and section 129, be deemed to be a private corporation at that time, except that its non-eligible refundable dividend tax on hand (as defined in subsection 129(4)) at the end of the year shall be determined without reference to paragraph (a) of that definition.

Eligible donee

(1.‍3) In this Part, an eligible donee in respect of a particular charity is

• (a) a registered charity

  • (i) of which more than 50% of the members of the board of directors or trustees of the registered charity deal at arm’s length with each member of the board of directors or trustees of the particular charity,

  • (ii) that is not the subject of a suspension under subsection 188.‍2(1),

  • (iii) that has no unpaid liabilities under this Act or under the Excise Tax Act,

  • (iv) that has filed all information returns required by subsection 149.‍1(14), and

  • (v) that is not the subject of a certificate under subsection 5(1) of the Charities Registration (Security Information) Act or, if it is the subject of such a certificate, the certificate has been determined under subsection 7(1) of that Act not to be reasonable; or

• (b) a municipality in Canada that is approved by the Minister in respect of a transfer of property from the particular charity.

Reduction of liability for penalties

(6.‍3) If the Minister has assessed a particular person in respect of the particular person’s liability for penalties under section 188.‍1 for a taxation year, and that liability exceeds $1,000, that liability is, at any particular time, reduced by the total of all amounts, each of which is an amount, in respect of a property transferred by the particular person after the day on which the Minister first assessed that liability and before the particular time to another person that was at the time of the transfer an eligible donee described in paragraph 188(1.‍3)‍(a) in respect of the particular person, equal to the amount, if any, by which the fair market value of the property, when transferred, exceeds the total of

• (d.‍1) requiring any person or partnership to provide any information — including their name, address, business number, Social Insurance Number or trust account number — to any class of persons required to make an information return containing that information;

Production of number

(1.‍1) Every person and partnership shall provide their designated number

• (a) in any return filed under this Act; and

• (b) to another person or partnership at the request of the other person or partnership, if the other person or partnership is required to make an information return pursuant to this Act or the Regulations requiring the designated number.

Designated number

(1.‍2) For the purpose of subsection (1.‍1), designated number, of a person or partnership, means