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A is its tax payable under Part VI for the
year (determined without reference to
subsection 190.1(3)), and
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B is the amount, if any, by which
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(i) the amount that would, but for
this section, be its tax payable under
this Part for the year
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(ii) the lesser of its Canadian surtax
payable (within the meaning
assigned by subsection 125.3(4))
and the amount that would, but for
subsection 181.1(4), be its tax
payable under Part I.3 for the year.
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(2) Subsection (1) applies for the purpose
of computing the amount that may be
deducted by a corporation under
subsection 125.2(1) of the Act
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(a) subject to paragraphs (b) and (c), for
taxation years that end before 1992 in
respect of unused Part VI tax credits for
taxation years that end after 1991;
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(b) where the corporation has elected
under subsection 111(2) of An Act to
amend the Income Tax Act, the Canada
Pension Plan, the Income Tax
Conventions Interpretation Act, the Tax
Rebate Discounting Act, the
Unemployment Insurance Act and certain
related Acts, being chapter 24 of the
Statutes of Canada, 1993, for its taxation
years that end before 1991 in respect of
unused Part VI tax credits for taxation
years that end after 1990, except that for
the purpose of computing its unused Part
VI tax credits under subsection 125.2(3)
of the Income Tax Act, as enacted by
subsection (1), for taxation years that end
in 1991, the amount determined under
subparagraph (ii) of the description of B
in subsection 125.2(3) of the Act, as
enacted by subsection (1), shall be
deemed to be nil; and
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(c) where paragraph (b) does not apply
and the corporation elected under
paragraph 88(2)(b), for its taxation years
that end before 1992 in respect of unused
Part VI tax credits for taxation years that
end after 1990, except that
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(i) for the purpose of computing its
unused Part VI tax credits under
subsection 125.2(3) of the Act, as
enacted by subsection (1), for its
taxation years that end in 1991, the
amount determined under
subparagraph (ii) of the description of
B in subsection 125.2(3) of the Act, as
enacted by subsection (1), shall be
deemed to be nil, and
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(ii) for the purpose of computing the
amount that it may deduct under
subsection 125.2(1) of the Act for its
taxation years that end in 1991,
paragraph 125.2(3)(a) of the Act, as
enacted by subsection (1), shall be read
as follows:
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(a) its tax payable under Part VI
(determined without reference to
subsection 190.1(3)) for the year, and
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59. (1) The definition ``Canadian surtax
payable'' in subsection 125.3(4) of the Act is
replaced by the following:
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``Canadian
surtax
payable''
« surtax
canadienne
payable »
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``Canadian surtax payable'' of a corporation
for a taxation year means
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(a) in the case of a corporation that is
non-resident throughout the year, the
lesser of
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(i) the amount determined under
section 123.2 in respect of the
corporation for the year, and
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(ii) its tax payable under this Part for
the year, and
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(b) in any other case, the lesser of
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(i) the prescribed proportion of the
amount determined under section
123.2 in respect of the corporation for
the year, and
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(ii) its tax payable under this Part for
the year;
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(2) Subsection (1) applies to the 1994 and
subsequent taxation years.
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60. (1) Subclause 126(1)(b)(ii)(A)(II) of
the Act is replaced by the following:
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(II) where section 114 applies to the
taxpayer in respect of the year, the total
of the taxpayer's income for the period
or periods in the year referred to in
paragraph 114(a) and the amount that
would be determined under paragraph
114(b) in respect of the taxpayer for the
year if subsection 115(1) were read
without reference to paragraphs
115(1)(d) to (f)
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(2) Subclause 126(2.1)(a)(ii)(A)(II) of the
Act is replaced by the following:
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(II) where section 114 applies to the
taxpayer in respect of the year, the
total of the taxpayer's income for
the period or periods referred to in
paragraph 114(a) and the amount
that would be determined under
paragraph 114(b) in respect of the
taxpayer for the year if subsection
115(1) were read without reference
to paragraphs 115(1)(d) to (f)
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(3) Subparagraph 126(2.1)(b)(ii) of the
Act is replaced by the following:
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(ii) the amount, if any, by which,
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(A) where section 114 does not apply
to the taxpayer in respect of the year,
the taxpayer's income for the year, and
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(B) where section 114 applies to the
taxpayer in respect of the year, the total
of the taxpayer's income for the period
or periods referred to in paragraph
114(a) and the amount that would be
determined under paragraph 114(b) in
respect of the taxpayer for the year if
subsection 115(1) were read without
reference to paragraphs 115(1)(d) to (f)
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(C) the taxpayer's income earned in
the year in a province (within the
meaning assigned by
subsection 120(4)).
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(4) The portion of subsection 126(2.2) of
the Act before paragraph (a) is replaced by
the following:
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| Non-resident'
s foreign tax
deduction
|
(2.2) Where at any time in a taxation year a
taxpayer who is not at that time resident in
Canada disposes of property that was deemed
by subsection 48(2), as it read in its
application before 1993, or paragraph
128.1(4)(e) to be taxable Canadian property of
the taxpayer, the taxpayer may deduct from
the tax for the year otherwise payable under
this Part by the taxpayer an amount equal to
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(5) Subparagraphs 126(3)(b)(i) and (ii) of
the Act are replaced by the following:
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(i) where section 114 does not apply to
the individual in respect of the year, the
total of the individual's income for the
year and the amount, if any, included
under subsection 110.4(2) in computing
the individual's taxable income for the
year, and
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(ii) where section 114 applies to the
individual in respect of the year, the total
of the individual's income for the period
or periods in the year referred to in
paragraph 114(a) and the amount that
would be determined under paragraph
114(b) in respect of the individual for the
year if subsection 115(1) were read
without reference to paragraphs
115(1)(d) to (f)
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(6) The definition ``non-business-income
tax'' in subsection 126(7) of the Act is
amended by adding the following before
paragraph (d):
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(c.1) that is in respect of an amount
deducted because of subsection 104(22.3)
in computing the taxpayer's
business-income tax,
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(7) Subsections (1) to (3) and (5) apply to
the 1993 and subsequent taxation years.
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(8) Subsection (4) applies after 1992.
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(9) Subsection (6) applies to taxation
years that end after November 12, 1981.
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61. (1) The definition ``qualified
expenditure'' in subsection 127(9) of the Act
is amended by striking out the word ``nor''
at the end of paragraph (a), by adding the
word ``or'' at the end of paragraph (b) and
by adding the following after
paragraph (b):
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(c) subject to subsection (11.4), an
expenditure in respect of which the
taxpayer does not, by the day on or before
which the taxpayer's return of income
under this Part for the taxpayer's taxation
year after that in which the expenditure
was incurred is required to be filed, or
would be required to be filed if tax under
this Part were payable by the taxpayer for
that following year, file with the Minister
a prescribed form containing prescribed
information;
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(2) The definition ``qualified property''
in subsection 127(9) of the Act is amended
by striking out the word ``or'' at the end of
paragraph (c) and by adding the following
after paragraph (c):
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(c.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, where
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(i) all or substantially all of the energy
or steam
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(A) is used by the taxpayer for the
purpose of gaining or producing
income from a business (other than
the business of selling the product of
the particular property), or
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(B) is sold directly (or indirectly by
way of sale to a provincially
regulated power utility operating in
the prescribed area) to a person
related to the taxpayer, and
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(ii) the energy or steam is used by the
taxpayer or the person related to the
taxpayer primarily for the purpose of
manufacturing or processing goods in
the prescribed area for sale or lease, or
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(3) Paragraph (d) of the definition
``qualified property'' in subsection 127(9)
of the Act is amended by striking out the
word ``or'' at the end of subparagraph (ii),
by adding the word ``or'' at the end of
subparagraph (iii) and by adding the
following after subparagraph (iii):
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(iv) the property is a fishing vessel,
including the furniture, fittings and
equipment attached to it, leased by an
individual (other than a trust) to a
corporation, controlled by the
individual, that carries on a fishing
business in connection with one or
more commercial fishing licences
issued by the Government of Canada
to the individual,
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(4) Section 127 of the Act is amended by
adding the following after subsection (11.3):
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| Reclassified
expenditures
|
(11.4) Paragraph (c) of the definition
``qualified expenditure'' in subsection (9)
does not apply to an expenditure incurred in a
taxation year by a taxpayer where the
expenditure is reclassified by the Minister on
an assessment of the taxpayer's tax payable
under this Part for the year, or on a
determination that no tax under this Part is
payable for the year by the taxpayer, as an
expenditure in respect of scientific research
and experimental development.
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(5) Subsections (1) and (4) apply after
February 21, 1994 to expenditures incurred
at any time except that, for an expenditure
incurred by a taxpayer in a taxation year
ending before February 22, 1994, the
taxpayer may file the prescribed form
referred to in paragraph (c) of the
definition ``qualified expenditure'' in
subsection 127(9) of the Act, as enacted by
subsection (1), by the later of the day
referred to in that paragraph and the day
that is 90 days after this Act is assented to.
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(6) Subsection (2) applies to property
acquired after 1991.
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(7) Subsection (3) applies to the 1980 and
subsequent taxation years.
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62. (1) The Act is amended by adding the
following after section 128:
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| Immigration
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128.1 (1) For the purposes of this Act,
where at a particular time a taxpayer becomes
resident in Canada,
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| Year-end,
fiscal period
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(a) where the taxpayer is a corporation or a
trust,
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(i) the taxpayer's taxation year that
would otherwise include the particular
time shall be deemed to have ended
immediately before the particular time
and a new taxation year of the taxpayer
shall be deemed to have begun at the
particular time, and
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(ii) for the purpose of determining the
taxpayer's fiscal period after the
particular time, the taxpayer shall be
deemed not to have established a fiscal
period before the particular time;
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| Deemed
disposition
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(b) the taxpayer shall be deemed to have
disposed, at the time (in this subsection
referred to as the ``time of disposition'') that
is immediately before the time that is
immediately before the particular time, of
each property owned by the taxpayer, other
than
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(i) property that would be taxable
Canadian property if the taxpayer had
been resident in Canada at no time in the
taxpayer's last taxation year that began
before the particular time,
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(ii) property that is described in the
inventory of a business carried on by the
taxpayer in Canada at the time of
disposition,
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(iii) eligible capital property in respect of
a business carried on by the taxpayer in
Canada at the time of disposition,
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(iv) property in respect of which the
taxpayer elected under paragraph
48(1)(c), as it read in its application
before 1993, or subparagraph (4)(b)(iv)
in respect of the last preceding time the
taxpayer ceased to be resident in Canada,
and
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(v) a right to acquire shares of the capital
stock of a corporation where section 7
would apply if the taxpayer disposed of
the right to a person with whom the
taxpayer was dealing at arm's length,
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for proceeds equal to its fair market value at
the time of disposition;
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| Deemed
acquisition
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(c) the taxpayer shall be deemed to have
acquired at the particular time each
property deemed by paragraph (b) to have
been disposed of by the taxpayer, at a cost
equal to the proceeds of disposition of the
property; and
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| Foreign
affiliate
|
(d) where the taxpayer was, immediately
before the particular time, a foreign affiliate
of another taxpayer that is resident in
Canada,
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(i) the affiliate shall be deemed to have
been a controlled foreign affiliate (within
the meaning assigned by
subsection 95(1)) of the other taxpayer
immediately before the particular time,
and
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(ii) such amount as is prescribed shall be
included in the foreign accrual property
income (within the meaning assigned by
subsection 95(1)) of the affiliate for its
taxation year ending immediately before
the particular time.
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| Idem -
paid-up
capital
|
(2) For the purposes of this Act, where at a
particular time a corporation becomes
resident in Canada, in computing the paid-up
capital at any time after the particular time in
respect of a particular class of shares of the
capital stock of the corporation, there shall be
deducted the amount determined by the
formula
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A x (C - D)
B
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where
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A is the paid-up capital, determined without
reference to this subsection, of the particu
lar class of shares at the particular time;
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B is the paid-up capital, determined without
reference to this subsection, in respect of
all of the shares of the corporation at the
particular time;
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C is the total of
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(a) the paid-up capital, determined
without reference to this subsection, in
respect of all of the shares of the
corporation at the particular time,
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(b) all amounts each of which is the
amount of any debt owing by the
corporation, or any other obligation of
the corporation to pay an amount, that
is outstanding at the particular time,
and
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(c) any amount claimed under
paragraph 219(1)(h) by the
corporation for its last taxation year
that began before the particular time;
and
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D is the total of
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(a) all amounts each of which is
deemed by paragraph (1)(c) to be the
cost to the corporation of property
(other than property described in
paragraph (d)) deemed under
paragraph (1)(c) to have been acquired
by the corporation at the particular
time,
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(b) all amounts each of which is the
cost amount to the corporation,
immediately after the particular time,
of property (other than a Canadian
resource property or property
described in paragraph (a) or (d)),
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(i) all Canadian exploration and
development expenses incurred by
the corporation before the particular
time, except to the extent that those
expenses were deducted in
computing a taxpayer's income for
a taxation year that ended before the
particular time,
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(ii) the corporation's cumulative
Canadian exploration expense at the
particular time (within the meaning
assigned by subsection 66.1(6)),
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