|
|
(7) Subsection 138(11) of the Act is
repealed.
|
|
|
|
(8) The portion of subsection 138(11.3) of
the Act before paragraph (a) is replaced by
the following:
|
|
| Deemed
disposition
|
(11.3) Subject to subsection (11.31), and
except for the purposes of paragraph 20(1)(l),
the description of A in the definition
``undepreciated capital cost'' in subsection
13(21) and paragraph (b) of the description of
F in that definition and any regulations made
for the purpose of the definition ``property
used by it in the year in, or held by it in the year
in the course of'' in subsection (12), where a
life insurer resident in Canada, or a
non-resident insurer, that carries on an
insurance business in Canada and in a country
other than Canada, at any time,
|
|
|
|
(9) Subsection 138(11.3) of the Act is
amended by adding the word ``or'' at the
end of paragraph (a) and by repealing
paragraphs (c) and (d).
|
|
|
|
(10) Section 138 of the Act is amended by
adding the following after subsection (11.3):
|
|
| Exclusion
from deemed
disposition
|
(11.31) Subsection (11.3) does not apply in
respect of a change in use of a property of an
insurer where subsection 142.5(2) deemed the
insurer to have disposed of the property in the
taxation year that ended immediately before
the change in use.
|
|
|
|
(11) Subsection 138(11.4) of the Act is
replaced by the following:
|
|
| Deduction of
loss
|
(11.4) Notwithstanding any other provision
of this Act, where an insurer has a loss for a
taxation year from the disposition, because of
subsection (11.3), of a property other than a
specified debt obligation (as defined in
subsection 142.2(1)), and the loss would, but
for this subsection, have been deductible in
the year, the loss shall be deductible only in the
taxation year in which the taxpayer disposes
of the property otherwise than because of
subsection (11.3).
|
|
|
|
(12) Subsection 138(11.41) of the Act is
repealed.
|
|
|
|
(13) Paragraph 138(11.5)(e) of the Act is
replaced by the following:
|
|
|
|
(e) subject to paragraph (k.1), where the fair
market value, at that time, of the
consideration (other than shares of the
capital stock of the transferee or a right to
receive any such shares) received or
receivable by the transferor for the
transferred property does not exceed the
total of the cost amounts to the transferor, at
that time, of the transferred property, the
proceeds of disposition of the transferor and
the cost to the transferee of the transferred
property shall be deemed to be the cost
amount, at that time, to the transferor of the
transferred property, and in any other case,
the provisions of subsection 85(1) shall be
applied in respect of the transfer,
|
|
|
|
(14) Paragraph 138(11.5)(k) of the Act is
replaced by the following:
|
|
|
|
(k) for the purposes of this section, sections
12, 12.3, 12.4, 20, 138.1, 140 and 142,
subsections 142.5(5) and (7), paragraphs
142.4(4)(c) and (d), section 148 and Part
XII.3, the transferee shall, in its taxation
years following its taxation year referred to
in paragraph (h), be deemed to be the same
person as, and a continuation of, the
transferor in respect of the business referred
to in paragraph (a), the transferred property
referred to in paragraph (b) and the
obligations referred to in paragraph (c),
|
|
|
|
(k.1) except for the purpose of this
subsection, where the provisions of
subsection 85(1) are not required to be
applied in respect of the transfer,
|
|
|
|
(i) the transferor shall be deemed not to
have disposed of a transferred property
that is a specified debt obligation (other
than a mark-to-market property), and
|
|
|
|
(ii) the transferee shall be deemed, in
respect of a transferred property that is a
specified debt obligation (other than a
mark-to-market property), to be the same
person as, and a continuation of, the
transferor,
|
|
|
|
and for the purpose of this paragraph,
``mark-to-market property'' and ``specified
debt obligation'' have the meanings
assigned by subsection 142.2(1),
|
|
|
|
(k.2) for the purposes of subsections 112(5)
to (5.2) and (5.4) and the definition
``mark-to-market property'' in subsection
142.2(1), the transferee shall be deemed, in
respect of the transferred property, to be the
same person as, and a continuation of, the
transferor,
|
|
|
|
(15) The definitions ``Canada security''
and ``cost'' in subsection 138(12) of the Act
are repealed.
|
|
|
|
(16) The first formula in the definition
``gross investment revenue'' in subsection
138(12) of the Act is replaced by the
following:
|
|
|
|
A + B + C + D + E + F - G
|
|
|
|
(17) The description of A in the definition
``gross investment revenue'' in subsection
138(12) of the Act is replaced by the
following:
|
|
|
|
A is the total of the following amounts
included in its gross revenue for the year:
|
|
|
|
(a) taxable dividends, and
|
|
|
|
(b) amounts received or receivable as,
on account of, in lieu of or in
satisfaction of, interest, rentals or
royalties, other than amounts in
respect of debt obligations to which
subsection 142.3(1) applies for the
year,
|
|
|
|
(18) The description of E in the definition
``gross investment revenue'' in subsection
138(12) of the Act is replaced by the
following:
|
|
|
|
|
|
|
|
(a) all amounts required by paragraph
142.3(1)(a) to be included in computing
its income for the year, and
|
|
|
|
(b) all amounts required by subsection
12(3) or 20(14) to be included in
computing its income for the year except
to the extent that those amounts are
included in the computation of A,
|
|
|
|
(19) The definition ``gross investment
revenue'' in subsection 138(12) of the Act is
amended by adding the word ``and'' at the
end of the description of F and by adding the
following after the description of F:
|
|
|
|
G is the total of all amounts each of which
is
|
|
|
|
(a) an amount deemed by
subparagraph 16(6)(a)(ii) to be paid by
it in respect of the year as interest, or
|
|
|
|
(b) an amount deductible under
paragraph 142.3(1)(b) in computing its
income for the year;
|
|
|
|
(20) Subsection 138(13) of the Act is
replaced by the following:
|
|
| Variation in
``tax basis''
and
``amortized
cost''
|
(13) Where
|
|
|
|
(a) in a taxation year that ended after 1968
and before 1978 an insurer carried on a life
insurance business in Canada and an
insurance business in a country other than
Canada,
|
|
|
|
(b) the insurer did not make an election in
respect of the year under subsection 138(9)
of the Income Tax Act, chapter 148 of the
Revised Statutes of Canada, 1952, as it
applied to that year, and
|
|
|
|
(c) the ratio of the value for the year of the
insurer's specified Canadian assets to its
Canadian investment fund for the year
exceeded one,
|
|
|
|
each of the amounts included or deducted as
follows in respect of the year shall be
multiplied by the ratio referred to in paragraph
(c):
|
|
|
|
(d) under paragraph (c), (d), (k) or (l) of the
definition ``tax basis'' in subsection
142.4(1) in determining the tax basis of a
debt obligation to the insurer, or
|
|
|
|
(e) under paragraph (c), (d), (f) or (h) of the
definition ``amortized cost'' in subsection
248(1) in determining the amortized cost of
a debt obligation to the insurer.
|
|
|
|
(21) Subsections (1), (3), (7) and (15)
apply to taxation years that begin after
February 22, 1994 and
|
|
|
|
(a) paragraph 138(3)(b) of the Act, as it
applies to a taxation year that includes
February 22, 1994, shall be read as
follows:
|
|
|
|
(b) the total of losses sustained in the year
by the insurer in respect of Canada
securities owned by it that were disposed of
by it in the year and before February 23,
1994;
|
|
|
|
and
|
|
|
|
(b) paragraph 138(4)(b) of the Act, as it
applies to a taxation year that includes
February 22, 1994, shall be read as
follows:
|
|
|
|
(b) the total of profits or gains made in the
year by the insurer in respect of Canada
securities owned by it that were disposed of
by it in the year and before February 23,
1994; and
|
|
|
|
(22) Subsections (2), (4), (6), (17), (18) and
(20) apply to taxation years that end after
February 22, 1994.
|
|
|
|
(23) Subsection (5) applies to dispositions
occurring after October 30, 1994, except
the disposition of a debt obligation before
July 1995 where
|
|
|
|
(a) the disposition is part of a series of
transactions or events that began before
October 31, 1994;
|
|
|
|
(b) as part of the series of transactions or
events, the taxpayer who acquired the
debt obligation disposed of property
before October 31, 1994; and
|
|
|
|
(c) it is reasonable to consider that one of
the main reasons for the acquisition of the
debt obligation by the taxpayer was to
obtain a deduction because, as a
consequence of the disposition referred to
in paragraph (b),
|
|
|
|
(i) an amount was included in the
taxpayer's income for any taxation
year, or
|
|
|
|
(ii) an amount was subtracted from a
balance of undeducted outlays,
expenses or other amounts of the
taxpayer and the subtracted amount
exceeded the portion, if any, of the
balance that could reasonably be
considered to be in respect of the
property.
|
|
|
|
(24) Subsections (8) and (10) apply to
changes in use of property occurring in
taxation years that begin after October
1994.
|
|
|
|
(25) Subsections (9) and (12) apply to
changes in use of property occurring after
February 22, 1994.
|
|
|
|
(26) Subsection (11) applies to property
deemed by subsection 138(11.3) of the Act to
be disposed of after 1994.
|
|
|
|
(27) Subsection (13) and paragraph
138(11.5)(k.1) of the Act, as enacted by
subsection (14), apply to transfers of
insurance businesses occurring after
February 22, 1994.
|
|
|
|
(28) Paragraph 138(11.5)(k) of the Act, as
enacted by subsection (14), applies to
transfers of insurance businesses occurring
after October 1994.
|
|
|
|
(29) Paragraph 138(11.5)(k.2) of the Act,
as enacted by subsection (14), applies to
transfers of insurance businesses occurring
at any time (including, for greater
certainty, transfers occurring before this
Act is assented to).
|
|
|
|
(30) Subsections (16) and (19) apply to
taxation years that end after October 16,
1991, except that, in its application to
taxation years that end before February 23,
1994, the description of G in the definition
``gross investment revenue'' in subsection
138(12) of the Act, as enacted by subsection
(19), shall be read as follows:
|
|
|
|
G is the total of all amounts deemed by
subparagraph 16(6)(a)(ii) to be paid by it
in respect of the year as interest;
|
|
|
|
58. (1) The Act is amended by adding the
following after section 142.1:
|
|
|
|
|
|
|
|
Interpretation
|
|
| Definitions
|
142.2 (1) In this section and sections 142.3
to 142.6,
|
|
``financial
institution''
« institution
financière »
|
``financial institution'' at any time means
|
|
|
|
(a) a corporation that is, at that time,
|
|
|
|
(i) a corporation referred to in any of
paragraphs (a) to (e) of the definition
``restricted financial institution'' in
subsection 248(1),
|
|
|
|
(ii) an investment dealer, or
|
|
|
|
(iii) a corporation controlled by one or
more persons or partnerships each of
which is a financial institution at that
time, other than a corporation the
control of which was acquired by
reason of the default of a debtor where
it is reasonable to consider that control
is being retained solely for the purpose
of minimizing any losses in respect of
the debtor's default, and
|
|
|
|
(b) a trust or partnership more than 50%
of the fair market value of all interests in
which are held at that time by one or more
financial institutions,
|
|
|
|
|
|
|
|
(c) a corporation that is, at that time,
|
|
|
|
(i) an investment corporation,
|
|
|
|
(ii) a mortgage investment
corporation,
|
|
|
|
(iii) a mutual fund corporation, or
|
|
|
|
(iv) a deposit insurance corporation (as
defined in subsection 137.1(5)),
|
|
|
|
(d) a trust that is a mutual fund trust at that
time, nor
|
|
|
|
(e) a prescribed person or partnership;
|
|
``investment
dealer''
« courtier en
valeurs
mobilières »
|
``investment dealer'' at any time means a
corporation that is, at that time, a registered
securities dealer;
|
|
``mark-to-mar
ket property''
« bien évalué
à la valeur du
marché »
|
``mark-to-market property'' of a taxpayer for
a taxation year means property held by the
taxpayer in the year that is
|
|
|
|
|
|
|
|
(b) where the taxpayer is not an
investment dealer, a specified debt
obligation that
|
|
|
|
(i) was carried at fair market value in
the taxpayer's financial statements
|
|
|
|
(A) for the year, where the taxpayer
held the obligation at the end of the
year, and
|
|
|
|
(B) for each preceding taxation year
that ended after the taxpayer
acquired the obligation, or
|
|
|
|
(ii) was acquired and disposed of in the
year, where it is reasonable to expect
that the obligation would have been
carried in the taxpayer's financial
statements for the year at fair market
value if the taxpayer had not disposed
of the obligation,
|
|
|
|
other than a specified debt obligation of
the taxpayer that was (or would have
been) carried at fair market value
|
|
|
|
(iii) solely because its fair market
value was less than its cost to the
taxpayer, or
|
|
|
|
(iv) because of a default of the debtor,
and
|
|
|
|
(c) where the taxpayer is an investment
dealer, a specified debt obligation,
|
|
|
|
|
|
|
|
(d) a share of a corporation in which the
taxpayer has a significant interest at any
time in the year, nor
|
|
|
|
(e) a prescribed property;
|
|