BILL C-69 - First Reading

``specified proportion'' « proportion déterminée »	``specified proportion'' of a member of a part nership for a fiscal period of the partnership means the proportion that the member's share of the total income or loss of the part nership for the partnership's fiscal period is of the partnership's total income or loss for that period and, for the purpose of this defi nition, where that income or loss for a peri od is nil, that proportion shall be computed as if the partnership had income for that pe riod in the amount of $1,000,000.
	(4) Section 206 of the Act is amended by adding the following after subsection (1):
Exception where substantial Canadian presence	(1.1) Property described in paragraph (d.1) of the definition ``foreign property'' in subsec tion (1) does not, at a particular time, include property of a taxpayer that is a share or debt obligation that was issued by a corporation that, at the particular time, is a Canadian corporation where
	(a) either at any time in any of the last 15 months beginning before the time (in this subsection referred to as the ``acquisition time'') when the property was last acquired before the particular time by the taxpayer or at any time in the calendar year that includes the acquisition time, the total of all amounts each of which is the designated value of a qualified property of the corpora tion or an affiliate of the corporation exceeded $50,000,000;
	(b) the particular time is not later than the end of the 15th month ending after the acquisition time and, at any time in any of the last 15 months beginning before the acquisition time, the total of all amounts each of which is the designated value of a qualified property of the corporation or another corporation controlled by the cor poration exceeded 50% of the lesser of the fair market value of all of the corporation's property and the carrying value of all of the corporation's property;
	(c) the particular time is after the acquisi tion time and, at any time in any of the first 15 months beginning after the acquisition time, the total of all amounts each of which is the designated value of a qualified property of the corporation or another corporation controlled by the corporation exceeded 50% of the lesser of the fair market value of all of the corporation's property and the carrying value of all of the corporation's property;
	(d) the particular time is after 1995 and, at the particular time,
	(i) either
	(A) the corporation was incorporated under the laws of Canada or a prov ince, or
	(B) where the corporation was not required to maintain an office under the laws by or under which it was incorporated, the maintenance of an office in Canada is required under the constitutional documents of the corpo ration,
	(ii) the corporation maintains an office in Canada, and
	(iii) any of the following clauses applies:
	(A) the corporation employs more than 5 individuals in Canada full time and those individuals are not employed primarily in connection with
	(I) an investment activity of the corporation or another corporation with which the corporation does not deal at arm's length,
	(II) a business carried on by the corporation through a partnership of which the corporation is not a ma jority interest partner, or
	(III) a business carried on by another corporation with which the corpora tion does not deal at arm's length through a partnership of which that other corporation is not a majority interest partner,
	(B) another corporation that is con trolled by the corporation employs more than 5 individuals in Canada full time and those individuals are not employed primarily in connection with
	(I) an investment activity of the other corporation or another corpo ration with which the other corpora tion does not deal at arm's length,
	(II) a business carried on by the other corporation through a partner ship of which the other corporation is not a majority interest partner, or
	(III) a business carried on by another corporation with which the other corporation does not deal at arm's length through a partnership of which that other corporation is not a majority interest partner,
	(C) the total amount incurred by the corporation for the services (other than services relating to an investment activity of the corporation or another corporation with which the corpora tion does not deal at arm's length) of employees and other individuals ren dered in Canada in any calendar year that ends in any of the last 15 months that end before the particular time exceeds $250,000,
	(D) the total amount incurred by another corporation that is controlled by the corporation for the services (other than services relating to an investment activity of the other corpo ration or another corporation with which the other corporation does not deal at arm's length) of employees and other individuals rendered in Canada in any calendar year that ends in any of the last 15 months that end before the particular time exceeds $250,000, or
	(E) the corporation was incorporated in the calendar year that includes the particular time and the total amount incurred by the corporation for the services (other than services relating to an investment activity of the corpora tion or another corporation with which the corporation does not deal at arm's length) of employees and other indi viduals rendered in Canada exceeds $250,000; or
	(e) the particular time is after 1995 and, at the particular time, all or substantially all of the property of the corporation is not foreign property.
Partnerships	(1.2) For the purposes of paragraphs (1.1)(a) to (c) and this subsection,
	(a) a member of a partnership
	(i) is deemed not to own any interest in the partnership at any time, and
	(ii) is deemed to own the member's specified proportion for the partnership's first fiscal period that ends at or after that time of each property that would, if the assumption in paragraph 96(1)(c) were made, be owned by the partnership at that time; and
	(b) the carrying value at that time of that specified proportion of a partnership's property is deemed to be that specified proportion of the carrying value at that time to the partnership of that property.
Interpreta- tion	(1.3) For the purpose of paragraph (1.1)(d),
	(a) an employee of a corporation is deemed to be employed in Canada where the corporation's permanent establishment (as defined by regulation) to which the em ployee principally reports is situated in Canada; and
	(b) services are deemed to be rendered in Canada to a corporation where the perma nent establishment (as defined by regula tion) for which the services are rendered is situated in Canada.
Rights in respect of foreign property	(1.4) For the purpose of determining wheth er a property owned by a taxpayer is foreign property at any time because of paragraph (f) or (h) of the definition ``foreign property'' in subsection (1), it shall be assumed that each other property not owned at that time by the taxpayer was acquired immediately before that time by the taxpayer.
Identical property	(1.5) Notwithstanding paragraphs (d.1), (f) and (h) of the definition ``foreign property'' in subsection (1), a property shall not be consid ered to be foreign property at a particular time of a taxpayer because of any of those para graphs where
	(a) the property is
	(i) a share or debt obligation issued by a Canadian corporation, or
	(ii) an interest in, a right to, a property that is convertible into or a property that is exchangeable for, a share or debt obligation issued by a Canadian corpora tion; and
	(b) the property, or the share or obligation referred to in subparagraph (a)(ii), is identi cal to another property that is owned at the particular time by the taxpayer and that is not foreign property at the particular time of the taxpayer.
	(5) Section 206 of the Act is amended by adding the following after subsection (2):
Registered investments	(2.01) Notwithstanding subsection (2), the tax payable under this section by a registered investment in respect of a month is equal to the lesser of
	(a) the tax that would, but for this subsec tion, be payable by the registered invest ment in respect of the month, and
	(b) the greater of
	(i) 20% of the amount determined under paragraph (a), and
	(ii) the amount determined by the formu la
	$5,000 + (A x B/C)
	where
	A is equal to the amount determined under paragraph (a),
	B is equal to
	(A) where the registered investment is a trust, the total of all amounts each of which is the fair market value at the end of the month of an interest in the registered investment that is held at that time by a taxpayer described in any of paragraphs 205(a) to (f) or by a mutual fund corporation, investment corpora tion, mutual fund trust, prescribed trust or prescribed partnership, and
	(B) where the registered investment is a corporation, the total of all amounts each of which is the fair market value at the end of the month of a share of the capital stock of the registered investment that is held at that time by a taxpayer described in any of paragraphs 205(a) to (f) or by a mutual fund corporation, invest ment corporation, mutual fund trust, prescribed trust or prescribed part nership, and
	C is equal to
	(A) where the registered investment is a trust, the total of all amounts each of which is the fair market value at the end of the month of an interest in the registered investment that is held at that time, and
	(B) where the registered investment is a corporation, the total of all amounts each of which is the fair market value at the end of the month of a share of the capital stock of the registered investment that is held at that time.
	(6) Subsection 206(3) of the Act is re pealed.
	(7) Paragraph (d.1) of the definition ``foreign property'' in subsection 206(1) of the Act, as enacted by subsection (1), and the definitions ``affiliate'', ``carrying val ue'', ``designated value'', ``excluded share'', ``qualified property'', ``specified active business'' and ``specified propor tion'' in subsection 206(1) of the Act, as enacted by subsection (3), apply to shares and indebtedness acquired after December 4, 1985 (otherwise than pursuant to an agreement in writing made before 5:00 p.m. Eastern Standard Time on December 4, 1985), except that, with respect to shares and indebtedness last acquired before 1996, the reference to ``primarily from foreign property'' in that paragraph shall be read as a reference to ``primarily from portfolio investments in property that is foreign property''.
	(8) Paragraph (e) of the definition ``for eign property'' in subsection 206(1) of the Act, as enacted by subsection (1), and subsection (6) apply to months that end after June 1995.
	(9) Subsection (2) applies to months after March 1991.
	(10) The definitions ``investment activ ity'' and ``significant interest'' in subsection 206(1) of the Act, as enacted by subsection (3), apply after 1995.
	(11) Subsection (4) applies after Decem ber 4, 1985.
	(12) Subsection (5) applies to months that end after 1992.
	133. (1) Section 206.1 of the Act is replaced by the following:
Tax in respect of acquisition of shares	206.1 Where at any time a taxpayer to which this Part applies makes an agreement (otherwise than as a consequence of the acquisition or writing by it of an option listed on a prescribed stock exchange) to acquire a share of the capital stock of a corporation (otherwise than from the corporation) at a price that may differ from the fair market value of the share at the time the share may be acquired, the taxpayer shall, in respect of each month during which the taxpayer is a party to the agreement, pay a tax under this Part equal to the total of all amounts each of which is the amount, if any, by which
	(a) the amount of a dividend paid on the share at a time in the month at which the taxpayer is a party to the agreement
	exceeds
	(b) the amount, if any, of the dividend that is received by the taxpayer.
	(2) Subsection (1) applies to agreements entered into after 1992, except that, in its application to agreements entered into after 1992 and before April 26, 1995, section 206.1 of the Act, as enacted by subsection (1), shall be read as follows:
	206.1 Where at any time a taxpayer to which this Part applies enters into an agree ment (otherwise than as a consequence of the acquisition or writing by it of an option listed on a prescribed stock exchange) to acquire a share of the capital stock of a corporation (otherwise than from the corporation) at a price that may differ from the fair market value of the share at the time the share may be acquired, the taxpayer shall, in respect of each month during which the taxpayer is a party to the agreement, pay a tax under this Part equal to the lesser of
	(a) the total of all amounts each of which is the amount, if any, by which
	(i) the amount of a dividend paid on the share at a time in the month at which the taxpayer is a party to the agreement
	exceeds
	(ii) the amount, if any, of the dividend that is received by the taxpayer, and
	(b) 1% of the fair market value of the share at the time the agreement is entered into.
	133.1 (1) Section 207.6 of the Act is amended by adding the following after subsection (6):
Transfers	(7) Where an amount (other than an amount that is part of a series of periodic payments) is transferred directly to a retirement compensa tion arrangement (other than an arrangement the custodian of which is non-resident or which is deemed by subsection (5) to be a retirement compensation arrangement) from another retirement compensation arrange ment,
	(a) the amount shall not, solely because of the transfer, be included in computing a taxpayer's income under Part I;
	(b) no deduction may be made in respect of the amount in computing a taxpayer's income under Part I; and
	(c) the amount is considered, for the purpose of the definition ``refundable tax'' in subsection 207.5(1), to be paid as a distribution to one or more persons under the arrangement from which the amount is transferred and to be a contribution made under the arrangement to which the amount is transferred.
	(2) Subsection (1) applies to amounts transferred after 1995.
	134. (1) The portion of the description of A in subsection 211.1(3) of the Act before paragraph (a) is replaced by the following:
	A is, subject to subsection (4), the total of all amounts, each of which is in respect of a li ability, benefit, risk or guarantee under a life insurance policy that was at any time in the year a taxable life insurance policy of the insurer, determined by multiplying the net interest rate in respect of the liability, benefit, risk or guarantee for the year by 1/2 of the total of
	(2) The portion of the description of D in subsection 211.1(3) of the Act before para graph (a) is replaced by the following:
	D is, subject to subsection (4), the amount de termined by multiplying the percentage de termined in the description of A in the defi nition ``net interest rate'' in subsection 211(1) in respect of the year by 1/2 of the to tal of
	(3) Section 211.1 of the Act is amended by adding the following after subsection (3):
Short taxation year	(4) Where a taxation year of a life insurer is less than 51 weeks, the values of A and D in subsection (3) for the year are that proportion of those values otherwise so determined that the number of days in the year (other than February 29) is of 365.
	(4) Subsections (1) to (3) apply to the 1992 and subsequent taxation years.
	135. (1) Section 211.3 of the Act is replaced by the following:
Instalments	211.3 (1) Every life insurer shall, in respect of each of its taxation years, pay to the Receiver General on or before the last day of each month in the year, an amount equal to 1/12 of the lesser of