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(b) the individual's labour-sponsored funds
tax credit in respect of the original
acquisition of the share is nil;
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(c) tax becomes payable under Part XII.5
because of the redemption, acquisition or
cancellation;
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(d) an amount determined under regulations
made for the purpose of clause
204.81(1)(c)(v)(F) is directed to be remitted
to the Receiver General in order to permit
the redemption, acquisition or cancellation;
or
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(e) the individual becomes either disabled
and permanently unfit for work or
terminally ill in the year
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(i) after the last original acquisition in the
year of any approved share by the
individual or by a qualifying trust for the
individual in respect of that share, and
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(ii) before the redemption, acquisition or
cancellation.
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Labour-
sponsored
funds tax
credit limit
|
(5) For the purpose of subsection (2), an
individual's labour-sponsored funds tax credit
limit for a taxation year is the lesser of
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(b) the amount, if any, by which
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(i) the total of all amounts each of which
is the individual's labour-sponsored
funds tax credit in respect of an original
acquisition in the year or in the first 60
days of the following taxation year of an
approved share
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(ii) the portion of the total described in
subparagraph (i) that was deducted under
subsection (2) in computing the
individual's tax payable under this Part
for the preceding taxation year.
|
|
| Labour-
sponsored
funds tax
credit
|
(6) For the purposes of subsections (4) and
(5), an individual's labour-sponsored funds
tax credit in respect of an original acquisition
of an approved share is equal to the least of
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(a) 15% of the net cost to the individual (or
to a qualifying trust for the individual in
respect of the share) for the original
acquisition of the share by the individual or
by the trust,
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(b) nil, where the share was issued by a
registered labour-sponsored venture capital
corporation unless the information return
described in paragraph 204.81(6)(c) is filed
with the individual's return of income for
the taxation year for which a claim is made
under subsection (2) in respect of the
original acquisition of the share (other than
a return of income filed under subsection
70(2), paragraph 104(23)(d) or 128(2)(e) or
subsection 150(4)),
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(c) nil, where the individual dies after
December 5, 1996 and before the original
acquisition of the share, and
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(d) nil, where a payment in respect of the
disposition of the share has been made
under section 211.9.
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(5) Subsections (1) and (2) and
subsections 127.4(3) to (6) of the Act, as
enacted by subsection (4), apply to the 1996
and subsequent taxation years, except that,
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(a) in its application to the 1996 taxation
year, subsection 127.4(5) of the Act, as
enacted by subsection (4), shall be read as
follows:
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(5) For the purpose of subsection (2), an
individual's labour-sponsored funds tax credit
limit for a taxation year is the lesser of
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(i) the lesser of $1,000 and the amount, if
any, by which
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(A) the total of all amounts each of
which is the individual's
labour-sponsored funds tax credit in
respect of an original acquisition after
1995 and before March 6, 1996 of an
approved share
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(B) such portion of the amount
deducted under subsection (2) in
computing the individual's tax
payable under this Part for the 1995
taxation year as is attributable to the
original acquisition after 1995 of an
approved share, and
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(ii) the amount, if any, by which $525
exceeds the amount determined under
subparagraph (i) in respect of the
individual for the year, and
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(b) the amount, if any, by which
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(i) the total of all amounts each of which
is the individual's labour-sponsored
funds tax credit in respect of an original
acquisition in the year or in the first 60
days of the following taxation year of an
approved share
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(ii) the portion of the total described in
subparagraph (i) that was deducted under
subsection (2) in computing the
individual's tax payable under this Part
for the preceding taxation year.
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(b) the reference to ``15%'' in paragraph
127.4(6)(a) of the Act, as enacted by
subsection (4), shall be read as ``20%'' for
original acquisitions that occurred
before March 6, 1996.
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(6) Subsection (3) applies after 1995.
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|
(7) Subsection 127.4(2) of the Act, as
enacted by subsection (4), applies to the
1996 and subsequent taxation years and, for
the 1992 to 1995 taxation years, subsection
127.4(2) of the Act shall be read as follows:
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(2) There may be deducted from the tax
otherwise payable by an individual (other than
a trust) for a taxation year the lesser of $1,000
and the individual's labour-sponsored funds
tax credit (determined as if an approved share
in respect of which an individual receives a
payment under section 211.9 had never been
either acquired nor irrevocably subscribed and
paid for).
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38. (1) The portion of subsection
127.41(3) of the Act before paragraph (a) is
replaced by the following:
|
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| Deemed
payment of
Part I tax
|
(3) There is deemed to have been paid on
account of the tax payable under this Part by
a taxpayer (other than a taxpayer exempt from
such tax) for a taxation year on the taxpayer's
balance-due day for the year, such amount as
the taxpayer claims not exceeding the amount,
if any, by which
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(2) Subsection (1) applies to the 1996 and
subsequent taxation years.
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39. (1) Subsection 138(2) of the Act is
replaced by the following:
|
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| Insurer's
income or loss
|
(2) Notwithstanding any other provision of
this Act, where a life insurer resident in
Canada carries on an insurance business in
Canada and in a country other than Canada in
a taxation year
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(a) its income or loss for the year from
carrying on an insurance business is the
amount of its income or loss for the year,
computed in accordance with this Act, from
the business in Canada; and
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(b) no amount shall be included in
computing its income for the year in respect
of its taxable capital gains and allowable
capital losses from dispositions of property
(other than property disposed of in a
taxation year in which it was designated
insurance property) of the insurer used or
held by it in the course of carrying on an
insurance business.
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|
(2) Subparagraphs 138(3)(a)(i) and (ii) of
the Act are replaced by the following:
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(i) any amount that the insurer claims as
a policy reserve for the year in respect of
its life insurance policies, not exceeding
the total of amounts that the insurer is
allowed by regulation to deduct in
respect of the policies,
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(ii) any amount that the insurer claims as
a reserve in respect of claims that were
received by the insurer before the end of
the year under its life insurance policies
and that are unpaid at the end of the year,
not exceeding the total of amounts that
the insurer is allowed by regulation to
deduct in respect of the policies,
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(ii.1) the amount included under
paragraph (4)(b) in computing the
insurer's income for the taxation year
preceding the year,
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|
(3) Subsection 138(4) of the Act is
replaced by the following:
|
|
| Amounts
included in
computing
income
|
(4) In computing a life insurer's income for
a taxation year from carrying on its life
insurance business in Canada, there shall be
included
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|
(a) each amount deducted under
subparagraph (3)(a)(i), (ii) or (iv) in
computing the insurer's income for the
preceding taxation year;
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|
(b) the amount prescribed in respect of the
insurer for the year in respect of its life
insurance policies; and
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|
(c) the total of all amounts received by the
insurer in the year in respect of the
repayment of policy loans or in respect of
interest on policy loans.
|
|
| Life insurance
policy
|
(4.01) For the purposes of subsections (3)
and (4), a life insurance policy includes a
benefit under a group life insurance policy or
a group annuity contract.
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|
(4) The portion of subsection 138(4.4) of
the Act after paragraph (d) and before
paragraph (e) is replaced by the following:
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there shall be included in computing the
insurer's income for the year, where the land,
building or interest was designated insurance
property of the insurer for the year, or property
used or held by it in the year in the course of
carrying on an insurance business in Canada,
the total of all amounts each of which is the
amount prescribed in respect of the insurer's
cost or capital cost, as the case may be, of the
land, building or interest for the period, and
the amount prescribed shall, at the end of the
period, be included in computing
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|
(5) The portion of subsection 138(4.5) of
the Act before paragraph (a) is replaced by
the following:
|
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| Application
|
(4.5) Where a life insurer transfers or lends
property, directly or indirectly in any manner
whatever, to a person or partnership (in this
subsection referred to as the ``transferee'')
that is affiliated with the insurer or a person or
partnership that does not deal at arm's length
with the insurer and
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|
(6) Paragraph 138(4.5)(d) of the Act is
replaced by the following:
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|
(d) subsection (4.4) shall apply to include
an amount in the insurer's income for the
year on the assumption that the property
was owned by the insurer for the period, was
property described in paragraph (4.4)(a),
(b), (c) or (d) of the insurer and was used or
held by it in the year in the course of
carrying on an insurance business in
Canada, and
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|
(7) Paragraph 138(5)(b) of the Act is
replaced by the following:
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|
(b) in the case of a non-resident insurer or a
life insurer resident in Canada that carries
on any of its insurance business in a country
other than Canada, no deduction may be
made under paragraph 20(1)(c) or (d) in
computing its income for a taxation year
from carrying on an insurance business in
Canada, except in respect of
|
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(i) interest on borrowed money used to
acquire designated insurance property
for the year in respect of the business,
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|
(ii) interest on amounts payable for
designated insurance property for the
year in respect of the business,
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|
(iii) interest on deposits received or other
amounts held by the insurer that arose in
connection with life insurance policies in
Canada or with policies insuring
Canadian risks, or
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|
(iv) other interest that does not exceed a
prescribed amount.
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|
(8) Subsection 138(7) of the Act is
repealed.
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|
(9) Subsections 138(9), (10) and (11.1) of
the Act are replaced by the following:
|
|
| Computation
of income
|
(9) Where in a taxation year an insurer
(other than an insurer resident in Canada that
does not carry on a life insurance business)
carries on an insurance business in Canada and
in a country other than Canada, there shall be
included in computing its income for the year
from carrying on its insurance businesses in
Canada the total of
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|
(a) its gross investment revenue for the year
from its designated insurance property for
the year, and
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|
(b) the amount prescribed in respect of the
insurer for the year.
|
|
| Application of
financial
institution
rules
|
(10) Notwithstanding sections 142.3, 142.4
and 142.5, where in a taxation year an insurer
(other than an insurer resident in Canada that
does not carry on a life insurance business)
carries on an insurance business in Canada and
in a country other than Canada, in computing
its income for the year from carrying on an
insurance business in Canada,
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|
(a) sections 142.3 and 142.5 apply only in
respect of property that is designated
insurance property for the year in respect of
the business; and
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|
(b) section 142.4 applies only in respect of
the disposition of property that, for the
taxation year in which the insurer disposed
of it, was designated insurance property in
respect of the business.
|
|
| Identical
properties
|
(11.1) For the purpose of section 47, any
property of a life insurance corporation that
would, but for this subsection, be identical to
any other property of the corporation is
deemed not to be identical to the other
property unless both properties are
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(a) designated insurance property of the
insurer in respect of a life insurance
business carried on in Canada; or
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|
(b) designated insurance property of the
insurer in respect of an insurance business
in Canada other than a life insurance
business.
|
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|
(10) Subsections 138(11.3) and (11.31) of
the Act are replaced by the following:
|
|
| Deemed
disposition
|
(11.3) Subject to subsection (11.31), where
a property of a life insurer resident in Canada
that carries on an insurance business in
Canada and in a country other than Canada or
of a non-resident insurer is
|
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|
(a) designated insurance property of the
insurer for a taxation year, was owned by
the insurer at the end of the preceding
taxation year and was not designated
insurance property of the insurer for that
preceding year, or
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|
(b) not designated insurance property for a
taxation year, was owned by the insurer at
the end of the preceding taxation year and
was designated insurance property of the
insurer for that preceding year,
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|
the insurer is deemed to have disposed of the
property at the beginning of the year for
proceeds of disposition equal to its fair market
value at that time and to have immediately
thereafter reacquired the property at a cost
equal to that fair market value.
|
|
| Exclusion
from deemed
disposition
|
(11.31) Subsection (11.3) does not apply
|
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|
(a) to deem a disposition in a taxation year
of a property of an insurer where subsection
142.5(2) deemed the insurer to have
disposed of the property in its preceding
taxation year; nor
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|
(b) for the purposes of paragraph 20(1)(l),
the description of A and paragraph (b) of the
description of F in the definition
``undepreciated capital cost'' in subsection
13(21) and the definition ``designated
insurance property'' in subsection (12).
|
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|
(11) Paragraph 138(11.5)(i) of the Act is
replaced by the following:
|
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|
(i) for the purpose of determining the
amount of gross investment revenue
required by subsection (9) to be included in
computing the transferor's income for the
particular taxation year referred to in
paragraph (h) and its gains and losses from
its designated insurance property for its
subsequent taxation years, the transferor is
deemed to have transferred the business
referred to in paragraph (a), the property
referred to in paragraph (b) and the
obligations referred to in paragraph (c) to
the transferee on the last day of the
particular year,
|
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|
(12) Subsection 138(11.5) of the Act is
amended by adding the following after
paragraph (j):
|
|
|
|
(j.1) for the purpose of determining the
income of the transferor and the transferee
for their taxation years following their
taxation years referred to in paragraph (h),
amounts included under paragraphs (4)(b)
and 12(1)(e.1) in computing the transferor's
income for its taxation year referred to in
paragraph (h) in respect of the insurance
policies of the business referred to in
paragraph (a) are deemed to have been
included in computing the income of the
transferee, and not of the transferor, for
their taxation years referred to in paragraph
(h),
|
|
|
|
(13) Paragraph 138(11.91)(d) of the Act is
replaced by the following:
|
|
|
|
(d) for the purposes of paragraphs 12(1)(d)
and (e), paragraph (4)(a), subsection (9) and
the definition ``designated insurance
property'' in subsection (12), the insurer is
deemed to have carried on the business in
Canada in that preceding year and to have
claimed the maximum amounts to which it
would have been entitled under paragraphs
20(1)(l) and (l.1) and 20(7)(c) and
subparagraphs (3)(a)(i), (ii) and (iv) for that
year,
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