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(7) The definition ``designated insurance
property'' in subsection 138(12) of the Act
is replaced by the following:
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``designated
insurance
property'' « bien d'assurance désigné »
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``designated insurance property'' for a
taxation year of an insurer (other than an
insurer resident in Canada that at no time in
the year carried on a life insurance business)
that, at any time in the year, carried on an
insurance business in Canada and in a
country other than Canada, means property
determined in accordance with prescribed
rules except that, in its application to any
taxation year, ``designated insurance
property'' for the 1998 or a preceding
taxation year means property that was,
under this subsection as it read in its
application to taxation years that ended in
1996, property used by it in the year in, or
held by it in the year in the course of,
carrying on an insurance business in
Canada;
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(8) Subsections (1) to (3) and (7) apply to
the 1997 and subsequent taxation years.
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(9) Subsections (4) to (6) apply to the 1999
and subsequent taxation years except that,
where a taxpayer or a taxpayer's legal
representative so elects in writing and files
with the Minister of National Revenue
before 2002 its election in respect of one or
more of paragraph 138(11.5)(b) of the Act,
as enacted by subsection (4), paragraph
138(11.91)(e) of the Act, as enacted by
subsection (5), or paragraph 138(11.94)(b)
of the Act, as enacted by subsection (6), each
of the subsections in respect of which the
election was made applies to the taxpayer's
1997 and subsequent taxation years.
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134. (1) Section 138.1 of the Act is
amended by adding the following after
subsection (3):
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Deemed gains
and losses
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(3.1) Where an amount is deemed under
subsection (3) to be a capital gain or capital
loss of a policyholder or other beneficiary (in
this subsection referred to as the ``taxpayer'')
of a related segregated fund trust, in respect of
capital gains or losses realized in a taxation
year of the related segregated fund trust that
includes February 28, 2000 or October 17,
2000, and the related segregated fund trust so
elects under this subsection in its return of
income for the year,
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Deemed gains
and losses -
taxpayer
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(3.2) Where a capital gain or a capital loss
is deemed by subsection (3) to be a capital gain
or a capital loss of a taxpayer and not that of
a related segregated fund trust,
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(2) Subsection (1) applies to taxation
years that end after February 27, 2000.
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135. (1) The portion of subsection 141(5)
of the Act before paragraph (a) is replaced
by the following:
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Exclusion
from taxable
Canadian
property
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(5) For the purpose of paragraph (d) of the
definition ``taxable Canadian property'' in
subsection 248(1), a share of the capital stock
of a corporation is deemed to be listed at any
time on a stock exchange prescribed for the
purpose of that definition where
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(2) Subsection (1) applies after December
15, 1998.
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136. (1) The portion of subsection
142.2(1) of the Act before the definition
``financial institution'' is replaced by the
following:
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Definitions
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142.2 (1) In this section and sections 142.3
to 142.7,
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(2) Subsection (1) applies after June 27,
1999.
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137. (1) Subsection 142.6(2) of the Act is
replaced by the following:
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Ceasing to use
property in
Canadian
business
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(1.1) If at a particular time in a taxation year
a taxpayer that is a non-resident financial
institution (other than a life insurance
corporation) ceases to use, in connection with
a business or part of a business carried on by
the taxpayer in Canada immediately before
the particular time, a property that is a
mark-to-market property of the taxpayer for
the year or a specified debt obligation, but that
is not a property that was disposed of by the
taxpayer at the particular time,
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Beginning to
use property
in a Canadian
business
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(1.2) If at a particular time a taxpayer that
is a non-resident financial institution (other
than a life insurance corporation) begins to
use, in connection with a business or part of a
business carried on by the taxpayer in Canada,
a property that is a mark-to-market property of
the taxpayer for the year that includes the
particular time or a specified debt obligation,
but that is not a property that was acquired by
the taxpayer at the particular time, the
taxpayer is deemed
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Specified debt
obligation
marked to
market
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(1.3) In applying subsection (1.1) to a
taxpayer in respect of a property in a taxation
year,
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Deemed
disposition
not applicable
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(2) For the purposes of this Act, the
determination of when a taxpayer acquired a
share shall be made without regard to a
disposition or acquisition that occurred
because of subsection 142.5(2) or subsection
(1), (1.1) or (1.2).
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(2) Subsection (1) applies after June 27,
1999 in respect of an authorized foreign
bank, and after August 8, 2000 in any other
case.
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138. (1) The Act is amended by adding the
following after section 142.6:
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Conversion of Foreign Bank Affiliate to Branch |
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Definitions
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142.7 (1) The definitions in this subsection
apply in this section.
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``Canadian
affiliate'' « filiale canadienne »
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``Canadian affiliate'' of an entrant bank at any
particular time means a Canadian
corporation that was, immediately before
the particular time, affiliated with the
entrant bank and that was, at all times
during the period that began on February
11, 1999 and ended immediately before the
particular time,
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``eligible
property'' « bien admissible »
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``eligible property'' of a Canadian affiliate at
any time means a property described in any
of paragraphs 85(1.1)(a) to (g.1) that is,
immediately before that time, used or held
by it in carrying on its business in Canada.
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``entrant
bank'' « banque entrante »
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``entrant bank'' means a non-resident
corporation that is, or has applied to the
Superintendent of Financial Institutions to
become, an authorized foreign bank.
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``qualifying
foreign
merger'' « fusion étrangère déterminée »
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``qualifying foreign merger'' means a merger
or combination of two or more corporations
that would be a ``foreign merger'' within
the meaning assigned by subsection 87(8.1)
if that subsection were read without
reference to the words ``and otherwise than
as a result of the distribution of property to
one corporation on the winding-up of
another corporation.
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Qualifying
foreign
merger
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(2) Where an entrant bank was formed as
the result of a qualifying foreign merger, after
February 11, 1999, of two or more
corporations (referred to in this subsection as
``predecessors''), and at the time immediately
before the merger, there were one or more
Canadian corporations (referred to in this
subsection as ``predecessor affiliates''), each
of which at that time would have been a
Canadian affiliate of a predecessor if the
predecessor were an entrant bank at that time,
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Branch-establi
shment
rollover
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(3) If a Canadian affiliate of an entrant bank
transfers an eligible property to the entrant
bank, the entrant bank begins immediately
after the transfer to use or hold the transferred
property in its Canadian banking business and
the Canadian affiliate and the entrant bank
jointly elect, in accordance with subsection
(11), to have this subsection apply in respect
of the transfer, subsections 85(1) (other than
paragraph (e.2)), (1.1), (1.4) and (5) apply,
with any modifications that the circumstances
require, in respect of the transfer, except that
the portion of subsection 85(1) before
paragraph (a) shall be read as follows:
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``85. (1) Where a taxpayer that is a
Canadian affiliate of an entrant bank (within
the meanings assigned by subsection
142.7(1)) has, in a taxation year, disposed of
any of the taxpayer's property to the entrant
bank (referred to in this subsection as the
``corporation''), if the taxpayer and the
corporation have jointly elected under
subsection 142.7(3), the following rules
apply:''.
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Deemed fair
market value
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(4) If a Canadian affiliate of an entrant bank
and the entrant bank make an election under
subsection (3) in respect of a transfer of
property by the Canadian affiliate to the
entrant bank, for the purposes of subsections
15(1), 52(2), 69(1), (4) and (5), 246(1) and
247(2) in respect of the transfer, the fair
market value of the property is deemed to be
the amount agreed by the Canadian affiliate
and the entrant bank in their election.
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Specified debt
obligations
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(5) If a Canadian affiliate of an entrant bank
transfers a specified debt obligation to the
entrant bank in a transaction in respect of
which an election is made under subsection
(3), the Canadian affiliate is a financial
institution in its taxation year in which the
transfer is made, and the amount that the
Canadian affiliate and the entrant bank agree
on in their election in respect of the obligation
is equal to the tax basis of the obligation within
the meaning assigned by subsection 142.4(1),
the entrant bank is deemed, in respect of the
obligation, for the purposes of sections 142.2
to 142.4 and 142.6, to be the same corporation
as, and a continuation of, the Canadian
affiliate.
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Mark-to-mark
et property
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(6) If a Canadian affiliate of an entrant bank
described in paragraph (11)(a) transfers at any
time within the period described in paragraph
(11)(c) to the entrant bank a property that is,
for the Canadian affiliate's taxation year in
which the property is transferred, a
mark-to-market property of the Canadian
affiliate,
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Reserves
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(7) If
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then
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