Coming into Force

Coming into force

19. (1) Subject to subsection (2), the provisions of this Part or the provisions of any Act enacted by this Part come into force or are deemed to have come into force on a day or days to be fixed by order of the Governor in Council.

Section 16

(2) Despite section 153 of the Employment Insurance Act, section 16 comes into force on a day or days to be fixed by order of the Governor in Council.

PART 4

R.S., c. 1 (5th Supp.)

INCOME TAX ACT

20. (1) Subsection 6(8) of the Income Tax Act is replaced by the following:

GST rebates re costs of property or service

(8) If

    (a) an amount in respect of an outlay or expense is deducted under section 8 in computing the income of a taxpayer for a taxation year from an office or employment, or

    (b) an amount is included in the capital cost to a taxpayer of a property described in subparagraph 8(1)(j)(ii) or 8(1)(p)(ii),

and a particular amount is paid to the taxpayer in a particular taxation year as a rebate under the Excise Tax Act in respect of any goods and services tax included in the amount of the outlay or expense, or the capital cost of the property, as the case may be, the particular amount

    (c) to the extent that it relates to an outlay or expense referred to in paragraph (a), shall be included in computing the taxpayer's income from an office or employment for the particular taxation year, and

    (d) to the extent that it relates to the capital cost of property referred to in paragraph (b), is deemed, for the purposes of subsection 13(7.1), to have been received by the taxpayer in the particular taxation year as assistance from a government for the acquisition of the property.

(2) Subsection (1) applies to the 2002 and subsequent taxation years.

21. (1) Subsection 8(1) of the Act is amended by striking out the word ``and'' at the end of paragraph (p), by adding the word ``and'' at the end of paragraph (q) and by adding the following after paragraph (q):

Apprentice mechanics' tool costs

    (r) if the taxpayer was an eligible apprentice mechanic at any time after 2001 and before the end of the taxation year, the amount claimed by the taxpayer for the taxation year under this paragraph not exceeding the lesser of

      (i) the taxpayer's income for the taxation year computed without reference to this paragraph, and

      (ii) the amount determined by the formula

(A - B) + C

      where

      A is the total of all amounts each of which is the cost to the taxpayer of an eligible tool acquired in the taxation year by the taxpayer or, if the taxpayer first becomes employed as an eligible apprentice mechanic in the taxation year, the cost to the taxpayer of an eligible tool acquired by the taxpayer in the last three months of the preceding taxation year,

      B is the lesser of

          (A) the value of A for the taxation year in respect of the taxpayer, and

          (B) the greater of $1,000 and 5% of the total of all amounts, each of which is the taxpayer's income from employment for the taxation year as an eligible apprentice mechanic, computed without reference to this paragraph, and

      C is the amount by which the amount determined under this subparagraph for the preceding taxation year in respect of the taxpayer exceeds the amount deducted under this paragraph for that preceding taxation year by the taxpayer.

(2) Section 8 of the Act is amended by adding the following after subsection (5):

Apprentice mechanics

(6) For the purpose of paragraph (1)(r),

    (a) a taxpayer is an eligible apprentice mechanic in a taxation year if, at any time in the taxation year, the taxpayer

      (i) is registered in a program established in accordance with the laws of a province that leads to designation under those laws as a mechanic licensed to repair self-propelled motorized vehicles, and

      (ii) is employed as an apprentice mechanic;

    (b) an eligible tool is a tool (including ancillary equipment) that

      (i) is acquired by a taxpayer for use in connection with the taxpayer's employment as an eligible apprentice mechanic,

      (ii) has not been used for any purpose before it is acquired by the taxpayer, and

      (iii) is certified in prescribed form by the taxpayer's employer to be required to be provided by the taxpayer as a condition of, and for use in, the taxpayer's employment as an eligible apprentice mechanic; and

    (c) a taxpayer who, for a taxation year, is not an eligible apprentice mechanic and has an excess amount determined under the description of C in subparagraph (1)(r)(ii) is, for the taxation year, entitled to claim a deduction under that paragraph as if that excess amount were wholly applicable to an employment of the taxpayer.

Cost of tools of an apprentice mechanic

(7) Except for the purpose of the description of A in subparagraph (1)(r)(ii), the cost to a taxpayer of an eligible tool the cost of which was included in determining the value of that description in respect of the taxpayer for a taxation year is the amount determined by the formula

K - (K x L/M)

where

K is the cost to the taxpayer of the tool determined without reference to this subsection;

L is the amount that would be determined under subparagraph (1)(r)(ii) in respect of the taxpayer for the taxation year if the value of C in that subparagraph were nil; and

M is the value of A determined under subparagraph (1)(r)(ii) in respect of the taxpayer for the taxation year.

(3) Subsections (1) and (2) apply to eligible tools acquired after 2001.

22. (1) The portion of paragraph 38(a.1) of the Act before subparagraph (i) is replaced by the following:

    (a.1) a taxpayer's taxable capital gain for a taxation year from the disposition of any property is ¼ of the taxpayer's capital gain for the year from the disposition of the property if

(2) Subsection (1) applies to dispositions that occur after 2001.

23. (1) Paragraph 53(2)(m) of the Act is replaced by the following:

    (m) any part of the cost to the taxpayer of the property that was deductible (otherwise than because of this subdivision or paragraph 8(1)(r)) in computing the taxpayer's income for any taxation year commencing before that time and ending after 1971;

(2) Subsection (1) applies after 2001.

24. (1) Subsection 56(1) of the Act is amended by adding the following after paragraph (j):

Apprentice tools, re proceeds

    (k) all amounts received in the year by a person or partnership (in this paragraph referred to as the ``vendor'') as consideration for the disposition by the vendor of a property the cost of which was included in computing an amount under paragraph 8(1)(r) in respect of the vendor or in respect of a person with whom the vendor does not deal at arm's length, to the extent that the total of those amounts received in respect of the disposition in the year and in preceding taxation years exceeds the total of the cost to the vendor of the property immediately before the disposition and all amounts included in respect of the disposition under this paragraph in computing the vendor's income for a preceding taxation year, unless the property was acquired by the vendor in circumstances to which subsection 85(5.1) or subsection 97(5) applied;

(2) Subsection (1) applies to the 2002 and subsequent taxation years.

25. (1) Paragraph 60(n) of the Act is replaced by the following:

Repayment of pension or benefits

    (n) any amount paid by the taxpayer in the year as a repayment (otherwise than because of Part VII of the Unemployment Insurance Act, chapter U-1 of the Revised Statutes of Canada, 1985, or of Part VII of the Employment Insurance Act) of any of the following amounts to the extent that the amount was included in computing the taxpayer's income, and not deducted in computing the taxpayer's taxable income, for the year or for a preceding taxation year, namely,

      (i) a pension described in clause 56(1)(a)(i)(A),

      (ii) a benefit described in clause 56(1)(a)(i)(B),

      (iii) an amount described in subparagraph 56(1)(a)(ii),

      (iv) a benefit described in subparagraph 56(1)(a)(iv),

      (v) a benefit described in subparagraph 56(1)(a)(vi), and

      (vi) an amount described in paragraph 56(1)(r);

(2) Subsection (1) applies to the 1997 and subsequent taxation years and, notwithstanding subsections 152(4) to (5) of the Act, any assessment of a taxpayer's tax, interest or penalty for any taxation year shall be made that is necessary to give effect to subsection (1).

26. (1) Subsection 67.1(2) of the Act is amended by striking out the word ``or'' at the end of paragraph (e) and by adding the following after paragraph (e):

    (e.1) is an amount that

      (i) is not paid or payable in respect of entertainment or of a conference, convention, seminar or similar event,

      (ii) would, if this Act were read without reference to subparagraph 6(6)(a)(i), be required to be included in computing a taxpayer's income for a taxation year because of the application of section 6 in respect of food or beverages consumed by the taxpayer or by a person with whom the taxpayer does not deal at arm's length,

      (iii) is paid or payable in respect of the taxpayer's duties performed at a site in Canada at which the person carries on a construction activity or at a construction work camp referred to in subparagraph (iv) in respect of the site, and

      (iv) is paid or payable for food or beverages provided at a construction work camp, at which the taxpayer is lodged, that was constructed or installed at or near the site to provide board and lodging to employees while they are engaged in construction services at the site; or

(2) Subsection (1) applies to amounts paid or payable in respect of food and beverages provided after 2001.

27. (1) The portion of subsection 70(9) of the Act before paragraph (a) is replaced by the following:

Transfer of farm property to child

(9) If any land in Canada or depreciable property in Canada of a prescribed class of a taxpayer to which subsection (5) would otherwise apply was, before the taxpayer's death, used principally in a farming business in which the taxpayer, the taxpayer's spouse or common-law partner or any of the taxpayer's children was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot), the property is, as a consequence of the death, transferred or distributed to a child of the taxpayer who was resident in Canada immediately before the death and it can be shown, within the period ending 36 months after the death or, if written application that this subsection apply has been made to the Minister by the taxpayer's legal representative within that period, within any longer period that the Minister considers reasonable in the circumstances, that the property has vested indefeasibly in the child,

(2) Subparagraph 70(9.3)(b)(i) of the Act is replaced by the following:

      (i) a share in the capital stock of a Canadian corporation that would be a share in the capital stock of a family farm corporation if paragraph (a) of the definition ``share of the capital stock of a family farm corporation'' in subsection (10) were read without the words ``in which the person or a spouse, common-law partner, child or parent of the person was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot)'', or

(3) The portion of paragraph (a) of the definition ``interest in a family farm partnership'' in subsection 70(10) of the Act after subparagraph (iv) is replaced by the following:

      principally in the course of carrying on a farming business in Canada in which the person or a spouse, common-law partner, child or parent of the person was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot),

(4) The portion of paragraph (a) of the definition ``share of the capital stock of a family farm corporation'' in subsection 70(10) of the Act after subparagraph (iv) is replaced by the following:

      principally in the course of carrying on a farming business in Canada in which the person or a spouse, common-law partner, child or parent of the person was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot),

(5) Subsection (1) applies to transfers of property that occur as a consequence of deaths that occur after December 10, 2001.

(6) Subsection (2) applies to transfers and distributions of property that occur after December 10, 2001.

(7) Subsections (3) and (4) apply to transfers of property that occur after December 10, 2001.

28. (1) The portion of subsection 73(3) of the Act before paragraph (a) is replaced by the following:

Inter vivos transfer of farm property to child

(3) For the purposes of this Part, if at any time any land in Canada or depreciable property in Canada of a prescribed class of a taxpayer or any eligible capital property in respect of a business carried on in Canada by a taxpayer is transferred by the taxpayer to a child of the taxpayer who was resident in Canada immediately before the transfer, and the property was, before the transfer, used principally in a farming business in which the taxpayer, the taxpayer's spouse or common-law partner or any of the taxpayer's children was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot),

(2) Subsection (1) applies to transfers of property that occur after December 10, 2001.

29. (1) Section 85 of the Act is amended by adding the following after subsection (5):

Acquisition of apprentice tools, re capital cost and deemed depreciation

(5.1) If subsection (1) has applied in respect of the acquisition at any particular time of any depreciable property by a corporation from an individual, the cost of the property to the individual was included in computing an amount under paragraph 8(1)(r) in respect of the individual, and the amount that would be the cost of the property to the individual immediately before the transfer if this Act were read without reference to subsection 8(7) (which amount is in this subsection referred to as the ``individual's original cost'') exceeds the individual's proceeds of disposition of the property,

    (a) the capital cost to the corporation of the property is deemed to be equal to the individual's original cost; and

    (b) the amount by which the individual's original cost exceeds the individual's proceeds of disposition in respect of the property is deemed to have been deducted by the corporation under paragraph 20(1)(a) in respect of the property in computing income for taxation years that ended before that particular time.

(2) Subsection (1) applies to dispositions that occur after 2001.

30. (1) Paragraph 87(2)(j.92) of the Act is replaced by the following:

Subsections 125(5.1) and 157.1(1)

    (j.92) for the purposes of subsection 125(5.1) and the definition ``eligible corporation'' in subsection 157.1(1), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;