Bill C-28

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

PDF

	(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.
	214. (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
	(a) the amount estimated by the insurer to be the annualized tax payable under this Part by it for the year, and
	(b) the annualized tax payable under this Part by the insurer for the immediately preceding taxation year.
Annualized tax payable	(2) For the purposes of subsections (1) and 211.5(2), the annualized tax payable under this Part by a life insurer for a taxation year is the amount determined by the formula
	(365/A) x B
	where
	A is
	(a) if the year is less than 357 days, the number of days in the year (other than February 29), and
	(b) otherwise, 365; and
	B is the tax payable under this Part by the insurer for the year.
	(2) Subsection (1) applies to taxation years that begin after 1995.
	215. (1) Section 211.5 of the Act is renumbered as subsection 211.5(1) and is amended by adding the following:
Interest on instalments	(2) For the purposes of subsection 161(2) and section 163.1 as they apply to this Part, a life insurer is, in respect of a taxation year, deemed to have been liable to pay, on or before the last day of each month in the year, an instalment equal to 1/12 of the lesser of
	(a) the annualized tax payable under this Part by the insurer for the year, and
	(b) the annualized tax payable under this Part by the insurer for the immediately preceding taxation year.
	(2) Subsection (1) applies to taxation years that begin after 1995.
	216. (1) Paragraph 212(1)(j) of the Act is replaced by the following:
Benefits	(j) any benefit described in any of subparagraphs 56(1)(a)(iii) to (vi), any amount described in paragraph 56(1)(x) or (z) (other than an amount transferred under circumstances in which subsection 207.6(7) applies) or the purchase price of an interest in a retirement compensation arrangement;
	(2) Subsection 212(9) of the Act is replaced by the following:
Exemptions	(9) Where
	(a) a dividend or interest is received by a trust from a non-resident-owned investment corporation,
	(b) an amount (in this subsection referred to as the ``royalty payment'') is received by a trust as, on account of, in lieu of payment of or in satisfaction of, a royalty on or in respect of a copyright in respect of the production or reproduction of any literary, dramatic, musical or artistic work, or
	(c) interest is received by a mutual fund trust maintained primarily for the benefit of non-resident persons
	and a particular amount is paid or credited to a non-resident person as income of or from the trust and can reasonably be regarded as having been derived from the dividend, interest or royalty payment, as the case may be, no tax is payable because of paragraph (1)(c) as a consequence of the payment or crediting of the particular amount if no tax would have been payable under this Part in respect of the dividend, interest or royalty payment, as the case may be, if it had been paid directly to the non-resident person instead of to the trust.
	(3) Subsection (1) applies to amounts paid or credited after 1995.
	(4) Subsection (2) applies to amounts paid or credited after April 1995 to non-resident persons.
	217. (1) Subsection 216(4) of the Act is replaced by the following:
Optional method of payment	(4) Where a non-resident person or, in the case of a partnership, each non-resident person who is a member of the partnership files with the Minister an undertaking in prescribed form to file within 6 months after the end of a taxation year a return of income under Part I for the year as permitted by this section, a person who is otherwise required by subsection 215(3) to remit in the year, in respect of the non-resident person or the partnership, an amount to the Receiver General in payment of tax on rent on real property or on a timber royalty may elect under this section not to remit under that subsection, and if that election is made, the elector shall,
	(a) when any amount is available out of the rent or royalty received for remittance to the non-resident person or the partnership, as the case may be, deduct 25% of the amount available and remit the amount deducted to the Receiver General on behalf of the non-resident person or the partnership on account of the tax under this Part; and
	(b) if the non-resident person or, in the case of a partnership, a non-resident person who is a member of the partnership
	(i) does not file a return for the year in accordance with the undertaking, or
	(ii) does not pay under this section the tax the non-resident person or member is liable to pay for the year within the time provided for payment,
	pay to the Receiver General, on account of the non-resident person's or the partnership's tax under this Part, on the expiration of the time for filing or payment, as the case may be, the full amount that the elector would otherwise have been required to remit in the year in respect of the rent or royalty minus the amounts that the elector has remitted in the year under paragraph (a) in respect of the rent or royalty.
	(2) Subsection (1) applies to amounts paid or credited after November 1991.
	218. The heading ``ADDITIONAL TAX ON CORPORATIONS (OTHER THAN CANADIAN CORPORATIONS) CARRYING ON BUSINESS IN CANADA'' before section 219 of the Act is replaced by the following:
	ADDITIONAL TAX ON NON-RESIDENT CORPORATIONS
	219. (1) Subsection 219(1) of the Act is replaced by the following:
Additional tax	219. (1) Every corporation that is non-resident in a taxation year shall, on or before its filing-due date for the year, pay a tax under this Part for the year equal to 25% of the amount, if any, by which the total of
	(a) the corporation's taxable income earned in Canada for the year (in this subsection referred to as the corporation's ``base amount''),
	(b) the amount deducted because of section 112 and paragraph 115(1)(d.1) in computing the corporation's base amount,
	(c) the amount deducted under paragraph 20(1)(v.1) in computing the corporation's base amount, other than any portion of the amount so deducted that was deductible because of the membership of the corporation in a partnership,
	(d) 1/3 of the amount, if any, by which the total of all amounts each of which is a taxable capital gain of the corporation for the year from a disposition of a taxable Canadian property exceeds the total of all amounts each of which is
	(i) an allowable capital loss of the corporation for the year from a disposition of a taxable Canadian property, or
	(ii) an amount deductible because of paragraphs 111(1)(b) and 115(1)(e) in computing the corporation's base amount,
	(e) the total of all amounts each of which
	(i) is an amount in respect of a grant or credit that can reasonably be considered to have been received by the corporation in the year as a reimbursement or repayment of, or as indemnification or compensation for, an amount deducted because of
	(A) paragraph (j), as it read in its application to the 1995 taxation year, in computing the amount determined under this subsection for a preceding taxation year that began before 1996, or
	(B) paragraph (k) in computing the amount determined under this subsection for the year or for a preceding taxation year that began after 1995, and
	(ii) was not included in computing the corporation's base amount for any taxation year,
	(f) where, at any time in the year, the corporation has made one or more dispositions described in paragraph (l) of qualified property, the total of all amounts each of which is an amount in respect of one of those dispositions equal to the amount, if any, by which the fair market value of the qualified property at the time of the disposition exceeds the corporation's proceeds of disposition of the property, and
	(g) the amount, if any, claimed for the immediately preceding taxation year under paragraph (j) by the corporation,
	exceeds the total of
	(h) that proportion of the total of
	(i) the total of the taxes payable under Parts I, I.3 and VI for the year by the corporation, determined without reference to subsection (1.1), and
	(ii) the total of the income taxes payable to the government of a province for the year by the corporation, determined without reference to subsection (1.1),
	that the corporation's base amount is of the amount that would, if this Act were read without reference to subsection (1.1), be the corporation's base amount,
	(i) the total of all amounts each of which is the amount of interest or a penalty paid by the corporation in the year
	(i) under this Act, or
	(ii) on or in respect of an income tax payable by it to the government of a province under a law of the province relating to income tax,
	to the extent that the interest or penalty was not deductible in computing its base amount for any taxation year,
	(j) where the corporation was carrying on business in Canada at the end of the year, the amount claimed by the corporation for the year, not exceeding the amount prescribed to be its allowance for the year in respect of its investment in property in Canada,
	(k) the portion of the total of all amounts, each of which is an amount by which the corporation's base amount is increased because of paragraph 12(1)(o) or 18(1)(l.1) or (m) or subsection 69(6) or (7), that is not deductible under paragraph (h) or (j), and
	(l) where the corporation has at any time in the year disposed of property (in this paragraph and paragraph (f) referred to as ``qualified property'') used by it immediately before that time for the purpose of gaining or producing income from a business carried on by it in Canada to a Canadian corporation (in this paragraph referred to as the ``purchaser corporation'') that was, immediately after the disposition, a qualified related corporation of the corporation for consideration that includes a share of the capital stock of the purchaser corporation, the total of all amounts each of which is an amount in respect of a disposition in the year of a qualified property equal to the amount, if any, by which
	(i) the fair market value of the qualified property at the time of the disposition
	exceeds the total of
	(ii) the amount, if any, by which the paid-up capital in respect of the issued and outstanding shares of the capital stock of the purchaser corporation increased because of the disposition, and
	(iii) the fair market value, at the time of receipt, of the consideration (other than shares) given by the purchaser corporation for the qualified property.
Excluded gains	(1.1) For the purposes of subsection (1), paragraph 115(1)(b) shall be read without reference to subparagraphs (i) and (iii) to (xii).
	(2) Subsection 219(8) of the Act is replaced by the following:
Meaning of ``qualified related corporation''	(8) For the purposes of this Part, a corporation is a ``qualified related corporation'' of a particular corporation if it is resident in Canada and all of the issued and outstanding shares (other than directors' qualifying shares) of its capital stock (having full voting rights under all circumstances) are owned by
	(a) the particular corporation,
	(b) a subsidiary wholly-owned corporation of the particular corporation,
	(c) a corporation of which the particular corporation is a subsidiary wholly-owned corporation,
	(d) a subsidiary wholly-owned corporation of a corporation of which the particular corporation is also a subsidiary wholly-owned corporation, or
	(e) any combination of corporations each of which is a corporation described in paragraph (a), (b), (c) or (d),
	and, for the purpose of this subsection, a subsidiary wholly-owned corporation of a particular corporation includes any subsidiary wholly-owned corporation of a corporation that is a subsidiary wholly-owned corporation of the particular corporation.
	(3) Subsections (1) and (2) apply to taxation years that begin after 1995 except that, in its application to taxation years that began in 1996, the reference in paragraph 219(1)(g) of the Act, as enacted by subsection (1), to ``paragraph (j)'' shall be read as a reference to ``paragraph (h), as it read in its application to the 1995 taxation year, or paragraph (j)''.
	220. (1) Section 219.1 of the Act is replaced by the following:
Corporate emigration	219.1 Where a taxation year of a corporation is deemed by paragraph 128.1(4)(a) to have ended at any time, the corporation shall, on or before its filing-due date for the year, pay a tax under this Part for the year equal to 25% of the amount, if any, by which
	(a) the fair market value of all the property owned by the corporation immediately before that time
	exceeds the total of
	(b) the paid-up capital in respect of all the issued and outstanding shares of the capital stock of the corporation immediately before that time,
	(c) all amounts (other than amounts payable by the corporation in respect of dividends and amounts payable under this section) each of which is a debt owing by the corporation, or an obligation of the corporation to pay an amount, that is outstanding at that time, and
	(d) where a tax was payable by the corporation under subsection 219(1) or this section for a preceding taxation year that began before 1996 and after the corporation last became resident in Canada, 4 times the total of all amounts that would, but for sections 219.2 and 219.3 and any agreement or convention between the Government of Canada and the government of any other country that has the force of law in Canada, have been so payable.
	(2) Subsection (1) applies to the 1996 and subsequent taxation years.
	220.1 (1) Section 219.3 of the Act is replaced by the following:
Effect of tax treaty	219.3 For the purpose of section 219.1, where an agreement or convention between the Government of Canada and the government of another country that has the force of law in Canada provides that the rate of tax imposed on a dividend paid by a corporation resident in Canada to a corporation resident in the other country that owns all of the shares of the capital stock of the corporation resident in Canada shall not exceed a specified rate, the reference in section 219.1 to ``25%'' shall, in respect of a corporation that ceased to be resident in Canada and to which the agreement or convention applies at the beginning of its first taxation year after its taxation year that is deemed by paragraph 128.1(4)(a) to have ended, be read as a reference to the specified rate unless it can reasonably be concluded that one of the main reasons that the corporation became resident in the other country was to reduce the amount of tax payable under this Part or Part XIII.

Bill C-28

ADDITIONAL TAX ON NON-RESIDENT CORPORATIONS