Bill C-25

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Authority to communicate number	(4) An insurance corporation may communicate, or allow to be communicated, to another person the Social Insurance Number or business number of a particular person or partnership where
	(a) the other person became the holder of a share of the capital stock of the insurance corporation, or of a holding corporation (in this subsection having the meaning assigned by subsection 139.1(1)) in respect of the insurance corporation, on the share's issuance in connection with the demutualization (as defined by subsection 139.1(1)) of the insurance corporation;
	(b) the other person became the holder of the share in the other person's capacity as nominee or agent for the particular person or partnership pursuant to an arrangement established by the insurance corporation or a holding corporation in respect of the insurance corporation; and
	(c) the other person is required, by this Act or the Regulations, to make an information return, in respect of the disposition of the share or income from the share, that requires the Social Insurance Number or business number.
	66. Subsection 239(3) of the Act is replaced by the following:
Penalty on conviction	(3) Where a person is convicted under this section, the person is not liable to pay a penalty imposed under section 162, 163 or 163.2 for the same contravention unless the penalty is assessed before the information or complaint giving rise to the conviction was laid or made.
	67. (1) Subsection 248(1) of the Act is amended by adding the following in alphabetical order:
``insurance policy'' « police d'assurance »	``insurance policy'' includes a life insurance policy;
``specified individual'' « particulier déterminé »	``specified individual'' has the meaning assigned by subsection 120.4(1);
``split income'' « revenu fractionné »	``split income'' has the meaning assigned by subsection 120.4(1);
	(2) Subsection 248(11) of the Act is replaced by the following:
Compound interest	(11) Interest computed at a prescribed rate under any of subsections 129(2.1) and (2.2), 131(3.1) and (3.2), 132(2.1) and (2.2), 133(7.01) and (7.02), 159(7), 160.1(1), 161(1), (2) and (11), 161.1(5) , 164(3) to (4), 181.8(1) and (2) (as those two subsections read in their application to the 1991 and earlier taxation years), 185(2), 187(2) and 189(7), section 190.23 (as it read in its application to the 1991 and earlier taxation years) and subsections 193(3), 195(3), 202(5) and 227(8.3), (9.2) and (9.3) of this Act and subsection 182(2) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952 (as that subsection read in its application to taxation years beginning before 1986) and subsection 191(2) of that Act (as that subsection read in its application to the 1984 and earlier taxation years) shall be compounded daily and, where interest is computed on an amount under any of those provisions and is unpaid or unapplied on the day it would, but for this subsection, have ceased to be computed under that provision, interest at the prescribed rate shall be computed and compounded daily on the unpaid or unapplied interest from that day to the day it is paid or applied and shall be paid or applied as would be the case if interest had continued to be computed under that provision after that day.
	(3) The definition ``insurance policy'' in subsection 248(1) of the Act, as enacted by subsection (1), applies after December 15, 1998.
	(4) The definitions ``specified individual'' and ``split income'' in subsection 248(1) of the Act, as enacted by subsection (1), apply to the 2000 and subsequent taxation years.
	(5) Subsection (2) applies after 1999.
	68. (1) Paragraph 250(1)(f) of the Act is replaced by the following:
	(f) was at any time in the year a child of, and dependent for support on, an individual to whom paragraph (b), (c), (d) or (d.1) applies and the person's income for the year did not exceed the amount used under paragraph (c) of the description of B in subsection 118(1) for the year ;
	(2) Subsection (1) applies to the 1999 and subsequent taxation years except that, in its application to the 1999 taxation year, the reference to ``the amount used under paragraph (c) of the description of B in subsection 118(1) for the year'' in paragraph 250(1)(f) of the Act, as enacted by subsection (1), shall be read as a reference to ``$7,044''.
	69. (1) Subsection 252(3) of the Act is amended by replacing the expression ``and 148(8.1) and (8.2)'' with the expression ``and 148(8.1) and (8.2), the definition ``small business property'' in subsection 206(1),''.
	(2) Subsection (1) applies to the 1998 and subsequent taxation years.
R.S., c. E-15	EXCISE TAX ACT
	*70. (1) The Excise Tax Act* is amended by adding the following after section 285:**
Definitions	285.1 (1) The definitions in this subsection apply in this section.
``culpable conduct'' « conduite coupable »	``culpable conduct'' means conduct, whether an act or a failure to act, that
	(a) is tantamount to intentional conduct;
	(b) shows an indifference as to whether this Part is complied with; or
	(c) shows a wilful, reckless or wanton disregard of the law.
``entity'' « entité »	``entity'' includes an association, a corporation, a fund, a joint venture, an organization, a partnership, a syndicate and a trust.
``excluded activity'' « activité exclue »	``excluded activity'', in respect of a false statement, means the activity of
	(a) promoting or selling (whether as principal or agent or directly or indirectly) an arrangement, an entity, a plan, a property or a scheme (in this definition referred to as the ``arrangement'') where it can reasonably be considered that one of the main purposes for a person's participation in the arrangement is to obtain a tax benefit; or
	(b) accepting (whether as principal or agent or directly or indirectly) consideration in respect of the promotion or sale of an arrangement.
``false statement'' « faux énoncé »	``false statement'' includes a statement that is misleading because of an omission from the statement.
``gross entitlements'' « droits à paiement »	``gross entitlements'' of a person at any time, in respect of a planning activity or a valuation activity of the person, means all amounts to which the person, or another person not dealing at arm's length with the person, is entitled, either before or after that time and either absolutely or contingently, to receive or obtain in respect of the activity.
``participate'' « participer »	``participate'' includes
	(a) to cause a subordinate to act or to omit information; and
	(b) to know of, and to not make a reasonable attempt to prevent, the participation by a subordinate in an act or an omission of information.
``planning activity'' « activité de planification »	``planning activity'' includes
	(a) organizing or creating, or assisting in the organization or creation of, an arrangement, an entity, a plan or a scheme; and
	(b) participating, directly or indirectly, in the selling of an interest in, or in the promotion of, an arrangement, an entity, a plan, a property or a scheme.
``property'' « bien »	``property'' has the meaning assigned by subsection 248(1) of the Income Tax Act.
``subordinate' ' « subalterne »	``subordinate'', in respect of a particular person, includes any other person over whose activities the particular person has direction, supervision or control whether or not the other person is an employee of the particular person or of another person, except that, if the particular person is a member of a partnership, the other person is not a subordinate of the particular person solely because the particular person is a member of the partnership.
``tax benefit'' « avantage fiscal »	``tax benefit'' means a reduction, avoidance or deferral of tax, net tax or other amount payable under this Part or an increase in a refund or rebate under this Part.
``valuation activity'' « activité d'évaluation »	``valuation activity'' of a person means anything done by the person in determining the value of a property or a service.
Penalty for misrepresenta - tions in tax planning arrangements	(2) Every person who makes or furnishes, participates in the making of or causes another person to make or furnish a statement that the person knows, or would reasonably be expected to know but for circumstances amounting to culpable conduct, is a false statement that could be used by another person (in subsection (6) referred to as the ``other person'') for a purpose of this Part is liable to a penalty in respect of the false statement.
Amount of penalty	(3) The penalty to which a person is liable under subsection (2) in respect of a false statement is
	(a) if the statement is made in the course of a planning activity or a valuation activity, the greater of $1,000 and the total of the person's gross entitlements, at the time at which the notice of assessment of the penalty is sent to the person, in respect of the planning activity and the valuation activity; and
	(b) in any other case, $1,000.
Penalty for participating in a misrepresentat ion	(4) Every person who makes, or participates in, assents to or acquiesces in the making of, a statement to, or by or on behalf of, another person (in this subsection and subsections (5) and (6) referred to as the ``other person'') that the person knows, or would reasonably be expected to know but for circumstances amounting to culpable conduct, is a false statement that could be used by or on behalf of the other person for a purpose of this Part is liable to a penalty in respect of the false statement.
Amount of penalty	(5) The penalty to which a person is liable under subsection (4) in respect of a false statement is the greater of
	(a) $1,000, and
	(b) 50% of the total of all amounts each of which is
	(i) if the false statement is relevant to the determination of net tax of the other person for a reporting period, the amount determined by the formula
	A - B
	where
	A is the net tax of the other person for the period, and
	B is the amount that would be the net tax of the other person for the period if the statement were not a false statement,
	(ii) if the false statement is relevant to the determination of an amount of tax payable by the other person, the amount, if any, by which
	(A) that tax payable
	exceeds
	(B) the amount that would be the tax payable by the other person if the statement were not a false statement, and
	(iii) if the false statement is relevant to the determination of a rebate under this Part, the amount, if any, by which
	(A) the amount that would be the rebate payable to the other person if the statement were not a false statement
	exceeds
	(B) the amount of the rebate payable to the other person.
Reliance in good faith	(6) For the purposes of subsections (2) and (4), a person (in this subsection and in subsection (7) referred to as the ``advisor'') who acts on behalf of the other person is not considered to have acted in circumstances amounting to culpable conduct in respect of the false statement referred to in subsection (2) or (4) solely because the advisor relied, in good faith, on information provided to the advisor by or on behalf of the other person or, because of such reliance, failed to verify, investigate or correct the information.
Non-applicati on of subsection (6)	(7) Subsection (6) does not apply in respect of a statement that an advisor makes, or participates in, assents to or acquiesces in the making of, in the course of an excluded activity.
False statements in respect of a particular arrangement	(8) For the purpose of applying this section (other than subsections (4) and (5)),
	(a) where a person makes or furnishes, participates in the making of or causes another person to make or furnish two or more false statements, the false statements are deemed to be one false statement if the statements are made or furnished in the course of
	(i) one or more planning activities that are in respect of a particular arrangement, entity, plan, property or scheme, or
	(ii) a valuation activity that is in respect of a particular property or service; and
	(b) for greater certainty, a particular arrangement, entity, plan, property or scheme includes an arrangement, an entity, a plan, a property or a scheme in respect of which one of the main purposes for a person's participation in the arrangement, entity, plan or scheme, or a person's acquisition of the property, is to obtain a tax benefit.
Clerical services	(9) For the purposes of this section, a person is not considered to have made or furnished, or participated in, assented to or acquiesced in the making of, a false statement solely because the person provided clerical services (other than bookkeeping services) or secretarial services with respect to the statement.
Valuations	(10) Despite subsection (6), a statement as to the value of a property or a service (which value is in this subsection referred to as the ``stated value''), made by the person who opined on the stated value or by a person in the course of an excluded activity is deemed to be a statement that the person would reasonably be expected to know, but for circumstances amounting to culpable conduct, is a false statement if the stated value is
	(a) less than the product obtained when the prescribed percentage for the property or service is multiplied by the fair market value of the property or service; or
	(b) greater than the product obtained when the prescribed percentage for the property or service is multiplied by the fair market value of the property or service.
Exception	(11) Subsection (10) does not apply to a person in respect of a statement as to the value of a property or service if the person establishes that the stated value was reasonable in the circumstances and that the statement was made in good faith and, where applicable, was not based on one or more assumptions that the person knew or would reasonably be expected to know, but for circumstances amounting to culpable conduct, were unreasonable or misleading in the circumstances.
Special rules	(12) For the purpose of applying this section,
	(a) where a person is assessed a penalty under subsection (2) the amount of which is based on the person's gross entitlements at any time in respect of a planning activity or a valuation activity and another assessment of the penalty is made at a later time,
	(i) if the person's gross entitlements in respect of the activity are greater at that later time, the assessment of the penalty made at that later time is deemed to be an assessment of a separate penalty, and
	(ii) in any other case, the notice of assessment of the penalty sent before that later time is deemed not to have been sent; and
	(b) a person's gross entitlements at any time in respect of a planning activity or a valuation activity, in the course of which the person makes or furnishes, participates in the making of or causes another person to make or furnish a false statement, shall exclude the total of all amounts each of which is the amount of a penalty (other than a penalty the assessment of which is void because of subsection (13)) determined under paragraph (3)(a) in respect of the false statement for which notice of the assessment was sent to the person before that time.
Assessment void	(13) For the purposes of this Part, if an assessment of a penalty under subsection (2) or (4) is vacated, the assessment is deemed to be void.
Maximum penalty	(14) A person who is liable at any time to a penalty under both subsections (2) and (4) in respect of the same false statement is liable to pay a penalty that is not more than the greater of
	(a) the total amount of the penalties to which the person is liable at that time under subsection (2) in respect of the statement, and
	(b) the total amount of the penalties to which the person is liable at that time under subsection (4) in respect of the statement.

Bill C-25

EXCISE TAX ACT