;

Bill C-13

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Application

42. For the purposes of applying the provisions of the Customs Act that provide for the payment of, or the liability to pay, interest in respect of any amount, the amount shall be determined and interest shall be computed on it as though sections 37 to 41 had come into force on July 1, 2006.

Amendments Relating to Alcohol Products

R.S., c. E-14

Excise Act

1990, c. 45, s. 34

43. (1) Sections 1 and 2 of Part II of the schedule to the Excise Act are replaced by the following:

1. On all beer or malt liquor containing more than 2.5% absolute ethyl alcohol by volume, $31.22 per hectolitre.

2. On all beer or malt liquor containing more than 1.2% absolute ethyl alcohol by volume but not more than 2.5% absolute ethyl alcohol by volume, $15.61 per hectolitre.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

2002, c. 22

Excise Act, 2001

44. (1) Subparagraphs 217(2)(a)(i) and (ii) of the Excise Act, 2001 are replaced by the following:

(i) $11.696 multiplied by the number of litres of absolute ethyl alcohol in the spirits to which the offence relates,

(ii) $0.62 multiplied by the number of litres of wine to which the offence relates, and

(2) Subparagraphs 217(3)(a)(i) and (ii) of the Act are replaced by the following:

(i) $23.392 multiplied by the number of litres of absolute ethyl alcohol in the spirits to which the offence relates,

(ii) $1.24 multiplied by the number of litres of wine to which the offence relates, and

(3) Subsections (1) and (2) come into force on the later of July 1, 2006 and the day on which this Act is assented to.

45. (1) Subparagraphs 218(2)(a)(i) and (ii) of the Act are replaced by the following:

(i) $23.392 multiplied by the number of litres of absolute ethyl alcohol in the spirits to which the offence relates, and

(ii) $1.24 multiplied by the number of litres of wine to which the offence relates, and

(2) Subparagraphs 218(3)(a)(i) and (ii) of the Act are replaced by the following:

(i) $35.088 multiplied by the number of litres of absolute ethyl alcohol in the spirits to which the offence relates, and

(ii) $1.86 multiplied by the number of litres of wine to which the offence relates, and

(3) Subsections (1) and (2) come into force on the later of July 1, 2006 and the day on which this Act is assented to.

46. (1) Section 242 of the Act is replaced by the following:

Contravention of section 72

242. Every person who contravenes section 72 is liable to a penalty equal to $1.24 per litre of wine to which the contravention relates.

(2) Subsection (1) comes into force on the later of July 1, 2006 and the day on which this Act is assented to.

47. (1) Paragraph 243(b) of the Act is replaced by the following:

(b) if the contravention relates to wine, $0.62 per litre of that wine.

(2) Subsection (1) comes into force on the later of July 1, 2006 and the day on which this Act is assented to.

48. (1) Sections 1 and 2 of Schedule 4 to the Act are replaced by the following:

1. Spirits: $11.696 per litre of absolute ethyl alcohol contained in the spirits.

2. Spirits containing not more than 7% absolute ethyl alcohol by volume: $0.295 per litre of spirits.

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

49. (1) Paragraphs (b) and (c) of Schedule 6 to the Act are replaced by the following:

(b) in the case of wine that contains more than 1.2% of absolute ethyl alcohol by volume but not more than 7% of absolute ethyl alcohol by volume, $0.295 per litre; and

(2) Subsection (1) comes into force, or is deemed to have come into force, on July 1, 2006.

Application

50. For the purposes of applying the provisions of the Customs Act and the Excise Act that provide for the payment of, or the liability to pay, interest in respect of any amount, the amount shall be determined and interest shall be computed on it as though sections 43, 48 and 49 had come into force on July 1, 2006.

PART 2

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

AMENDMENTS TO THE INCOME TAX ACT

51. (1) The portion of paragraph 38(a.1) of the Income Tax Act before subparagraph (ii) is replaced by the following:

(a.1) a taxpayer’s taxable capital gain for a taxation year from the disposition of a property is equal to zero if

(i) the disposition is the making of a gift to a qualified donee (other than a private foundation) of a share, debt obligation or right listed on a prescribed stock exchange, a share of the capital stock of a mutual fund corporation, a unit of a mutual fund trust, an interest in a related segregated fund trust (within the meaning assigned by paragraph 138.1(1)(a)) or a prescribed debt obligation, or

(2) The portion of paragraph 38(a.2) of the Act before subparagraph (i) is replaced by the following:

(a.2) a taxpayer’s taxable capital gain for a taxation year from the disposition of a property is equal to zero if

(3) Subsections (1) and (2) apply in respect of gifts of property made after May 1, 2006.

52. (1) Clause 53(1)(e)(i)(A) of the Act is replaced by the following:

(A) paragraphs 38(a.1) and (a.2) and the fractions set out in the formula in paragraph 14(1)(b) and in subsection 14(5), paragraph 38(a) and subsection 41(1),

(2) Subsection (1) applies after May 1, 2006.

53. (1) Clauses (ii)(F) to (H) of the description of A in paragraph 64(a) of the Act are replaced by the following:

(F) where the taxpayer has an impairment in physical or mental functions, for the cost of note-taking services and to a person engaged in the business of providing such services, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires such services,

(G) where the taxpayer has an impairment in physical functions, for the cost of voice recognition software, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires that software,

(H) where the taxpayer has a learning disability or an impairment in mental functions, for the cost of tutoring services that are rendered to, and supplementary to the primary education of, the taxpayer and to a person ordinarily engaged in the business of providing such services to individuals who are not related to the person, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that disability or impairment, requires those services,

(2) Subparagraph (ii) of the description of A in paragraph 64(a) of the Act is amended by striking out the word “and” at the end of clause (I) and by adding the following after clause (J):

(K) where the taxpayer has a severe and prolonged impairment in physical or mental functions, for the cost of job coaching services (not including job placement or career counselling services) and to a person engaged in the business of providing such services if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires such services,

(L) where the taxpayer is blind or has a severe learning disability, for the cost of reading services and to a person engaged in the business of providing such services, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment or disability, requires those services,

(M) where the taxpayer is blind and profoundly deaf, for the cost of deaf-blind intervening services and to a person engaged in the business of providing such services,

(N) where the taxpayer has a speech impairment, for the cost of a device that is a Bliss symbol board, or a similar device, that is prescribed by a medical practitioner to help the taxpayer communicate by selecting the symbols or spelling out words,

(O) where the taxpayer is blind, for the cost of a device that is a Braille note-taker, prescribed by a medical practitioner, to allow the taxpayer to take notes (that can, by the device, be read back to them or printed or displayed in Braille) with the help of a keyboard,

(P) where the taxpayer has a severe and prolonged impairment in physical functions that markedly restricts their ability to use their arms or hands, for the cost of a device that is a page turner prescribed by a medical practitioner to help the taxpayer to turn the pages of a book or other bound document, and

(Q) where the taxpayer is blind, or has a severe learning disability, for the cost of a device or software that is prescribed by a medical practitioner and designed to enable the taxpayer to read print,

(3) Subsections (1) and (2) apply to the 2005 and subsequent taxation years.

54. (1) Subsection 67.1(1) of the Act is replaced by the following:

Expenses for food, etc.

67.1 (1) For the purposes of this Act, other than sections 62, 63, 118.01 and 118.2, an amount paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment is deemed to be 50% of the lesser of

(a) the amount actually paid or payable in respect thereof, and

(b) an amount in respect thereof that would be reasonable in the circumstances.

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

55. (1) Subsection 87(2) of the Act is amended by adding the following before paragraph (t):

Tax deferred cooperative shares

(s) for the purpose of section 135.1, if the new corporation is, at the beginning of its first taxation year, an agricultural cooperative corporation (within the meaning assigned by subsection 135.1(1)),

(i) the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation that was an agricultural cooperative corporation at the end of the predecessor corporation’s last taxation year, and

(ii) if, on the amalgamation, the new corporation issues a share (in this subparagraph referred to as the “new share”) that is described in all of paragraphs (b) to (d) of the definition “tax deferred cooperative share” in subsection 135.1(1) to a taxpayer in exchange for a share of a predecessor corporation (in this subparagraph referred to as the “old share”) that was, at the end of the predecessor corporation’s last taxation year, a tax deferred cooperative share within the meaning assigned by that definition, and the amount of paid-up capital, and the amount, if any, that the taxpayer is entitled to receive on a redemption, acquisition or cancellation, of the new share are equal to those amounts, respectively, in respect of the old share,

(A) the new share is deemed to have been issued at the time the old share was issued, and

(B) in applying subsection 135.1(2), the taxpayer is deemed to have disposed of the old share for nil proceeds;

(2) Subsection (1) applies after 2005.

56. (1) The portion of paragraph 110(1)(d.01) of the Act before subparagraph (i) is replaced by the following:

Charitable donation of employee option securities

(d.01) subject to subsection (2.1), where the taxpayer disposes of a security acquired in the year by the taxpayer under an agreement referred to in subsection 7(1) by making a gift of the security to a qualified donee (other than a private foundation), an amount in respect of the disposition of the security equal to 1/2 of the lesser of the benefit deemed by paragraph 7(1)(a) to have been received by the taxpayer in the year in respect of the acquisition of the security and the amount that would have been that benefit had the value of the security at the time of its acquisition by the taxpayer been equal to the value of the security at the time of the disposition, if

(2) Subsection (1) applies to gifts made after May 1, 2006.

57. (1) Paragraph 111(1)(a) of the Act is replaced by the following:

Non-capital losses

(a) non-capital losses for the 20 taxation years immediately preceding and the 3 taxation years immediately following the year;

(2) Paragraphs 111(1)(c) and (d) of the Act are replaced by the following:

Restricted farm losses

(c) restricted farm losses for the 20 taxation years immediately preceding and the 3 taxation years immediately following the year, but no amount is deductible for the year in respect of restricted farm losses except to the extent of the taxpayer’s incomes for the year from all farming businesses carried on by the taxpayer;

Farm losses

(d) farm losses for the 20 taxation years immediately preceding and the 3 taxation years immediately following the year; and

(3) The portion of the definition “non-capital loss” in subsection 111(8) of the Act before the description of F is replaced by the following:

“non-capital loss”
« perte autre qu’une perte en capital »

“non-capital loss” of a taxpayer for a taxation year means, at any time, the amount determined by the formula

(A + B) - (D + D.1 + D.2)

where

A is the amount determined by the formula

E - F

where

E is the total of all amounts each of which is

(a) the taxpayer’s loss for the year from an office, employment, business or property,

(b) an amount deducted under paragraph (1)(b) or section 110.6, or deductible under any of paragraphs 110(1)(d) to (d.3), (f), (g), (j) and (k), section 112 and subsections 113(1) and 138(6), in computing the taxpayer’s taxable income for the year, or

(c) if that time is before the taxpayer’s eleventh following taxation year, the taxpayer’s allowable business investment loss for the year, and

(4) Subsections (1) to (3) apply in respect of losses that arise in the 2006 and subsequent taxation years.

58. (1) Subsection 117(2) of the Act is replaced by the following:

Rates for the 2005 taxation year

(2) The tax payable under this Part by an individual on the individual’s taxable income or taxable income earned in Canada, as the case may be (in this subdivision referred to as the “amount taxable”) for the 2005 taxation year is

(a) 15% of the amount taxable, if the amount taxable is equal to or less than $35,595;

(b) $5,339 plus 22% of the amount by which the amount taxable exceeds $35,595, if the amount taxable is greater than $35,595 and is equal to or less than $71,190;

(c) $13,170 plus 26% of the amount by which the amount taxable exceeds $71,190, if the amount taxable is greater than $71,190 and is equal to or less than $115,739; and

(d) $24,753 plus 29% of the amount by which the amount taxable exceeds $115,739, if the amount taxable is greater than $115,739.

(2) Subsection 117(2) of the Act, as enacted by subsection (1), is replaced by the following:

Rates for the 2006 taxation year

(a) 15.25% of the amount taxable, if the amount taxable is equal to or less than $36,378;

(b) $5,548 plus 22% of the amount by which the amount taxable exceeds $36,378, if the amount taxable is greater than $36,378 and is equal to or less than $72,756;

(c) $13,551 plus 26% of the amount by which the amount taxable exceeds $72,756 if the amount taxable is greater than $72,756 and is equal to or less than $118,285; and

(d) $25,388 plus 29% of the amount by which the amount taxable exceeds $118,285, if the amount taxable is greater than $118,285.

(3) Subsection 117(2) of the Act, as enacted by subsection (2), is replaced by the following:

Rates for taxation years after 2006

(a) 15.5% of the amount taxable, if the amount taxable is equal to or less than the amount determined for the taxation year in respect of $36,378;

(b) if the amount taxable is greater than the amount determined for the year in respect of $36,378 and is equal to or less than the amount determined for the year in respect of $72,756, the amount determined in respect of the taxation year under paragraph (a) plus 22% of the amount by which the amount taxable exceeds the amount determined in respect of $36,378 for the year;

(c) if the amount taxable is greater than the amount determined for the year in respect of $72,756, but is equal to or less than the amount determined for the year in respect of $118,825, the total of the amounts determined in respect of the taxation year under paragraphs (a) and (b) plus 26% of the amount by which the amount taxable exceeds the amount determined in respect of $72,756; and

(d) if the amount taxable is greater than the amount that would be determined for the year in respect of $118,825, the total of the amounts determined in respect of the taxation year under paragraphs (a), (b) and (c) plus 29% of the amount by which the amount taxable exceeds the amount determined in respect of $118,825.

(4) Subsection (1) applies to the 2005 taxation year.

(5) Subsection (2) applies to the 2006 taxation year.

(6) Subsection (3) applies to the 2007 and subsequent taxation years.

59. (1) The portion of subsection 117.1(1) of the Act before paragraph (a) is replaced by the following:

Annual adjustment (indexing)

117.1 (1) Each of the amounts expressed in dollars in subsection 117(2), the description of B in subsection 118(1), subsections 118(2) and 118.01(2), the descriptions of C and F in subsection 118.2(1), subsections 118.3(1), 122.5(3) and 122.51(1) and (2) and Part I.2 in relation to tax payable under this Part or Part I.2 for a taxation year shall be adjusted so that the amount to be used under those provisions for the year is the total of

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

60. (1) Subsections 118(3.1) to (3.3) of the Act are replaced by the following:

Additions to personal credits — basic personal amount

(3.1) The amount of $7,131 referred to in paragraphs (a) to (c) of the description of B in subsection (1) (in this subsection referred to as the “particular amount”) that is to be used for the purpose of determining the amount of that description is

(a) for the 2005 taxation year, to be replaced by $8,648;

(b) for the 2006 taxation year, to be replaced by $8,839, except that, for the purpose of determining the particular amount for the 2007 taxation year, the particular amount for 2006 is deemed to be $8,639;

(c) for the 2007 taxation year, to be replaced by the amount that is the total of $100 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount of $8,639 as deemed under paragraph (b);

(d) for the 2008 taxation year, to be replaced by the amount that is the total of $200 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (c);

(e) for the 2009 taxation year, to be replaced by the amount that is the greater of

(i) the total of $600 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (d), and

(ii) $10,000; and

(f) for each of the 2010 and subsequent taxation years, to be replaced by the amount that is the amount that would be determined for that description for those years in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under this subsection in respect of the amount for the immediately preceding taxation year.

Additions to personal credits — spouse or common-law partner or wholly dependent person

(3.2) The amount of $6,055 referred to in subparagraphs (a)(ii) and (b)(iv) of the description of B in subsection (1) (in this subsection referred to as the “particular amount”) that is to be used for the purpose of determining the amount of that description is

(a) for the 2005 taxation year, to be replaced by $7,344;

(b) for the 2006 taxation year, to be replaced by $7,505, except that, for the purpose of determining the particular amount for the 2007 taxation year, the particular amount for 2006 is deemed to be $7,335;

(c) for the 2007 taxation year, to be replaced by the amount that is the total of $85 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount of $7,335 as deemed under paragraph (b);

(d) for the 2008 taxation year, to be replaced by the amount that is the total of $170 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (c);

(e) for the 2009 taxation year, to be replaced by the amount that is the greater of

(i) the total of $510 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (d), and

(ii) $8,500; and

(f) for each of the 2010 and subsequent taxation years, to be replaced by the amount determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined for that description for the immediately preceding taxation year in respect of the particular amount.

Additions to personal credits — net income threshold

(3.3) The amount of $606 referred to in subparagraphs (a)(ii) and (b)(iv) of the description of B in subsection (1) (in this subsection referred to as the “particular amount”) that is to be used for the purpose of determining the amount of that description is

(a) for the 2005 taxation year, to be replaced by $734;

(b) for the 2006 taxation year, to be replaced by $751, except that, for the purpose of determining the particular amount for the 2007 taxation year, the particular amount for 2006 is deemed to be $734;

(c) for the 2007 taxation year, to be replaced by the amount that is the total of $8.50 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount of $734 as deemed under paragraph (b);

(d) for the 2008 taxation year, to be replaced by the amount that is the total of $17.00 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (c);

(e) for the 2009 taxation year, to be replaced by the amount that is the greater of

(i) the total of $51.00 and the amount that would be determined for that description for that taxation year in respect of the particular amount by applying section 117.1 (without reference to subsection 117.1(3)) to the amount determined under paragraph (d); and

(ii) $850; and

(2) Section 118 of the Act is amended by adding the following after subsection (8):

Rounding

(9) If an amount determined under any of paragraphs (3.1)(a) to (f), (3.2)(a) to (f) and (3.3)(a) to (f) is not a multiple of one dollar, it shall be rounded to the nearest multiple of one dollar or, where it is equidistant from two such consecutive multiples, to the greater multiple.

(3) Subsections (1) and (2) apply to the 2005 and subsequent taxation years.

61. (1) The Act is amended by adding the following after section 118:

Definitions

118.01 (1) The following definitions apply in this section.

“adoption period”
« période d’adoption »

“adoption period”, in respect of an eligible child of an individual, means the period that

(a) begins at the earlier of the time that the eligible child’s adoption file is opened with a provincial ministry responsible for adoption (or with an adoption agency licensed by a provincial government) and the time, if any, that an application related to the adoption is made to a Canadian court; and

(b) ends at the later of the time an adoption order is issued by, or recognized by, a government in Canada in respect of that child, and the time that the child first begins to reside permanently with the individual.

“eligible adoption expense”
« dépense d’adoption admissible »

“eligible adoption expense”, in respect of an eligible child of an individual, means an amount paid for expenses incurred during the adoption period in respect of the adoption of that child, including

(a) fees paid to an adoption agency licensed by a provincial government;

(b) court costs and legal and administrative expenses related to an adoption order in respect of that child;

(d) document translation fees;

(e) mandatory fees paid to a foreign institution;

(f) mandatory expenses paid in respect of the immigration of that child; and

(g) any other reasonable expenses related to the adoption required by a provincial government or an adoption agency licensed by a provincial government.

“eligible child”
« enfant admissible »

“eligible child”, of an individual, means a child who has not attained the age of 18 years at the time that an adoption order is issued or recognized by a government in Canada in respect of the adoption of that child by that individual.

Adoption expense tax credit

(2) For the purpose of computing the tax payable under this Part by an individual for the taxation year that includes the end of the adoption period in respect of an eligible child of the individual, there may be deducted the amount determined by the formula

A × B

where

A is the appropriate percentage for the taxation year; and

B is the lesser of

(a) $10,000, and

(b) the amount determined by the formula

C - D

where

C is the total of all eligible adoption expenses in respect of the eligible child, and

D is the total of all amounts each of which is the amount of a reimbursement or any other form of assistance (other than an amount that is included in computing the individual’s income and that is not deductible in computing the individual’s taxable income) that any individual is or was entitled to receive in respect of an amount included in computing the value of C.

Apportionment of credit

(3) Where more than one individual is entitled to a deduction under this section for a taxation year in respect of the adoption of an eligible child, the total of all amounts so deductible shall not exceed the maximum amount that would be so deductible for the year by any one of those individuals for that child if that individual were the only individual entitled to deduct an amount for the year under this section, and if the individuals cannot agree as to what portion of the amount each can so deduct, the Minister may fix the portions.

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

62. (1) The portion of the description of D in subsection 118.2(1) of the Act before the formula is replaced by the following:

D is the total of all amounts each of which is, in respect of a dependant of the individual (within the meaning assigned by subsection 118(6), other than a child of the individual who has not attained the age of 18 years before the end of the taxation year), the lesser of $10,000 and the amount determined by the formula

(2) Paragraph 118.2(2)(i) of the Act is replaced by the following:

(i) for, or in respect of, an artificial limb, an iron lung, a rocking bed for poliomyelitis victims, a wheel chair, crutches, a spinal brace, a brace for a limb, an iliostomy or colostomy pad, a truss for hernia, an artificial eye, a laryngeal speaking aid, an aid to hearing, an artificial kidney machine, phototherapy equipment for the treatment of psoriasis or other skin disorders, or an oxygen concentrator, for the patient;

(3) Paragraphs 118.2(2)(l.2) and (l.21) of the Act are replaced by the following:

(l.2) for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient to gain access to, or to be mobile or functional within, the dwelling, provided that such expenses

(i) are not of a type that would typically be expected to increase the value of the dwelling, and

(ii) are of a type that would not normally be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment;

(l.21) for reasonable expenses relating to the construction of the principal place of residence of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, that can reasonably be considered to be incremental costs incurred to enable the patient to gain access to, or to be mobile or functional within, the patient’s principal place of residence, provided that such expenses

(i) are not of a type that would typically be expected to increase the value of the dwelling, and

(ii) are of a type that would not normally be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment;

(4) Subsection 118.2(2) of the Act is amended by adding the following after paragraph (l.42):

(l.43) on behalf of the patient who is blind or has a severe learning disability, for reading services, if

(i) the patient has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires such services, and

(ii) the payment is made to a person in the business of providing such services;

(l.44) on behalf of the patient who is blind and profoundly deaf, for deaf-blind intervening services, if the payment is made to a person in the business of providing those services;

(5) Subsection 118.2(2) of the Act is amended by striking out the word “or” at the end of paragraph (q) and by adding the following after paragraph (r):

(s) for drugs obtained under Health Canada’s Special Access Programme in accordance with sections C.08.010 and C.08.011 of the Food and Drug Regulations and purchased for use by the patient;

(t) for medical devices obtained under Health Canada’s Special Access Programme in accordance with Part 2 of the Medical Devices Regulations and purchased for use by the patient; or

(u) on behalf of the patient who is authorized to possess marihuana for medical purposes under the Marihuana Medical Access Regulations or section 56 of the Controlled Drugs and Substances Act, for

(i) the cost of medical marihuana or marihuana seeds purchased from Health Canada, or

(ii) the cost of marihuana purchased from an individual who possesses, on behalf of that patient, a designated-person production licence to produce marihuana under the Marihuana Medical Access Regulations or an exemption for cultivation or production under section 56 of the Controlled Drugs and Substances Act.

(6) Subsections (1), (2), (4) and (5) apply to the 2005 and subsequent taxation years.

(7) Subsection (3) applies to expenses incurred after February 22, 2005.

63. (1) Paragraph 118.3(1)(a) of the Act is replaced by the following:

(a) an individual has one or more severe and prolonged impairments in physical or mental functions,

(2) The portion of subsection 118.3(1)(a.1) of the Act before subparagraph (i) is replaced by the following:

(a.1) the effects of the impairment or impairments are such that the individual’s ability to perform more than one basic activity of daily living is significantly restricted where the cumulative effect of those restrictions is equivalent to having a marked restriction in the ability to perform a basic activity of daily living or are such that the individual’s ability to perform a basic activity of daily living is markedly restricted or would be markedly restricted but for therapy that

(3) Paragraph 118.3(1)(a.2) of the Act is replaced by the following:

(a.2) in the case of an impairment in physical or mental functions the effects of which are such that the individual’s ability to perform a single basic activity of daily living is markedly restricted or would be so restricted but for therapy referred to in paragraph (a.1), a medical practitioner has certified in prescribed form that the impairment is a severe and prolonged impairment in physical or mental functions the effects of which are such that the individual’s ability to perform a basic activity of daily living is markedly restricted or would be markedly restricted, but for therapy referred to in paragraph (a.1), where the medical practitioner is a medical doctor or, in the case of

(i) a sight impairment, an optometrist,

(ii) a speech impairment, a speech-language pathologist,

(iii) a hearing impairment, an audiologist,

(iv) an impairment with respect to an individual’s ability in feeding or dressing themself, an occupational therapist,

(v) an impairment with respect to an individual’s ability in walking, an occupational therapist, or after February 22, 2005, a physiotherapist, and

(vi) an impairment with respect to an individual’s ability in mental functions necessary for everyday life, a psychologist,

(a.3) in the case of one or more impairments in physical or mental functions the effects of which are such that the individual’s ability to perform more than one basic activity of daily living is significantly restricted, a medical practitioner has certified in prescribed form that the impairment or impairments are severe and prolonged impairments in physical or mental functions the effects of which are such that the individual’s ability to perform more than one basic activity of daily living is significantly restricted and that the cumulative effect of those restrictions is equivalent to having a marked restriction in the ability to perform a single basic activity of daily living, where the medical practitioner is, in the case of

(i) an impairment with respect to the individual’s ability in feeding or dressing themself, or in walking, a medical doctor or an occupational therapist, and

(ii) in the case of any other impairment, a medical doctor,

(4) Section 118.3 of the Act is amended by adding the following after subsection (1):

Time spent on therapy

(1.1) For the purpose of paragraph 118.3(1)(a.1), in determining whether therapy is required to be administered at least three times each week for a total duration averaging not less than an average of 14 hours a week, the time spent on administering therapy

(a) includes only time spent on activities that require the individual to take time away from normal everyday activities in order to receive the therapy;

(b) in the case of therapy that requires a regular dosage of medication that is required to be adjusted on a daily basis, includes (subject to paragraph (d)) time spent on activities that are directly related to the determination of the dosage of the medication;

(c) in the case of a child who is unable to perform the activities related to the administration of the therapy as a result of the child’s age, includes the time, if any, spent by the child’s primary caregivers performing or supervising those activities for the child; and

(d) does not include time spent on activities related to dietary or exercise restrictions or regimes (even if those restrictions or regimes are a factor in determining the daily dosage of medication), travel time, medical appointments, shopping for medication or recuperation after therapy.

(5) Subsections (1) to (4) apply to the 2005 and subsequent taxation years.

64. (1) Subsection 118.4(1) of the Act is amended by adding the following after paragraph (b):

(b.1) an individual is considered to have the equivalent of a marked restriction in a basic activity of daily living only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual’s ability to perform more than one basic activity of daily living (including for this purpose, the ability to see) is significantly restricted, and the cumulative effect of those restrictions is tantamount to the individual’s ability to perform a basic activity of daily living being markedly restricted;

(2) Subparagraph 118.4(1)(c)(i) of the Act is replaced by the following:

(i) mental functions necessary for everyday life,

(3) Subsection 118.4(1) of the Act is amended by adding the following after paragraph (c):

(c.1) mental functions necessary for everyday life include

(i) memory,

(ii) problem solving, goal-setting and judgement (taken together), and

(iii) adaptive functioning;

(4) The portion of subsection 118.4(2) of the Act before paragraph (a) is replaced by the following:

Reference to medical practitioners, etc.

(2) For the purposes of sections 63, 64, 118.2, 118.3 and 118.6, a reference to an audiologist, dentist, medical doctor, medical practitioner, nurse, occupational therapist, optometrist, pharmacist, physiotherapist, psychologist, or speech-language pathologist is a reference to a person authorized to practise as such,

(5) Subsections (1) to (3) apply to the 2005 and subsequent taxation years.

(6) Subsection (4) applies to the 2004 and subsequent taxation years, except that in its application before February 23, 2005, the portion of subsection 118.4(2) of the Act before paragraph (a), as enacted by subsection (4), is to be read as follows:

(2) For the purposes of sections 63, 64, 118.2, 118.3 and 118.6, a reference to an audiologist, dentist, medical doctor, medical practitioner, nurse, occupational therapist, optometrist, pharmacist, psychologist or speech-language pathologist is a reference to a person authorized to practise as such,

65. (1) The description of C in subsection 118.61(1) of the Act is replaced by the following:

C is the lesser of the value of B and the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.01, 118.3 and 118.7);

(2) Paragraph 118.61(2)(b) of the Act is replaced by the following:

(b) the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118, 118.01, 118.3 and 118.7).

(3) Section 118.61 of the Act is amended by adding the following after subsection (3):

Change of Appropriate Percentage

(4) For the purpose of determining the amount that may be deducted under subsection (2) in computing an individual’s tax payable for a taxation year, in circumstances where the appropriate percentage for the taxation year is different from the appropriate percentage for the preceding taxation year, the individual’s unused tuition fee and education tax credit at the end of the preceding taxation year is deemed to be the amount determined by the formula

A/B × C

where

A is the appropriate percentage for the current taxation year;

B is the appropriate percentage for the preceding taxation year; and

C is the amount that would be the individual’s unused tuition and education tax credits at the end of the preceding taxation year if this section were read without reference to this subsection.

(4) Subsection (1) applies to the 2002 and subsequent taxation years except that, for taxation years that are after 2001 and before 2005, the description of C in subsection 118.61(1) of the Act, as enacted by subsection (1), shall be read as follows:

(5) Subsection (2) applies to the 2002 and subsequent taxation years except that, for taxation years that are after 2001 and before 2005, paragraph 118.61(2)(b) of the Act, as enacted by subsection (2), shall be read as follows:

(6) Subsection (3) applies to the 2005 and subsequent taxation years.

66. (1) Subparagraph (ii) of the description of A in paragraph 118.81(a) of the Act is replaced by the following:

(ii) the amount determined by the formula

C × D

where

C is the appropriate percentage for the taxation year, and

D is $5,000.

(2) The description of B in paragraph 118.81(a) of the Act is replaced by the following:

B is the amount that would be the person’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under any of sections 118, 118.01, 118.3, 118.61 and 118.7), and

(3) Subsections (1) and (2) apply to the 2005 and subsequent taxation years.

67. (1) Subparagraph 118.91(b)(i) of the Act is replaced by the following:

(i) such of the deductions permitted under subsection 118(3) and sections 118.01, 118.1, 118.2, 118.5, 118.6, 118.62 and 118.7 as can reasonably be considered wholly applicable, and

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

68. (1) Sections 118.92 to 118.94 of the Act are replaced by the following:

Ordering of credits

118.92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsection 118(3) and sections 118.01, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62 and 121.

Credits in separate returns

118.93 Where a separate return of income with respect to a taxpayer is filed under subsection 70(2), 104(23) or 150(4) for a particular period and another return of income under this Part with respect to the taxpayer is filed for a period ending in the calendar year in which the particular period ends, for the purpose of computing the tax payable under this Part by the taxpayer in those returns, the total of all deductions claimed in all those returns under any of subsection 118(3) and sections 118.01 to 118.7 and 118.9 shall not exceed the total that could be deducted under those provisions for the year with respect to the taxpayer if no separate returns were filed under subsections 70(2), 104(23) and 150(4).

Tax payable by non-residents (credits restricted)

118.94 Sections 118, 118.01 and 118.2, subsections 118.3(2) and (3) and sections 118.6, 118.8 and 118.9 do not apply for the purpose of computing the tax payable under this Part for a taxation year by an individual who at no time in the year is resident in Canada unless all or substantially all of the individual’s income for the year is included in computing the individual’s taxable income earned in Canada for the year.

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

69. (1) Paragraph 118.95(a) of the Act is replaced by the following:

(a) such of the deductions as the individual is entitled to under subsection 118(3) and sections 118.01, 118.1, 118.2, 118.5, 118.6, 118.62 and 118.7 as can reasonably be considered wholly applicable to the taxation year, and

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

70. (1) Paragraph (a) of the description of A in subsection 122.51(2) of the Act is replaced by the following:

(a) $1,000, and

(2) Paragraph (b) of the description of B in subsection 122.51(2) of the Act is replaced by the following:

(b) $21,663.

(3) Subsection (1) applies to the 2006 and subsequent taxation years.

(4) Subsection (2) applies to the 2005 and subsequent taxation years.

71. (1) The portion of the description of N in the description of M in subsection 122.61(1) of the Act before paragraph (a) is replaced by the following:

N is the product obtained by multiplying $2,300 by the number of qualified dependants in respect of whom both

(2) The description of P in the description of M in subsection 122.61(1) of the Act is replaced by the following:

P is 4% (or where the person is an eligible individual in respect of only one qualified dependant included in the description of N at the beginning of the month, 2%) of the amount determined for the description of O,

(3) Subsections (1) and (2) apply in respect of overpayments deemed to arise during months that are after June 2006.

72. (1) Subsections 123.2(2) and (3) of the Act are replaced by the following:

Specified percentage

(2) The specified percentage of a corporation for a taxation year is that proportion of 4% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year.

(2) Section 123.2 of the Act is repealed.

(3) Subsection (2) applies to taxation years that begin after 2007.

73. (1) The definition “general rate reduction percentage” in subsection 123.4(1) of the Act is replaced by the following:

“general rate reduction percentage”
« pourcentage de réduction du taux général »

“general rate reduction percentage” of a corporation for a taxation year is the total of

(a) that proportion of 7% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year,

(b) that proportion of 7.5% that the number of days in the taxation year that are in 2008 is of the number of days in the taxation year,

(c) that proportion of 8% that the number of days in the taxation year that are in 2009 is of the number of days in the taxation year, and

(d) that proportion of 9% that the number of days in the taxation year that are after 2009 is of the number of days in the taxation year.

(2) The portion of paragraph (a) of the definition “full rate taxable income” in subsection 123.4(1) of the Act before subparagraph (ii) is replaced by the following:

(a) if the corporation is not a corporation described in paragraph (b) or (c) for the year, the amount by which the corporation’s taxable income for the year (or, for greater certainty, if the corporation is non-resident, its taxable income earned in Canada for the year) exceeds the total of

(i) if an amount is deducted under subsection 125.1(1) from the corporation’s tax otherwise payable under this Part for the year, the amount obtained by dividing the amount so deducted by the corporation’s general rate reduction percentage for the taxation year,

74. (1) The portion of subsection 125.1(1) of the Act before paragraph (a) is replaced by the following:

Manufacturing and processing profits deductions

125.1 (1) There may be deducted from the tax otherwise payable under this Part by a corporation for a taxation year an amount equal to the corporation’s general rate reduction percentage for the taxation year (within the meaning assigned by subsection 123.4(1)) multiplied by the lesser of

(2) The portion of subsection 125.1(2) of the Act before the formula is replaced by the following:

Electrical energy and steam

(2) A corporation that generates electrical energy for sale, or produces steam for sale, in a taxation year may deduct from its tax otherwise payable under this Part for the year an amount equal to the corporation’s general rate reduction percentage for the taxation year (within the meaning assigned by subsection 123.4(1)) multiplied by the amount determined by the formula

75. (1) Paragraph (d) of the definition “investment tax credit” in subsection 127(9) of the Act is repealed.

(2) Paragraph (a) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act is replaced by the following:

(a) that is a Canadian exploration expense incurred by a corporation after May 1, 2006 and before 2008 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2008) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition “mineral resource” in subsection 248(1),

(3) Paragraphs (c) and (d) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act are replaced by the following:

(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after May 1, 2006 and before April 1, 2007, and

(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after May 1, 2006 and before April 1, 2007;

(4) Section 127 of the Act is amended by adding the following after subsection (9):

Transitional application of investment tax credit definition

(9.01) For the purpose of applying each of paragraphs (c) to (f), (h) and (i) of the definition “investment tax credit” in subsection (9) in respect of a taxpayer, the reference to “10” in that paragraph is to be read as a reference to the number that is the lesser of

(a) 20, and

(b) the number that is the total of 10 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 2005 exceeds 11.

Transitional application of investment tax credit definition

(9.02) For the purpose of applying paragraph (g) of the definition “investment tax credit” in subsection (9) in respect of a taxpayer, the reference to “9” in that paragraph is to be read as a reference to the number that is the lesser of

(a) 19, and

(b) the number that is the total of 9 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 2005 exceeds 11.

(5) Section 127 of the Act is amended by adding the following after subsection (35);

Transitional application of investment tax credit recapture

(36) For the purpose of applying each of subsection (27) or (29) in respect of a taxpayer, subsection (28) in respect of a partnership or subsection (34) or (35) in respect of a purchaser and an original user, as the case may be, (which taxpayer, partnership or original user is, in this subsection, referred to as the “taxpayer”), the reference to “10” in that subsection is to be read as a reference to the number that is the lesser of

(a) 20, and

(b) the number that is the total of 10 and the number of taxation years or fiscal periods, as the case may be, by which the number of taxation years or fiscal periods of the taxpayer that have ended after 2005 exceeds 11.

(6) Subsections (1), (4) and (5) apply to the 2006 and subsequent taxation years.

(7) Subsections (2) and (3) apply to expenses renounced under agreements made after May 1, 2006.

75.1 (1) Clause 127.52(1)(h)(ii)(A) of the Act is replaced by the following:

(A) the amount deducted under paragraph 110(1)(d.01), and

(2) Subsection (1) applies to the 2006 and subsequent taxation years except that, for the 2006 taxation year, clause 127.52(1)(h)(ii)(A) of the Act, as enacted by subsection (1), shall be read as follows:

(A) the total of

(I) twice the amount deducted under paragraph 110(1)(d.01) in respect of gifts made before May 2, 2006, and

(II) the amount deducted under paragraph 110(1)(d.01) in respect of gifts made after May 1, 2006, and

76. (1) Section 127.531 of the Act is replaced by the following:

Basic minimum tax credit determined

127.531 An individual’s basic minimum tax credit for a taxation year is the total of all amounts each of which is

(a) an amount deducted under subsection 118(1) or (2), 118.01(2) or 118.3(1) or any of sections 118.5 to 118.7 in computing the individual’s tax payable for the year under this Part; or

(b) the amount that was claimed under section 118.1 or 118.2 in computing the individual’s tax payable for the year under this Part, determined without reference to this Division, to the extent that the amount claimed does not exceed the maximum amount deductible under that section in computing the individual’s tax payable for the year under this Part, determined without reference to this Division.

(2) Subsection (1) applies to the 2002 and subsequent taxation years except that, for taxation years before 2005, paragraph 127.531(a) of the Act, as enacted by subsection (1), shall be read as follows:

(a) an amount deducted under subsection 118(1) or (2) or 118.3(1) or any of sections 118.5 to 118.7 in computing the individual’s tax payable for the year under this Part; or

77. (1) Subparagraph 127.54(2)(b)(ii) of the Act is replaced by the following:

(ii) the amount determined by the formula

A × B

where

A is the appropriate percentage for the taxation year, and

B is the individual’s foreign income for the year.

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

78. (1) Clause 128(2)(e)(iii)(A) of the Act is replaced by the following:

(A) under section 118, 118.01, 118.2, 118.3, 118.5, 118.6, 118.8 or 118.9,

(2) Subsection (1) applies to the 2005 and subsequent taxation years.

79. (1) The portion of subsection 135(1) of the Act before paragraph (a) is replaced by the following:

Deduction in computing income

135. (1) Notwithstanding anything in this Part, other than subsections (1.1) to (2.1) and 135.1(3), there may be deducted, in computing the income of a taxpayer for a taxation year, the total of the payments made, pursuant to allocations in proportion to patronage, by the taxpayer

(2) The portion of subsection 135(3) of the Act before paragraph (a) is replaced by the following:

Amount to be deducted or withheld from payment to customer

(3) Subject to subsection 135.1(6), a taxpayer who makes at any particular time in a calendar year a payment pursuant to an allocation in proportion to patronage to a person who is resident in Canada and is not exempt from tax under section 149 shall, notwithstanding any agreement or any law to the contrary, deduct or withhold from the payment an amount equal to 15% of the lesser of the amount of the payment and the amount, if any, by which

(3) The portion of subsection 135(4) of the Act before the definition “allocation in proportion to patronage” is replaced by the following:

Definitions

(4) For the purposes of this section and section 135.1,

(4) Subsection 135(7) of the Act is replaced by the following:

Payment to customer to be included in income

(7) Where a payment pursuant to an allocation in proportion to patronage (other than an allocation in respect of consumer goods or services) has been received by a taxpayer, the amount of the payment shall, subject to subsection 135.1(2), be included in computing the recipient’s income for the taxation year in which the payment was received and, without restricting the generality of the foregoing, where a certificate of indebtedness or a share was issued to a person pursuant to an allocation in proportion to patronage, the amount of the payment by virtue of that issuance shall be included in computing the recipient’s income for the taxation year in which the certificate or share was received and not in computing the recipient’s income for the year in which the indebtedness was subsequently discharged or the share was redeemed.

(5) Subsections (1) to (4) apply after 2005.

80. (1) The Act is amended by adding the following after section 135:

Agricultural Cooperatives — Tax-deferred Patronage Dividends

Definitions

135.1 (1) The following definitions apply in this section and section 135.

“agricultural business”
« entreprise d’agriculture »

“agricultural business” means a business, carried on in Canada, that consists of one or any combination of

(a) farming (including, if the person carrying on the business is a corporation described in paragraph (a) of the definition “agricultural cooperative corporation”, the production, processing, storing and wholesale marketing of the products of its members’ farming activities); or

(b) the provision of goods or services (other than financial services) that are required for farming.

“agricultural cooperative corporation”
« coopérative agricole »

“agricultural cooperative corporation” at any time means a corporation

(a) that was incorporated or continued by or under the provisions of a law, of Canada or of a province, that provide for the establishment of the corporation as a cooperative corporation or that provide for the establishment of cooperative corporations; and

(b) that has at that time

(i) as its principal business an agricultural business, or

(ii) members, making up at least 75% of all members of the corporation, each of whom

(A) is an agricultural cooperative corporation, or

(B) has as their principal business a farming business.

“allowable disposition”
« disposition admissible »

“allowable disposition” means a disposition by a taxpayer of a tax deferred cooperative share less than five years after the day on which the share was issued if

(a) before the disposition,

(i) the agricultural cooperative corporation is notified in writing that the taxpayer has after the share was issued become disabled and permanently unfit for work, or terminally ill, or

(ii) the taxpayer ceases to be a member of the agricultural cooperative corporation; or

(b) the agricultural cooperative corporation is notified in writing that the share is held by a person on whom the share has devolved as a consequence of the death of the taxpayer.

“eligible member”
« membre admissible »

“eligible member” of an agricultural cooperative corporation means a member who carries on an agricultural business and who is

(a) an individual resident in Canada;

(b) an agricultural cooperative corporation;

(d) a partnership that carries on the business of farming in Canada, all of the members of which are described in any of paragraphs (a) to (c) or this paragraph.

“tax deferred cooperative share”
« part à imposition différée »

“tax deferred cooperative share” at any time means a share

(a) issued, after 2005 and before 2016, by an agricultural cooperative corporation to a person or partnership that is at the time the share is issued an eligible member of the agricultural cooperative corporation, pursuant to an allocation in proportion to patronage;

(b) the holder of which is not entitled to receive on the redemption, cancellation or acquisition of the share by the agricultural cooperative corporation or by any person with whom the agricultural cooperative corporation does not deal at arm’s length an amount that is greater than the amount that would, if this Act were read without reference to this section, be included under subsection135(7) in computing the eligible member’s income for their taxation year in which the share was issued;

(d) that is of a class

(i) the terms of which provide that the agricultural cooperative corporation shall not, otherwise than pursuant to an allowable disposition, redeem, acquire or cancel a share of the class before the day that is five years after the day on which the share was issued, and

(ii) that is identified by the agricultural cooperative corporation in prescribed form and manner as a class of tax deferred cooperative shares.

“tax paid balance”
« solde libéré d’impôt »

“tax paid balance” of a taxpayer at the end of a particular taxation year of the taxpayer means the amount, if any, by which

(a) the total of

(i) the taxpayer’s tax paid balance at the end of the immediately preceding taxation year, and

(ii) the amount, if any, that is included in computing the taxpayer’s income under this Part for the particular taxation year because of an election described in subparagraph (2)(a)(ii),

exceeds

(b) the total of all amounts each of which is the taxpayer’s proceeds of disposition of a tax deferred cooperative share that the taxpayer disposed of in the particular taxation year.

Income inclusion

(2) In computing the income of a taxpayer for a particular taxation year, there shall be included under subsection 135(7), in respect of the taxpayer’s receipt, as an eligible member, of tax deferred cooperative shares of an agricultural cooperative corporation in the particular taxation year, only the total of

(a) the lesser of

(i) the total of all amounts, in respect of the taxpayer’s receipt in the particular taxation year of tax deferred cooperative shares, that would, if this Act were read without reference to this section, be included under subsection 135(7) in computing the taxpayer’s income for the particular taxation year, and

(ii) the greater of nil and the amount, if any, specified by the taxpayer in an election in prescribed form that is filed with the taxpayer’s return of income for the particular taxation year, and

(b) the amount, if any, by which

(i) the total of all amounts each of which is the taxpayer’s proceeds of disposition of a tax deferred cooperative share disposed of by the taxpayer in the particular taxation year

exceeds

(ii) the total of

(A) the taxpayer’s tax paid balance at the end of the immediately preceding taxation year, and

(B) the amount, if any, that is included in computing the taxpayer’s income for the particular taxation year because of an election described in subparagraph (a)(ii).

Deductibility limit

(3) The amount that may be deducted under subsection 135(1) for a particular taxation year by an agricultural cooperative corporation in respect of payments, in the form of tax deferred cooperative shares, made pursuant to allocations in proportion to patronage shall not exceed 85% of the agricultural cooperative corporation’s income of the taxation year attributable to business done with members.

Deemed disposition

(4) A taxpayer who holds a tax deferred cooperative share is deemed to have disposed of the share, for proceeds of disposition equal to the amount that would, if this Act were read without reference to this section, have been included under subsection 135(7), in respect of the share, in computing the taxpayer’s income for the taxation year in which the share was issued, at the earliest time at which

(a) the paid-up capital of the share is reduced otherwise than by way of a redemption of the share; or

(b) the taxpayer pledges, or for civil law hypothecates, assigns or in any way alienates the share as security for indebtedness of any kind.

Reacquisition

(5) A taxpayer who is deemed by subsection (4) to have disposed at any time of a tax deferred cooperative share is deemed to have reacquired the share, immediately after that time, at a cost equal to the taxpayer’s proceeds of disposition from that disposition.

Exclusion from withholding obligation

(6) Subsection 135(3) does not apply to a payment pursuant to an allocation in proportion to patronage that is paid by an agricultural cooperative corporation through the issuance of a tax deferred cooperative share.

Withholding on redemption

(7) If a share that was, at the time it was issued, a tax deferred cooperative share of an agricultural cooperative corporation is redeemed, acquired or cancelled by the agricultural cooperative corporation, or by a person or partnership with whom the agricultural cooperative corporation does not deal at arm’s length, the agricultural cooperative corporation or the person or partnership, as the case may be, shall withhold and forthwith remit to the Receiver General, on account of the shareholder’s tax liability, 15% from the amount otherwise payable on the redemption, acquisition or cancellation.

Application of subsections 84(2) and (3)

(8) Subsections 84(2) and (3) do not apply to a tax deferred cooperative share.

(2) Subsection (1) applies after 2005, except that paragraph 135.1(4)(b) of the Act, as enacted by subsection (1), does not apply to any indebtedness entered into before 2006.

81. (1) The portion of subsection 136(2) of the Act before paragraph (a) is replaced by the following:

Definition of “cooperative corporation”

(2) In this section, “cooperative corporation” means a corporation that was incorporated or continued by or under the provisions of a law, of Canada or of a province, that provide for the establishment of the corporation as a cooperative corporation or that provide for the establishment of cooperative corporations, for the purpose of marketing (including processing incident to or connected to the marketing) natural products belonging to or acquired from its members or customers, of purchasing supplies, equipment or household necessaries for or to be sold to its members or customers or of performing services for its members or customers, if

(2) Subsection (1) applies after June 2005.

82. (1) Subsection 181.1(1.1) of the Act is amended by adding the word “and” at the end of paragraph (b) and by repealing paragraphs (d) and (e).

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

83. (1) Subparagraphs 186(1)(d)(i) and (ii) of the Act are replaced by the following:

(i) non-capital loss for any of its 20 taxation years immediately preceding or 3 taxation years immediately following the year, and

(ii) farm loss for any of its 20 taxation years immediately preceding or 3 taxation years immediately following the year

(2) Subsection (1) applies in respect of losses that arise in the 2006 and subsequent taxation years.

84. (1) Subsection 211.1(2) of the Act is replaced by the following:

Taxable Canadian life investment income

(2) For the purposes of this Part, the taxable Canadian life investment income of a life insurer for a taxation year is the amount, if any, by which its Canadian life investment income for the year exceeds the total of its Canadian life investment losses for the 20 taxation years immediately preceding the year, to the extent that those losses were not deducted in computing its taxable Canadian life investment income for any preceding taxation year.

(2) Subsection (1) applies in respect of losses that arise in the 2006 and subsequent taxation years.

85. (1) Subsection 225.1(8) of the Act is replaced by the following:

Definition of “large corporation”

(8) For the purposes of this section and section 235, a corporation (other than a corporation described in subsection 181.1(3)) is a “large corporation” in a particular taxation year if the total of the taxable capital employed in Canada of the corporation, at the end of the particular taxation year, and the taxable capital employed in Canada of any other corporation, at the end of the other corporation’s last taxation year that ends at or before the end of the particular taxation year, if the other corporation is related (within the meaning assigned for the purposes of section 181.5) to the corporation at the end of the particular taxation year, exceeds $10 million, and, for the purpose of this subsection, a corporation formed as a result of the amalgamation or merger of 2 or more predecessor corporations is deemed to be the same corporation as, and a continuation of, each predecessor corporation.

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

86. (1) The portion of subsection 227(5) of the Act before paragraph (a) is replaced by the following:

Payments by trustees, etc.

(5) Where a specified person in relation to a particular person (in this subsection referred to as the “payer”) has any direct or indirect influence over the disbursements, property, business or estate of the payer and the specified person, alone or together with another person, authorizes or otherwise causes a payment referred to in subsection 135(3), 135.1(7) or 153(1), or on or in respect of which tax is payable under Part XII.5 or XIII, to be made by or on behalf of the payer, the specified person

(2) Paragraph 227(5)(a.1) of the Act is replaced by the following:

(a.1) is, for the purposes of subsections 135.1(7) and 211.8(2), deemed to be a person who redeemed, acquired or cancelled a share and made the payment as a consequence of the redemption, acquisition or cancellation;

(3) Subparagraph 227(5)(b)(i) of the Act is replaced by the following:

(i) all amounts payable by the payer because of any of subsections 135(3), 135.1(7), 153(1) and 211.8(2) and section 215 in respect of the payment, and

(4) The portion of subsection 227(8.3) of the Act before paragraph (a) is replaced by the following:

Interest on amounts not deducted or withheld

(8.3) A person who fails to deduct or withhold any amount as required by subsection 135(3), 135.1(7), 153(1) or 211.8(2) or section 215 shall pay to the Receiver General interest on the amount at the prescribed rate, computed

(5) Paragraph 227(8.3)(b) of the Act is replaced by the following:

(b) in the case of an amount required by subsection 135(3) or 135.1(7) or section 215 to be deducted or withheld, from the day on which the amount was required to be deducted or withheld to the day of payment of the amount to the Receiver General; and

(6) Subsection 227(8.4) of the Act is replaced by the following:

Liability to pay amount not deducted or withheld

(8.4) A person who fails to deduct or withhold any amount as required under subsection 135(3) or 135.1(7) in respect of a payment made to another person or under subsection 153(1) in respect of an amount paid to another person who is non-resident or who is resident in Canada solely because of paragraph 250(1)(a) is liable to pay as tax under this Act on behalf of the other person the whole of the amount that should have been so deducted or withheld and is entitled to deduct or withhold from any amount paid or credited by the person to the other person or otherwise to recover from the other person any amount paid by the person as tax under this Part on behalf of the other person.

(7) Subsections (1) to (6) apply after 2005.

87. (1) Subsection 227.1(1) of the Act is replaced by the following:

Liability of directors for failure to deduct

227.1 (1) Where a corporation has failed to deduct or withhold an amount as required by subsection 135(3) or 135.1(7) or section 153 or 215, has failed to remit such an amount or has failed to pay an amount of tax for a taxation year as required under Part VII or VIII, the directors of the corporation at the time the corporation was required to deduct, withhold, remit or pay the amount are jointly and severally, or solidarily, liable, together with the corporation, to pay that amount and any interest or penalties relating to it.

(2) Subsection (1) applies after 2005.

88. (1) Section 235 of the Act is replaced by the following:

Penalty for failing to file corporate returns

235. Every large corporation (within the meaning assigned by subsection 225.1(8)) that fails to file a return for a taxation year as and when required by section 150 or 190.2 is liable, in addition to any penalty otherwise provided, to a penalty for each such failure equal to the amount determined by the formula

A × B

where

A is the total of

(a) 0.0005% of the corporation’s taxable capital employed in Canada at the end of the taxation year, and

(b) 0.25% of the tax that would be payable under Part VI by the corporation for the year if this Act were read without reference to subsection 190.1(3); and

B is the number of complete months, not exceeding 40, from the day on or before which the return was required to be filed to the day on which the return is filed.

(2) Subsection (1) applies to the 2006 and subsequent taxation years.

PART 3

AMENDMENTS RELATING TO EXCISE TAX ON JEWELLERY, ETC.

R.S., c. E-15

Excise Tax Act

2005, c. 30, s. 25(1)

89. (1) Sections 5 to 5.2 of Schedule I to the Excise Tax Act are repealed.

(2) Subsection (1) is deemed to have come into force on May 2, 2006.

2005, c. 30

Budget Implementation Act, 2005

90. Section 26 of the Budget Implementation Act, 2005 is repealed.

PART 4

AMENDMENTS RELATING TO ABORIGINAL TAX POWERS AND ABORIGINAL TAX TREATMENT

2003, c. 15, s. 67

First Nations Goods and Services Tax Act

2005, c. 19, s. 10

91. The title of Part 2 of the First Nations Goods and Services Tax Act is replaced by the following:

FIRST NATIONS SALES TAX — SPECIFIED PROVINCES

2005, c. 19, s. 10

92. (1) The definitions “parallel Quebec law” and “reserves in Quebec” in section 17 of the Act are repealed.

(2) Section 17 of the Act is amended by adding the following in alphabetical order:

“parallel provincial law”
« loi provinciale parallèle »

“parallel provincial law”, in respect of a band law, means the enactment of the specified province listed in Schedule 2 opposite the name of the council of the band that enacted the band law, or those provisions of an enactment of that province, to which the band law is similar.

“specified province”
« province visée »

“specified province” means a province that is listed in Schedule 2.

2005, c. 19, s. 10

93. Sections 21 and 22 of the Act are replaced by the following:

Application of other Acts

21. If a law of a specified province provides that one or more laws of the specified province apply as if the tax imposed under a band law were imposed under a particular law of the specified province, all Acts of Parliament, other than this Act, apply as if the tax imposed under the band law were imposed under that particular law of the specified province.

Administration Agreement

Authority to enter into agreement

22. A council of the band may, on behalf of the band, enter into an administration agreement with the government of the specified province listed opposite the name of that council in Schedule 2 in respect of a band law enacted by that council.

2005, c. 19, s. 10

94. (1) Subsections 23(1) and (2) of the Act are replaced by the following:

Authority to impose a direct sales tax

23. (1) A council of the band that is listed in Schedule 2 may enact a law that imposes a direct sales tax, and any other amount that may be required to be paid in relation to the imposition of that direct sales tax, within its reserves that are situated in the specified province listed opposite the name of that council in that Schedule and that are listed in that Schedule opposite the name of the council.

Parallel provincial law

(2) A law may not be enacted under subsection (1) unless the law has only one parallel provincial law that is expressly identified in that law.

2005, c. 19, s. 10

(2) Paragraphs 23(3)(a) to (d) of the Act are replaced by the following:

(a) an administration agreement in respect of the law is in effect;

(b) that administration agreement is between the council of the band and the government of the specified province listed opposite the name of that council in Schedule 2;

(c) the law is administered and enforced, and the direct sales tax imposed under that law is collected, in accordance with that administration agreement;

(d) the name of the band, the name of the council of the band, the name, or description, of the reserves of the band within which the law applies and the name of the specified province in which the reserves are situated are listed opposite one another in Schedule 2; and

(e) its parallel provincial law is in force.

2005, c. 19, s. 10

95. Section 24 of the Act is replaced by the following:

Coming into force — law under section 23

24. Subject to subsection 23(3), a band law comes into force on the date specified in the administration agreement entered into under section 22 in respect of that law.

2005, c. 19, s. 10

96. Section 29 of the Act is replaced by the following:

Amendment of Schedule 2

29. The Governor in Council may, by order, amend Schedule 2 by adding, deleting or varying the name of a band, the name of a council of the band, the name, or description, of a band’s reserves or the name of a specified province.

2005, c. 19, s. 12

97. Schedule 2 to the Act is replaced by the Schedule 2 set out in Schedule 1 to this Act.