Bill C-10

COORDINATING AMENDMENTS

Bill C-2

280. (1) Subsections (2) and (3) apply if Bill C-2, introduced in the 1st session of the 39th Parliament and entitled the Federal Accountability Act (the “other Act”), receives royal assent.

(2) On the coming into force of subsection 64(2) of the other Act, subparagraph 53(2)(c)(iii) of the Income Tax Act, as enacted by subsection 66(3) of this Act, is replaced by the following:

(iii) any amount deemed by subsection 110.1(4) or 118.1(8) to have been the eligible amount of a gift made by the taxpayer by reason of the taxpayer’s membership in the partnership at the end of a fiscal period of the partnership ending before that time,

(3) If subsection 64(2) of the other Act comes into force before this Act is assented to, subsections 123(6) and (9) of this Act are deemed to have come into force before subsection 64(2) of the other Act.

Bill C-28

281. (1) Subsections (2) to (12) apply if Bill C-28, introduced in the 1st session of the 39th Parliament and entitled the Budget Implementation Act, 2006, No. 2 (the “other Act”), receives royal assent.

(2) If subsection 3(3) of the other Act comes into force, paragraph 14(3)(a) of the Income Tax Act, as amended by subsection 53(1) of this Act, is amended by replacing the expression “subsection (1.01)” with the expression “subsection (1.01) or (1.02)”.

(3) Subsection 82(1) of the Income Tax Act, as enacted by subsection 44(1) of the other Act, is replaced by the following:

82. (1) In computing the income of a taxpayer for a taxation year, there shall be included the total of the following amounts:

(a) the amount, if any, by which

(i) the total of all amounts, other than eligible dividends and amounts described in paragraph (c), (d) or (e) received by the taxpayer in the taxation year from corporations resident in Canada as, on account of, in lieu of payment of or in satisfaction of, taxable dividends,

exceeds

(ii) if the taxpayer is an individual, the total of all amounts each of which is, or is deemed by paragraph 260(12)(b) to have been, paid by the taxpayer in the taxation year and deemed by subsection 260(5.1) to have been received by another person as a taxable dividend (other than an eligible dividend);

(a.1) the amount, if any, by which

(i) the total of all amounts, other than amounts included in computing the income of the taxpayer because of paragraph (c), (d) or (e), received by the taxpayer in the taxation year from corporations resident in Canada as, on account of, in lieu of payment of or in satisfaction of, eligible dividends,

exceeds

(ii) if the taxpayer is an individual, the total of all amounts each of which is, or is deemed by paragraph 260(12)(b) to have been, paid by the taxpayer in the taxation year and deemed by subsection 260(5.1) to have been received by another person as an eligible dividend;

(b) if the taxpayer is an individual, other than a trust that is a registered charity, the total of

(i) 25% of the amount determined under paragraph (a) in respect of the taxpayer for the taxation year, and

(ii) 45% of the amount determined under paragraph (a.1) in respect of the taxpayer for the taxation year;

(c) all taxable dividends received by the taxpayer in the taxation year, from corporations resident in Canada, under dividend rental arrangements of the taxpayer;

(d) all taxable dividends (other than taxable dividends described in paragraph (c)) received by the taxpayer in the taxation year from corporations resident in Canada that are not taxable Canadian corporations; and

(e) if the taxpayer is a trust, all amounts each of which is all or part of a taxable dividend (other than a taxable dividend described in paragraph (c) or (d)) that was received by the trust in the taxation year on a share of the capital stock of a taxable Canadian corporation and that can reasonably be considered to have been included in computing the income of a beneficiary under the trust who was non-resident at the end of the taxation year.

(4) If subsection 3(3) of the other Act comes into force, subsection 96(3) of the Income Tax Act, as amended by subsection 20(3) of this Act, is amended by replacing the expression “14(1.01) and (6)” with the expression “14(1.01), (1.02) and (6)”.

(5) Section 54 of the other Act is, or is deemed to have been, repealed.

(6) Section 260 of the Income Tax Act is amended by adding the following after subsection (1):

(1.1) This subsection applies to an amount if the amount is received by a person who is resident in Canada, is deemed under subsection (5.1) to be a taxable dividend, and is either

(a) received as compensation for an eligible dividend, within the meaning assigned by subsection 89(1); or

(b) received as compensation for a taxable dividend (other than an eligible dividend) paid by a corporation to a non-resident shareholder in circumstances where it is reasonable to consider that the corporation would, if that shareholder were resident in Canada, have designated the dividend to be an eligible dividend under subsection 89(14).

(7) Subsection 260(5.1) of the Income Tax Act, as enacted by subsection 194(6) of this Act, is replaced by the following:

(5.1) If this subsection applies in respect of a particular amount received by a taxpayer in a taxation year as an SLA compensation payment or as a dealer compensation payment, the particular amount is deemed for the purpose of this Act, to the extent of the underlying payment to which the amount relates, to have been received by the taxpayer in the taxation year as,

(a) where the underlying payment is a taxable dividend paid on a share of the capital stock of a public corporation (other than an underlying payment to which paragraph (b) applies), a taxable dividend and, if subsection (1.1) applies to the particular amount, an eligible dividend on the share;

(b) where the underlying payment is paid by a trust on a qualified trust unit issued by the trust,

(i) an amount of the trust’s income that was, to the extent that subsection 104(13) applied to the underlying payment,

(A) paid by the trust to the taxpayer as a beneficiary under the trust, and

(B) designated by the trust in respect of the taxpayer to the extent of a valid designation, if any, by the trust under this Act in respect of the recipient of the underlying payment, and

(ii) to the extent that the underlying payment is a distribution of a property from the trust, a distribution of that property from the trust; or

(c) in any other case, interest.

(8) Paragraph 260(12)(b) of the Income Tax Act, as enacted by subsection 194(9) of this Act, is replaced by the following:

(b) for the purpose of subsection 82(1), to have paid the individual’s specified proportion, for each fiscal period of the partnership that ends in the year, of each amount paid by the partnership in that fiscal period that is deemed by subsection (5.1) to have been received by another person as a taxable dividend or an eligible dividend.

(9) Subsection (2) applies to taxation years that end after December 20, 2002, except that the expression “disposition after December 20, 2002 of a property that was an eligible capital property” in the description of A.1 in the description of A in the definition “cumulative eligible capital” in subsection 14(5) of the Income Tax Act, as enacted by subsection 53(2) of this Act, is to be read as the expression “disposition after 2003 of a property that was an eligible capital property” if

(a) the taxpayer referred to in that description of A.1 acquired the property referred to in that description from the transferor referred to in that description;

(b) the property was so acquired under an agreement in writing made before December 21, 2002, between the transferor, or a particular person that controlled the transferor, and another person who dealt at an arm’s length with the transferor and the particular person; and

(c) no clause in the agreement or any other arrangement allows an obligation of any party to the agreement to be changed, reduced or waived in the event of a change to, or an adverse assessment under, the Income Tax Act.

(10) Subsection (3) is deemed to have come into force on January 1, 2006.

(11) Subsection (4) applies to taxation years that end after December 20, 2002. However, subsection 96(3) of the Income Tax Act, as amended by subsection 20(3) of this Act, is, before 2007, to be read without reference to “sections 94.1 to 94.3, paragraph 95(2)(g.3)”.

(12) Subsections (6) to (8) apply to SLA compensation payments or dealer compensation payments received in respect of eligible dividends paid after 2005.