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Bill C-9

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Pension Plans

Definitions

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

“active member”
« participant actif »

“active member” has the meaning assigned by subsection 8500(1) of the Income Tax Regulations.

“employer resource”
« ressource d’employeur »

“employer resource” of a person means

(a) all or part of a labour activity of the person, other than the part of the labour activity consumed or used by the person in the process of creating, developing or bringing into existence property;

(b) all or part of property or a service supplied to the person, other than the part of the property or service consumed or used by the person in the process of creating, developing or bringing into existence property;

(d) any combination of the items referred to in paragraphs (a) to (c).

“excluded activity”
« activité exclue »

“excluded activity”, in respect of a pension plan, means an activity undertaken exclusively for

(a) compliance by a participating employer of the pension plan as an issuer, or prospective issuer, of securities with reporting requirements under a law of Canada or of a province in respect of the regulation of securities;

(b) evaluating the feasibility or financial impact on a participating employer of the pension plan of establishing, altering or winding-up the pension plan, other than an activity that relates to the preparation of an actuarial report in respect of the plan required under a law of Canada or of a province;

(c) evaluating the financial impact of the pension plan on the assets and liabilities of a participating employer of the pension plan;

(d) negotiating changes to the benefits under the pension plan with a union or similar organization of employees; or

(e) prescribed purposes.

“labour activity”
« activité de main-d’oeuvre »

“labour activity” of a person means anything done by an individual who is or agrees to become an employee of the person in the course of, or in relation to, the office or employment of that individual.

“participating employer”
« employeur participant »

“participating employer” of a pension plan means an employer that has made, or is required to make, contributions to the pension plan in respect of the employer’s employees or former employees, or payments under the pension plan to the employer’s employees or former employees, and includes an employer prescribed for the purposes of the definition “participating employer” in subsection 147.1(1) of the Income Tax Act.

“pension activity”
« activité de pension »

“pension activity”, in respect of a pension plan, means an activity (other than an excluded activity) that relates to

(a) the establishment, management or administration of the pension plan or a pension entity of the pension plan; or

(b) the management or administration of assets in respect of the pension plan.

“pension entity”
« entité de gestion »

“pension entity” of a pension plan means a person in respect of the pension plan that is

(a) a person referred to in paragraph (a) of the definition “pension plan”;

(b) a corporation referred to in paragraph (b) of that definition; or

“pension plan”
« régime de pension »

“pension plan” means a registered pension plan (as defined in subsection 248(1) of the Income Tax Act)

(a) that governs a person that is a trust or that is deemed to be a trust for the purposes of that Act;

(b) in respect of which a corporation is

(i) incorporated and operated either

(A) solely for the administration of the registered pension plan, or

(B) for the administration of the registered pension plan and for no other purpose other than acting as trustee of, or administering, a trust governed by a retirement compensation arrangement (as defined in subsection 248(1) of that Act), where the terms of the arrangement provide for benefits only in respect of individuals who are provided with benefits under the registered pension plan, and

(ii) accepted by the Minister, under subparagraph 149(1)(o.1)(ii) of that Act, as a funding medium for the purpose of the registration of the registered pension plan; or

“provincial factor”
« facteur provincial »

“provincial factor” in respect of a pension plan and a participating province, for a fiscal year of a person that is a participating employer of the pension plan, means the amount (expressed as a percentage) determined by the formula

A × B

where

A is the tax rate for the participating province on the last day of the fiscal year; and

B is

(a) if the person made contributions to the pension plan during the fiscal year that may be deducted by the person under paragraph 20(1)(q) of the Income Tax Act in computing its income (in this paragraph referred to as “pension contributions”) and the number of active members of the pension plan who were employees of the person on the particular day that is the last day of the last calendar year ending on or before the last day of the fiscal year is greater than zero, the amount determined by the formula

[(C/D) + (E/F)]/2

where

C is the total of all pension contributions made to the pension plan by the person during the fiscal year in respect of employees of the person who were resident in the participating province on the particular day,

D is the total of all pension contributions made to the pension plan by the person during the fiscal year in respect of employees of the person,

E is the number of active members of the pension plan who were, on the particular day, employees of the person and resident in the participating province, and

F is the number of active members of the pension plan who were, on the particular day, employees of the person;

(b) if paragraph (a) does not apply and the number of active members of the pension plan who were employees of the person on the particular day that is the last day of the last calendar year ending on or before the last day of the fiscal year is greater than zero, the amount determined by the formula

G/H

where

G is the number of active members of the pension plan who were, on the particular day, employees of the person and resident in the participating province, and

H is the number of active members of the pension plan who were, on the particular day, employees of the person; or

Excluded resource

(2) For the purposes of this section, property or a service that is supplied to a particular person that is a participating employer of a pension plan by another person is an excluded resource of the particular person in respect of the pension plan if

(a) for each pension entity of the pension plan, no tax would become payable under this Part in respect of the supply if

(i) the supply were made by the other person to the pension entity and not to the particular person, and

(ii) the pension entity and the other person were dealing at arm’s length; and

(b) where the supply is a supply of tangible personal property made outside Canada, the supply would not be an imported taxable supply (as defined in section 217) if the particular person were a registrant not engaged exclusively in commercial activities.

Time of acquisition

(3) For the purposes of this section, if, at a particular time, a supply of property described in paragraph 142(2)(a) or (b) is made to a person who is a participating employer of a pension plan and, at a later time, tax under section 212 becomes payable by the person in respect of the property

(a) the supply is deemed to have been made to the person at the later time and not at the particular time; and

(b) tax is deemed to have been payable in respect of the supply at the later time.

Specified pension entity

(4) If a person is a participating employer of a pension plan and the pension plan has,

(a) at all times in a fiscal year of the person, no more than one pension entity, that pension entity is the specified pension entity of the pension plan in respect of the person for the fiscal year; and

(b) in the fiscal year, two or more pension entities, the person and one of those pension entities may jointly elect, in prescribed form containing prescribed information, for that pension entity to be the specified pension entity of the pension plan in respect of the person for the fiscal year.

Acquisition of property or a service for supply

(5) If a person that is a registrant and a participating employer of a pension plan acquires property or a service (in this subsection referred to as the “specified resource”) for the purpose of making a supply of all or part of the specified resource to a pension entity of the pension plan for consumption, use or supply by the pension entity in the course of pension activities in respect of the pension plan and the specified resource is not an excluded resource of the person in respect of the pension plan, the following rules apply:

(a) for the purposes of this Part, the person is deemed to have made a taxable supply of the specified resource or part on the last day of the particular fiscal year of the person in which the person acquired the specified resource;

(b) for the purposes of this Part, tax in respect of the taxable supply is deemed to have become payable on the last day of the particular fiscal year and the person is deemed to have collected that tax on that day;

(c) for the purposes of this Part, the tax referred to in paragraph (b) is deemed to be equal to the amount determined by the formula

A + B

where

A is the amount determined by the formula

C × D

where

C is the fair market value of the specified resource or part at the time it was acquired by the person, and

D is the rate set out in subsection 165(1), and

B is the total of all amounts, each of which is determined for a participating province by the following formula

E × F

where

E is the fair market value of the specified resource or part at the time it was acquired by the person, and

F is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year; and

(d) for the purpose of determining an input tax credit of the pension entity under this Part and for the purposes of sections 232.01, 232.02 and 261.01, the pension entity is deemed

(i) to have received a supply of the specified resource or part on the last day of the particular fiscal year,

(ii) to have paid tax in respect of that supply on that day equal to

(A) if the pension entity is a selected listed financial institution on that day, the amount determined for A in the formula in paragraph (c) in determining the amount of tax under that paragraph, and

(B) in any other case, the amount of tax determined under paragraph (c), and

(iii) to have acquired the specified resource or part for consumption, use or supply in the course of its commercial activities to the same extent that the specified resource or part was acquired by the person for the purpose of making a supply of the specified resource or part to the pension entity for consumption, use or supply by the pension entity in the course of pension activities in respect of the pension plan that are commercial activities of the pension entity.

Consumption or use of employer resource for supply

(6) If a person is both a registrant and a participating employer of a pension plan at any time in a particular fiscal year of the person, the person consumes or uses at that time an employer resource of the person for the purpose of making a supply of property or a service (in this subsection referred to as the “pension supply”) to a pension entity of the pension plan for consumption, use or supply by the pension entity in the course of pension activities in respect of the pension plan, and the employer resource is not an excluded resource of the person in respect of the pension plan, the following rules apply:

(a) for the purposes of this Part, the person is deemed to have made a taxable supply of the employer resource (in this subsection referred to as the “employer resource supply”) on the last day of the particular fiscal year;

(b) for the purposes of this Part, tax in respect of the employer resource supply is deemed to have become payable on the last day of the particular fiscal year and the person is deemed to have collected that tax on that day;

(c) for the purposes of this Part, the tax referred to in paragraph (b) is deemed to be equal to the amount determined by the formula

A + B

where

A is the amount determined by the formula

C × D

where

C is

(i) if the employer resource was consumed by the person during the particular fiscal year for the purpose of making the pension supply, the product obtained when the fair market value of the employer resource at the time the person began consuming it in the particular fiscal year is multiplied by the extent to which that consumption (expressed as a percentage of the total consumption of the employer resource by the person during the particular fiscal year) occurred when the person was both a registrant and a participating employer of the pension plan, or

(ii) otherwise, the product obtained when the fair market value of the use of the employer resource during the particular fiscal year as determined on the last day of the particular fiscal year is multiplied by the extent to which the employer resource was used during the par- ticular fiscal year (expressed as a percentage of the total use of the employer resource by the person during the particular fiscal year) for the purpose of making the pension supply when the person was both a registrant and a participating employer of the pension plan, and

D is the rate set out in subsection 165(1), and

B is the total of all amounts, each of which is determined for a participating province by the following formula

E × F

where

E is the amount determined for C, and

F is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year; and

(d) for the purpose of determining an input tax credit of the pension entity under this Part and for the purposes of sections 232.01, 232.02 and 261.01, the pension entity is deemed

(i) to have received a supply of the employer resource on the last day of the particular fiscal year,

(ii) to have paid tax in respect of that supply on that day equal to

(B) in any other case, the amount of tax determined under paragraph (c), and

(iii) to have acquired the employer resource for consumption, use or supply in the course of its commercial activities to the same extent that the property or service supplied in the pension supply was acquired by the pension entity for consumption, use or supply by the pension entity in pension activities in respect of the pension plan that are commercial activities of the pension entity.

Consumption or use of employer resource otherwise than for supply

(7) If a person is both a registrant and a participating employer of a pension plan at any time in a particular fiscal year of the person, the person consumes or uses at that time an employer resource of the person in the course of pension activities in respect of the pension plan, the employer resource is not an excluded resource of the person in respect of the pension plan, and subsection (6) does not apply to that consumption or use, the following rules apply:

(c) for the purposes of this Part, the tax referred to in paragraph (b) is deemed to be equal to the amount determined by the formula

A + B

where

A is the amount determined by the formula

C × D

where

C is

(i) if the employer resource was consumed by the person during the particular fiscal year in the course of pension activities in respect of the pension plan, the product obtained when the fair market value of the employer resource at the time the person began consuming it in the particular fiscal year is multiplied by the extent to which that consumption (expressed as a percentage of the total consumption of the employer resource by the person during the particular fiscal year) occurred when the person was both a registrant and a participating employer of the pension plan, or

(ii) otherwise, the product obtained when the fair market value of the use of the employer resource during the particular fiscal year as determined on the last day of the particular fiscal year is multiplied by the extent to which the employer resource was used during the par- ticular fiscal year (expressed as a percentage of the total use of the employer resource by the person during the particular fiscal year) in the course of pension activities in respect of the pension plan when the person was both a registrant and a participating employer of the pension plan, and

D is the rate set out in subsection 165(1), and

B is the total of all amounts, each of which is determined for a participating province by the following formula

E × F

where

E is the amount determined for C, and

F is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year; and

(d) for the purposes of determining, under section 261.01, an eligible amount of the specified pension entity of the pension plan in respect of the person for the particular fiscal year, the specified pension entity is deemed to have paid tax on the last day of the particular fiscal year equal to

(i) if the specified pension entity is a selected listed financial institution on that day, the amount determined for A in the formula in paragraph (c) in determining the amount of tax under that paragraph, and

(ii) in any other case, the amount of tax determined under paragraph (c).

Provision of information to pension entity

(8) If subsection (5), (6) or (7) applies in respect of a person that is a participating employer of a pension plan, the person shall, in prescribed form and in a manner satisfactory to the Minister, provide prescribed information to the pension entity of the pension plan that is deemed to have paid tax under that subsection.

(2) Subsection (1) applies in respect of fiscal years of a person beginning on or after September 23, 2009, except that

(a) if a person that is a participating employer of a pension plan acquires property or a service for the purpose of making a supply of all or part of the property or service to a pension entity of the pension plan but not for the purpose of making a supply of any part of the property or service to a pension entity of the pension plan after June 2010, the amount determined for B in the formula in paragraph 172.1(5)(c) of the Act, as enacted by subsection (1), for Ontario or British Columbia in respect of a taxable supply of all or part of the property or service that is deemed to have been made under paragraph 172.1(5)(a) of the Act, as enacted by subsection (1), shall be zero; and

(b) if a fiscal year of a person begins before July 1, 2010 and ends on or after that day, the third formula in paragraph 172.1(6)(c) of the Act and the descriptions in that formula, as enacted by subsection (1), and the third formula in paragraph 172.1(7)(c) of the Act and the descriptions in that formula, as enacted by subsection (1), shall be read as follows:

E × F × G/H

where

E is the amount determined for C,

F is the provincial factor in respect of the pension plan and the participating province for the particular fiscal year,

G is

(i) if the participating province is Ontario or British Columbia, the number of days in the particular fiscal year that are after June 2010, and

(ii) in any other case, the number of days in the particular fiscal year, and

H is the number of days in the particular fiscal year; and

59. (1) The Act is amended by adding the following after section 177:

Network Sellers

Definitions

178. (1) The following definitions apply in this section and section 236.5.

“network commission”
« commission de réseau »

“network commission” of a sales representative of a person means an amount that is payable by the person to the sales representative under an agreement between the person and the sales representative

(a) as consideration for a supply of a service, made by the sales representative, of arranging for the sale of a select product or a sales aid of the person; or

(b) solely as a consequence of a supply of a service, made by any sales representative of the person described in paragraph (a) of the definition “sales representative”, of arranging for the sale of a select product or a sales aid of the person.

“network seller”
« vendeur de réseau »

“network seller” means a person notified by the Minister of an approval under subsection (5).

“sales aid”
« matériel de promotion »

“sales aid” of a particular person that is a network seller or a sales representative of a network seller means property (other than a select product of any person) that

(a) is a customized business form or a sample, demonstration kit, promotional or instructional item, catalogue or similar person- al property acquired, manufactured or produced by the particular person for sale to assist in the promotion, sale or distribution of select products of the network seller; and

(b) is neither sold nor held for sale by the particular person to a sales representative of the network seller that is acquiring the property for use as capital property.

“sales representative”
« représentant commercial »

“sales representative” of a particular person means

(a) a person (other than a person that is an employee of the particular person or that acts, in the course of its commercial activities, as agent in making supplies of select products of the particular person on behalf of the particular person) that

(i) has a contractual right under an agreement with the particular person to arrange for the sale of select products of the particular person, and

(ii) does not arrange for the sale of select products of the particular person primarily at a fixed place of business of the person other than a private residence; or

(b) a person (other than a person that is an employee of the particular person or that acts, in the course of its commercial activities, as agent in making supplies of select products of the particular person on behalf of the particular person) that has a contractual right under an agreement with the particular person to be paid an amount by the particular person solely as a consequence of a supply of a service, made by a person described in paragraph (a), of arranging for the sale of a select product or a sales aid of the particular person.

“select product”
« produit déterminé »

“select product” of a person means tangible personal property that

(a) is acquired, manufactured or produced by the person for supply by the person for consideration, otherwise than as used property, in the ordinary course of business of the person; and

(b) is ordinarily acquired by consumers by way of sale.

Qualifying network seller

(2) For the purposes of this section, a person is a qualifying network seller throughout a fiscal year of the person if

(a) all or substantially all of the total of all consideration, included in determining the income from a business of the person for the fiscal year, for supplies made in Canada by way of sale is for

(i) supplies of select products of the person, made by the person, by way of sales that are arranged for by sales representatives of the person (in this subsection referred to as “select supplies”), or

(ii) where the person is a direct seller (as defined in section 178.1), supplies by way of sale of exclusive products (as defined in that section) of the person made by the person to independent sales contractors (as defined in that section) of the person at any time when an approval of the Minister for the application of section 178.3 to the person is in effect;

(b) all or substantially all of the total of all consideration, included in determining the income from a business of the person for the fiscal year, for select supplies is for select supplies made to consumers;

(c) all or substantially all of the sales representatives of the person to which network commissions become payable by the person during the fiscal year are sales representatives, each having a total of such network commissions of not more than the amount determined by the formula

$30,000 × A/365

where

A is the number of days in the fiscal year; and

(d) the person and each of its sales representatives have made joint elections under subsection (4).

Application

(3) A person may apply to the Minister, in prescribed form containing prescribed information, to have subsection (7) apply to the person and each of its sales representatives, beginning on the first day of a fiscal year of the person, if the person

(a) is registered under Subdivision d of Division V and is reasonably expected to be, throughout the fiscal year,

(i) engaged exclusively in commercial activities, and

(ii) a qualifying network seller; and

(b) files the application in prescribed manner before

(i) in the case of a person that has never made a supply of a select product of the person, the day in the fiscal year on which the person first makes a supply of a select product of the person, and

(ii) in any other case, the first day of the fiscal year.

Joint election

(4) If subsection (3) applies to a person or a person is a network seller, the person and a sales representative of the person may jointly elect, in prescribed form containing prescribed information, to have subsection (7) apply to them at all times when an approval granted under subsection (5) is in effect.

Approval or refusal

(5) If the Minister receives an application under subsection (3) from a person, the Minister may approve the application of subsection (7) to the person and each of its sales representatives beginning on the first day of a fiscal year of the person or may refuse the application and the Minister shall notify the person in writing of the approval and the day on which it becomes effective or of the refusal.

Evidence of joint elections

(6) Every network seller shall maintain evidence satisfactory to the Minister that the network seller and each of its sales representatives have made joint elections under subsection (4).

Effect of approval

(7) For the purposes of this Part, if, at any time when an approval granted under subsection (5) in respect of a network seller and each of its sales representatives is in effect, a network commission becomes payable by the network seller to a sales representative of the network seller as consideration for a taxable supply (other than a zero-rated supply) of a service made in Canada by the sales representative, the taxable supply is deemed not to be a supply.

Sales aids

(8) For the purposes of this Part, if, at any time when an approval granted under subsection (5) in respect of a network seller and each of its sales representatives is in effect, the network seller or a sales representative of the network seller makes in Canada a taxable supply by way of sale of a sales aid of the network seller or of the sales representative, as the case may be, to a sales representative of the network seller, the taxable supply is deemed not to be a supply.

Host gifts

(9) For the purposes of this Part, if, at any time when an approval granted under subsection (5) in respect of a network seller and each of its sales representatives is in effect, the network seller or a particular sales representative of the network seller makes a supply of property to an individual as consideration for the supply by the individual of a service of acting as a host at an occasion that is organized for the purpose of allowing a sales representative of the network seller or the particular sales representative, as the case may be, to promote, or to arrange for the sale of, select products of the network seller, the individual is deemed not to have made a supply of the service and the service is deemed not to be consideration for a supply.

Notification of refusal

(10) If the Minister notifies a person of a refusal under subsection (5) at any time when the person and a sales representative of the person have made a joint election under subsection (4), the person shall forthwith notify the sales representative of the refusal in a manner satisfactory to the Minister.

Revocation by Minister

(11) The Minister may revoke an approval granted under subsection (5) in respect of a network seller and each of its sales representatives, effective on the first day of a fiscal year of the network seller, if, before that day, the Minister notifies the network seller of the revocation and the day on which it becomes effective and if

(a) the network seller fails to comply with any provision of this Part;

(b) it can reasonably be expected that the network seller will not be a qualifying network seller throughout the fiscal year;

(d) the notice referred to in subsection 242(1) has been given to, or the request referred to in subsection 242(2) has been filed by, the network seller; or

(e) it can reasonably be expected that the network seller will not be engaged exclusively in commercial activities throughout the fiscal year.

Deemed revocation

(12) If an approval granted under subsection (5) in respect of a network seller and each of its sales representatives is in effect at any time in a particular fiscal year of the network seller and, at any time during the particular fiscal year, the network seller ceases to be engaged exclusively in commercial activities or the Minister cancels the registration of the network seller, the approval is deemed to be revoked, effective on the first day of the fiscal year of the network seller immediately following the particular fiscal year, unless, on that first day, the network seller is registered under Subdivision d of Division V and it is reasonably expected that the network seller will be engaged exclusively in commercial activities throughout that following fiscal year.

Effect of revocation

(13) If an approval granted under subsection (5) in respect of a network seller and each of its sales representatives is revoked under subsection (11) or (12), the following rules apply:

(a) the approval ceases to have effect immediately before the day on which the revocation becomes effective;

(b) the network seller shall forthwith notify each of its sales representatives in a manner satisfactory to the Minister of the revocation and the day on which it becomes effective; and

(c) a subsequent approval granted under subsection (5) in respect of the network seller and each of its sales representatives shall not become effective before the first day of a fiscal year of the network seller that is at least two years after the day on which the revocation became effective.

Failure to notify on revocation

(14) For the purposes of this Part, a taxable supply (other than a zero-rated supply) of a service made in Canada by a sales representative of a network seller is deemed not to be a supply if

(a) the consideration for the taxable supply is a network commission that becomes payable by the network seller to the sales representative at any time after an approval granted under subsection (5) in respect of the network seller and each of its sales representatives ceases to have effect as a consequence of a revocation on the basis of any of paragraphs (11)(a) to (c);

(b) the approval could not have been revoked on the basis of paragraph (11)(d) or (e) and would not have otherwise been revoked under subsection (12);

(i) has not been notified of the revocation by the network seller, as required under paragraph (13)(b), or by the Minister, and

(ii) neither knows, nor ought to know, that the approval ceased to have effect; and

(d) an amount has not been charged or collected as or on account of tax in respect of the taxable supply.

Failure to notify on revocation

(15) Subsection (16) applies if the following conditions are satisfied:

(a) the consideration for a taxable supply (other than a zero-rated supply) of a service made in Canada by a sales representative of a network seller is a network commission that becomes payable by the network seller to the sales representative at any time after an approval granted under subsection (5) in respect of the network seller and each of its sales representatives ceases to have effect as a consequence of a revocation under subsection (11) or (12);

(b) the approval was, or could at any time otherwise have been, revoked on the basis of paragraph (11)(d) or (e) or was, or would at any time otherwise have been, revoked under subsection (12);

(i) has not been notified of the revocation by the network seller, as required under paragraph (13)(b), or by the Minister, and

(ii) neither knows, nor ought to know, that the approval ceased to have effect; and

(d) an amount has not been charged or collected as or on account of tax in respect of the taxable supply.

Failure to notify on revocation

(16) If the conditions described in paragraphs (15)(a) to (d) are satisfied, the following rules apply for the purposes of this Part:

(a) section 166 shall not apply in respect of the taxable supply described in paragraph (15)(a);

(b) tax that becomes payable or that would, in the absence of section 166, become payable in respect of the taxable supply shall not be included in determining the net tax of the sales representative referred to in paragraph (15)(a); and

(c) the consideration for the taxable supply shall not, in determining whether the sales representative is a small supplier, be included in the total referred to in paragraph 148(1)(a) or (2)(a).

Sales aids on revocation

(17) For the purposes of this Part, a taxable supply of a sales aid of a particular sales representative of a network seller made in Canada by way of sale to another sales representative of the network seller is deemed not to be a supply if

(a) the consideration for the taxable supply becomes payable at any time after an approval granted under subsection (5) in respect of the network seller and each of its sales representatives ceases to have effect as a consequence of a revocation under subsection (11) or (12);

(b) at the time the consideration becomes payable, the particular sales representative

(i) has not been notified of the revocation by the network seller, as required under paragraph (13)(b), or by the Minister, and

(ii) neither knows, nor ought to know, that the approval ceased to have effect; and

Restriction on input tax credits

(18) If

(a) a registrant that is a network seller in respect of which an approval granted under subsection (5) is in effect acquires or imports property (other than a select product of the network seller) or a service or brings it into a participating province for supply to a sales representative of the network seller or an individual related to the sales representative,

(b) tax becomes payable in respect of the acquisition, importation or bringing in, as the case may be,

(c) the property or service is so supplied by the registrant for no consideration or for consideration that is less than the fair market value of the property or service, and

(d) the sales representative or individual is not acquiring the property or service for consumption, use or supply exclusively in the course of commercial activities of the sales representative or individual, as the case may be,

the following rules apply:

(e) no tax is payable in respect of the supply, and

(f) in determining an input tax credit of the registrant, no amount shall be included in respect of tax that becomes payable, or is paid without having become payable, by the registrant in respect of the property or service.

Appropriations for sales representatives

(19) For the purposes of this Part, if a registrant that is a network seller in respect of which an approval granted under subsection (5) is in effect appropriates, at any time, property (other than a select product of the network seller) that was acquired, manufactured or produced, or any service acquired or performed, in the course of commercial activities of the registrant, to or for the benefit of a sales representative of the network seller, or any individual related to the sales representative, that is not acquiring the property or service for consumption, use or supply exclusively in the course of commercial activities of the sales representative or individual, in any manner (otherwise than by way of supply for consideration equal to the fair market value of the property or service), the registrant shall be deemed

(a) to have made a supply of the property or service for consideration paid at that time equal to the fair market value of the property or service at that time; and

(b) except where the supply is an exempt supply, to have collected, at that time, tax in respect of the supply calculated on that consideration.

Exception

(20) Subsection (19) does not apply to property or a service appropriated by a registrant if the registrant was not entitled to claim an input tax credit in respect of the property or service because of section 170.

Ceasing to be a registrant

(21) If, at any time when an approval granted under subsection (5) in respect of a network seller and each of its sales representatives is in effect, a sales representative of the network seller ceases to be a registrant, paragraph 171(3)(a) does not apply to sales aids of the sales representative that were supplied to the sales representative by the network seller or another sales representative of the network seller at any time when the approval was in effect.

Non-arm’s length supply

(22) Section 155 does not apply to the supply described in subsection (9) made to an individual acting as a host.

(2) Subsection (1) applies in respect of any fiscal year of a person that begins on or after January 1, 2010, except that, for the purposes of applying section 178 of the Act, as enacted by subsection (1), in respect of a fiscal year of a person that begins during 2010, the following rules also apply:

(a) a person may, despite subparagraphs 178(3)(b)(i) and (ii) of the Act, as enacted by subsection (1), apply under subsection 178(3) of the Act, as enacted by subsection (1), to have subsection 178(7) of the Act, as enacted by subsection (1), apply to the person and each of its sales representatives, beginning on a day in 2010 that the person specifies in the application, if the person files the application before that day and that day is the first day of a reporting period of the person that begins during the fiscal year;

(b) if the person makes an application in accordance with paragraph (a),

(i) each reference in subsections 178(2), (3), (5) and (11) of the Act, as enacted by subsection (1), to “fiscal year” is to be read as a reference to “qualifying period”, and

(ii) each reference in subsection 178(12) of the Act, as enacted by subsection (1), to “particular fiscal year” is to be read as a reference to “qualifying period”; and

(c) “qualifying period” of a person means the period beginning on the day specified in an application made by the person in accordance with paragraph (a) and ending on the last day of the fiscal year.

1997, c. 10, s. 179(1)

60. (1) Subsection 185(1) of the Act is replaced by the following:

Financial services — input tax credits

185. (1) If tax in respect of property or a service acquired, imported or brought into a participating province by a registrant becomes payable by the registrant at a time when the registrant is neither a listed financial institution nor a person that is a financial institution because of paragraph 149(1)(b), for the purpose of determining an input tax credit of the registrant in respect of the property or service and for the purposes of Subdivision d, to the extent (determined in accordance with subsections 141.01(2) and 141.02(6)) that the property or service was acquired, imported or brought into the province, as the case may be, for consumption, use or supply in the course of making supplies of financial services that relate to commercial activities of the registrant,

(a) if the registrant is a financial institution because of paragraph 149(1)(c), the property or service is deemed, despite subsections 141.01(2) and 141.02(6), to have been so acquired, imported or brought into the province for consumption, use or supply in the course of those commercial activities except to the extent that the property or service was so acquired, imported or brought into the province for consumption, use or supply in the course of activities of the registrant that relate to

(i) credit cards or charge cards issued by the registrant, or

(ii) the making of any advance, the lending of money or the granting of any credit; and

(b) in any other case, the property or service is deemed, despite subsections 141.01(2) and 141.02(6), to have been so acquired, imported or brought into the province for consumption, use or supply in the course of those commercial activities.

(2) Subsection (1) is deemed to have come into force on April 1, 2007.

1997, c. 10, s. 42(1); 1999, c. 31, s. 86(F)

61. (1) The portion of section 217 of the Act before paragraph (a) is replaced by the following:

Definitions

217. The following definitions apply in this Division.

“imported taxable supply”
« fourniture taxable importée »

“imported taxable supply” means

(2) Section 217 of the Act is amended by adding the following in alphabetical order:

“Canadian activity”
« activité au Canada »

“Canadian activity” of a person means an activity of the person carried on, engaged in or conducted in Canada.

“duty”
« tâche »

“duty” means anything done by an employee in the course of, or in relation to, the office or employment of the employee.

“employee”
« salarié »

“employee” includes an individual who agrees to become an employee.

“external charge”
« frais externes »

“external charge” for a specified year of a qualifying taxpayer in respect of an outlay or expense described in any of paragraphs 217.1(2)(a) to (c) means the amount in respect of the outlay or expense determined by the formula

A – B

where

A is the amount of the outlay or expense that

(a) is allowed as a deduction, an allowance or an allocation for a reserve under the Income Tax Act in computing the qualifying taxpayer’s income for the specified year, or would be so allowed if

(i) the qualifying taxpayer’s income were computed in accordance with that Act,

(ii) the qualifying taxpayer carried on a business in Canada, and

(iii) that Act applied to the qualifying taxpayer, and

(b) may reasonably be regarded as being applicable to a Canadian activity of the qualifying taxpayer; and

B is the total of all amounts, each of which is included in the amount determined under the description of A and is a permitted deduction for the specified year or a preceding specified year of the qualifying taxpayer.

“loading”
« chargement »

“loading” means any part of the value of the consideration for a supply of a financial service that is attributable to administrative expenses, an error or profit margin, business handling costs, commissions, communications expenses, claims handling costs, employee compensation or benefits, execution or clearing costs, management fees, marketing or advertising costs, occupancy or equipment expenses, operating expenses, acquisition costs, premium collection costs, processing costs or any other costs or expenses of a person that makes the supply, other than commissions for a specified financial service or the part of the value of the consideration that is equal to

(a) if the financial service includes the issuance, renewal, variation or transfer of ownership of an insurance policy but not of any other qualifying instrument, the estimate of the net premium of the insurance policy;

(b) if the financial service includes the issuance, renewal, variation or transfer of ownership of a qualifying instrument (other than an insurance policy), the estimate of the default risk premium that is directly associated with the qualifying instrument; and

(c) if the financial service includes the issuance, renewal, variation or transfer of ownership of an insurance policy and a qualifying instrument (other than an insurance policy), the amount determined by the formula

A + B

where

A is the estimate of the net premium of the insurance policy, and

B is the estimate of the default risk premium that is directly associated with the qualifying instrument.

“permitted deduction”
« déduction autorisée »

“permitted deduction” for a specified year of a qualifying taxpayer means an amount that is

(a) consideration for a supply of property or a service, or the value of imported goods, upon which tax under this Part (other than section 218.01 or subsection 218.1(1.2)) became payable during the specified year by the qualifying taxpayer;

(b) tax referred to in paragraph (a) in respect of a supply or importation referred to in that paragraph;

(c) a provincial levy that is prescribed for the purposes of section 154 and is in respect of a supply referred to in paragraph (a);

(d) an amount that is deemed, under subsection 248(18) or (18.1) of the Income Tax Act, to be assistance repaid by the qualifying taxpayer in respect of property or a service referred to in paragraph (a);

(e) consideration for a supply of property or a service (other than a financial service) made to the qualifying taxpayer as part of a transaction or series of transactions in which all participants deal at arm’s length with the qualifying taxpayer, unless

(i) that consideration is included in paragraph (a), or

(ii) an activity carried on, engaged in or conducted outside Canada, through a qualifying establishment of the qualifying taxpayer or of a person related to the qualifying taxpayer, relates in any manner to the supply;

(f) qualifying compensation of an employee of the qualifying taxpayer that is paid in the specified year by the qualifying taxpayer if the employee was primarily in Canada while performing its duties during the specified year;

(g) interest that is paid or payable by the qualifying taxpayer as the consideration for a supply of a financial service made to the qualifying taxpayer (other than an amount paid or credited by the qualifying taxpayer, or deemed by Part I of the Income Tax Act to have been paid or credited in the specified year by the qualifying taxpayer, to a person as, on account or in lieu of payment of, or in satisfaction of, a management or administration fee or charge (within the meaning of subsection 212(4) of that Act));

(h) dividends;

(i) consideration (other than interest referred to in paragraph (g) or dividends referred to in paragraph (h)) for a specified arm’s length supply made to the qualifying taxpayer;

(j) consideration (other than interest referred to in paragraph (g) or dividends referred to in paragraph (h)) for a supply (other than a specified derivative supply) of a specified financial service made to the qualifying taxpayer;

(k) consideration (other than interest referred to in paragraph (g), dividends referred to in paragraph (h) or loading) for a specified non-arm’s length supply made to the qualifying taxpayer;

(l) consideration (other than interest referred to in paragraph (g) or dividends referred to in paragraph (h)) for a specified derivative supply made to the qualifying taxpayer; or

(m) a prescribed amount.

“qualifying compensation”
« rétribution admissible »

“qualifying compensation” of an employee means any salary, wages and other remuneration of the employee and any other amount that is required to be included as income from an office or employment in computing the income of the employee for the purposes of the Income Tax Act.

“qualifying consideration”
« contrepartie admissible »

“qualifying consideration” for a specified year of a qualifying taxpayer in respect of an outlay made, or expense incurred, outside Canada means the amount in respect of the outlay or expense determined by the formula

A – B

where

A is the amount of the outlay or expense that

(a) is allowed as a deduction, an allowance or an allocation for a reserve under the Income Tax Act in computing the qualifying taxpayer’s income for the specified year, or would be so allowed if

(i) the qualifying taxpayer’s income were computed in accordance with that Act,

(ii) the qualifying taxpayer carried on a business in Canada, and

(iii) that Act applied to the qualifying taxpayer, and

(b) may reasonably be regarded as being applicable to a Canadian activity of the qualifying taxpayer; and

B is the total of all amounts each of which is included in the amount determined under the description of A and is

(a) an amount (other than an amount included in paragraph (b)) that is a permitted deduction for the specified year or a preceding specified year of the qualifying taxpayer, or

(b) an amount that represents a cost to a qualifying establishment of the qualifying taxpayer in a country other than Canada, or a share of a profit of the qualifying taxpayer that is redistributed from a qualifying establishment of the qualifying taxpayer in Canada to a qualifying establishment of the qualifying taxpayer in a country other than Canada, that is solely attributable to the issuance, renewal, variance or transfer of ownership by the qualifying taxpayer of a financial instrument that is a derivative, provided that all or substantially all of the amount is

(i) an error or profit margin, or employee compensation or benefits, that is reasonably attributable to the issuance, renewal, variance or transfer of ownership, or

(ii) the estimate of the default risk premium that is directly associated with the derivative.

“qualifying establishment”
« établissement admissible »

“qualifying establishment” means a permanent establishment as defined in subsection 123(1) or a permanent establishment as defined in subsection 132.1(2).

“qualifying instrument”
« instrument admissible »

“qualifying instrument” means money, a credit card voucher, a charge card voucher or a financial instrument.

“qualifying service”
« service admissible »

“qualifying service” means a service or duty.

“specified arm’s length supply”
« fourniture déterminée entre personnes sans lien de dépendance »

“specified arm’s length supply” means a supply (other than a specified derivative supply) of a financial service (other than a specified financial service) made to a qualifying taxpayer as part of a transaction or series of transactions in which all participants deal at arm’s length with the qualifying taxpayer.

“specified derivative supply”
« fourniture déterminée d’instrument dérivé »

“specified derivative supply” means a supply

(a) that is a supply of a financial service of issuing, renewing, varying or transferring the ownership of a financial instrument that is a derivative, or that is a supply made by an agent, salesperson or broker of arranging for the issuance, renewal, variance or transfer of ownership of a financial instrument that is a derivative; and

(b) for which all or substantially all of the value of the consideration is attributable to

(i) any error or profit margin, or employee compensation or benefits, reasonably attributable to the supply, and

(ii) amounts that are not loading.

“specified financial service”
« service financier déterminé »

“specified financial service” means a financial service supplied to a qualifying taxpayer by an agent, salesperson or broker of arranging for the issuance, renewal, variation or transfer of ownership of a financial instrument that is property of a person other than the agent, salesperson or broker.

“specified non-arm’s length supply”
« fourniture déterminée entre personnes ayant un lien de dépendance »

“specified non-arm’s length supply” means a supply (other than a specified derivative supply) of a financial service (other than a specified financial service) that includes the issuance, renewal, variation or transfer of ownership of a qualifying instrument, made to a qualifying taxpayer as part of a transaction or series of transactions in which any participant does not deal at arm’s length with the qualifying taxpayer.

“specified year”
« année déterminée »

“specified year” of a person means

(a) in the case of a person that is described in paragraph (a) or (b) of the definition “taxation year” in subsection 123(1), the taxation year of the person;

(b) in the case of a person that is a registrant but is not described in paragraph (a) or (b) of the definition “taxation year” in subsection 123(1), the fiscal year of the person; and

“taxing statute”
« loi fiscale »

“taxing statute” of a country means a statute of the country, or of a state, province or other political subdivision of the country, that imposes a levy or charge of general application that is an income or profits tax.

“transaction”
« opération »

“transaction” includes an arrangement or event.

(3) Subsections (1) and (2) apply to any specified year of a person that ends after November 16, 2005, except that, for the purposes of applying the definition “permitted deduction” in section 217 of the Act, as enacted by subsection (2), in respect of an amount of consideration for a specified non-arm’s length supply that became due, or was paid without having become due, on or before that day, paragraph (k) of that definition shall be read without reference to the words “or loading”.

62. (1) The Act is amended by adding the following after section 217:

Qualifying taxpayer

217.1 (1) For the purposes of this Division, a person is a qualifying taxpayer throughout a specified year of the person if

(a) the person is a financial institution at any time in the specified year; and

(b) the person, at any time in the specified year

(i) is resident in Canada,

(ii) has a qualifying establishment in Canada,

(iii) where a majority of the persons having beneficial ownership of the person’s property in Canada are resident in Canada, carries on, engages in or conducts an activity in Canada, or

(iv) is a prescribed person or a person of a prescribed class.

Outlay made, or expense incurred, outside Canada

(2) For the purposes of this Division, an outlay made, or expense incurred, outside Canada includes any amount representing

(a) an outlay made, or expense incurred, by a qualifying taxpayer in respect of

(i) property that is, in whole or in part, transferred outside Canada to the qualifying taxpayer,

(ii) property, the possession or use of which is, in whole or in part, given or made available outside Canada to the qualifying taxpayer, or

(iii) a service that is performed, in whole or in part, outside Canada for the benefit of the qualifying taxpayer or is rendered, in whole or in part, outside Canada to the qualifying taxpayer;

(b) an adjustment (within the meaning of subsection 247(2) of the Income Tax Act) to an outlay or expense described in paragraph (a);

(c) an expenditure or purchase in respect of a reportable transaction (as defined in section 233.1 of the Income Tax Act) in respect of which a qualifying taxpayer is required under that section to file with the Minister a return in prescribed form containing prescribed information, or would be so required if the qualifying taxpayer carried on a business in Canada and that Act applied to the qualifying taxpayer;

(d) in the case of a qualifying taxpayer that is resident in Canada, qualifying compensation of an employee paid in a specified year by the qualifying taxpayer if

(i) in the specified year, a duty is performed by the employee outside Canada (in this subsection referred to as a “duty performed outside Canada”) at a qualifying establishment of the qualifying taxpayer or of a person related to the qualifying taxpayer, and

(ii) it is not the case that all or substantially all of the duties performed outside Canada by the employee in the specified year are performed elsewhere than at such qualifying establishments; and

(e) in the case of a qualifying taxpayer that is not resident in Canada,

(i) an allocation by the qualifying taxpayer of an outlay or expense as an amount in respect of a business carried on in Canada by the qualifying taxpayer for the purpose of computing the qualifying taxpayer’s income under the Income Tax Act, or an amount that would be such an allocation if

(A) the qualifying taxpayer’s income were computed in accordance with that Act,

(B) anything done by the qualifying taxpayer through a qualifying establishment in Canada of the qualifying taxpayer were the carrying on of a business in Canada by the qualifying taxpayer, and

(ii) an outlay or expense that may reasonably be regarded under the Income Tax Act as an amount that is applicable to a qualifying establishment in Canada of the qualifying taxpayer, or that would reasonably be so regarded if the qualifying establishment were a permanent establishment for purposes of that Act, the qualifying taxpayer carried on a business in Canada and that Act applied to the qualifying taxpayer, and

(iii) qualifying compensation of an employee paid in a specified year by the qualifying taxpayer.

Series of transactions

(3) For the purposes of this Division, if there is a reference to a series of transactions, the series is deemed to include any related transactions completed in contemplation of the series.

Internal charge

(4) For the purposes of this Division, any part of an amount in respect of a transaction or dealing between a particular qualifying establishment of a qualifying taxpayer in Canada and another qualifying establishment of the qualifying taxpayer in a particular country other than Canada is an internal charge for a specified year of the qualifying taxpayer if

(a) the amount meets the following criteria:

(i) the amount would be allowed as a deduction, an allowance or an allocation for a reserve under the Income Tax Act in computing the income of the particular qualifying establishment for the specified year if

(A) that Act applied to the particular qualifying establishment,

(B) the income of the particular qualifying establishment were computed in accordance with that Act, and

(I) anything done by the qualifying taxpayer through the particular qualifying establishment were the carrying on of a business in Canada,

(II) the particular qualifying establishment were a permanent establishment, and

(III) the specified year were the particular qualifying establishment’s taxation year,

(ii) where the qualifying taxpayer has not specified pursuant to paragraph 217.2(2)(c) that subparagraph (iii) is to apply in all cases in determining the internal charges for the specified year and the particular country is a taxing country (as defined in subsection 126(7) of the Income Tax Act) that has a tax treaty (as defined in subsection 248(1) of that Act) with Canada, the amount would be required to be included in computing, under a taxing statute of the particular country that applies to the qualifying taxpayer, or that would apply if the other qualifying establishment were a permanent establishment for the purposes of that statute, the other qualifying establishment’s income or profits for any period (in this paragraph referred to as a “taxing period”) that ends during the specified year if

(A) the taxing statute applied to the other qualifying establishment,

(B) the other qualifying establishment’s income or profits were computed in accordance with the taxing statute, and

(I) anything done by the qualifying taxpayer through the other qualifying establishment were the carrying on of a business in the particular country, and

(II) the other qualifying establishment were a permanent establishment and had the same taxing periods that the qualifying taxpayer would have under the taxing statute, and

(iii) where subparagraph (ii) does not apply, the amount would be required to be included in computing under the Income Tax Act the other qualifying establishment’s income for the specified year if

(A) the laws of Canada, and not the laws of the particular country, applied, with any modifications that the circumstances require, in the particular country,

(B) that Act applied to the other qualifying establishment,

(D) for the purposes of that Act,

(I) anything done by the qualifying taxpayer through the other qualifying establishment were the carrying on of a business in the particular country,

(II) the other qualifying establishment were a permanent establishment, and

(III) the specified year were the other qualifying establishment’s taxation year; and

(b) the part of the amount is not

(i) an amount determined under the description of A in the formula in the definition “external charge” in section 217 in calculating an external charge of the qualifying taxpayer for the specified year or a preceding specified year of the qualifying taxpayer,

(ii) a permitted deduction of the qualifying taxpayer for the specified year or a preceding specified year of the qualifying taxpayer, other than a permitted deduction of the qualifying taxpayer that is included in determining an amount under the description of B in the formula in the definition “external charge” in section 217 in calculating an external charge of the qualifying taxpayer for the specified year or a preceding specified year of the qualifying taxpayer,

(iii) an amount that represents a cost to the other qualifying establishment, or a share of a profit of the qualifying taxpayer that is redistributed from the particular qualifying establishment to the other qualifying establishment, that is solely attributable to the issuance, renewal, variance or transfer of ownership by the qualifying taxpayer of a financial instrument that is a derivative, provided that all or substantially all of the amount is

(A) an error or profit margin, or employee compensation or benefits, that is reasonably attributable to the issuance, renewal, variance or transfer of ownership, or

(B) the estimate of the default risk premium that is directly associated with the derivative, or

(iv) a prescribed amount.

Separate entities

(5) For the purposes of applying paragraph (4)(a) in respect of a particular qualifying establishment of a qualifying taxpayer in a country other than Canada and another qualifying establishment of the qualifying taxpayer in Canada, the following rules apply:

(a) the particular qualifying establishment is deemed to be a distinct and separate enterprise from the qualifying taxpayer, engaged in the same or similar activities under the same or similar conditions as the particular qualifying establishment and dealing wholly independently with the other qualifying establishment and with the part (in this subsection referred to as the “remainder of the qualifying taxpayer”) of the qualifying taxpayer, if any, that is neither the particular qualifying establishment nor the other qualifying establishment;

(b) the other qualifying establishment is deemed to be a distinct and separate enterprise from the qualifying taxpayer, engaged in the same or similar activities under the same or similar conditions as the other qualifying establishment and dealing wholly independently with the particular qualifying establishment and with the remainder of the qualifying taxpayer; and

(c) any transactions or dealings between any of the particular qualifying establishment, the other qualifying establishment and the remainder of the qualifying taxpayer are deemed to be supplies made on such terms as would have been agreed upon between parties dealing at arm’s length.

Qualifying rule for credits

(6) If an amount (in this subsection referred to as a “qualifying expenditure”) of qualifying consideration, or of an external charge, of a qualifying taxpayer in respect of an outlay made, or expense incurred, outside Canada is greater than zero and, during a reporting period of the qualifying taxpayer during which the qualifying taxpayer is a registrant, tax under section 218.01 or subsection 218.1(1.2) in respect of the qualifying expenditure becomes payable by the qualifying taxpayer or is paid by the qualifying taxpayer without having become payable, the following rules apply for the purpose of determining an input tax credit of the qualifying taxpayer:

(a) the whole or part of property (in this subsection and subsection (8) referred to as “attributable property”) or of a qualifying service (in this subsection and subsection (8) referred to as an “attributable service”) to which the qualifying expenditure is attributable is deemed to have been acquired by the qualifying taxpayer at the time at which the outlay was made or the expense was incurred;

(b) the tax is deemed to be tax in respect of a supply of the attributable property or attributable service; and

(c) the extent to which the qualifying taxpayer acquired the attributable property or attributable service for consumption, use or supply in the course of commercial activities of the qualifying taxpayer is deemed to be the same extent as that to which the whole or part of the outlay or expense, which corresponds to the qualifying expenditure, was made or incurred to consume, use or supply the attributable property or attributable service in the course of commercial activities of the qualifying taxpayer.

Qualifying rule for credits — internal charge

(7) If tax (in this subsection referred to as “internal tax”) under section 218.01 or subsection 218.1(1.2) in respect of an internal charge becomes payable by a qualifying taxpayer, or is paid by the qualifying taxpayer without having become payable, and the internal charge is determined based in whole or in part on the inclusion of an outlay made, or an expense incurred, outside Canada by the qualifying taxpayer, the following rules apply for the purpose of determining an input tax credit of the qualifying taxpayer:

(a) the whole or part of property (in this subsection and subsection (8) referred to as “internal property”) or of a qualifying service (in this subsection and subsection (8) referred to as an “internal service”) to which the outlay or expense is attributable is deemed to have been supplied to the qualifying taxpayer at the time the outlay was made or the expense was incurred;

(b) the amount of the internal tax that can reasonably be attributed to the outlay or expense is deemed to be tax (in this paragraph referred to as “attributed tax”) in respect of the supply of the internal property or the internal service, and the attributed tax is deemed to have become payable at the time the internal tax becomes payable by the qualifying taxpayer or is paid by the qualifying taxpayer without having become payable; and

(c) the extent to which the qualifying taxpayer acquired the internal property or internal service for consumption, use or supply in the course of commercial activities of the qualifying taxpayer is deemed to be the same extent as that to which the outlay or expense was made or incurred to consume, use or supply the internal property or internal service in the course of commercial activities of the qualifying taxpayer.

Input tax credits

(8) For the purpose of determining an input tax credit of a qualifying taxpayer under section 169

(a) in respect of attributable property or an attributable service, the reference in that section to “property or a service” is to be read as a reference to “attributable property or an attributable service, within the meaning of those terms in paragraph 217.1(6)(a)”; and

(b) in respect of internal property or an internal service, the reference in that section to “property or a service” is to be read as a reference to “internal property or an internal service, within the meaning of those terms in paragraph 217.1(7)(a)”.

Election

217.2 (1) A qualifying taxpayer that is resident in Canada may elect to determine tax under section 218.01 in accordance with paragraph 218.01(a) and tax under subsection 218.1(1.2) in accordance with paragraph 218.1(1.2)(a) for each specified year of the qualifying taxpayer during which the election is in effect.

Form and contents of election

(2) An election made under subsection (1) by a qualifying taxpayer shall

(a) be made in prescribed form containing prescribed information;

(b) set out the first specified year of the qualifying taxpayer during which the election is to be in effect;

(c) specify if subparagraph 217.1(4)(a)(iii) is to apply in all cases in determining the internal charges for all specified years of the qualifying taxpayer during which the election is to be in effect; and

(d) be filed with the Minister in prescribed manner on or before the day on or before which the qualifying taxpayer’s return under section 219 in respect of tax under section 218.01 or subsection 218.1(1.2) for the first specified year is required to be filed.

Effective date

(3) An election made under subsection (1) by a qualifying taxpayer shall become effective on the first day of the specified year set out in the form.

Cessation

(4) An election made under subsection (1) by a qualifying taxpayer ceases to have effect on the earlier of

(a) the first day of the specified year of the qualifying taxpayer in which the qualifying taxpayer ceases to be resident in Canada; and

(b) the day on which a revocation of the election becomes effective.

Revocation

(5) A qualifying taxpayer that has made an election under subsection (1) may revoke the election, effective on the first day of a specified year of the qualifying taxpayer that begins at least two years after the election became effective, by filing in prescribed manner with the Minister a notice of revocation in prescribed form containing prescribed information not later than the day on which the revocation is to become effective.

Restriction

(6) If a revocation of an election made under subsection (1) becomes effective on a particular date, any subsequent election under that subsection is not a valid election unless the first day of the specified year set out in the subsequent election is at least two years after the day on which the revocation became effective.

(2) Subsection (1) applies to any specified year of a person that ends after November 16, 2005.

(3) If a return under section 219 of the Act, as amended by subsection 66(1), in respect of tax under section 218.01 of the Act, as enacted by section 63, or tax under subsection 218.1(1.2) of the Act, as enacted by subsection 64(2), for a specified year of a qualifying taxpayer is required to be filed on or before the day on which this Act is assented to, the qualifying taxpayer may, despite paragraph 217.2(2)(d) of the Act, as enacted by subsection (1), make an election under subsection 217.2(1) of the Act, as enacted by subsection (1), that becomes effective on the first day of the specified year, provided that the qualifying taxpayer files the election with the Minister of National Revenue in prescribed manner on or before the day that is sixty days after the day on which this Act is assented to.

(4) If a qualifying taxpayer makes an election under subsection 217.2(1) of the Act, as enacted by subsection (1), that is in effect for a specified year of the qualifying taxpayer that ends before the day on which this Act is assented to,

(a) if an amount (in this paragraph referred to as the “paid amount”) was paid on or before that day by the qualifying taxpayer to the Receiver General as or on account of tax for the specified year under section 218.01 of the Act, as enacted by section 63, or under subsection 218.1(1.2) of the Act, as enacted by subsection 64(2), and, by reason of the election being in effect for the specified year, the total amount of tax payable for the specified year under those provisions is less than the paid amount,

(i) the qualifying taxpayer may request in writing on or before the day that is two years after the day on which this Act is assented to that the Minister of National Revenue make an assessment, reassessment or additional assessment for the purpose of taking into account that the election was in effect for the specified year, and

(ii) on receipt of a request under subparagraph (i), the Minister shall, with all due dispatch,

(A) consider the request, and

(B) despite section 298 of the Act, as amended by section 79, assess, reassess or make an additional assessment under section 296 of the Act of tax payable by the qualifying taxpayer for the specified year under section 218.01 of the Act, as enacted by section 63, or under subsection 218.1(1.2) of the Act, as enacted by subsection 64(2), and of any interest, penalty or other obligation of the qualifying taxpayer, but only to the extent that the assessment, reassessment or additional assessment may reasonably be regarded as being for the purpose of taking into account that the election was in effect for the specified year; and

(b) despite paragraph 298(1)(d) of the Act, as amended by section 79, the Minister of National Revenue may assess, reassess or make an additional assessment under section 296 of the Act of tax payable by the qualifying taxpayer for the specified year under section 218.01 of the Act, as enacted by section 63, or under subsection 218.1(1.2) of the Act, as enacted by subsection 64(2), on or before the day that is seven years after the later of

(i) the day on which the election is filed with the Minister,

(ii) the day on or before which the qualifying taxpayer was required to file the return in which that tax payable was required to be reported, and

(iii) the day on which that return was filed.

63. (1) The Act is amended by adding the following after section 218:

Imposition of goods and services tax

218.01 Subject to this Part, every qualifying taxpayer shall, for each specified year of the qualifying taxpayer, pay to Her Majesty in right of Canada tax equal to

(a) if an election under subsection 217.2(1) is in effect for the specified year, the amount determined by the formula

[(A + B) × (C/D) × E] + [(A + B) × ((D – C)/D) × F]

where

A is the total of all amounts, each of which is an internal charge for the specified year that is greater than zero,

B is the total of all amounts, each of which is an external charge for the specified year that is greater than zero,

C is the number of days in the specified year before

(i) if the specified year begins before July 2006, July 2006, and

(ii) in any other case, January 2008,

D is the total number of days in the specified year,

E is

(i) if the specified year begins before July 2006, 7%, and

(ii) in any other case, 6%, and

F is

(i) if the specified year begins before July 2006, 6%, and

(ii) in any other case, 5%; and

(b) in any other case, the amount determined by the formula

[G × (H/I) × J] + [G × ((I – H)/I) × K]

where

G is the total of all amounts, each of which is qualifying consideration for the specified year that is greater than zero,

H is the number of days in the specified year before

(i) if the specified year begins before July 2006, July 2006, and

(ii) in any other case, January 2008,

I is the total number of days in the specified year,

J is

(i) if the specified year begins before July 2006, 7%, and

(ii) in any other case, 6%, and

K is

(i) if the specified year begins before July 2006, 6%, and

(ii) in any other case, 5%.

(2) Section 218.01 of the Act, as enacted by subsection (1), is replaced by the following:

Imposition of goods and services tax

218.01 Subject to this Part, every qualifying taxpayer shall, for each specified year of the qualifying taxpayer, pay to Her Majesty in right of Canada tax calculated at the rate of 5% on

(a) if an election under subsection 217.2(1) is in effect for the specified year, the amount determined by the formula

A + B

where

A is the total of all amounts, each of which is an internal charge for the specified year that is greater than zero, and

B is the total of all amounts, each of which is an external charge for the specified year that is greater than zero; and

(b) in any other case, the total of all amounts, each of which is qualifying consideration for the specified year that is greater than zero.

(3) Subsection (1) applies to any specified year of a qualifying taxpayer that ends after November 16, 2005 and begins before January 2008.

(4) Subsection (2) applies to any specified year of a qualifying taxpayer that begins after December 2007.

2000, c. 30, s. 46(2); 2007, c. 35, s. 3(1)

64. (1) Paragraphs 218.1(1)(c) and (d) of the Act are replaced by the following:

(c) every person that is the recipient of a supply, included in any of paragraphs (b.1) to (b.3) of the definition “imported taxable supply” in section 217, of property that is delivered or made available to the person in a particular participating province and that is either resident in that province or is a registrant, and

(d) every person that is the recipient of a supply that is included in paragraph (c.1), (d) or (e) of the definition “imported taxable supply” in section 217 and that is made in a particular participating province

(2) Section 218.1 of the Act is amended by adding the following after subsection (1.1):

Tax in a participating province

(1.2) Subject to this Part, every qualifying taxpayer that is resident in a participating province shall, for each specified year of the qualifying taxpayer and for each particular participating province in which the qualifying taxpayer is resident at any time in the specified year, pay to Her Majesty in right of Canada, in addition to the tax payable under section 218.01, tax calculated at the tax rate for the particular participating province on

(a) if an election under subsection 217.2(1) is in effect for the specified year, the amount determined by the formula

A + B

where

A is the total of all amounts, each of which is an amount in respect of an internal charge for the specified year that is greater than zero determined by the formula

A₁ × A₂

where

A1 is the internal charge, and

A2 is the extent (expressed as a percentage) to which the internal charge is attributable to outlays or expenses that were made or incurred to consume, use or supply the whole or part of property or of a qualifying service, in respect of which the internal charge is attributable, in carrying on, engaging in or conducting an activity of the qualifying taxpayer in the particular participating province, and

B is the total of all amounts, each of which is an amount in respect of an external charge for the specified year that is greater than zero determined by the formula

B₁ × B₂

where

B1 is the external charge, and

B2 is the extent (expressed as a percentage) to which the whole or part of the outlay or expense, which corresponds to the external charge, was made or incurred to consume, use or supply the whole or part of property or of a qualifying service, in respect of which the external charge is attributable, in carrying on, engaging in or conducting an activity of the qualifying taxpayer in the particular participating prov-ince; and

(b) in any other case, the total of all amounts, each of which is an amount in respect of qualifying consideration for the specified year that is greater than zero determined by the formula

C × D

where

C is the qualifying consideration, and

D is the extent (expressed as a percentage) to which the whole or part of the outlay or expense, which corresponds to the qualifying consideration, was made or incurred to consume, use or supply the whole or part of property or of a qualifying service, in respect of which the qualifying consideration is attributable, in carrying on, engaging in or conducting an activity of the qualifying taxpayer in the particular participating province.

Qualifying taxpayer resident in a province

(1.3) Despite section 132.1 and for the purposes of subsection (1.2), a qualifying taxpayer is deemed to be resident in a province at any time if, at that time,

(a) the qualifying taxpayer has a qualifying establishment in the province; or

(b) in the case of a qualifying taxpayer that is resident in Canada, the qualifying taxpayer is

(i) a corporation incorporated or continued under the laws of the province and not continued elsewhere,

(ii) an entity that is a partnership, an unincorporated society, a club, an association or an organization, or a branch of such an entity, in respect of which a majority of the members having management and control of the entity or branch are resident in the province, or

(iii) a trust, carrying on activities as a trust in the province, that has a local office or branch in the province.

(3) The portion of subsection 218.1(1.2) of the Act, as enacted by subsection (2), before paragraph (a) is replaced by the following:

Tax in a participating province

(1.2) Subject to this Part, every qualifying taxpayer that is resident in a participating province shall, for each specified year of the qualifying taxpayer and for each particular participating province, pay to Her Majesty in right of Canada, in addition to the tax payable under section 218.01, tax calculated at the tax rate for the particular participating province on

2000, c. 30, s. 46(3)

(4) The portion of subsection 218.1(2) of the Act before paragraph (a) is replaced by the following:

Selected listed financial institutions

(2) If tax under subsection (1) or (1.2) would, in the absence of this subsection, become payable by a person when the person is a selected listed financial institution, that tax is not payable unless it is an amount of tax that

(5) Subsections (1), (2) and (4) apply to any specified year of a person that ends after November 16, 2005, except that for supplies made on or before March 19, 2007, paragraph 218.1(1)(d) of the Act, as amended by subsection (1), shall be read without reference to “(c.1)”.

(6) Subsection (3) applies to any specified year of a person that ends after June 2010.

(7) Despite subsections (5) and (6), the amount of tax payable by a person under subsection 218.1(1.2) of the Act, as enacted by subsections (2) and (3), for the specified year of the person that begins before July 1, 2010 and ends on or after that day and for Ontario or British Columbia is equal to the amount determined by the formula

A × (B/C)

where

A is the amount that, in the absence of this subsection, would be tax payable under subsection 218.1(1.2) of the Act, as enacted by subsections (2) and (3), for the specified year and for Ontario or British Columbia, as the case may be;

B is the number of days in the specified year that are after June 2010; and

C is the number of days in the specified year.

1997, c. 10, s. 203(1)

65. (1) Section 218.2 of the Act is replaced by the following:

When tax payable

218.2 Tax under this Division (other than tax under section 218.01 or subsection 218.1(1.2)) that is calculated on an amount of consideration for a supply that becomes due at any time, or is paid at any time without having become due, becomes payable at that time.

When tax payable

218.3 Tax under section 218.01 and subsection 218.1(1.2) that is determined for a specified year of a qualifying taxpayer becomes payable by the qualifying taxpayer on

(a) if the specified year is a taxation year of the qualifying taxpayer for the purposes of the Income Tax Act and the qualifying taxpayer is required under Division I of that Act to file a return of income for the specified year, the filing-due date for the specified year for the purposes of that Act; and

(b) in any other case, the day that is six months after the end of the specified year.

(2) Subsection (1) applies to any specified year of a qualifying taxpayer that ends after November 16, 2005.

1997, c. 10, s. 43(1)

66. (1) Paragraph 219(a) of the Act is replaced by the following:

(a) if the person is a registrant, the person shall, on or before the day on or before which the person’s return under section 238 for the reporting period in which the tax became payable is required to be filed, pay the tax to the Receiver General and

(i) if the person is not a qualifying taxpayer, report the tax in that return, or

(ii) if the person is a qualifying taxpayer, file with the Minister in prescribed manner a return in respect of the tax in prescribed form containing prescribed information; and

(2) Subsection (1) applies in respect of any reporting period that ends after November 16, 2005.

1990, c. 45, s. 12(1); 1993, c. 27, s. 84(1) and (2)

67. (1) Section 220 of the Act is replaced by the following:

Definitions

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

“intangible capital”
« capital incorporel »

“intangible capital” of a specified person means any of the following that is consumed or used by the specified person in the process of creating, developing or bringing into existence intangible personal property:

(a) all or part of a labour activity of the specified person;

(b) all or part of property (other than intangible personal property described in paragraph (a) of the definition “intangible resource”); or

“intangible resource”
« ressource incorporelle »

“intangible resource” of a specified person means

(a) all or part of intangible personal property supplied to, or created, developed or brought into existence by, the specified person that is not support capital of the specified person;

(b) intangible capital of the specified person; or

“labour activity”
« activité de main-d’oeuvre »

“labour activity” of a specified person means anything done by an employee of the specified person in the course of, or in relation to, the office or employment of the employee.

“support capital”
« capital d’appui »

“support capital” of a specified person means all or part of intangible personal property that is consumed or used by the specified person in the process of creating, developing or bringing into existence property (other than intangible personal property) or in supporting, assisting or furthering a labour activity of the specified person.

“support resource”
« ressource d’appui »

“support resource” of a specified person means

(a) all or part of property (other than intangible personal property) supplied to, or created, developed or brought into existence by, the specified person that is not intangible capital of the specified person;

(b) all or part of a service supplied to the specified person that is not intangible capital of the specified person;

(d) support capital of the specified person; or

(e) any combination of the items referred to in paragraphs (a) to (d).

Specified person and specified business

(2) For the purposes of this section,

(a) a person is a specified person throughout a taxation year of the person if the person

(i) carries on, at any time in the taxation year, a business through a permanent establishment of the person outside Canada, and

(ii) carries on, at any time in the taxation year, a business through a permanent establishment of the person in Canada; and

(b) a business of a person is a specified business of the person throughout a taxation year of the person if the business is carried on, at any time in the taxation year, in Canada through a permanent establishment of the person.

Internal use

(3) For the purposes of this section, internal use of a support resource, or of an intangible resource, of a specified person occurs during a taxation year of the specified person if

(a) the specified person at any time in the taxation year uses outside Canada any part of the resource in relation to the carrying on of a specified business of the specified person; or

(b) the specified person is permitted under the Income Tax Act, or would be so permitted if that Act applied to the specified person, to allocate for the taxation year, as an amount in respect of a specified business of the specified person,

(i) any part of an outlay made, or expense incurred, by the specified person in respect of any part of the resource, or

(ii) any part of an allowance, or allocation for a reserve, in respect of any part of such an outlay or expense.

Dealings between permanent establishments

(4) If internal use of a support resource of a specified person occurs during a taxation year of the specified person, the following rules apply:

(a) for the purposes of this Division, the specified person is deemed

(i) to have rendered, during the taxation year, a service of internally using the support resource at a permanent establishment of the specified person outside Canada in the course of carrying on a specified business of the specified person, and to be the person to which the service was rendered,

(ii) to be the recipient of a supply made outside Canada of the service, and

(iii) to be, in the case of a non-resident specified person, resident in Canada;

(b) for the purposes of this Division, the supply is deemed not to be a supply of a service that is in respect of

(i) real property situated outside Canada, or

(ii) tangible personal property that is situated outside Canada at the time the service is performed;

(c) for the purposes of this Division, the value of the consideration for the supply is deemed to be the total of all amounts, each of which is the fair market value of a part, or of the use of a part, as the case may be, of the support resource referred to in subsection (3)

(i) if the part is only referred to in paragraph (3)(a), at the time referred to in that paragraph, and

(ii) otherwise, on the last day of the taxation year;

(d) for the purposes of this Division, the consideration for the supply is deemed to have become due and to have been paid, on the last day of the taxation year, by the specified person; and

(e) for the purposes of section 217 and of determining an input tax credit of the specified person under this Part, the specified person is deemed to have acquired the service for the same purpose as that for which the part of the support resource referred to in subsection (3) was acquired, consumed or used by the specified person.

Dealings between permanent establishments

(5) If internal use of an intangible resource of a specified person occurs during a taxation year of the specified person, the following rules apply:

(a) for the purposes of this Division, the specified person is deemed

(i) to have made available, during the taxation year, at a permanent establishment of the specified person outside Canada intangible personal property in the course of carrying on a specified business of the specified person and to be the person to which the property was made available,

(ii) to be the recipient of a supply made outside Canada of the property, and

(iii) to be, in the case of a non-resident specified person, resident in Canada;

(b) for the purposes of this Division, the supply is deemed not to be a supply of property that relates to real property situated outside Canada, to a service to be performed wholly outside Canada or to tangible personal property situated outside Canada;

(i) if the part is only referred to in paragraph (3)(a), at the time referred to in that paragraph, and

(ii) otherwise, on the last day of the taxation year;

(d) for the purposes of this Division, the consideration for the supply is deemed to have become due and to have been paid, on the last day of the taxation year, by the specified person; and

(e) for the purposes section 217 and of determining an input tax credit of the specified person under this Part, the specified person is deemed to have acquired the property for the same purpose as that for which the part of the intangible resource referred to in subsection (3) was acquired, consumed or used by the specified person.

(2) The portion of paragraph 220(2)(a) of the Act before subparagraph (i), as enacted as by subsection (1), is replaced by the following:

(a) a person (other than a financial institution) is a specified person throughout a taxation year of the person if the person

(3) Subsection (1) is deemed to have come into force on December 17, 1990.

(4) Subsection (2) applies to any taxation year of a person that ends after November 16, 2005.

68. (1) Section 220.05 of the Act is amended by adding the following after subsection (3):

Pension entities

(3.1) No tax is payable under subsection (1) in respect of property if a person that is a pension entity of a pension plan (as those terms are defined in subsection 172.1(1)) is the recipient of a particular supply of the property made by a participating employer (as defined in that subsection) of the pension plan and

(a) the amount determined for B in the formula in paragraph 172.1(5)(c) in respect of a supply of the same property that is deemed to have been made by the participating employer under paragraph 172.1(5)(a) is greater than zero; or

(b) the amount determined for B in the formula in paragraph 172.1(6)(c) in respect of every supply deemed to have been made under paragraph 172.1(6)(a) of an employer resource (as defined in subsection 172.1(1)) consumed or used for the purpose of making the particular supply is greater than zero.

(2) Subsection (1) is deemed to have come into force on September 23, 2009.

69. (1) Section 220.08 of the Act is amended by adding the following after subsection (3):

Pension entities

(3.1) No tax is payable under subsection (1) in respect of a particular supply of property or a service made by a participating employer of a pension plan (as those terms are defined in subsection 172.1(1)) to a person that is a pension entity (as defined in that subsection) of the pension plan if

(a) the amount determined for B in the formula in paragraph 172.1(5)(c) in respect of a supply of the same property or service that is deemed to have been made by the participating employer under paragraph 172.1(5)(a) is greater than zero; or

(2) Subsection (1) is deemed to have come into force on September 23, 2009.

1997, c. 10, s. 208(1)

70. (1) Paragraph (a) in the description of A in subsection 225.2(2) of the Act is replaced by the following:

(a) all tax (other than a prescribed amount of tax) that became payable under any of subsection 165(1) and sections 212, 218 and 218.01 by the financial institution during the particular reporting period or that was paid by the financial institution during the particular reporting period without having become payable,

(2) Subsection (1) applies to any taxation year of a qualifying taxpayer that ends after November 16, 2005.

71. (1) The Act is amended by adding the following after section 232:

Definitions

232.01 (1) In this section and in section 232.02,

(a) “employer resource”, “participating employer”, “pension entity”, “pension plan” and “specified resource” have the same meanings as in section 172.l;

(b) “claim period” has the meaning assigned by subsection 259(1); and

(c) “eligible amount”, “non-qualifying pension entity”, “pension rebate amount”, “provincial pension rebate amount”, “qualifying employer” and “qualifying pension entity” have the same meanings as in section 26l.01.

“Total tax amount”

(2) In this section, “total tax amount” of a tax adjustment note issued under subsection (3) means the total of the federal component amount and the provincial component amount of the tax adjustment note.

Tax adjustment note — subsection 172.1(5)

(3) A person may, on a particular day, issue to a pension entity a note (in this section referred to as a “tax adjustment note”) in respect of all or part of a specified resource, specifying an amount determined in accordance with paragraph (4)(a) (in this section referred to as the “federal component amount” of the tax adjustment note) and an amount determined in accordance with paragraph (4)(b) (in this section referred to as the “provincial component amount” of the tax adjustment note), if

(a) the person is deemed under paragraph 172.1(5)(b) to have collected tax, on or before the particular day, in respect of a taxable supply of the specified resource or part deemed to have been made by the person under paragraph 172.1(5)(a);

(b) a supply of the specified resource or part is deemed to have been received by the pension entity under subparagraph 172.1(5)(d)(i) and tax in respect of that supply is deemed to have been paid under subparagraph 172.1(5)(d)(ii) by the pension entity; and

(c) an amount of tax becomes payable, or is paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of a taxable supply of the specified resource or part on or before the particular day.

Federal and provincial component amounts

(4) For a tax adjustment note issued under subsection (3) on a particular day in respect of a specified resource or part,

(a) the federal component amount shall not exceed the amount determined by the formula

A – B

where

A is the lesser of

(i) the amount determined for A in the formula in paragraph 172.1(5)(c) in respect of the specified resource or part, and

(ii) the total of all amounts, each of which is an amount of tax under subsection 165(1) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of a taxable supply of the specified resource or part on or before the particular day, and

B is the total of all amounts, each of which is the federal component amount of another tax adjustment note issued under subsection (3) on or before the particular day in respect of the specified resource or part; and

(b) the provincial component amount shall not exceed the amount determined by the formula

C – D

where

C is the lesser of

(i) the amount determined for B in the formula in paragraph 172.1(5)(c) in respect of the specified resource or part, and

(ii) the total of all amounts, each of which is an amount of tax under subsection 165(2) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of a taxable supply of the specified resource or part on or before the particular day, and

D is the total of all amounts, each of which is the provincial component amount of another tax adjustment note issued under subsection (3) on or before the particular day in respect of the specified resource or part.

Effect of tax adjustment note

(5) If a person issues a tax adjustment note to a pension entity under subsection (3) in respect of all or part of a specified resource, a supply of the specified resource or part is deemed to have been received by the pension entity under subparagraph 172.1(5)(d)(i) and tax (in this subsection referred to as “deemed tax”) in respect of that supply is deemed to have been paid on a particular day under subparagraph 172.1(5)(d)(ii) by the pension entity, the following rules apply:

(a) the total tax amount of the tax adjustment note may be deducted in determining the net tax of the person for its reporting period that includes the day on which the tax adjustment note is issued;

(b) the pension entity shall add, in determining its net tax for its reporting period that includes the day on which the tax adjustment note is issued, the amount determined by the formula

A × (B/C)

where

A is the total of all input tax credits that the pension entity is entitled to claim in respect of the deemed tax,

B is

(i) if the pension entity was a selected listed financial institution on the par-ticular day, the federal component amount of the tax adjustment note, and

(ii) in any other case, the total tax amount of the tax adjustment note, and

C is the amount of the deemed tax;

(c) if any part of the amount of the deemed tax is an eligible amount of the pension entity for a particular claim period of the pension entity and the pension entity was a qualifying pension entity on the last day of the particular claim period, the pension entity shall pay to the Receiver General, on or before the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued, the amount determined by the formula

A × B × (C/D) × [(E – F)/E]

where

A is that part of the amount of the deemed tax,

B is 33%,

C is

(i) if the pension entity was a selected listed financial institution on the par-ticular day, the federal component amount of the tax adjustment note, and

(ii) in any other case, the total tax amount of the tax adjustment note,

D is the amount of the deemed tax,

E is the pension rebate amount of the pension entity for the particular claim period, and

F is the total determined for B in the formula in subsection 261.01(2) in respect of the pension entity for the particular claim period; and

(d) if any part of the amount of the deemed tax is an eligible amount of the pension entity for a claim period of the pension entity for which an election under any of subsections 261.01(5), (6) or (9) was made jointly by the pension entity and all participating employers of the pension plan that were, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan, each of those participating employers shall add, in determining its net tax for its reporting period that includes the day on which the tax adjustment note is issued, the amount determined by the formula

A × B × (C/D) × (E/F)

where

A is that part of the amount of the deemed tax,

B is 33%,

C is

(i) if the pension entity was a selected listed financial institution on the par-ticular day, the federal component amount of the tax adjustment note, and

(ii) in any other case, the total tax amount of the tax adjustment note,

D is the amount of the deemed tax,

E is the amount of the deduction determined for the participating employer under subsection 261.01(5), paragraph 261.01(6)(b) or subsection 261.01(9), as the case may be, for the claim period, and

F is

(i) if the pension entity was a selected listed financial institution on the par-ticular day, the total of the pension rebate amount of the pension entity for the claim period and the provincial pension rebate amount of the pension entity for the claim period, and

(ii) in any other case, the pension rebate amount of the pension entity for the claim period.

Prescribed form and manner

(6) A tax adjustment note issued under subsection (3) shall be issued in prescribed form containing prescribed information and in a manner satisfactory to the Minister.

Notification

(7) If a tax adjustment note is issued under subsection (3) to a pension entity of a pension plan and, as a consequence of that issuance, paragraph (5)(d) applies to a participating employer of the pension plan, the pension entity shall, in prescribed form containing prescribed information and in a manner satisfactory to the Minister, forthwith notify the participating employer of that issuance.

Joint and several liability

(8) If a participating employer of a pension plan is required to add an amount to its net tax under paragraph (5)(d) as a consequence of the issuance of a tax adjustment note under subsection (3) to a pension entity of the pension plan, the participating employer and the pension entity are jointly and severally, or solidarily, liable to pay the amount to the Receiver General.

Assessment

(9) The Minister may assess a person for any amount for which the person is liable under subsection (8) and, if the Minister sends a notice of assessment, sections 296 to 311 apply, with such modifications as the circumstances require.

Liability where participating employer ceases to exist

(10) If a participating employer of a pension plan has ceased to exist on or before the day on which a tax adjustment note is issued under subsection (3) to a pension entity of the pension plan and the participating employer would have been required, had it not ceased to exist, to add an amount to its net tax under paragraph (5)(d) as a consequence of that issuance, the pension entity shall pay the amount to the Receiver General on or before the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued.

Requirement to maintain records

(11) Despite section 286, every person that issues a tax adjustment note under subsection (3) shall maintain, for a period of six years from the day on which the tax adjustment note was issued, evidence satisfactory to the Minister that the person was entitled to issue the tax adjustment note for the amount for which it was issued.

“Total tax amount”

232.02 (1) In this section, “total tax amount” of a tax adjustment note issued under subsection (2) means the total of the federal component amount and the provincial component amount of the tax adjustment note.

Tax adjustment note — subsection 172.1(6)

(2) A person may, on a particular day, issue to a pension entity a note (in this section referred to as a “tax adjustment note”) in respect of employer resources consumed or used for the purpose of making a supply (in this section referred to as the “actual pension supply”) of property or a service to the pension entity, specifying an amount determined in accordance with paragraph (3)(a) (in this section referred to as the “federal component amount” of the tax adjustment note) and an amount determined in accordance with paragraph (3)(b) (in this section referred to as the “provincial component amount” of the tax adjustment note), if

(a) the person is deemed under paragraph 172.1(6)(b) to have collected tax, on or before the particular day, in respect of one or more taxable supplies, deemed to have been made by the person under paragraph 172.1(6)(a), of the employer resources;

(b) a supply of each of those employer resources is deemed to have been received by the pension entity under subparagraph 172.1(6)(d)(i) and tax in respect of each of those supplies is deemed to have been paid under subparagraph 172.1(6)(d)(ii) by the pension entity; and

(c) an amount of tax becomes payable, or is paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of the actual pension supply on or before the particular day.

Federal and provincial component amounts

(3) For a tax adjustment note issued under subsection (2) on a particular day in respect of employer resources consumed or used for the purpose of making an actual pension supply,

(a) the federal component amount shall not exceed the amount determined by the formula

A – B

where

A is the lesser of

(a) the total of all amounts, each of which is an amount determined for A in the formula in paragraph 172.1(6)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6)(b) to have become payable and to have been collected on or before the particular day, and

(b) the total of all amounts, each of which is an amount of tax under subsection 165(1) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of the actual pension supply on or before the particular day, and

B is the total of all amounts, each of which is the federal component amount of another tax adjustment note issued under subsection (2) on or before the particular day in respect of employer resources consumed or used for the purpose of making the actual pension supply; and

(b) the provincial component amount shall not exceed the amount determined by the formula

C – D

where

C is the lesser of

(a) the total of all amounts, each of which is an amount determined for B in the formula in paragraph 172.1(6)(c) in determining an amount of tax that is in respect of one of those employer resources and that is deemed under paragraph 172.1(6)(b) to have become payable and to have been collected on or before the particular day, and

(b) the total of all amounts, each of which is an amount of tax under subsection 165(2) that became payable, or was paid without having become payable, to the person (otherwise than by the operation of section 172.1) by the pension entity in respect of the actual pension supply on or before the particular day; and

D is the total of all amounts, each of which is the provincial component amount of another tax adjustment note issued under subsection (2) on or before the particular day in respect of employer resources consumed or used for the purpose of making the actual pension supply.

Effect of tax adjustment note

(4) If a person issues a tax adjustment note to a pension entity under subsection (2) in respect of particular employer resources consumed or used for the purpose of making an actual pension supply, a supply of each of those particular employer resources (each of which in this subsection is referred to as a “particular supply”) is deemed to have been received by the pension entity under subparagraph 172.1(6)(d)(i) and tax (in this subsection referred to as “deemed tax”) in respect of each of the particular supplies is deemed to have been paid under subparagraph 172.1(6)(d)(ii) by the pension entity, the following rules apply:

(a) the total tax amount of the tax adjustment note may be deducted in determining the net tax of the person for its reporting period that includes the day on which the tax adjustment note is issued;

(b) the pension entity shall add, in determining its net tax for its reporting period that includes the day on which the tax adjustment note is issued, the amount determined by the formula

A × (B/C)

where

A is the total of all amounts, each of which is the total of all input tax credits that the pension entity is entitled to claim in respect of deemed tax in respect of a particular supply,

B is

(i) if the pension entity was a selected listed financial institution on the par-ticular day that is the first day on which an amount of deemed tax is deemed to have been paid, the federal component amount of the tax adjustment note, and

(ii) in any other case, the total tax amount of the tax adjustment note, and

C is the total of all amounts, each of which is an amount of deemed tax in respect of a particular supply;

(c) for each particular claim period of the pension entity for which any part of an amount of deemed tax in respect of a particular supply is an eligible amount of the pension entity and for which the pension entity was a qualifying pension entity on the last day of the particular claim period, the pension entity shall pay to the Receiver General, on or before the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued, the amount determined by the formula

A × B × (C/D) × [(E – F)/E]

where

A is the total of all amounts, each of which is the part of an amount of deemed tax in respect of a particular supply that is an eligible amount of the pension entity for the particular claim period,

B is 33%,

C is

(i) if the pension entity was a selected listed financial institution on the par-ticular day referred to in paragraph (b), the federal component amount of the tax adjustment note, and

(ii) in any other case, the total tax amount of the tax adjustment note,

D is the total of all amounts, each of which is an amount of deemed tax in respect of a particular supply,

E is the pension rebate amount of the pension entity for the particular claim period, and

F is the total determined for B in the formula in subsection 261.01(2) in respect of the pension entity for the particular claim period; and

(d) for each claim period of the pension entity for which any part of an amount of deemed tax in respect of a particular supply is an eligible amount of the pension entity and for which an election under any of subsections 261.01(5), (6) or (9) was made jointly by the pension entity and all participating employers of the pension plan that were, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan, each of those participating employers shall add, in determining its net tax for its reporting period that includes the day on which the tax adjustment note is issued, the amount determined by the formula

A × B × (C/D) × (E/F)

where

A is the total of all amounts, each of which is the part of an amount of deemed tax in respect of a particular supply that is an eligible amount of the pension entity for the claim period,

B is 33%,

C is

(i) if the pension entity was a selected listed financial institution on the particular day referred to in paragraph (b), the federal component amount of the tax adjustment note, and

(ii) in any other case, the total tax amount of the tax adjustment note,

D is the total of all amounts, each of which is an amount of deemed tax in respect of a particular supply,

E is the amount of the deduction determined for the participating employer under subsection 261.01(5), paragraph 261.01(6)(b) or subsection 261.01(9), as the case may be, for the claim period, and

F is

(i) if the pension entity was a selected listed financial institution on the par-ticular day referred to in paragraph (b), the total of the pension rebate amount of the pension entity for the claim period and the provincial pension rebate amount of the pension entity for the claim period, and

(ii) in any other case, the pension rebate amount of the pension entity for the claim period.

Prescribed form and manner

(5) A tax adjustment note issued under subsection (2) shall be issued in prescribed form containing prescribed information and in a manner satisfactory to the Minister.

Notification

(6) If a tax adjustment note is issued under subsection (2) to a pension entity of a pension plan and, as a consequence of that issuance, paragraph (4)(d) applies to a participating employer of the pension plan, the pension entity shall, in prescribed form containing prescribed information and in a manner satisfactory to the Minister, forthwith notify the participating employer of that issuance.

Joint and several liability

(7) If a participating employer of a pension plan is required to add an amount to its net tax under paragraph (4)(d) as a consequence of the issuance of a tax adjustment note under subsection (2) to a pension entity of the pension plan, the participating employer and the pension entity are jointly and severally, or solidarily, liable to pay the amount to the Receiver General.

Assessment

(8) The Minister may assess a person for any amount for which the person is liable under subsection (7) and, if the Minister sends a notice of assessment, sections 296 to 311 apply, with such modifications as the circumstances require.

Liability where participating employer ceases to exist

(9) If a participating employer of a pension plan has ceased to exist on or before the day on which a tax adjustment note is issued under subsection (2) to a pension entity of the pension plan and the participating employer would have been required, had it not ceased to exist, to add an amount to its net tax under paragraph (4)(d) as a consequence of that issuance, the pension entity shall pay the amount to the Receiver General on or before the last day of its claim period that immediately follows its claim period that includes the day on which the tax adjustment note is issued.

Requirement to maintain records

(10) Despite section 286, every person that issues a tax adjustment note under subsection (2) shall maintain, for a period of six years from the day on which the tax adjustment note was issued, evidence satisfactory to the Minister that the person was entitled to issue the tax adjustment note for the amount for which it was issued.

(2) Subsection (1) is deemed to have come into force on September 23, 2009.

72. (1) The Act is amended by adding the following after section 236.4:

First and second variant years

236.5 (1) For the purposes of this section, a fiscal year of a network seller in respect of which an approval granted under 178(5) is in effect is

(a) the first variant year of the network seller if the network seller

(i) fails to meet the condition referred to in paragraph 178(2)(c) in respect of the fiscal year, and

(ii) meets the condition referred to in paragraph 178(2)(c) for each fiscal year of the network seller, in respect of which an approval granted under 178(5) is in effect, preceding the fiscal year; and

(b) the second variant year of the network seller if

(i) the fiscal year is after the first variant year of the network seller,

(ii) the network seller fails to meet the condition referred to in paragraph 178(2)(c) in respect of the fiscal year, and

(iii) the network seller meets the condition referred to in paragraph 178(2)(c) for each fiscal year (other than the first variant year) of the network seller, in respect of which an approval granted under 178(5) is in effect, preceding the fiscal year.

Adjustment by network seller if conditions not met

(2) Subject to subsections (3) and (4), if a network seller fails to satisfy any condition referred to in paragraphs 178(2)(a) to (c) for a fiscal year of the network seller in respect of which an approval granted under subsection 178(5) is in effect and, at any time during the fiscal year, a network commission would, if this Part were read without reference to subsection 178(7), become payable by the network seller to a sales representative of the network seller as consideration for a taxable supply (other than a zero-rated supply) made in Canada by the sales representative, the network seller shall, in determining the net tax for the first reporting period of the network seller following the fiscal year, add an amount equal to interest, at the prescribed rate, on the total amount of tax that would be payable in respect of the taxable supply if tax were payable in respect of the taxable supply, computed for the period beginning on the earliest day on which consideration for the taxable supply is paid or becomes due and ending on the day on or before which the network seller is required to file a return for the reporting period that includes that earliest day.

No adjustment for first variant year

(3) In determining the net tax for the first reporting period of a network seller following the first variant year of the network seller, the network seller is not required to add an amount in accordance with subsection (2) if

(a) the network seller satisfies the conditions referred to in paragraphs 178(2)(a) and (b) for the first variant year and for each fiscal year, in respect of which an approval granted under subsection 178(5) is in effect, preceding the first variant year; and

(b) the network seller would meet the condition referred to in paragraph 178(2)(c) for the first variant year if the reference in that paragraph to “all or substantially all” were read as a reference to “at least 80%”.

No adjustment for second variant year

(4) In determining the net tax for the first reporting period of the network seller following the second variant year of the network seller, the network seller is not required to add an amount in accordance with subsection (2) if

(a) the network seller satisfies the conditions referred to in paragraphs 178(2)(a) and (b) for the second variant year and for each fiscal year, in respect of which an approval granted under subsection 178(5) is in effect, preceding the second variant year;

(b) the network seller would meet the condition referred to in paragraph 178(2)(c) for each of the first variant year and the second variant year if the reference in that paragraph to “all or substantially all” were read as a reference to “at least 80%”; and

(c) within 180 days after the beginning of the second variant year, the network seller requests in writing that the Minister revoke the approval.

Adjustment by network seller due to notification failure

(5) If, at any time after an approval granted under subsection 178(5) in respect of a network seller and each of its sales representatives ceases to have effect as a consequence of a revocation under subsection 178(11) or (12), a network commission would, if this Part were read without reference to subsection 178(7), become payable as consideration for a taxable supply (other than a zero-rated supply) made in Canada by a sales representative of the network seller that has not been notified, as required under paragraph 178(13)(b), of the revocation and an amount is not charged or collected as, or on account of, tax in respect of the taxable supply, the network seller shall, in determining the net tax for the particular reporting period of the network seller that includes the earliest day on which consideration for the taxable supply is paid or becomes due, add an amount equal to interest, at the prescribed rate, on the total amount of tax that would be payable in respect of the taxable supply if tax were payable in respect of the taxable supply, computed for the period beginning on that earliest day and ending on the day on or before which the network seller is required to file a return for the particular reporting period.

(2) Subsection (1) applies in respect of any fiscal year of a person that begins on or after January 1, 2010, except that, if the person makes an application in accordance with paragraph 59(2)(a) in respect of a qualifying period (as defined in paragraph 59(2)(c)), for the purposes of applying subsections 236.5(1) to (4) of the Act, as enacted by subsection (1), each reference in those subsections to “fiscal year” is to be read, in respect of a fiscal year of the person that begins in 2010, as a reference to “qualifying period”.

1996, c. 21, s. 66(1)

73. (1) Paragraph 238(1)(a) of the Act is replaced by the following:

(a) where the registrant’s reporting period is or would, in the absence of subsection 251(1), be the fiscal year,

(i) if the registrant is a listed financial institution described in any of subparagraphs 149(1)(a)(i) to (x), within six months after the end of the year,

(ii) if subparagraph (i) does not apply, the registrant is an individual, the fiscal year is a calendar year and, for the purposes of the Income Tax Act, the individual carried on a business in the year and the filing-due date of the individual for the year is June 15 of the following year, on or before that day, and

(iii) in any other case, within three months after the end of the year; and

1997, c. 10, s. 217(1)

(2) The portion of subsection 238(2.1) of the English version of the Act before paragraph (a) is replaced by the following:

Filing by certain selected listed financial institutions

(2.1) Despite paragraph (1)(b) and subsection (2), if a selected listed financial institution’s reporting period is a fiscal month or fiscal quarter, the financial institution shall

1997, c. 10, s. 217(1)

(3) Paragraph 238(2.1)(b) of the Act is replaced by the following:

(b) file a final return for the period with the Minister within six months after the end of the fiscal year in which the period ends.

(4) Subsections (1) and (3) apply in respect of reporting periods in any fiscal year that begins after September 23, 2009.

74. (1) Section 242 of the Act is amended by adding the following after subsection (2.2):

Request for cancellation

(2.3) If, at any time when an approval granted under subsection 178(5) in respect of a network seller (as defined in subsection 178(1)) and each of its sales representatives (as defined in that subsection) is in effect, a sales representative of the network seller would be a small supplier if the approval had been in effect at all times before that time and the sales representative files with the Minister in prescribed manner a request, in prescribed form containing prescribed information, to have the registration of the sales representative cancelled, the Minister shall cancel the registration of the sales representative.

(2) Subsection (1) is deemed to have come into force on January 1, 2010.

2000, c. 30, s. 77(1)

75. (1) The definition “multi-employer plan” in subsection 261.01(1) of the Act is repealed.

(2) Subsection 261.01(1) of the Act is amended by adding the following in alphabetical order:

“active member”
« participant actif »

“active member” has the meaning assigned by subsection 8500(1) of the Income Tax Regulations.

“eligible amount”
« montant admissible »

“eligible amount” of a pension entity for a claim period of the pension entity means an amount of tax, other than a recoverable amount in respect of the claim period, that

(a) became payable by the pension entity during the claim period, or was paid by the pension entity during the claim period without having become payable, in respect of a supply, importation or bringing into a partic-ipating province of property or a service that the pension entity acquired, imported or brought into the participating province, as the case may be, for consumption, use or supply in respect of a pension plan, other than an amount of tax that

(i) is deemed to have been paid by the pension entity under this Part (other than section 191),

(ii) became payable, or was paid without having become payable, by the pension entity at a time when it was entitled to claim a rebate under section 259,

(iii) was payable under subsection 165(1), or is deemed under section 191 to have been paid, by the pension entity in respect of a taxable supply to the pension entity of a residential complex, an addition to a residential complex or land if, in respect of that supply, the pension entity was entitled to claim a rebate under section 256.2 or would be so entitled after paying the tax payable in respect of that supply, or

(iv) if the pension entity is a selected listed financial institution throughout the claim period, was payable under any of subsection 165(2), sections 212.1 and 218.1 and Division IV.1; or

(b) is deemed to have been paid by the pension entity under section 172.1 during the claim period.

“non-qualifying pension entity”
« entité de gestion non admissible »

“non-qualifying pension entity” means a pension entity that is not a qualifying pension entity.

“participating employer”
« employeur participant »

“participating employer” has the meaning assigned by subsection 172.1(1).

“pension contribution”
« cotisation »

“pension contribution” means a contribution by a person to a pension plan that may be deducted by the person under paragraph 20(1)(q) of the Income Tax Act in computing its income.

“pension entity”
« entité de gestion »

“pension entity” has the meaning assigned by subsection 172.1(1).

“pension plan”
« régime de pension »

“pension plan” has the meaning assigned by subsection 172.1(1).

“pension rebate amount”
« montant de remboursement de pension »

“pension rebate amount” of a pension entity for a claim period of the pension entity means the amount determined by the formula

A × B

where

A is 33%; and

B is the total of all amounts each of which is an eligible amount of the pension entity for the claim period.

“provincial pension rebate amount”
« montant de remboursement de pension provincial »

“provincial pension rebate amount” of a pension entity for a claim period of the pension entity in a fiscal year that ends in a taxation year of the pension entity means the amount equal to

(a) if the pension entity is a selected listed financial institution throughout the claim period, the total of all amounts, each of which is determined for a participating province by the formula

A × B × C/D

where

A is the pension rebate amount of the pension entity for the claim period,

B is the pension entity’s percentage for the participating province for the taxation year for the purposes of C in the formula in subsection 225.2(2),

C is the tax rate for the participating province, and

D is the rate set out in subsection 165(1); and

(b) in any other case, zero.

“qualifying employer”
« employeur admissible »

“qualifying employer” of a pension plan for a calendar year means a participating employer of the pension plan that is a registrant and that

(a) if pension contributions were made to the pension plan in the immediately preceding calendar year, made pension contributions to the pension plan in that year; and

(b) in any other case, was the employer of one or more active members of the pension plan in the immediately preceding calendar year.

“qualifying pension entity”
« entité de gestion admissible »

“qualifying pension entity” means a pension entity of a pension plan other than a pension plan in respect of which

(a) listed financial institutions made 10% or more of the total pension contributions to the pension plan in the last preceding calendar year in which pension contributions were made to the pension plan; or

(b) it can reasonably be expected that listed financial institutions will make 10% or more of the total pension contributions to the pension plan in the next calendar year in which pension contributions will be required to be made to the pension plan.

“recoverable amount”
« montant recouvrable »

“recoverable amount” in respect of a claim period of a person means an amount of tax

(a) that is included in determining an input tax credit of the person for the claim period;

(b) for which it can reasonably be regarded that the person has obtained or is entitled to obtain a rebate, refund or remission under any other section of this Act or under any other Act of Parliament; or

(c) that can reasonably be regarded as having been included in an amount adjusted, refunded or credited to or in favour of the person for which a credit note referred to in subsection 232(3) has been received by the person or a debit note referred to in that subsection has been issued by the person.

“tax recovery rate”
« taux de recouvrement de taxe »

“tax recovery rate” of a person for a fiscal year of the person means the lesser of

(a) 100%; and

(b) the amount (expressed as a percentage) determined by the formula

(A + B) / C

where

A is the total of all amounts, each of which is

(i) if the person is a selected listed financial institution at any time in the fiscal year, an input tax credit of the person, in respect of an amount of tax under any of subsection 165(1) and sections 212, 218 and 218.01, for a reporting period of the person included in the fiscal year, and

(ii) in any other case, an input tax credit of the person for a reporting period of the person included in the fiscal year,

B is the total of all amounts, each of which is

(i) if the person is a selected listed financial institution at any time in the fiscal year, a rebate to which the person is entitled under section 259, in respect of an amount of tax under any of subsection 165(1) and sections 212, 218 and 218.01, for a claim period of the person included in the fiscal year, and

(ii) in any other case, a rebate to which the person is entitled under section 259 for a claim period of the person included in the fiscal year, and

C is the total of all amounts, each of which is

(i) if the person is a selected listed financial institution at any time in the fiscal year, an amount of tax under any of subsection 165(1) and sections 212, 218 and 218.01 that became payable, or was paid without having become payable, by the person during the fiscal year, and

(ii) in any other case, an amount of tax that became payable, or was paid without having become payable, by the person during the fiscal year.

2000, c. 30, s. 77(1); 2001, c. 15, s. 17(1)

(3) Subsections 261.01(2) to (5) of the Act are replaced by the following:

Rebate for qualifying pension entities

(2) If a pension entity is a qualifying pension entity on the last day of a claim period of the pension entity, the Minister shall pay a rebate to the pension entity for the claim period equal to the amount determined by the formula

A – B

where

A is the pension rebate amount of the pension entity for the claim period; and

B is the total of all amounts, each of which is an amount

(a) determined by the formula

C × D

where

C is an amount determined for A in the formula in subsection (5) for a qualifying employer as a consequence of an election made under that subsection for the claim period, and

D is the percentage specified for the qualifying employer in the election, or

(b) determined under paragraph (6)(a) in respect of a qualifying employer as a consequence of an election made under subsection (6) for the claim period.

Application for rebate

(3) A rebate under subsection (2) shall not be paid for a claim period of a pension entity, unless the pension entity files an application for the rebate within two years after the day that is

(a) if the pension entity is a registrant, the day on or before which the pension entity is required to file a return under Division V for the claim period; and

(b) in any other case, the last day of the claim period.

Limitation

(4) A pension entity shall not make more than one application for a rebate under subsection (2) for any claim period of the pension entity.

Election to share rebate — engaged exclusively in commercial activities

(5) If a pension entity of a pension plan is a qualifying pension entity on the last day of a claim period of the pension entity, the pension entity makes an election for the claim period jointly with all persons that are, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan and each of those qualifying employers is engaged exclusively in commercial activities throughout the claim period, each of those qualifying employers may deduct in determining its net tax for the reporting period that includes the day on which the election is filed with the Minister an amount determined by the formula

(A + B) × C

where

A is the pension rebate amount of the pension entity for the claim period;

B is the provincial pension rebate amount of the pension entity for the claim period; and

C is the percentage specified for the qualifying employer in the election.

Election to share rebate — not engaged exclusively in commercial activities

(6) If a pension entity of a pension plan is a qualifying pension entity on the last day of a claim period of the pension entity, the pension entity makes an election for the claim period jointly with all persons that are, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan and any of those qualifying employers is not engaged exclusively in commercial activities throughout the claim period, the following rules apply:

(a) an amount (in this subsection referred to as a “shared portion”) shall be determined for the purposes of this section in respect of each of those qualifying employers by the formula

A × B × C

where

A is the pension rebate amount of the pension entity for the claim period,

B is the percentage specified for the qualifying employer in the election, and

C is

(i) in the case where pension contributions were made to the pension plan in the calendar year that immediately precedes the calendar year that includes the last day of the claim period (in this paragraph referred to as the “preceding calendar year”), the amount determined by the formula

D/E

where

D is the total of all amounts, each of which is a pension contribution made by the qualifying employer to the pension plan in the preceding calendar year, and

E is the total of all amounts, each of which is a pension contribution made to the pension plan in the preceding calendar year,

(ii) in the case where subparagraph (i) does not apply and one or more qualifying employers of the pension plan was the employer of one or more active members of the pension plan in the preceding calendar year, the amount determined by the formula

F/G

where

F is the total number of employees of the qualifying employer in the preceding calendar year who were active members of the pension plan in that year, and

G is the sum of the total number of employees of each of those qualifying employers in the preceding calendar year who were active members of the pension plan in that year, and

(iii) in any other case, zero; and

(b) each of those qualifying employers may deduct in determining its net tax for the reporting period that includes the day on which the election is filed with the Minister an amount determined by the formula

(A + B) × C

where

A is the shared portion in respect of the qualifying employer as determined under paragraph (a),

B is the amount determined by the formula

D × E × F

where

D is the provincial pension rebate amount of the pension entity for the claim period,

E is the percentage specified for the qualifying employer in the election, and

F is the amount determined for C in the formula in paragraph (a), and

C is the tax recovery rate of the qualifying employer for the fiscal year of the qualifying employer that ended on or before the last day of the claim period.

Engaged exclusively in commercial activities

(7) For the purposes of subsections (5) and (6), a qualifying employer of a pension plan is engaged exclusively in commercial activities throughout a claim period of a pension entity of the pension plan if

(a) in the case of a qualifying employer that is a financial institution at any time in the claim period, all of the activities of the qualifying employer for the claim period are commercial activities; and

(b) in any other case, all or substantially all of the activities of the qualifying employer for the claim period are commercial activities.

Form and manner of filing

(8) An election made under subsection (5) or (6) by a pension entity of a pension plan and the qualifying employers of the pension plan shall

(a) be made in prescribed form containing prescribed information;

(b) be filed by the pension entity with the Minister in prescribed manner at the same time the application for the rebate under subsection (2) for the claim period is filed by the pension entity;

(c) in the case of an election under subsection (5), indicate the percentage specified for each qualifying employer, the total of which for all qualifying employers shall not exceed 100%; and

(d) in the case of an election under subsection (6), indicate for each qualifying employer the percentage specified for the qualifying employer, which shall not exceed 100%.

Non-qualifying pension entities

(9) If a pension entity of a pension plan is a non-qualifying pension entity on the last day of a claim period of the pension entity and the pension entity makes an election for the claim period jointly with all persons that are, for the calendar year that includes the last day of the claim period, qualifying employers of the pension plan, each of those qualifying employers may deduct in determining its net tax for the reporting period that includes the day on which the election is filed with the Minister the amount determined by the formula

(A + B) × C × D

where

A is the pension rebate amount of the pension entity for the claim period;

B is the provincial pension rebate amount of the pension entity for the claim period;

C is

(a) in the case where pension contributions were made to the pension plan in the calendar year (in this subsection referred to as the “preceding calendar year”) that immediately precedes the calendar year that includes the last day of the claim period, the amount determined by the formula

E/F

where

E is the total of all amounts, each of which is a pension contribution made by the qualifying employer to the pension plan in the preceding calendar year, and

F is the total of all amounts, each of which is a pension contribution made to the pension plan in the preceding calendar year,

(b) in the case where subparagraph (a) does not apply and one or more qualifying employers of the pension plan was the employer of one or more active members of the pension plan in the preceding calendar year, the amount determined by the formula

G/H

where

G is the total number of employees of the qualifying employer in the preceding calendar year who were active members of the pension plan in that year, and

H is the sum of the total number of employees of each of those qualifying employers in the preceding calendar year who were active members of the pension plan in that year, and

D is the tax recovery rate of the qualifying employer for the fiscal year of the qualifying employer that ended on or before the last day of the claim period.

Form and manner of filing

(10) An election made under subsection (9) for a claim period of a pension entity shall

(a) be made in prescribed form containing prescribed information; and

(b) be filed by the pension entity with the Minister in prescribed manner within two years after the day that is

(i) if the pension entity is a registrant, the day on or before which the pension entity is required to file a return under Division V for the claim period, and

(ii) in any other case, the last day of the claim period.

Limitation

(11) Not more than one election under subsection (9) shall be filed for a claim period of a pension entity.

Joint and several liability

(12) If, in determining the net tax for a reporting period of a qualifying employer of a pension plan, the qualifying employer deducts an amount under subsection (5), paragraph (6)(b) or subsection (9) and either the qualifying employer or the pension entity of the pension plan knows or ought to know that the qualifying employer is not entitled to the amount or that the amount exceeds the amount to which the qualifying employer is entitled, the qualifying employer and the pension entity are jointly and severally, or solidarily, liable to pay the amount or excess to the Receiver General.

(4) Subsections (1) to (3) apply in respect of any claim period of a pension entity beginning on or after September 23, 2009, except that for the purposes of determining a provincial pension rebate amount of a pension entity for a claim period of the pension entity that begins before July 1, 2010 and ends on or after that day, the formula in paragraph (a) of the definition “provincial pension rebate amount” in subsection 261.01(1) of the Act and the descriptions in that formula, as enacted by subsection (2), shall be read as follows:

A × B × C/D x (E – F)/E

where

A is the pension rebate amount of the pension entity for the claim period,

B is the pension entity’s percentage for the participating province for the taxation year for the purposes of C in the formula in subsection 225.2(2),

C is the tax rate for the participating province,

D is the rate set out in subsection 165(1),

E is the number of days in the claim period, and

F is

(i) if the participating province is Ontario or British Columbia, the number of days in the claim period that are before July 1, 2010, and

(ii) in any other case, zero; and

76. (1) The Act is amended by adding the following after section 273.1:

Subdivision b.3