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MINUTES OF PROCEEDINGS
 
Meeting No. 91
 
Tuesday, June 12, 2007
 

The Standing Committee on Finance met in a televised session at 11:45 a.m. this day, in Room 237-C, Centre Block, the Chair, Brian Pallister, presiding.

 

Members of the Committee present: Diane Ablonczy, Dean Del Mastro, Rick Dykstra, Hon. John McCallum, Massimo Pacetti, Brian Pallister, Thierry St-Cyr, Mike Wallace and Judy Wasylycia-Leis.

 

Acting Members present: Omar Alghabra for Hon. John McKay, Louis Plamondon for Paul Crête and Paul Szabo for Hon. John McCallum.

 

In attendance: Library of Parliament: Alexandre Laurin, Analyst. House of Commons: Marc Toupin, Legislative Clerk.

 

Witnesses: Department of Finance: Wallace Conway, Chief, Tax Legislation Division, Foreign Income, Trusts and Capital Gains; Gérard Lalonde, Acting Director, Tax Policy Branch.

 
Pursuant to the Order of Reference of Monday, May 14, 2007, the Committee proceeded to the consideration of Bill C-33, An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that Act.
 

The Committee commenced its clause-by-clause study of the Bill.

 

By unanimous consent, the following amendments were agreed to:

That Bill C-33, in Clause 2, be amended by replacing line 12 on page 1 with the following:

“that begin after 2006, except that that subsection also applies to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 3, be amended by replacing line 6 on page 2 with the following:

“(2) Subsection (1) applies after 2006, except that that subsection also applies to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 4, be amended by replacing line 22 on page 2 with the following:

“(2) Subsection (1) applies after 2006, except that that subsection also applies to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 5, be amended by replacing line 32 on page 2 with the following:

“that occur after 2006, except that that subsection also applies to dispositions of a taxpayer that occur in a taxation year of the taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 6, be amended by replacing line 33 on page 3 with the following:

“2006, except that that subsection also applies in respect of a taxpayer to exchanges that occur in a taxation year of the taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 7, be amended by replacing line 29 on page 4 with the following:

“that begin after 2006, except that that subsection also applies to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 8, be amended by

(a) replacing lines 2 and 3 on page 5 with the following:

“before 2007 or, if this paragraph applies to the taxpayer for a taxation year preceding the taxpayer’s first taxation year beginning after 2006, as it applied to taxation years of the taxpayer that began before the taxpayer’s first taxation year to which this paragraph applied) or a participating interest in a foreign investment entity,”

(b) replacing line 13 on page 5 with the following:

“before 2007 or, if this clause applies to the taxpayer for a taxation year preceding the taxpayer’s first taxation year beginning after 2006, as it applied to taxation years of the taxpayer that began before the taxpayer’s first taxation year to which this clause applied), or”

(c) replacing lines 38 and 39 on page 5 with the following:

“foreign affiliate that began before 2007 or, if this clause applies to the controlled foreign affiliate for a taxation year preceding the controlled foreign affiliate’s first taxation year beginning after 2006, as those subsections read in their application to taxation years of the controlled foreign affiliate that began before the controlled foreign affiliate’s first taxation year to which this clause applied), or”

(d) adding after line 10 on page 8 the following:

“Subsections (2) and (4) also apply to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 9, be amended by replacing line 26 on page 10 with the following:

“tion years that begin after 2006, except that those subsections also apply to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 10, be amended by replacing line 43 on page 10 with the following:

“occur in taxation years that begin after 2006, except that that subsection also applies in respect of a taxpayer to transfers that occur in a taxation year of the taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 12, be amended by replacing line 6 on page 12 with the following:

“that begin after 2006, except that that subsection also applies to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 13, be amended by replacing line 35 on page 12 with the following:

“tion years that begin after 2006, except that those subsections also apply to dispositions or exchanges in respect of a taxpayer that occur in a taxation year of the taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 14, be amended by replacing line 8 on page 13 with the following:

“2006, except that that subsection also applies in respect of a taxpayer to dispositions that occur in a taxation year of the taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 16, be amended by replacing line 42 on page 13 with the following:

“that begin after 2006, except that that subsection also applies to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 17, be amended by

(a) replacing lines 1 to 3 on page 20 with the following:

“(a) the particular property is at that time”

(b) replacing line 13 on page 20 with the following:

“(b) there are at least 150 persons each of”

(c) replacing line 20 on page 20 with the following:

“(c) the total of all amounts each of which is”

(d) replacing line 30 on page 20 with the following:

“(d) property that is identical to the particular”

(e) replacing line 34 on page 20 with the following:

“(e) the particular property, or identical prop-”

(f) replacing line 19 on page 29 with the following:

“without reference to paragraphs (b) and (c) of the definition “contribution” and to paragraph (2)(l), or”

(g) replacing lines 43 to 46 on page 35 with the following:

“entity of the particular entity’s interest as a beneficiary under the trust that was acquired as a result of the contribution) to receive, at any”

(h) replacing line 40 on page 60 with the following:

“paragraph (b) of the definition “excluded”

That Bill C-33, in Clause 17, be amended by

(a) replacing lines 37 to 44 on page 51 with the following:

“2006 (or, where this subsection applies to a taxation year of the trust that begins before 2007, at the end of the last taxation year of the trust that begins before the first such taxation year of the trust) under subsection (2) (as it read in its application to taxation years that began before 2007 or, where this subsection applies to a taxation year of the trust that begins before 2007, as it read in its application to taxation years of the trust that began before the first such taxation year) in respect of the trust if the entity had received before 2007 amounts described under paragraph (2)(a) or (b) in respect of the trust (as those paragraphs read in their application to taxation years that began before 2007 or, where this subsection applies to a taxation year of the trust that begins before 2007, as those paragraphs read in their application to taxation years of the trust that began before the first such taxation year)”

(b) replacing line 4 on page 52 with the following:

“before 2007 (or, where this subsection applies to a taxation year of the trust that begins before 2007, in respect of the taxation years, of the trust, that began before the first such taxation year) under Divisions I and J, and”

(c) replacing lines 43 to 45 on page 55 with the following:

“end of 2006 (or, where this subsection applies to a taxation year of the trust that begins before 2007, at the end of the last taxation year of the trust beginning before the first such taxation year) under subsection (2) (as it read in its application to taxation years that began before 2007, or, where this subsection applies to a taxation year of the trust that begins before 2007, in its application to taxation years of the trust that began before the first such taxation year) if the trust had tax”

(d) replacing line 6 on page 56 with the following:

“years that began before 2007, or, where this subsection applies to a taxation year of the trust that begins before 2007, as they read in their application to taxation years of the trust that began before the first such taxation year), except to”

(e) replacing line 24 on page 56 with the following:

“before 2007, or, where this subsection applies to a taxation year of the trust that begins before 2007, as it read in its application to taxation years of the trust that began before the first such taxation year),”

(f) replacing line 36 on page 56 with the following:

“before 2007, or, where this subsection applies to a taxation year of the trust that begins before 2007, as it read in its application to taxation years of the trust that began before the first such taxation year), or”

(g) replacing line 25 on page 58 with the following:

“taxation years that began before 2007 (or, where this subsection applies to a taxation year of the trust that begins before 2007, as it read in its application to taxation years of the trust that began before the first such taxation year), or”

(h) replacing line 30 on page 58 with the following:

“before 2007 (or, where this subsection applies to a taxation year of the trust that begins before 2007, as it read in its application to taxation years of the trust that began before the first such taxation year) if that subsection were read in”

(i) replacing line 40 on page 58 with the following:

“began before 2007 or, where this subsection applies in respect of a taxation year of the trust that begins before 2007, as it read in its application to taxation years of the trust that began before the first such taxation year).”

(j) replacing lines 26 and 27 on page 61 with the following:

“ of a trust if the trust elects, in writing, to have section 94 of”

(k) replacing line 36 on page 61 with the following:

“trust if the trust”

(l) replacing line 3 on page 62 with the following:

“trust elects, in”

(m) replacing lines 12 and 13 on page 62 with the following:

“begin in 2006 of a trust if the trust elects, in writing, to”

(n) replacing lines 13 to 25 on page 71 with the following:

“(x) if a trust was, for its last taxation year that began before 2007 (or, where section 94 of the Act, as enacted by subsection (1), applies to a taxation year of the trust that begins before 2007, for its last taxation year that began before the first such taxation year), deemed by paragraph 94(1)(c) of the Act (as it read in its application to that taxation year) to be resident in Canada, paragraphs 94(4)(d) and (e) of the Act, as enacted by subsection (1), do not apply to the trust for the period that starts immediately before the end of that last taxation year and that ends immediately after the beginning of its first taxation year that begins after 2006 (or, where section 94 of the Act, as enacted by subsection (1), applies to a taxation year of the trust that begins before 2007, for the period that starts immediately before the end of the last taxation year beginning before the first such taxation year and that ends immediately after the beginning of that first such taxation year), unless during that period a change in the trustees of the trust occurred;”

That Bill C-33, in Clause 18, be amended by

(a) replacing lines 12 to 15 on page 73 with the following:

“scribed stock exchange, and those identical participating interests were traded on at least 10 consecutive trading days on that stock exchange in the period that begins 30 days before that time;”

(b) replacing lines 6 to 18 on page 75 with the following:

“D is the amount, if any, by which the fair market value of the participating interest exceeds the cost amount to the taxpayer of the participating interest at the beginning of the first taxation year of the taxpayer in respect of which subsection (4) applied to the taxpayer in respect of the participating interest;”

(c) replacing line 43 on page 75 to line 7 on page 76 with the following:

“G is the amount, if any, by which the cost amount to the taxpayer of the participating interest exceeds the fair market value of the participating interest at the beginning of the first taxation year of the taxpayer in respect of which subsection (4) applied to the taxpayer in respect of the participating interest.”

(d) replacing line 5 on page 95 with the following:

“in a trust that is not an exempt foreign trust (as defined in subsection 94(1)),”

(e) replacing line 41 on page 109 with the following:

“foreign trust (as defined in subsection 94(1)), the amount that would be”

(f) replacing lines 1 to 6 on page 110 with the following:

“(I) the cost to the taxpayer of the participating interest were equal to the amount determined by the formula

A/B × C

where

A is the amount, if any, by which

(a) the total of all amounts each of which is the cost amount, immediately before the disposition by the taxpayer of the participating interest in the trust, to the trust of a property (referred to in this subclause as a “distributed property”) that was distributed by the trust to the taxpayer as consideration for the disposition by the taxpayer of the participating interest in the trust,

exceeds

(b) the total of all amounts each of which is an amount of a debt or obligation of the trust that was assumed by the taxpayer because a distributed property was distributed to the taxpayer by the trust as consideration for the disposition by the taxpayer of the participating interest in the trust,

B is the amount, if any, by which

(a) the total of all amounts each of which is the cost amount to the trust of a property held by the trust immediately before the time of the disposition of the taxpayer’s participating interest in the trust,

exceeds

(b) the total of all amounts each of which is an amount of a debt or obligation of the trust immediately before the time of the disposition of the taxpayer’s participating interest in the trust, and

C is the total of all amounts each of which was the cost amount, immediately after the time the property was acquired by the trust because of the contribution, to the trust of a property that was contributed to the trust at any time before the time of the disposition of the taxpayer’s participating interest in the trust; and”

(g) replacing line 30 on page 150 with the following:

“any of those amounts payable or allocated and that is”

(h) replacing line 22 on page 152 with the following:

“become payable or allocated to a taxpayer in a particular”

That Bill C-33, in Clause 18, be amended by

(a) replacing line 36 on page 74 with the following:

“taxation year that ends after 2006 (or, where this definition applies to the taxpayer in respect of a taxation year of the taxpayer that ends before 2007, for a taxation year of the taxpayer that ends on or after the first day of the first such taxation year in respect of which this definition applies) and before”

(b) replacing lines 42 to 44 on page 74 with the following:

“began before 2007 or, where this definition applies in respect of a taxation year of the taxpayer that begins before 2007, as it read in its application to taxation years of the taxpayer that began before the first such taxation year) of the taxpayer at the end of the taxpayer’s last taxation year that began before 2007 (or, where this definition applies in respect of a taxation year of the taxpayer that began before 2007, at the end of the taxpayer’s last taxation year that began before the first such taxation year in respect of which this definition applies), the total of all amounts”

(c) replacing line 22 on page 75 with the following:

“the non-resident entity (or, where this definition applies in respect of a taxation year of the taxpayer that begins before 2007, after the last taxation year of the non-resident entity that begins before the first taxation year of the taxpayer in respect of which this definition applies) and before that time”

(d) replacing line 37 on page 75 with the following:

“the taxpayer after 2006 (or, where this definition applies in respect of a taxation year of the taxpayer that begins before 2007, acquired on or after the first day of the first taxation year of the taxpayer in respect of which this definition applies), the amount, if any,”

(e) replacing line 36 on page 110 with the following:

“began after 2006 (or, where this definition applies in respect of a taxation year of the taxpayer that begins before 2007, immediately before the beginning of the first taxation year of the taxpayer in respect of which this definition applies), the interest was capital”

(f) replacing line 16 on page 139 with the following:

“taxpayer that begins after 2006 (or, where this definition applies in respect of a taxation year of the taxpayer that begins before 2007, that ends in a taxation year of the taxpayer that begins on or after the first day of the first taxation year of the taxpayer in respect of which this definition applies) if, at the end”

(g) replacing line 16 on page 143 with the following:

“begins after 2006 (or, where this definition applies in respect of a taxation year of the taxpayer that begins before 2007, if that taxation year of the taxpayer begins on or after the first day of the first taxation year of the taxpayer in respect of which this definition applies), the income or profits”

(h) replacing lines 14 to 16 on page 150 with the following:

“taxpayer that begins after 2006 (or, where this subsection applies in respect of a taxation year of the taxpayer that begins before 2007, in a particular taxation year of the taxpayer that begins on or after the first day of the first taxation year of the taxpayer in respect of which this subsection applies) or in a preceding taxation year of the taxpayer that begins after 2006 (or, where this subsection applies to the taxpayer in respect of a taxation year of the taxpayer that begins before 2007, in a preceding taxation year of the taxpayer that begins on or after the first day of the first taxation year of the taxpayer in respect of which this subsection applies), payable or allocated to the taxpayer by a particular”

(i) replacing line 13 on page 152 with the following:

“preceding taxation years, or

(IV) the total of all amounts, each of which is an amount that was claimed by the taxpayer under paragraph (4)(a) or (b) in respect of the participating interest for any of those taxation years; and”

(j) adding after line 31 on page 153 the following:

“(4) If subsection 94.1(4), 94.2(4) or 94.3(4) (as that subsection read in its application to taxation years beginning after 2006) applied to a taxpayer in computing the taxpayer’s income for a particular taxation year of the taxpayer that began before 2007 (each such year referred to in this subsection as a “pre-2007 taxation year”) in respect of a participating interest of the taxpayer in a foreign investment entity

(a) there may be deducted, in computing the taxpayer’s income for the taxpayer’s first taxation year beginning after 2006, such amount as the taxpayer may claim not exceeding the amount, if any, by which

(i) the total of all amounts each of which is an amount included in computing the taxpayer’s income in a pre-2007 taxation year in respect of the participating interest because of subsection 94.1(4), 94.2(4) or 94.3(4)

exceeds

(ii) the total of all amounts each of which is an amount deducted in computing the taxpayer’s income in a pre-2007 taxation year in respect of the participating interest because of subsection 94.2(4), 94.3(4) or 94.4(2) or (3);

(b) there may be added, in computing the taxpayer’s capital loss from the disposition of a capital property for the taxpayer’s first taxation year beginning after 2006, such amount as the taxpayer may claim not exceeding the amount, if any, by which

(i) the total of all amounts each of which is an amount included in computing the taxpayer’s capital gain for a pre-2007 taxation year in respect of the participating interest because of subsection 94.2(4)

exceeds

(ii) the total of

(A) the total of all amounts each of which is an amount included in computing the taxpayer’s capital loss in a pre-2007 taxation year in respect of the participating interest because of subsection 94.2(4), and

(B) the amount, if any, by which the amount determined under subparagraph (a)(ii) exceeds the amount determined under subparagraph (a)(i) in respect of the participating interest; and

(c) in computing the adjusted cost base to the taxpayer at any time after the taxpayer’s first taxation year beginning after 2006, there is to be deducted the total of all amounts each of which is an amount claimed by the taxpayer under paragraph (a) or (b) to the extent that the amount claimed was deducted in computing the taxpayer’s income or added in computing the taxpayer’s capital loss from the disposition of a capital property.”

(k) replacing line 32 on page 153 to line 3 on page 154 with the following:

“(2) Subsection (1) applies to taxation years that begin after 2006, except that

(a) it also applies to

(i) taxation years of a taxpayer that begin after any of 2002, 2003, 2004 or 2005 if the taxpayer elects, in writing, to have sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxation years of the taxpayer that begin after the year specified in the election and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year in which this Act is assented to,

(ii) fiscal periods of a partnership that begin after any of 2002, 2003, 2004 or 2005 if a member of the partnership, who has authority to act for the partnership, elects, in writing, to have sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the fiscal periods of the partnership that begin after the year specified in the election and files the election with the Minister of National Revenue on or before the member’s filing-due date for the member’s taxation year in which this Act is assented to, and

(iii) taxation years of the foreign affiliates of a taxpayer that begin after any of 2002, 2003, 2004 or 2005 if the taxpayer elects, in writing, to have sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxation years of the foreign affiliates of the taxpayer that begin after the year specified in the election and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year in which this Act is assented to;

(b) any election or form referred to in any of sections 94.1 to 94.3 of the Act, as enacted by subsection (1), made by a taxpayer is deemed to have been filed with the Minister of National Revenue

(i) on a timely basis if it is filed with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to, and

(ii) in the taxpayer’s return of income for the taxpayer’s taxation year identified by the taxpayer in the election, if it is filed with the Minister of National Revenue in writing in the taxpayer’s return of income for the taxpayer’s taxation year that includes the day on which this Act is assented to;

(c) for taxation years that begin before October 30, 2003 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), subparagraph (a)(ii) of the definition “exempt interest” in subsection 94.1(1) of the Act, as enacted by subsection (1), is to be read as follows:

(ii) a qualifying entity, or

(d) for taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), subparagraph (a)(ii) of the definition “exempt interest” in subsection 94.1(1) of the Act, as enacted by subsection (1), is to be read without reference to “(other than a controlled foreign affiliate)”;

(e) for taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), the definition “investment property” in subsection 94.1(1) of the Act, as enacted by subsection (1), is to be read without reference to its paragraph (k);

(f) for taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), paragraph (c) of the definition “significant interest” in subsection 94.1(1) of the Act, as enacted by subsection (1), is to be read as follows:

(c) if the other entity is a non-discretionary trust (as defined in subsection 17(15)), an interest as a beneficiary under the trust, if at that time the particular entity, or the particular entity together with entities related (otherwise than by reason of a right referred to in paragraph 251(5)(b)) to the particular entity, holds such interests under the trust that have a fair market value of 25% or more of the fair market value of all the interests as beneficiaries under the trust.

(g) for taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), subparagraph (b)(i) of the definition “specified interest” in subsection 94.1(1) of the Act, as enacted by subsection (1), is to be read as follows:

(i) the entity or individual is at that time a successor beneficiary (as defined by subsection 94(1)) under the trust, or

(h) for taxation years that end before November 9, 2006 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), subparagraph (b)(ii) of the definition “specified interest” in subsection 94.1(1) of the Act, as enacted by subsection (1), is to be read as follows:

(ii) every amount of income and capital of the trust that the entity or individual may receive at or after that time depends on the exercise by any entity or individual of, or the failure by any entity or individual to exercise, a discretionary power.

(i) paragraph 94.1(2)(c) of the Act, as enacted by subsection (1), does not apply, in respect of a taxpayer and a participating interest of the taxpayer in a trust for each of the taxpayer’s taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), unless the taxpayer elects, by notifying the Minister of National Revenue in writing on or before the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act is assented to, that this paragraph not apply in respect of the taxpayer and the participating interest;

(j) for taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), subsection 94.1(2) of the Act, as enacted by subsection (1), is to be read without reference to its paragraph (t);

(k) for taxation years that begin on or before November 9, 2006 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), paragraph 94.1(2)(w) of the Act, as enacted by subsection (1), is to be read without reference to its subparagraph (i);

(l) for taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), paragraph 94.2(9)(d) of the Act, as enacted by subsection (1), is to be read without reference to the expression “(whether immediate or future, whether absolute or contingent or whether conditional on or subject to the exercise of any discretion by any entity or individual)”;

(m) for taxation years that end before November 9, 2006 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), paragraph 94.2(11)(c) of the Act, as enacted by subsection (1), is to be read as follows:

(c) paragraphs (a) and (b) do not apply to the taxpayer for the particular taxation year in respect of the interest if

(i) the taxpayer is an individual and the interest was acquired by the individual more than 60 months before the individual last became resident in Canada unless, at any particular time in the period that begins 60 months before the day on which the individual first became resident in Canada and that ends at the end of the particular taxation year, the total amount of premiums paid in respect of the policy is more than the total amount of premiums that can reasonably be considered to have been contemplated — at the time the policy was first issued — to be paid in respect of the policy as of the particular time,

(ii) under the terms and conditions of the insurance policy, the taxpayer is entitled to receive only

(A) benefits payable as a consequence of the occurrence of risks insured under the policy,

(B) an experience-rated refund of premiums for a year, or

(C) a return of premiums previously paid upon the surrender, cancellation or termination of the insurance policy, or

(iii) the taxpayer can establish to the satisfaction of the Minister that

(A) the interest in the policy was, on the anniversary day of the policy that occurs in the particular taxation year,

(I) an exempt policy, or

(II) a prescribed annuity contract, or

(B) the taxpayer has included in computing the taxpayer’s income for the particular taxation year the amount, if any, required under section 12.2 to be included in computing the taxpayer’s income for the particular taxation year in respect of the interest;

(n) for taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), the description of A in the definition “income allocation” in subsection 94.3(1) of the Act, as enacted by subsection (1), is to be read as if its paragraph (f) were replaced by the following:

(f) this Act were read without reference to subsections 20(11) and (12) and 104(4) to (6),

(f.1) in the case where the particular taxpayer is a corporation resident in Canada, dividends received by the non-resident entity in the particular taxation year from a foreign affiliate of the particular taxpayer were included in computing the income of the non-resident entity for the particular taxation year only where

(i) the particular taxpayer did not have a qualifying interest (within the meaning assigned by paragraph 95(2)(m)) in the foreign affiliate at the time the dividends were received, or

(ii) taking into account the application of paragraphs (a) and (h), subsection 94.2(4) applied for the purpose of computing the non-resident entity’s income for the particular taxation year in respect of the non-resident entity’s participating interest in the foreign affiliate,

(o) for taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), paragraph (h) of the description of A in the definition “income allocation” in subsection 94.3(1) of the Act, as enacted by subsection (1), is to be read as follows:

(h) the expression “controlled foreign affiliate” in paragraph (a) of the definition “exempt interest” in subsection 94.1(1) referred to a controlled foreign affiliate of the particular taxpayer and not to a controlled foreign affiliate of the non-resident entity,

(p) for taxation years that begin on or before July 18, 2005 (where sections 94.1 to 94.4 of the Act, as enacted by subsection (1), apply to the taxpayer for the taxation year), subparagraphs 94.3(2)(b)(v) to (viii) of the Act, as enacted by subsection (1), are to be read as follows:

(v) subsection (3)

(A) applied for a taxation year (referred to in this subparagraph as the “preceding taxation year”) that ended before the particular taxation year of the taxpayer in respect of the particular participating interest, and

(B) did not apply for a taxation year of the taxpayer that was after the preceding taxation year and before the particular taxation year in respect of the particular participating interest, or

(vi) subsection 94.2(9) applies to the taxpayer for the particular taxation year in respect of the particular participating interest.”

That Bill C-33, in Clause 19, be amended by replacing line 20 on page 159 with the following:

“of a taxpayer, that begin after 2006, except that they also apply to a taxation year of a foreign affiliate of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the foreign affiliate.”

That Bill C-33, in Clause 20, be amended by

(a) replacing line 9 on page 161 with the following:

“partnership that begins after 2006 (or, where sections 94.1 to 94.4 apply to a taxation year of the partnership that begins before 2007, that ends in a taxation year of the partnership that begins on or after the first day of the first taxation year of the partnership to which sections 94.1 to 94.4 apply),”

(b) replacing line 39 on page 164 with the following:

“periods that begin after 2006, except that those subsections also apply to a fiscal period of a partnership that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that fiscal period of the partnership.”

(c) replacing line 7 on page 165 with the following:

“(b) before 2007 (or, where sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to a fiscal period of the partnership that begins before 2007, before the first day of the first fiscal period of the partnership to which sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply), to be read without refer-”

That Bill C-33, in Clause 21, be amended by replacing line 30 on page 165 with the following:

“2006, except that that subsection also applies to dispositions of a taxpayer that occur in a taxation year of the taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 22, be amended by replacing line 10 on page 166 with the following:

“that begin after 2006, except that that subsection also applies to a fiscal period of a partnership that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that fiscal period of the partnership.”

That Bill C-33, in Clause 23, be amended by

(a) replacing lines 17 and 18 on page 166 with the following:

“that paragraph read in its application to taxation years that began before 2007 or, where sections 94.1 to 94.4 apply to a taxation year of a taxpayer that begins before 2007, as that paragraph read in its application to taxation years of the taxpayer that began before the first day of the first such taxation year) or paragraph”

(b) replacing line 13 on page 169 with the following:

“trust taxation years that begin after 2006. Subsection (1) also applies to a taxation year of a trust that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the trust.”

That Bill C-33, in Clause 24, be amended by replacing lines 13 to 17 on page 170 with the following:

“(3) Subsection (1) applies to taxation years that begin after 2006, except that that subsection also applies to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.

(4) Subsection (2) applies to distributions that occur in taxation years that begin after 2006, except that that subsection also applies to distributions that occur in a taxation year of the taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 25, be amended by replacing line 28 on page 170 with the following:

“2006, except that that subsection also applies to dispositions that occur in a taxation year of the taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 26, be amended by

(a) replacing line 14 on page 171 with the following:

“trust that began before 2007 (or, where sections 94.1 to 94.4 apply to a taxation year of the trust that begins before 2007, if that time is in a taxation year of the trust that began before the first day of the first such taxation year to which those sections apply), except in respect”

(b) replacing line 15 on page 172 with the following:

“taxation years that begin after 2006. Subsections (1) and (2) also apply to trust taxation years that begin before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the trust. Subsec-”

(c) replacing line 4 on page 173 with the following:

“after 2006 (or, where section 94 of the Act, as enacted by subsection 17(1), applies to a taxation year of the trust that begins before 2007, on or after the first day of the first such taxation year to which that section applies), whether an interest in a trust has”

That Bill C-33, in Clause 28, be amended by replacing line 26 on page 173 with the following:

“that begin after 2006, except that that subsection also applies to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 31, be amended by replacing line 15 on page 175 with the following:

“tion years that begin after 2006, except that those subsections also apply to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.”

That Bill C-33, in Clause 33, be amended by replacing line 10 on page 176 with the following:

“tion that, after 2006 (or, if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to a taxation year of the corporation that begins before 2007, on or after the first day of the first such taxation year), becomes or ceases to be”

That Bill C-33, in Clause 34, be amended by replacing line 18 on page 176 with the following:

“(2) Subsection (1) applies after 2006, except that, if section 94 of the Act, as enacted by subsection 17(1), applies to a taxation year of a taxpayer that begins before 2007, subsection (1) applies on or after the first day of the first such taxation year of the taxpayer to which that section 94 applies.”

That Bill C-33, in Clause 35, be amended by replacing line 2 on page 177 with the following:

“ments made after 2006, except that, if section 94 of the Act, as enacted by subsection 17(1), applies to a taxation year of a taxpayer that begins before 2007, subsection (1) applies to assessments made on or after the first day of the first such taxation year of the taxpayer to which that section 94 applies.”

That Bill C-33, in Clause 39, be amended by replacing line 36 on page 181 to line 3 on page 182 with the following:

“(2) Subsection (1) applies to trust taxation years that begin after 2006, except that

(a) that subsection also applies to a trust taxation year beginning before 2007 if section 94 of the Act, as enacted by subsection 17(1), applies to that taxation year of the trust; and

(b) an election referred to in subsection 216(4.1) of the Act, as enacted by subsection (1), is deemed to have been filed with the Minister of National Revenue on a timely basis if it is filed with the Minister of National Revenue on or before the trust’s filing-due date for the taxation year of the trust that includes the day on which this Act is assented to.”

That Bill C-33, in Clause 40, be amended by replacing line 12 on page 184 with the following:

“(i) an exempt foreign trust (as defined in subsection 94(1)),”

That Bill C-33, in Clause 44, be amended by replacing lines 40 and 41 on page 193 with the following:

“(B) is approved by the Minister for the purpose of section 146 or”

That Bill C-33, in Clause 44, be amended by replacing lines 15 to 18 on page 194 with the following:

“(10) Subsections (2) to (4), (6) and (7) apply to taxation years that begin after 2006, except that those subsections also apply to a taxation year of a taxpayer that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that taxation year of the taxpayer.

(11) Subsection (5) applies to fiscal periods that begin after 2006, except that that subsection also applies to a fiscal period of a partnership that begins before 2007 if sections 94.1 to 94.4 of the Act, as enacted by subsection 18(1), apply to that fiscal period of the partnership.”

That Bill C-33, in Clause 71, be amended by

(a) replacing line 9 on page 233 with the following:

“(b) individuals with whom the taxpayer does”

(b) replacing, in the French version, line 27 on page 240 with the following:

“et où des contribuables dans lesquels un ou”

(c) replacing, in the French version, line 37 on page 240 with the following:

“partie de la partie attribuable qui serait par ailleurs”

(d) replacing, in the English version, line 47 on page 240 with the following:

“taxation year by the taxpayer, except for the”

(e) replacing, in the English version, line 5 on page 241 with the following:

“joint election with the taxpayer;”

(f) adding after line 5 on page 241 the following:

“(c.1) if paragraph (b) applies to deem consideration to be received or receivable in a taxation year by the taxpayer and the consideration is actually received or receivable by another taxpayer – referred to in that paragraph – that is a corporation, partnership or trust, that consideration is deemed to have been received by the corporation, partnership or trust, as the case may be, as an agent of the taxpayer if it is transferred to taxpayer within 180 days from the date of receipt; and”

(g) replacing line 24 on page 241 with the following:

“property under paragraph 3(a).”

That Bill C-33, in Clause 86, be amended by

(a) replacing lines 17 and 18 on page 266 with the following:

“after the taxpayer’s adjustment time,”

(b) replacing, in the French version, line 8 on page 268 with the following:

“tion effectuée avant le moment de la”

(c) replacing, in the French version, line 28 on page 268 with the following:

“faveur d’une société, sauf si, à la fois :”

(d) replacing lines 26 to 31 on page 268 with the following:

“capital property, before June 7, 2007 and in a taxation year of the corporation ending after February 27, 2000, to a person with whom the corporation was dealing at arm’s length at the time of that disposition by the corporation.”

That Bill C-33, in Clause 117, be amended by

(a) replacing lines 7 to 38 on page 324 with the following:

“B is the amount determined by the formula

0.225% × (D - $10 million)

where

D is

(a) if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the preceding taxation year,

(b) if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the particular taxation year, or

(c) if, in the particular taxation year, the corporation is associated with one or more particular corporations, the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation or of any of the particular corporationsfor its last taxation year that ended in the preceding calendar year.”

(b) replacing lines 41 and 42 on page 324 with the following:

“(4) Subsection (2) applies to taxation years that begin after December 20, 2002, except that, in its application to a corporation described in subsection 181.1(3) for taxation years of the corporation that began before this Act is assented to, the description of B in subsection 125(5.1) of the Act, as enacted by subsection (2), shall be read as follows:

B is

(a) if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the amount that would, but for subsections 181.1(2) and (4), be the corporation’s tax payable under Part I.3 for the preceding taxation year,

(b) if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the amount that would, but for subsections 181.1(2) and (4), be the corporation’s tax payable under Part I.3 for the particular taxation year, and

(c) if, in the particular taxation year, the corporation is associated with one or more particular corporations, the amount determined by the formula

0.225% × (D - E)

where

D is the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation or of any of the particular corporations for its last taxation year that ended in the preceding calendar year, and

E is $10 million.”

That Bill C-33, in Clause 123, be amended by replacing, in the English version, lines 10 to 12 on page 338 with the following:

“amounts each of which is the eligible amount of a monetary contribution that is referred to in the Canada Elections Act and that is made by the taxpayer”

That Bill C-33, in Clause 140, be amended by replacing, in the French version, line 30 on page 365 with the following:

“de celle des sommes suivantes qui est ap-”

 

By unanimous consent, it was agreed, — That all clauses so amended be adopted.

 

By unanimous consent, it was agreed, — That all clauses that were not amended be adopted.

 

Schedule 1 carried.

 

The Title carried.

 

The Bill, as amended, carried.

 

ORDERED, — That the Chair report the Bill, as amended, to the House.

 

ORDERED, — That Bill C-33, as amended, be reprinted for the use of the House at report stage.

 

At 11:49 a.m., the sitting was suspended.

At 11:52 a.m., the sitting resumed in camera.

 
The Committee proceeded to the consideration of matters related to Committee business.
 

At 1:15 p.m., the Committee adjourned to the call of the Chair.

 



Elizabeth B. Kingston
Clerk of the Committee

 
 
2007/06/14 2:21 p.m.