I-3 - Taxation Act

Section 175.1 Disposition versions

2023-09-26

175.1. (1)  Notwithstanding any other provision of this Act, a taxpayer shall not, in computing the taxpayer’s income for a taxation year from a business or property other than income from a business computed in accordance with the method authorized by section 194, make any deduction in respect of an outlay or expense to the extent that it can reasonably be regarded as having been made or incurred

(a)  as consideration for services to be rendered after the end of the year;

(b)  as consideration for insurance in respect of a period after the end of the year, other than, where the taxpayer is an insurer, consideration for reinsurance;

(c)  as, or in lieu of, full or partial payment of interest, tax or taxes, other than taxes payable by an insurer in relation to the insurance premiums of a non-cancellable or guaranteed renewable accident and sickness insurance policy or of a life insurance policy other than a group term life insurance policy that provides coverage for a period of 12 months or less, rent or royalty in respect of a period that is after the end of the year; or

(d)  as consideration, subject to sections 869.4 to 869.7, for a “designated employee benefit” (as defined in section 869.1) required to be provided after the end of the year (other than consideration payable in the year, to a corporation that is licensed to provide insurance, for coverage in respect of the year).

(2)  The portion of any outlay or expense, other than an outlay or expense of a corporation, partnership or trust as, or in lieu of, full or partial payment of interest, that, but for subsection 1, would have been deductible in computing a taxpayer’s income for a taxation year is deductible in computing the taxpayer’s income for the subsequent taxation year to which it can reasonably be considered to relate.

(3)  For the purposes of subsection 1, an outlay or expense is deemed not to include a payment that is referred to in paragraph d or e of subsection 1 of section 222 and that

(a)  is made by the taxpayer to a person or partnership with which the taxpayer deals at arm’s length; and

(b)  is not an expenditure in respect of scientific research and experimental development related to a business of the taxpayer and undertaken in Canada on behalf of the taxpayer.

(4)  For the purposes of this section, an outlay or expense made or incurred by an insurer in a taxation year on account of the acquisition of an insurance policy at any time prior to the issuance of the policy is deemed to be an expense incurred as consideration for services rendered in the taxation year in which the policy is issued.

1982, c. 5, s. 47; 1988, c. 18, s. 12; 1990, c. 59, s. 96; 1994, c. 22, s. 111; 1997, c. 3, s. 71; 1997, c. 31, s. 20; 2004, c. 8, s. 31; 2011, c. 6, s. 121; 2015, c. 21, s. 133; 2023, c. 19, s. 19.

2015-10-21

175.1. (1)  Notwithstanding any other provision of this Act, a taxpayer shall not, in computing the taxpayer’s income for a taxation year from a business or property other than income from a business computed in accordance with the method authorized by section 194, make any deduction in respect of an outlay or expense to the extent that it can reasonably be regarded as having been made or incurred

(a)  as consideration for services to be rendered after the end of the year;

(b)  as consideration for insurance in respect of a period after the end of the year, other than, where the taxpayer is an insurer, consideration for reinsurance;

(c)  as, or in lieu of, full or partial payment of interest, tax or taxes other than taxes payable by an insurer in relation to the insurance premiums of a policy referred to in paragraph a or b of subsection 4, rent or royalty in respect of a period that is after the end of the year; or

(d)  as consideration, subject to sections 869.4 to 869.7, for a “designated employee benefit” (as defined in section 869.1) required to be provided after the end of the year (other than consideration payable in the year, to a corporation that is licensed to provide insurance, for coverage in respect of the year).

(2)  The portion of any outlay or expense, other than an outlay or expense of a corporation, partnership or trust as, or in lieu of, full or partial payment of interest, that, but for subsection 1, would have been deductible in computing a taxpayer’s income for a taxation year is deductible in computing the taxpayer’s income for the subsequent taxation year to which it can reasonably be considered to relate.

(3)  For the purposes of subsection 1, an outlay or expense is deemed not to include a payment that is referred to in paragraph d or e of subsection 1 of section 222 and that

(a)  is made by the taxpayer to a person or partnership with which the taxpayer deals at arm’s length; and

(b)  is not an expenditure in respect of scientific research and experimental development related to a business of the taxpayer and undertaken in Canada on behalf of the taxpayer.

(4)  For the purposes of this section, an outlay or expense made or incurred by an insurer on account of the acquisition of an insurance policy, other than the following policies, is deemed to be an expense incurred as consideration for services rendered consistently throughout the period of coverage of the policy:

(a)  a non-cancellable or guaranteed renewable accident and sickness insurance policy; or

(b)  a life insurance policy other than a group term life insurance policy that provides coverage for a period of 12 months or less.

1982, c. 5, s. 47; 1988, c. 18, s. 12; 1990, c. 59, s. 96; 1994, c. 22, s. 111; 1997, c. 3, s. 71; 1997, c. 31, s. 20; 2004, c. 8, s. 31; 2011, c. 6, s. 121; 2015, c. 21, s. 133.

2011-06-06

175.1. (1)  Notwithstanding any other provision of this Act, a taxpayer shall not, in computing the taxpayer’s income for a taxation year from a business or property other than income from a business computed in accordance with the method authorized by section 194, make any deduction in respect of an outlay or expense to the extent that it can reasonably be regarded as having been made or incurred

(a)  as consideration for services to be rendered after the end of the year;

(b)  as consideration for insurance in respect of a period after the end of the year, other than, where the taxpayer is an insurer, consideration for reinsurance;

(c)  as, or in lieu of, full or partial payment of interest, tax or taxes other than taxes payable by an insurer in relation to the insurance premiums of a policy referred to in paragraph a or b of subsection 4, rent or royalty in respect of a period that is after the end of the year; or

(d)  as consideration, subject to sections 869.4 to 869.7, for a “designated employee benefit” (as defined in section 869.1) required to be provided after the end of the year (other than consideration payable in the year, to a corporation that is licensed to provide insurance, for coverage in respect of the year).

(2)  The portion of any outlay or expense, other than an outlay or expense of a corporation, partnership or trust as, or in lieu of, full or partial payment of interest, that, but for subsection 1, would have been deductible in computing a taxpayer’s income for a taxation year is deductible in computing the taxpayer’s income for the subsequent taxation year to which it can reasonably be considered to relate.

(3)  For the purposes of subsection 1, an outlay or expense is deemed not to include a payment that is referred to in subsection 1 of section 222 by reason of the fact that it is a payment to which subsection 1 of section 222 first refers that is described in paragraph b of section 222.1, or is a payment to which that subsection 1 then refers, and that

(a)  is made by the taxpayer to a person or partnership with which the taxpayer deals at arm’s length; and

(b)  is not an expenditure in respect of scientific research and experimental development related to a business of the taxpayer and undertaken in Canada on behalf of the taxpayer.

(4)  For the purposes of this section, an outlay or expense made or incurred by an insurer on account of the acquisition of an insurance policy, other than the following policies, is deemed to be an expense incurred as consideration for services rendered consistently throughout the period of coverage of the policy:

(a)  a non-cancellable or guaranteed renewable accident and sickness insurance policy; or

(b)  a life insurance policy other than a group term life insurance policy that provides coverage for a period of 12 months or less.

1982, c. 5, s. 47; 1988, c. 18, s. 12; 1990, c. 59, s. 96; 1994, c. 22, s. 111; 1997, c. 3, s. 71; 1997, c. 31, s. 20; 2004, c. 8, s. 31; 2011, c. 6, s. 121.

2006-03-01

175.1. (1)  Notwithstanding any other provision of this Act, a taxpayer shall not, in computing the taxpayer’s income for a taxation year from a business or property other than income from a business computed in accordance with the method authorized by section 194, make any deduction in respect of an outlay or expense to the extent that it can reasonably be regarded as having been made or incurred

(a)  as consideration for services to be rendered after the end of the year;

(b)  as consideration for insurance in respect of a period after the end of the year, other than, where the taxpayer is an insurer, consideration for reinsurance; or

(c)  as, or in lieu of, full or partial payment of interest, tax or taxes other than taxes payable by an insurer in relation to the insurance premiums of a policy referred to in paragraph a or b of subsection 4, rent or royalty in respect of a period that is after the end of the year.

(2)  The portion of any outlay or expense, other than an outlay or expense of a corporation, partnership or trust as, or in lieu of, full or partial payment of interest, that, but for subsection 1, would have been deductible in computing a taxpayer’s income for a taxation year is deductible in computing the taxpayer’s income for the subsequent taxation year to which it can reasonably be considered to relate.

(3)  For the purposes of subsection 1, an outlay or expense is deemed not to include a payment that is referred to in subsection 1 of section 222 by reason of the fact that it is a payment to which subsection 1 of section 222 first refers that is described in paragraph b of section 222.1, or is a payment to which that subsection 1 then refers, and that

(a)  is made by the taxpayer to a person or partnership with which the taxpayer deals at arm’s length; and

(b)  is not an expenditure in respect of scientific research and experimental development related to a business of the taxpayer and undertaken in Canada on behalf of the taxpayer.

(4)  For the purposes of this section, an outlay or expense made or incurred by an insurer on account of the acquisition of an insurance policy, other than the following policies, is deemed to be an expense incurred as consideration for services rendered consistently throughout the period of coverage of the policy:

(a)  a non-cancellable or guaranteed renewable accident and sickness insurance policy; or

(b)  a life insurance policy other than a group term life insurance policy that provides coverage for a period of 12 months or less.

1982, c. 5, s. 47; 1988, c. 18, s. 12; 1990, c. 59, s. 96; 1994, c. 22, s. 111; 1997, c. 3, s. 71; 1997, c. 31, s. 20; 2004, c. 8, s. 31.