I-3 - Taxation Act

Section 21.0.5 Disposition versions

2020-09-24

21.0.5. In this chapter,

“beneficiary” has the meaning assigned by section 21.0.1;

“equity” has the meaning that would be assigned by the first paragraph of section 1129.70 if the definition of that expression were read without reference to its paragraph e;

“equity value” has the meaning assigned by the first paragraph of section 1129.70;

“fixed interest”, at a particular time of a person in a trust, means an interest of the person as a beneficiary (determined without reference to section 7.11.1) under the trust provided that no part of the income or capital of the trust to be distributed at any time in respect of any interest in the trust depends on the exercise by any person of, or the failure by any person to exercise, a power to appoint, other than a power to appoint in respect of which it is reasonable to conclude that

(a)  the power is consistent with normal commercial practice;

(b)  the power is consistent with terms that would be acceptable to beneficiaries under the trust that would be dealing with each other at arm’s length; and

(c)  the exercise of, or failure to exercise, the power will not materially affect the value of an interest as a beneficiary under the trust relative to the value of other such interests as a beneficiary under the trust;

“investment fund”, at a particular time, means a trust, if

(a)  at all times throughout the period that begins at the later of 21 March 2013 and the end of the calendar year in which it is created and that ends at the particular time, the trust has a class of units outstanding that would comply with the conditions prescribed for the purposes of section 1120 if section 1120R1 of the Regulation respecting the Taxation Act (chapter I-3, r. 1) were read without its paragraph b; and

(b)  at all times throughout the period that begins at the later of 21 March 2013 and the date on which it was created and that ends at the particular time, the trust

i.  is resident in Canada,

ii.  has no beneficiaries who have, for any reason, the right to receive directly from the trust an amount from the income or capital of the trust, other than beneficiaries whose interests as beneficiaries under the trust are fixed interests described by reference to units of the trust,

iii.  follows a reasonable policy of investment diversification,

iv.  limits its undertaking to the investing of its funds in property,

v.  does not alone, or as a member of a group of persons, control a corporation, and

vi.  does not hold

(1)  property that the trust, or a person with which the trust does not deal at arm’s length, uses in carrying on a business,

(2)  immovable property or a real right in an immovable property,

(3)  Canadian resource property, foreign resource property or a right in such property, or

(4)  more than 20% of the securities of any class of securities of a person (other than an investment fund or a mutual fund corporation that would meet the conditions of this paragraph, other than that of subparagraph ii, if it were a trust), unless at the particular time the securities (other than liabilities) of the person held by the trust have a total fair market value that does not exceed 10% of the equity value of the person and, at that time, the liabilities of the person held by the trust have a total fair market value that does not exceed 10% of the value of all of the liabilities of the person;

“majority-interest beneficiary” has the meaning that would be assigned by section 21.0.1 if the definition of that expression in that section were read without reference to “, if any,”;

“majority-interest group of beneficiaries” has the meaning assigned by section 21.0.1;

“majority-interest group of partners” has the meaning assigned by section 21.0.1;

“person” includes a partnership;

“specified right”, held at a particular time by a person in respect of a trust, means a right under a contract or otherwise, to acquire, either immediately or in the future and either absolutely or contingently, equity of the trust, or to cause the trust to redeem or cancel equity of the trust, unless the right is not exercisable at that time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual;

“subsidiary”, of a particular person at a particular time, means a corporation, partnership or trust (in this definition referred to as the “subject entity”) where

(a)  the particular person holds at that time property

i.  that is equity of the subject entity, or

ii.  that derives all or part of its fair market value, directly or indirectly, from equity of the subject entity; and

(b)  the total of the following amounts is at that time equal to more than 50% of the equity value of the subject entity:

i.  each amount that is the fair market value at that time of equity of the subject entity that is held at that time by the particular person or a person with whom the particular person is affiliated, and

ii.  each amount (other than an amount described in subparagraph i) that is the portion of the fair market value at that time—derived directly or indirectly from equity of the subject entity—of a property that is held at that time by the particular person or a person with whom the particular person is affiliated.

2017, c. 1, s. 72; 2017, c. 29, s. 23; 2020, c. 16, s. 29.

2017-12-07

21.0.5. In this chapter,

“beneficiary” has the meaning assigned by section 21.0.1;

“equity” has the meaning that would be assigned by the first paragraph of section 1129.70 if the definition of that expression were read without reference to its paragraph e;

“equity value” has the meaning assigned by the first paragraph of section 1129.70;

“fixed interest”, at a particular time of a person in a trust, means an interest of the person as a beneficiary (determined without reference to section 7.11.1) under the trust provided that no part of the income or capital of the trust to be distributed at any time in respect of any interest in the trust depends on the exercise by any person of, or the failure by any person to exercise, a power to appoint, other than a power to appoint in respect of which it is reasonable to conclude that

(a)  the power is consistent with normal commercial practice;

(b)  the power is consistent with terms that would be acceptable to beneficiaries under the trust that would be dealing with each other at arm’s length; and

(c)  the exercise of, or failure to exercise, the power will not materially affect the value of an interest as a beneficiary under the trust relative to the value of other such interests as a beneficiary under the trust;

“investment fund”, at a particular time, means a trust, if

(a)  at all times throughout the period that begins at the later of 21 March 2013 and the end of the calendar year in which it is created and that ends at the particular time, the trust has a class of units outstanding that would comply with the conditions prescribed for the purposes of section 1120 if section 1120R1 of the Regulation respecting the Taxation Act (chapter I-3, r. 1) were read without its paragraph b; and

(b)  at all times throughout the period that begins at the later of 21 March 2013 and the date on which it was created and that ends at the particular time, the trust

i.  is resident in Canada,

ii.  has no beneficiaries who have, for any reason, the right to receive directly from the trust an amount from the income or capital of the trust, other than beneficiaries whose interests as beneficiaries under the trust are fixed interests described by reference to units of the trust,

iii.  follows a reasonable policy of investment diversification,

iv.  limits its undertaking to the investing of its funds in property,

v.  does not alone, or as a member of a group of persons, control a corporation, and

vi.  does not hold

(1)  property that the trust, or a person with which the trust does not deal at arm’s length, uses in carrying on a business,

(2)  immovable or real property, a real right in an immovable property or an interest in real property,

(3)  Canadian resource property, foreign resource property, or a right or interest in Canadian resource property or foreign resource property, or

(4)  more than 20% of the securities of any class of securities of a person (other than an investment fund or a mutual fund corporation that would meet the conditions of this paragraph, other than that of subparagraph ii, if it were a trust), unless at the particular time the securities (other than liabilities) of the person held by the trust have a total fair market value that does not exceed 10% of the equity value of the person and, at that time, the liabilities of the person held by the trust have a total fair market value that does not exceed 10% of the value of all of the liabilities of the person;

“majority-interest beneficiary” has the meaning that would be assigned by section 21.0.1 if the definition of that expression in that section were read without reference to “, if any,”;

“majority-interest group of beneficiaries” has the meaning assigned by section 21.0.1;

“majority-interest group of partners” has the meaning assigned by section 21.0.1;

“person” includes a partnership;

“specified right”, held at a particular time by a person in respect of a trust, means a right under a contract or otherwise, to acquire, either immediately or in the future and either absolutely or contingently, equity of the trust, or to cause the trust to redeem or cancel equity of the trust, unless the right is not exercisable at that time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual;

“subsidiary”, of a particular person at a particular time, means a corporation, partnership or trust (in this definition referred to as the “subject entity”) where

(a)  the particular person holds at that time property

i.  that is equity of the subject entity, or

ii.  that derives all or part of its fair market value, directly or indirectly, from equity of the subject entity; and

(b)  the total of the following amounts is at that time equal to more than 50% of the equity value of the subject entity:

i.  each amount that is the fair market value at that time of equity of the subject entity that is held at that time by the particular person or a person with whom the particular person is affiliated, and

ii.  each amount (other than an amount described in subparagraph i) that is the portion of the fair market value at that time—derived directly or indirectly from equity of the subject entity—of a property that is held at that time by the particular person or a person with whom the particular person is affiliated.

2017, c. 1, s. 72; 2017, c. 29, s. 23.

2017-02-08

21.0.5. In this chapter,

“beneficiary” has the meaning assigned by section 21.0.1;

“equity” has the meaning that would be assigned by the first paragraph of section 1129.70 if the definition of that expression were read without reference to its paragraph e;

“equity value” has the meaning assigned by the first paragraph of section 1129.70;

“majority-interest beneficiary” has the meaning assigned by section 21.0.1;

“majority-interest group of beneficiaries” has the meaning assigned by section 21.0.1;

“majority-interest group of partners” has the meaning assigned by section 21.0.1;

“person” includes a partnership;

“specified right”, held at a particular time by a person in respect of a trust, means a right under a contract or otherwise, to acquire, either immediately or in the future and either absolutely or contingently, equity of the trust, or to cause the trust to redeem or cancel equity of the trust, unless the right is not exercisable at that time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual;

“subsidiary”, of a particular person at a particular time, means a corporation, partnership or trust (in this definition referred to as the “subject entity”) where

(a)  the particular person holds at that time property

i.  that is equity of the subject entity, or

ii.  that derives all or part of its fair market value, directly or indirectly, from equity of the subject entity; and

(b)  the total of the following amounts is at that time equal to more than 50% of the equity value of the subject entity:

i.  each amount that is the fair market value at that time of equity of the subject entity that is held at that time by the particular person or a person with whom the particular person is affiliated, and

ii.  each amount (other than an amount described in subparagraph i) that is the portion of the fair market value at that time—derived directly or indirectly from equity of the subject entity—of a property that is held at that time by the particular person or a person with whom the particular person is affiliated.

2017, c. 1, s. 72.