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I-3 - Taxation Act

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2019-06-19 Show full text at this date

593. In this chapter and Chapter VI.2,

“arm’s length transfer” at any time by a person or partnership (in this definition referred to as the “transferor”) means a transfer or loan (which transfer or loan is referred to in this definition as the “transfer”) of property (other than restricted property) that is made at that time (in this definition referred to as the “transfer time”) by the transferor to another person or partnership (in this definition referred to as the “recipient”) where

(a) it is reasonable to conclude that none of the reasons (with reference to all the circumstances including the terms of a trust, an intention, the laws of a country or the existence of an agreement, a memorandum, a letter of wishes or any other arrangement) for the transfer is the acquisition at any time by any person or partnership of an interest as a beneficiary under a trust that is not resident in Canada; and

(b) the transfer is

i. a payment of interest, of dividends, of rent, of royalties or of any other return on investment, or any substitute for such a return on investment, in respect of a particular property held by the recipient, if the amount of the payment is not more than the amount that the transferor would have paid if the transferor dealt at arm’s length with the recipient,

ii. a payment made by a corporation on a reduction of the paid-up capital in respect of shares of a class of its capital stock held by the recipient, if the amount of the payment is not more than the lesser of the amount of the reduction in the paid-up capital and the consideration for which the shares were issued,

iii. a transfer in exchange for which the recipient transfers or loans property to the transferor, or becomes obligated to transfer or loan property to the transferor, and for which it is reasonable to conclude

(1) having regard only to the transfer and the exchange, that the transferor would have been willing to make the transfer if the transferor dealt at arm’s length with the recipient, and

(2) that the terms and conditions, and circumstances, under which the transfer was made would have been acceptable to the transferor if the transferor dealt at arm’s length with the recipient,

iv. a transfer made in satisfaction of an obligation referred to in subparagraph iii and for which it is reasonable to conclude

(1) having regard only to the transfer and the obligation, that the transferor would have been willing to make the transfer if the transferor dealt at arm’s length with the recipient, and

(2) that the terms and conditions, and circumstances, under which the transfer was made would have been acceptable to the transferor if the transferor dealt at arm’s length with the recipient,

v. a payment of an amount owing by the transferor under a written agreement the terms and conditions of which, when entered into, were terms and conditions that, having regard only to the amount owing and the agreement, would have been acceptable to the transferor if the transferor dealt at arm’s length with the recipient,

vi. a payment made before 1 January 2002 to a trust, to a corporation controlled by a trust or to a partnership of which a trust is a majority-interest partner in repayment of or otherwise in respect of a loan made by a trust, corporation or partnership to the transferor, or

vii. a payment made after 31 December 2001 to a trust, to a corporation controlled by the trust or to a partnership of which the trust is a majority-interest partner, in repayment of or otherwise in respect of a particular loan made by the trust, corporation or partnership to the transferor and either

(1) the payment is made before 1 January 2011 and they would have been willing to enter into the particular loan if they dealt at arm’s length with each other, or

(2) the payment is made before 1 January 2005 in accordance with fixed repayment terms agreed to before 23 June 2000;

“beneficiary” under a trust includes

(a) a person or partnership that is beneficially interested in the trust; and

(b) a person or partnership that would be beneficially interested in the trust if subparagraph ii of subparagraph b of the first paragraph of section 7.11.1 were read as follows:

“ii. because of the terms or conditions of the particular trust or any agreement in respect of the particular trust at the particular time (including the terms or conditions of a share, or any agreement in respect of a share, of the capital stock of a corporation that is beneficially interested in the particular trust), the particular person or partnership becomes (or could become on the exercise of any discretion by any person or partnership), directly or indirectly, entitled to any amount derived, directly or indirectly, from the income or capital of the particular trust or might, because of the exercise of any discretion by any person or partnership, become beneficially interested in the particular trust at the particular time or at a later time, and”;

“closely held corporation” at any time means any corporation, other than a corporation in respect of which

(a) there is at least one class of shares of its capital stock that consists of shares prescribed for the purposes of paragraph d of subsection 1 of section 110 of the Income Tax Act (R.S.C. 1985, c. 1, (5th Suppl.));

(b) it is reasonable to conclude that at that time, in respect of each class of shares described in paragraph a, shares of the class are held by at least 150 shareholders each of whom holds shares of the class that have a total fair market value of at least $500; and

(c) it is reasonable to conclude that at that time in no case does a particular shareholder (or a particular shareholder together with one or more other shareholders with whom the particular shareholder does not deal at arm’s length) hold shares of the corporation

i. that would give the particular shareholder (or the group of other shareholders not dealing with each other at arm’s length and of which the particular shareholder is a member) 10% or more of the votes that could be cast under any circumstance at an annual meeting of shareholders of the corporation if the meeting were held at that time, or

ii. that have a fair market value of 10% or more of the fair market value of all of the issued and outstanding shares of the corporation;

“connected contributor” to a trust at any time means a contributor to the trust at that time, other than a person all of whose contributions to the trust made at or before that time were made at a non-resident time of the person;

“contribution” to a trust by a particular person or partnership means

(a) a transfer or loan (other than an arm’s length transfer) of property to the trust by the particular person or partnership;

(b) where a particular transfer or loan (other than an arm’s length transfer) of property is made by the particular person or partnership as part of a series of transactions that includes another transfer or loan (other than an arm’s length transfer) of property to the trust by another person or partnership, that other transfer or loan to the extent that it can reasonably be considered to have been made in respect of the particular transfer or loan; or

(c) where the particular person or partnership undertakes to make a transfer or loan (other than a transfer or loan that would, if it were made, be an arm’s length transfer) of property as part of a series of transactions that includes another transfer or loan (other than an arm’s length transfer) of property to the trust by another person or partnership, that other transfer or loan to the extent that it can reasonably be considered to have been made in respect of the undertaking;

“contributor” to a trust at any time means a person, including a person that has ceased to exist, that is not an exempt person and that, at or before that time, has made a contribution to the trust;

“electing contributor” to a trust at any time means a resident contributor, to the trust, who has made a valid election under the definition of “electing contributor” in subsection 1 of section 94 of the Income Tax Act to have subsection 16 of that section 94 apply in respect of the contributor and the trust for a taxation year of the contributor that includes that time or that ends before that time and for any subsequent taxation year;

“electing trust” in respect of a particular taxation year means a trust that

(a) holds at any time in the particular taxation year, or in a prior taxation year throughout which it was deemed, for the purpose of computing its income, to be resident in Canada under paragraph a of section 595, property that is at that time included in its non-resident portion; and

(b) has made a valid election under paragraph b of the definition of “electing trust” in subsection 1 of section 94 of the Income Tax Act;

“exempt foreign trust” at a particular time means either a prescribed trust at the particular time or a trust that is not resident in Canada and that

(a) is a trust in respect of which the following conditions are met:

i. each beneficiary under the trust at the particular time is

(1) an individual (in this paragraph referred to as an “infirm beneficiary”) who, because of mental or physical infirmity, was, at the time that the trust was created, dependent on an individual who is a contributor to the trust or on an individual related to such a contributor, or

(2) a person who is entitled, only after the particular time, to receive or otherwise obtain the enjoyment of all or part of the trust’s income or capital,

ii. at the particular time there is at least one infirm beneficiary under the trust who suffers from a mental or physical infirmity that causes the beneficiary to be dependent on a person,

iii. each infirm beneficiary is, at all times that the infirm beneficiary is a beneficiary under the trust during the trust’s taxation year that includes the particular time, not resident in Canada, and

iv. each contribution to the trust made at or before the particular time can reasonably be considered to have been, at the time that the contribution was made, made to provide for the maintenance of an infirm beneficiary during the expected period of the beneficiary’s infirmity;

(b) is a trust in respect of which the following conditions are met:

i. the trust was created because of the breakdown of a marriage of two particular individuals to provide for the maintenance of a beneficiary under the trust who was, during that marriage,

(1) a child of both of those particular individuals (in this paragraph referred to as a “child beneficiary”), or

(2) one of those particular individuals (in this paragraph referred to as the “adult beneficiary”),

ii. each beneficiary under the trust at the particular time is

(1) a child beneficiary under 21 years of age,

(2) a child beneficiary under 31 years of age who is enrolled at any time in the trust’s taxation year that includes the particular time at an educational institution that is described in the third paragraph,

(3) the adult beneficiary, or

(4) a person who is entitled, only after the particular time, to receive or otherwise obtain the enjoyment of all or part of the trust’s income or capital,

iii. each beneficiary described in any of subparagraphs 1 to 3 of subparagraph ii is, at all times that the beneficiary is a beneficiary under the trust during the trust’s taxation year that includes the particular time, not resident in Canada, and

iv. each contribution to the trust, at the time that the contribution was made, was

(1) an amount paid by the particular individual other than the adult beneficiary that would be a support amount as defined in section 312.3 if it had been paid by that particular individual directly to the adult beneficiary, or

(2) a contribution made by one of those particular individuals or a person related to one of those particular individuals to provide for the maintenance of a child beneficiary while the child was either under 21 years of age or under 31 years of age and enrolled at an educational institution located outside Canada that is described in the third paragraph;

i. at the particular time the trust is an agency of the United Nations,

ii. at the particular time the trust owns and administers a university described in subparagraph iv of paragraph a of the definition of “qualified donee” in subsection 1 of section 149.1 of the Income Tax Act,

iii. at any time in the trust’s taxation year that includes the particular time or at any time in the preceding calendar year Her Majesty in right of Canada has made a gift to the trust, or

iv. the trust is created under the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992, or any protocol to it that has been ratified by the Government of Canada;

(d) is a trust in respect of which the following conditions are met:

i. throughout the particular period that began at the time the trust was created and ended at the particular time, the trust would not be resident in Canada for the purposes of the Income Tax Act if that Act were read without reference to subsection 1 of section 94 of that Act as that subsection read in its application to a taxation year that includes 31 December 2000,

ii. the trust was created exclusively for charitable purposes and has been operated throughout the particular period described in subparagraph i exclusively for charitable purposes,

iii. if the particular time is more than 24 months after the day on which the trust was created, the trust numbers at the particular time at least 20 persons (other than trusts) each of whom at that time

(1) is a contributor to the trust,

(2) exists, and

(3) deals at arm’s length with at least 19 other contributors to the trust,

iv. the income of the trust (determined in accordance with the laws described in subparagraph v) for each of its taxation years that ends at or before the particular time would, if the income were not distributed and the laws described in subparagraph v did not apply, be subject to an income or profits tax in the country in which it was resident in the taxation year under consideration, and

v. the trust was, for each of its taxation years that ends at or before the particular time, exempt under the laws of the country in which it was resident from the payment of income or profits tax to the government of that country in recognition of the charitable purposes for which the trust is operated;

(e) is governed throughout the trust’s taxation year that includes the particular time by a profit sharing plan, a retirement compensation arrangement or a foreign retirement arrangement;

(f) is a trust that

i. throughout the particular period that began when it was created and ended at the particular time has been operated exclusively for the purpose of administering or providing employee benefits in respect of employees or former employees, and

ii. meets the following conditions throughout the trust’s taxation year that includes the particular time:

(1) the trust is a trust governed by an employee benefit plan or is a trust described in subparagraph a.1 of the third paragraph of section 647,

(2) the trust is maintained for the benefit of natural persons the majority of whom are not resident in Canada, and

(3) no benefits are provided under the trust other than benefits in respect of qualifying services;

(g) is a trust (other than a trust described in subparagraph a.1 of the third paragraph of section 647 or a prescribed trust) that throughout the particular period that began when it was created and ended at the particular time

i. has been resident in a foreign country the laws of which have, throughout the particular period,

(1) imposed an income or profits tax, and

(2) exempted the trust from the payment of all income tax, and all profits tax, to the government of that country in recognition of the purposes for which the trust is operated, and

ii. has been operated exclusively for the purpose of administering or providing pension benefits that are primarily in respect of services rendered in the foreign country by natural persons who were not resident in Canada at the time those services were rendered; or

(h) is a trust (other than a trust that has made a valid election, described in paragraph h of the definition of “exempt foreign trust” in subsection 1 of section 94 of the Income Tax Act, not to be an exempt foreign trust under that paragraph h for the taxation year for which the election is made and for any subsequent taxation year) in respect of which the following conditions are met at the particular time:

i. the only beneficiaries under the trust who for any reason are entitled to receive, at or after the particular time and directly from the trust, an amount from the income or capital of the trust are beneficiaries that hold fixed interests in the trust, and

ii. any of the following requirements are complied with:

(1) there are at least 150 beneficiaries among those described in subparagraph i under the trust each of whose fixed interests in the trust have at the particular time a total fair market value of at least $500,

(2) all fixed interests in the trust are listed on a designated stock exchange and in the 30 days immediately preceding the particular time fixed interests in the trust were traded on a designated stock exchange on at least 10 days,

(3) each outstanding fixed interest in the trust was issued by the trust for consideration that was not less than 90% of the interest’s proportionate share of the net asset value of the trust’s property at the time of its issuance, or was acquired for consideration equal to the fair market value of the interest at the time of its acquisition, or

(4) the trust is governed by a Roth IRA, within the meaning of section 408A of the United States Internal Revenue Code of 1986, as amended from time to time, or by a plan or arrangement created after 21 September 2007 that is subject to that Code and that is described in subclause II of clause D of subparagraph ii of paragraph h of the definition of “exempt foreign trust” in subsection 1 of section 94 of the Income Tax Act;

“exempt person” at any time means

(a) the State, Her Majesty in right of Canada or Her Majesty in right of a province, other than Québec;

(b) a person whose taxable income for the taxation year that includes that time is exempt from tax under this Part in accordance with Book VIII;

i. that was established by or arises under a law of Canada or of a province, and

ii. the principal activities of which at that time are to administer, manage or invest the monies of one or more superannuation or pension funds or plans established under a law of Canada or of a province;

(d) a trust or corporation established by or arising under a law of Canada or of a province in connection with a scheme or program for the compensation of workers injured in an accident arising out of or in the course of their employment;

(e) a trust resident in Canada all the beneficiaries under which are at that time exempt persons;

(f) a Canadian corporation all the shares, or rights to shares, of which are held at that time by exempt persons;

(g) a Canadian corporation without share capital all the property of which is held at that time exclusively for the benefit of exempt persons;

(h) a partnership all the members of which are at that time exempt persons; and

(i) a trust or corporation that is at that time a mutual fund;

“exempt service” means a service rendered at any time by a person or partnership (in this definition referred to as the “service provider”) to, for or on behalf of, another person or partnership (in this definition referred to as the “recipient”) where

(a) the recipient is a trust and the service relates to the administration of the trust; or

(b) the following conditions are met in respect of the service:

i. the service is rendered in the service provider’s capacity at that time as an employee or agent of the recipient,

ii. in exchange for the service, the recipient transfers or loans property or undertakes to transfer or loan property, and

iii. it is reasonable to conclude

(1) having regard only to the service and the exchange, that the service provider would be willing to provide the service if the service provider were dealing at arm’s length with the recipient, and

(2) that the terms, conditions and circumstances under which the service is provided would be acceptable to the service provider if the service provider were dealing at arm’s length with the recipient;

“fixed interest” at any time of a person or partnership in a trust means an interest of the person or partnership as a beneficiary (in this definition, determined without reference to section 7.11.1) under the trust provided that no amount 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 or partnership of, or the failure by any person or partnership to exercise, any discretionary power, other than a discretionary power 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 the beneficiaries under the trust if the beneficiaries were 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 under the trust;

“joint contributor” at any time in respect of a contribution to a trust means, if more than one contributor has made the contribution, each of those contributors that is at that time a resident contributor to the trust;

“mutual fund” at any time means a mutual fund corporation or mutual fund trust (in this definition referred to as the “fund”), but does not include a fund in respect of which statements or representations have been made at or before that time–by the fund, or by a promoter or other representative of the fund, in respect of the acquisition or offering of an interest in the fund–that the taxes under this Act on the income, profit or gains for any taxation year–in respect of property that is held by the fund and that is, or derives its value from, an interest in a trust– are less than, or are expected to be less than, the tax that would have been applicable under this Act if the income, profits or gains from the property had been earned directly by a person who acquires an interest in the fund;

“non-resident portion” of a trust at any time means all property held by the trust to the extent that it is not at that time part of the resident portion of the trust;

“non-resident time” of a person in respect of a contribution to a trust and a particular time means a time (in this definition referred to as the “contribution time”) at which the person made a contribution to a trust that is before the particular time and at which the person was not resident in Canada (or, if the person was not in existence at the contribution time, the person was not resident in Canada at any time in the 18 months before ceasing to exist), if the person was not resident in Canada or not in existence at any time in the period that began 60 months before the contribution time (or, if the person is an individual and the trust arose on and as a consequence of the death of the individual, 18 months before the contribution time) and ends at the earlier of

(a) the time that is 60 months after the contribution time; and

(b) the particular time;

“promoter” in respect of a trust or corporation at any time means

(a) a person or partnership that at or before that time establishes, organizes or substantially reorganizes the undertakings of the trust or corporation, as the case may be; and

(b) for the purposes of the definition of “mutual fund”, a person or partnership described in paragraph a and a person or partnership who in the course of carrying on a business

i. issues or sells, or promotes the issuance, sale or acquisition of, an interest in a mutual fund corporation or mutual fund trust,

ii. acts as an agent or advisor in respect of the issuance or sale, or the promotion of the issuance, sale or acquisition of, an interest in a mutual fund corporation or mutual fund trust, or

iii. accepts, whether as a principal or agent, consideration in respect of an interest in a mutual fund corporation or mutual fund trust;

“qualifying services” means

(a) services that are rendered to an employer by an employee of the employer, provided that the employee was not resident in Canada at any time in the period during which the services were rendered;

(b) services that are rendered to an employer by an employee of the employer, other than

i. services that were rendered primarily in Canada,

ii. services that were rendered primarily in connection with a business carried on by the employer in Canada, or

iii. any combination of services described in subparagraphs i and ii;

(c) services that are rendered in a particular month to an employer by an employee of the employer, provided that the employee

i. was resident in Canada throughout no more than 60 months during the 72-month period that ended at the end of the particular month, and

ii. became a member of, or a beneficiary under, the plan or trust under which benefits in respect of the services may be provided (or a similar plan or trust for which the plan or the trust was substituted) before the end of the month following the month in which the employee became resident in Canada; or

(d) any combination of services that are qualifying services because of any of paragraphs a to c;

“resident beneficiary” under a trust at any time means a person that is, at that time, a beneficiary under the trust other than a successor beneficiary under the trust or an exempt person, if, at that time,

(a) the person is resident in Canada; and

(b) there is a connected contributor to the trust;

“resident contributor” to a trust at any time means a person that is, at that time, resident in Canada and a contributor to the trust, but–if the trust was created before 1 January 1960 by a person who was not resident in Canada when the trust was created–does not include an individual (other than a trust) who has not, after 31 December 1959, made a contribution to the trust;

“resident portion” of a trust at a particular time means all of the trust’s property that is

(a) property in respect of which a contribution has been made at or before the particular time to the trust by a contributor that is at the particular time a resident contributor, or if there is at the particular time a resident beneficiary under the trust a connected contributor, to the trust and, for the purposes of this paragraph, the following rules apply:

i. if property is held by a contributor in common or in partnership immediately before the property is contributed to the trust, it is contributed by the contributor only to the extent that the contributor so held the property, and

ii. if the contribution to the trust is a transfer described in any of paragraphs a, c, e and g of section 594, the property in respect of which the contribution has been made is deemed to be

(1) in respect of a transfer under paragraph a of section 594 to which subparagraph 1 of subparagraph ii of that paragraph a applies, property the fair market value of which has increased because of a transfer or loan described in subparagraph i of that paragraph a, or, in respect of such a transfer to which subparagraph 2 of subparagraph ii of that paragraph a applies, property in respect of which a valid election under subclause II of clause A of subparagraph ii of paragraph a of the definition of “resident portion” in subsection 1 of section 94 of the Income Tax Act has been made,

(2) in respect of a transfer under paragraph c of section 594, property described in subparagraph ii of that paragraph c,

(3) in respect of a transfer under paragraph e of section 594, property acquired as a result of any undertaking including a guarantee, covenant or agreement given by a person or partnership other than the trust to ensure the repayment, in whole or in part, of a loan or other indebtedness incurred by the trust in accordance with that paragraph e, and

(4) in respect of a transfer under paragraph g of section 594, property in respect of which a valid election under clause D of subparagraph ii of paragraph a of the definition of “resident portion” in subsection 1 of section 94 of the Income Tax Act has been made;

(b) property that is acquired, at or before the particular time, by way of indebtedness incurred by the trust (in this paragraph referred to as the “subject property”), if

i. all or part of the indebtedness is secured on property (other than the subject property) that is held in the trust’s resident portion,

ii. it was reasonable to conclude, at the time that the indebtedness was incurred, that the indebtedness would be repaid with recourse to any property (other than the subject property) held at any time in the trust’s resident portion, or

iii. a person resident in Canada or partnership of which a person resident in Canada is a member is obligated, either absolutely or contingently, to effect any undertaking including any guarantee, covenant or agreement given to ensure the repayment, in whole or in part, of the indebtedness, or provided any other financial assistance in respect of the indebtedness;

(c) property to the extent that it is derived, directly or indirectly, in any manner whatever, from property described in any of paragraphs a, b and d, and, without limiting the generality of the foregoing, including property derived from the income (computed without reference to subparagraph f of the first paragraph of section 597.0.14, paragraphs a and b of section 657 and section 657.1) of the trust for a taxation year of the trust that ends at or before the particular time and property in respect of which an amount would be described at the particular time in respect of the trust in the definition of “capital dividend account” in subsection 1 of section 89 of the Income Tax Act if the trust were at that time a corporation; and

(d) property that is at the particular time substituted for property described in any of paragraphs a to c;

“restricted property” of a person or partnership means property that the person or partnership holds and that

(a) is a share (or a right to acquire a share) of the capital stock of a closely held corporation if the share or right, or property for which the share or right was substituted, was at any time acquired by the person or partnership as part of a transaction or series of transactions under which

i. a specified share of the capital stock of a closely held corporation was acquired by any person or partnership in exchange for or as consideration for the disposition of any property or upon the conversion of any property and the cost of the specified share to the person who acquired it was less than the fair market value of the specified share at the time of the acquisition, or

ii. a share (other than a specified share) of the capital stock of a closely held corporation becomes a specified share of the capital stock of the corporation;

(b) is an indebtedness or other obligation, or a right to acquire an indebtedness or other obligation, of a closely held corporation if

i. the indebtedness, obligation or right, or property for which the indebtedness, obligation or right was substituted, became property of the person or partnership as part of a transaction or series of transactions under which

(1) a specified share of the capital stock of a closely held corporation was acquired by any person or partnership in exchange for or as consideration for the disposition of any property or upon the conversion of any property and the cost of the specified share to the person who acquired it was less than the fair market value of the specified share at the time of the acquisition, or

(2) a share (other than a specified share) of the capital stock of a closely held corporation becomes a specified share of the capital stock of the corporation, and

ii. the amount of any payment under the indebtedness, obligation or right (whether the right to the amount is immediate or future, absolute or contingent or conditional on or subject to the exercise of a discretionary power by any person or partnership) is, directly or indirectly, determined primarily by one or more of the following criteria:

(1) the fair market value of, production from or use of any of the property of the closely held corporation,

(2) gains and profits from the disposition of any of the property of the closely held corporation,

(3) income, profits, revenue and cash flow of the closely held corporation, or

(4) any other criterion similar to a criterion referred to in any of subparagraphs 1 to 3; or

i. that the person or partnership acquired as part of a series of transactions described in paragraph a or b in respect of another property, and

ii. the fair market value of which is derived in whole or in part, directly or indirectly, from the other property referred to in subparagraph i;

“specified party” in respect of a particular person at any time means

(a) the particular person’s spouse at that time;

(b) a corporation that at that time

i. is a controlled foreign affiliate of the particular person or the particular person’s spouse, or

ii. would be a controlled foreign affiliate of a partnership, of which the particular person is a majority-interest partner, if the partnership were a person resident in Canada at that time;

(c) a person, or a partnership of which the particular person is a majority-interest partner, for which it is reasonable to conclude that the benefit referred to in subparagraph iv of subparagraph a of the first paragraph of section 597.0.5 was conferred

i. in anticipation of the person becoming after that time a corporation described in paragraph b, or

ii. to avoid or minimize a liability that arose, or that would otherwise have arisen, under this Act with respect to the particular person; or

(d) a corporation in which the particular person, or partnership of which the particular person is a majority-interest partner, is a shareholder if

i. the corporation is at or before that time a beneficiary under a trust, and

ii. the particular person or the partnership is a beneficiary under the trust solely because of the application of paragraph b of the definition of “beneficiary” in respect of the particular person or the partnership and in relation to the corporation;

“specified share” means a share of the capital stock of a corporation other than a share that is a prescribed share for the purposes of paragraph d of subsection 1 of section 110 of the Income Tax Act;

“specified time” in respect of a trust for a taxation year of the trust means

(a) if the trust exists at the end of the taxation year, the time that is the end of that taxation year; and

(b) in any other case, the time in that taxation year that is immediately before the time at which the trust ceases to exist;

“successor beneficiary” at a particular time under a trust means a person that is a beneficiary under the trust solely because of a right of the person to receive all or part of the trust’s income or capital, provided that under that right the person may receive that income or capital only on or after the death after the particular time of an individual who, at the particular time, is alive and

(a) is a contributor to the trust;

(b) is related to (including, for the purposes of this paragraph and paragraph c, an uncle, aunt, niece or nephew of) a contributor to the trust; or

(c) would have been related to a contributor to the trust if every individual who was alive before the particular time were alive at that time;

“tax-liable taxpayer” in respect of a trust at a particular time in a taxation year means

(a) in the case of a taxpayer who is, at the particular time, either a resident contributor to the trust, a resident beneficiary under the trust or an electing contributor under the trust, or a joint contributor in respect of a contribution to the trust, a person (other than a corporation) who is resident in Québec at the end of the taxation year or a corporation that has an establishment in Québec in the taxation year; or

(b) in the case of a taxpayer who is, at the particular time, a connected contributor to the trust, a person (other than a corporation) who was resident in Québec at a time that is before the particular time and at which the person made a contribution to the trust, or a corporation that had an establishment in Québec at a time that is before the particular time and at which the corporation made a contribution to the trust;

“transaction” includes an arrangement or event.

In this chapter, “trust” includes, for greater certainty, a succession.

An educational institution referred to in subparagraph 2 of subparagraph ii of paragraph b of the definition of “exempt foreign trust” in the first paragraph and in subparagraph 2 of subparagraph iv of that paragraph b is an educational institution located outside Canada that

(a) is a university, college or any other institution that provides courses at a post-secondary school level; or

(b) provides courses designed to furnish a person with skills for, or improve a person’s skills in, an occupation.

Chapter V.2 of Title II of Book I applies in relation to an election made under the definition of “electing contributor”, “electing trust”, “exempt foreign trust” and “resident portion” in subsection 1 of section 94 of the Income Tax Act or in relation to an election made before 20 December 2006 under paragraph h of the definition of “exempt foreign trust” in the first paragraph.

1975, c. 22, s. 164; 1984, c. 15, s. 130; 1994, c. 22, s. 209; 1996, c. 39, s. 273; 1997, c. 3, s. 71; 2015, c. 36, s. 28; 2019, c. 14, s. 157.

2015-12-04 Show full text at this date