• 23. (1) Paragraph 233.5(c) of the Act is replaced by the following:

  • (c) if the return is required to be filed under section 233.2 in respect of a trust, at the time of each transaction, if any, entered into by the person or partnership after March 5, 1996 and before June 23, 2000 that gave rise to the requirement to file a return for a taxation year of the trust that ended before 2007 or that affects the information to be reported in the return, it was reasonable to expect that sufficient information would be available to the person or partnership to comply with section 233.2 in respect of each taxation year of the trust that ended before 2007;

  • (c.1) if the return is required to be filed under section 233.2, at the time of each contribution (determined with reference to subsection 233.2(2)) made by the person or partnership after June 22, 2000 that gives rise to the requirement to file the return or that affects the information to be reported in the return, it was reasonable to expect that sufficient information would be available to the person or partnership to comply with section 233.2;

  • (c.2) if the return is required to be filed under section 233.4 by a person or partnership in respect of a corporation that is a controlled foreign affiliate for the purpose of that section of the person or partnership, at the time of each transaction, if any, entered into by the person or partnership after March 5, 1996 that gives rise to the requirement to file the return or that affects the information to be reported in the return, it was reasonable to expect that sufficient information would be available to the person or partnership to comply with section 233.4; and

• (2) Subsection (1) applies to returns in respect of trust taxation years that end after 2006. Subsection (1) also applies to returns in respect of an earlier taxation year of a trust if subsection 94(1) of the Act, as enacted by section 7, applies to that earlier taxation year of the trust.

2001, c. 17Income Tax Amendments Act, 2000

• 24. (1) Paragraph 53(2)(a) of the Income Tax Amendments Act, 2000 is replaced by the following:

  • (a) in respect of transfers that occur after 1999 and before 2007, for the purpose of subsection 73(1) of the Act, as enacted by subsection (1), the residence of a transferee trust shall be determined without reference to section 94 of the Act, as it reads in its application to taxation years that end before 2007;

• (2) Subsection (1) is deemed to have come into force on June 14, 2001.

• 25. (1) Subsection 80(19) of the Act is replaced by the following:

  • (19) Subsections (1) to (4) apply to the 2000 and subsequent taxation years except that, in respect of transfers after 1999 and before 2007, for the purposes of subsection 107(1) of the Act, as amended by this section, the residence of a transferee trust shall be determined without reference to section 94 of the Act, as it read in its application to taxation years that end before 2007.

• (2) Subsection (1) is deemed to have come into force on June 14, 2001.

R.S., c. I-4Income Tax Conventions Interpretation Act

• 26. (1) The Income Tax Conventions Interpretation Act is amended by adding the following after section 4.2:

  Marginal note:Application of section 94 of the Income Tax Act

  4.3 Notwithstanding the provisions of a convention or the Act giving the convention the force of law in Canada, if a trust is deemed by subsection 94(3) of the Income Tax Act to be resident in Canada for a taxation year for the purposes of computing its income, the trust is deemed to be a resident of Canada, and not a resident of the other contracting state, for the purposes of applying the convention

  • (a) in respect of the trust for that taxation year; and

  • (b) in respect of any other person for any period that includes all or part of that taxation year.

• (2) Subsection (1) is deemed to have come into force on March 5, 2010.

C.R.C., c. 945Income Tax Regulations

• 27. (1) Section 202 of the Income Tax Regulations is amended by adding the following after subsection (6):

  • (6.1) A trust that is deemed by subsection 94(3) of the Act to be resident in Canada for a taxation year for the purposes of computing its income, is deemed, in respect of amounts (other than an exempt amount as defined in subsection 94(1) of the Act) paid or credited by it, to be a person resident in Canada for the taxation year for the purposes of subsections (1) and (2).

• (2) Subsection (1) applies to amounts paid or credited after August 27, 2010.

• 28. (1) Section 5909 of the Regulations and the heading before it are repealed.

• (2) Subsection (1) applies to trust taxation years that end after 2006.

PART 2AMENDMENTS IN RESPECT OF FOREIGN AFFILIATES: SURPLUS RULES AND OTHER TECHNICAL AMENDMENTS

R.S., c. 1 (5th Supp.)Income Tax Act

• 29. (1) Paragraph 53(1)(d) of the Income Tax Act is replaced by the following:

  • (d) if the property is a share of the capital stock of a foreign affiliate of the taxpayer, any amount required by section 92 to be added in computing the adjusted cost base to the taxpayer of the share;

• (2) Subsection (1) is deemed to have come into force on December 21, 2002.

• 30. (1) Subparagraph 88(1)(d)(ii) of the Act is replaced by the following:

  • (ii) in no case shall the amount so designated in respect of any such capital property exceed the amount, if any, by which the fair market value of the property at the time the parent last acquired control of the subsidiary exceeds the total of

    • (A) the cost amount to the subsidiary of the property immediately before the winding-up, and

    • (B) the prescribed amount, and

• (2) Subparagraph 88(1)(d)(iii) of the French version of the Act is replaced by the following:

  • (iii) le total des sommes ainsi désignées, relativement à toute immobilisation semblable, ne peut en aucun cas dépasser l’excédent du total déterminé selon le sous-alinéa b)(ii) sur le total des sommes déterminées selon les sous-alinéas (i) et (i.1);

• (3) Section 88 of the Act is amended by adding the following after subsection (1.7):

  • Marginal note:Application of subsection (1.9)

    (1.8) Subsection (1.9) applies if

    • (a) a corporation has made a designation (referred to in this subsection and subsection (1.9) as the “initial designation”) under paragraph (1)(d) in respect of a share of the capital stock of a foreign affiliate of the corporation, or an interest in a partnership that, based on the assumptions contained in paragraph 96(1)(c), owns a share of the capital stock of a foreign affiliate of the corporation, on or before the filing-due date for its return of income under this Part for the taxation year in which a disposition of the share or the partnership interest, as the case may be, occurred in the course of a winding-up referred to in subsection (1) or an amalgamation referred to in subsection 87(11);

    • (b) the corporation made reasonable efforts to determine the foreign affiliate’s tax-free surplus balance (within the meaning assigned by subsection 5905(5.5) of the Income Tax Regulations), in respect of the corporation, that was relevant in the computation of the maximum amount available under subparagraph (1)(d)(ii) to be designated in respect of that disposition; and

    • (c) the corporation amends the initial designation on or before the day that is 10 years after the filing-due date referred to in paragraph (a).

  • Marginal note:Amended designation

    (1.9) If this subsection applies and, in the opinion of the Minister, the circumstances are such that it would be just and equitable to permit the initial designation to be amended, the amended designation under paragraph (1.8)(c) is deemed to have been made on the day on which the initial designation was made and the initial designation is deemed not to have been made.

• (4) Subsections (1) and (2) apply in respect of windings-up that begin, and amalgamations that occur, after February 27, 2004.

• (5) Subsection (3) is deemed to have come into force on December 19, 2009.

• 31. (1) Section 92 of the Act is amended by adding the following after subsection (1):

  • Marginal note:Adjustment for prescribed amount

    (1.1) The prescribed amount shall be added in computing the adjusted cost base of a share of the capital stock of a foreign affiliate of a corporation resident in Canada to

    • (a) another foreign affiliate of the corporation; or

    • (b) a partnership of which another foreign affiliate of the corporation is a member.

• (2) Subsection (1) is deemed to have come into force on December 19, 2009.

• 32. (1) Paragraph 93(1)(b) of the Act is replaced by the following:

  • (b) if subsection 40(3) applies to the disposing corporation or disposing affiliate, as the case may be, in respect of the share, the amount deemed by that subsection to be the gain of the disposing corporation or disposing affiliate, as the case may be, from the disposition of the share is, except for the purposes of paragraph 53(1)(a), deemed to be equal to the amount, if any, by which

    • (i) the amount deemed by that subsection to be the gain from the disposition of the share determined without reference to this paragraph

    exceeds

    • (ii) the elected amount.

• (2) Subparagraph 93(1.2)(a)(ii) of the Act is replaced by the following:

  • (ii) if subsection (1.3) applies, the prescribed amount

• (3) Subsection 93(3) of the Act is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):

  • (c) the prescribed amount is deemed to be an amount that is received, at the adjustment time referred to in subsection 5905(7.7) of the Income Tax Regulations, by a particular foreign affiliate of a corporation resident in Canada from another foreign affiliate of the corporation and that is in respect of an exempt dividend on a share of the capital stock of the other affiliate.

• (4) Section 93 of the Act is amended by adding the following after subsection (5.1):

  • Marginal note:Amended election

    (5.2) An election (referred to in this subsection as the “amended election”) by a taxpayer under subsection (1) in respect of a disposition of shares of the capital stock of a foreign affiliate of the taxpayer is deemed to have been made on the day on or before which the election was required to be made and any previous election (referred to in this subsection as the “old election”) under subsection (1) in respect of that disposition is deemed not to have been made if

    • (a) the taxpayer has not elected under section 51 of the Technical Tax Amendments Act, 2012;

    • (b) the taxpayer made the old election on or before December 18, 2009;

    • (c) in the opinion of the Minister, the circumstances are such that it would be just and equitable to permit the old election to be amended; and

    • (d) the amended election is made in prescribed form on or before December 31, 2013.

• (5) Subsection (1) applies in respect of elections made in respect of dispositions that occur after December 18, 2009.

• (6) Subsection (2) applies in respect of elections made under subsection 93(1.2) of the Act in respect of dispositions that occur after November 1999.

• (7) Subsections (3) and (4) are deemed to have come into force on December 19, 2009.

• 33. (1) The description of F in the definition “foreign accrual property income” in subsection 95(1) of the Act is replaced by the following:

  F

  is the prescribed amount for the year,

• (2) Clause (a)(i)(A) of the definition “investment business” in subsection 95(1) of the Act is replaced by the following:

  • (A) of each country in which the business is carried on through a permanent establishment in that country and of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued,

• (3) Subsection 95(1) of the Act is amended by adding the following in alphabetical order:

  “permanent establishment”

  « établissement stable »

  “permanent establishment” has the meaning assigned by regulation;

• (4) Clause 95(2)(l)(iii)(A) of the Act is replaced by the following:

  • (A) of each country in which the business is carried on through a permanent establishment in that country and of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued,

• (5) Clause 95(2.3)(b)(ii)(A) of the Act is replaced by the following:

  • (A) under the laws of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued, and under the laws of each country in which the business is carried on through a permanent establishment in that country,

• (6) Subparagraph 95(2.4)(a)(i) of the Act is replaced by the following:

  • (i) of the country under whose laws the affiliate is governed and any of exists, was (unless the affiliate was continued in any jurisdiction) formed or organized, or was last continued and of each country in which the business is carried on through a permanent establishment in that country,

• (7) Subclause (c)(ii)(B)(I) of the definition “indebtedness” in subsection 95(2.5) of the Act is replaced by the following:

  • (I) under the laws of the country under whose laws the non-resident corporation is governed and any of exists, was (unless the non-resident corporation was continued in any jurisdiction) formed or organized, or was last continued and under the laws of each country in which the business is carried on through a permanent establishment in that country,

• (8) Subsection (1) applies to taxation years of a foreign affiliate of a taxpayer that begin after November 1999.

• (9) Subsections (2) to (7) apply to taxation years of a foreign affiliate of a taxpayer that begin after 1999.

• 34. (1) Subparagraph 152(4)(b)(i) of the Act is replaced by the following:

  • (i) is required under subsection (6) or (6.1), or would be so required if the taxpayer had claimed an amount by filing the prescribed form referred to in the subsection on or before the day referred to in the subsection,

• (2) Subsection 152(6.1) of the Act is replaced by the following:

  • Marginal note:Reassessment if amount under subsection 91(1) is reduced

    (6.1) If

    • (a) a taxpayer has filed for a particular taxation year the return of income required by section 150,

    • (b) the amount included in computing the taxpayer’s income for the particular year under subsection 91(1) is subsequently reduced because of a reduction in the foreign accrual property income of a foreign affiliate of the taxpayer for a taxation year (referred to in this paragraph as the “claim year”) of the affiliate that ends in the particular year, if the reduction in that foreign accrual property income is

      • (i) attributable to a foreign accrual property loss (within the meaning assigned by subsection 5903(3) of the Income Tax Regulations) of the affiliate for a taxation year of the affiliate that ends in a subsequent taxation year of the taxpayer, and

      • (ii) included in the description of F in the definition “foreign accrual property income” in subsection 95(1) in respect of the affiliate for the claim year, and

    • (c) the taxpayer has filed with the Minister, on or before the filing-due date for that subsequent taxation year, a prescribed form amending the return,

    the Minister shall reassess the taxpayer’s tax for any relevant taxation year (other than a taxation year preceding the particular year) in order to take into account the reduction in the amount included under subsection 91(1) in computing the income of the taxpayer for the particular year.

• (3) Subsections (1) and (2) apply to taxation years that begin after November 1999.

• 35. (1) The portion of paragraph 161(7)(a) of the Act before subparagraph (i) is replaced by the following:

  • (a) the tax payable under this Part and Parts I.3, VI and VI.1 by the taxpayer for the year is deemed to be the amount that it would be if the consequences of the deduction, reduction or exclusion of the following amounts were not taken into consideration:

• (2) Paragraph 161(7)(a) of the Act is amended by striking out “and” at the end of subparagraph (x) and by adding the following after subparagraph (xi):

  • (xii) any amount by which the amount included under subsection 91(1) for the year is reduced because of a reduction referred to in paragraph 152(6.1)(b) in the foreign accrual property income of a foreign affiliate of the taxpayer for a taxation year of the affiliate that ends in the year; and

• (3) Subparagraph 161(7)(b)(iii) of the Act is replaced by the following:

  • (iii) if an amended return of the taxpayer’s income for the year or a prescribed form amending the taxpayer’s return of income for the year was filed under subsection 49(4) or 152(6) or (6.1) or paragraph 164(6)(e), the day on which the amended return or prescribed form was filed, and

• (4) Subsections (1) to (3) apply to taxation years that begin after December 18, 2009.