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

Security Transactions

• 230 (1) In this section,

  publicly traded

  publicly traded means, with respect to any security,

  • (a) a security that is listed or posted for trading on a stock exchange, commodity exchange, futures exchange or any other exchange, or

  • (b) a security in respect of the sale and distribution of which a prospectus, registration statement or similar document has been filed with a public authority; (négocié sur le marché)

  sale

  sale includes the granting of an option and a short sale; (vente)

  security

  security means

  • (a) a publicly traded share of the capital stock of a corporation,

  • (b) a publicly traded debt obligation,

  • (c) a debt obligation of or guaranteed by

    • (i) the Government of Canada,

    • (ii) the government of a province or an agent thereof,

    • (iii) a municipality in Canada,

    • (iv) a municipal or public body performing a function of government in Canada, or

    • (v) the government of a foreign country or of a political subdivision of a foreign country or a local authority of such a government,

  • (c.1) a debt obligation that is, at any time, described in paragraph 7000(1)(d),

  • (d) a publicly traded interest in a trust,

  • (e) a publicly traded interest in a partnership,

  • (f) an option or contract in respect of any property described in any of paragraphs (a) to (e), or

  • (g) a publicly traded option or contract in respect of any property including any commodity, financial futures, foreign currency or precious metal or in respect of any index relating to any property; (titre)

  trader or dealer in securities

  trader or dealer in securities means

  • (a) a person who is registered or licensed under the laws of a province to trade in securities, or

  • (b) a person who in the ordinary course of business makes sales of securities as agent on behalf of others. (négociant ou courtier en valeurs)

• (2) Every trader or dealer in securities who, in a calendar year, purchases a security as principal or sells a security as agent for any vendor shall make an information return for the year in prescribed form in respect of the purchase or sale.

• (3) Every person (other than an individual who is not a trust) who in a calendar year redeems, acquires or cancels in any manner whatever any securities issued by that person shall make an information return for the year in prescribed form in respect of each such transaction, other than a transaction to which section 51, 51.1, 86 (if there is no consideration receivable other than new shares) or 87 or subsection 98(3) or (6) of the Act applies.

• (4) Subsection (3) applies to

  • (a) Her Majesty in right of Canada or a province;

  • (b) a municipal or public body performing a function of government in Canada; and

  • (c) an agent of a person referred to in paragraph (a) or (b).

• (5) Every person who, in the ordinary course of a business of buying and selling precious metals in the form of certificates, bullion or coins, makes a payment in a calendar year to another person in respect of a sale by that other person of any such property shall make an information return for that year in prescribed form in respect of each such sale.

• (6) Every person who, while acting as nominee or agent for another person in respect of a sale or other transaction to which subsection (2), (3) or (5) applies, receives the proceeds of the sale or other transaction shall, where the transaction is carried out in the name of the nominee or agent, make an information return in prescribed form in respect of the sale or other transaction.

• (7) This section does not apply in respect of

  • (a) a purchase of a security by a trader or dealer in securities from another trader or dealer in securities other than a non-resident trader or dealer in securities;

  • (b) a sale of currencies or precious metals in the form of jewellery, works of art or numismatic coins;

  • (c) a sale of precious metals by a person who, in the ordinary course of business, produces or sells precious metals in bulk or in commercial quantities;

  • (d) a sale of securities by a trader or dealer in securities on behalf of a person who is exempt from tax under Part I of the Act; or

  • (e) a redemption by the issuer or an agent of the issuer of a debt obligation where

    • (i) the debt obligation was issued for its principal amount,

    • (ii) the redemption satisfies all of the issuer’s obligations in respect of the debt obligation,

    • (iii) each person with an interest in the debt obligation is entitled in respect thereof to a proportion of all payments of principal equal to the proportion to which the person is entitled of all payments other than principal, and

    • (iv) an information return is required under another section of this Part to be made as a result of the redemption in respect of each person with an interest in the debt obligation.

231 [Repealed, SOR/2011-188, s. 5]

Worker’s Compensation

• 232 (1) Every person who pays an amount in respect of compensation described in subparagraph 110(1)(f)(ii) of the Act shall make an information return in prescribed form in respect of that payment.

• (2) Where a worker’s compensation board, or a similar body, adjudicates a claim for compensation described in subparagraph 110(1)(f)(ii) of the Act and stipulates the amount of the award, that board or body shall make an information return in prescribed form in respect of the amount of the award.

• (3) A return required under this section must be filed on or before the last day of February of each year and shall be in respect of

  • (a) the preceding calendar year, if the return is required under subsection (1); and

  • (b) the amount of the award that pertains to the preceding calendar year, if the return is required under subsection (2).

• (4) Subsections (1) and (2) are not applicable in respect of a payment or an award in respect of

  • (a) medical expenses incurred by or on behalf of the employee;

  • (b) funeral expenses in respect of the employee;

  • (c) legal expenses in respect of the employee;

  • (d) job training or counselling of the employee; or

  • (e) the death of the employee, other than periodic payments made after the death of the employee.

Social Assistance

• 233 (1) Every person who makes a payment described in paragraph 56(1)(u) of the Act shall make an information return in prescribed form in respect of the payment.

• (2) Subsection (1) is not applicable in respect of a payment that

  • (a) is in respect of medical expenses incurred by or on behalf of the payee;

  • (b) is in respect of child care expenses, as defined in subsection 63(3) of the Act, incurred by or on behalf of the payee or a person related to the payee;

  • (c) is in respect of funeral expenses in respect of a person related to the payee;

  • (d) is in respect of legal expenses incurred by or on behalf of the payee or a person related to the payee;

  • (e) is in respect of job training or counselling of the payee or a person related to the payee;

  • (f) is paid in a particular year as a part of a series of payments, the total of which in the particular year does not exceed $500; or

  • (g) is not a part of a series of payments.

Farm Support Payments

• 234 (1) Every government, municipality or municipal or other public body (in sections 235 and 236 referred to as the “government payer”) or producer organization or association that makes a payment of an amount that is a farm support payment (other than an amount paid out of a net income stabilization account) to a person or partnership shall make an information return in prescribed form in respect of the amount.

• (2) For the purposes of subsection (1) farm support payment includes

  • (a) a payment that is computed with respect to an area of farm land;

  • (b) a payment that is made in respect of a unit of farm commodity grown or disposed of or a farm animal raised or disposed of; and

  • (c) a rebate of, or compensation for, all or a portion of

    • (i) a cost or capital cost incurred in respect of farming, or

    • (ii) unsowed or unplanted land or crops, or destroyed crops, farm animals or other farm output.

Identifier Information

235 Every corporation or trust for which an information return is required to be made under these Regulations by a government payer or by a producer organization or association shall provide its legal name, address and income tax identification number to the government payer or the producer organization or association, as the case may be.

236 Every person who is a member of a partnership for which an information return is required to be made under these Regulations by a government payer or by a producer organization or association shall provide the government payer or the producer organization or association, as the case may be, with the following information:

• (a) the person’s legal name, address and Social Insurance Number, or, where the person is a trust or is not an individual, the person’s income tax identification number; and

• (b) the partnership’s name and business address.

Contract for Goods and Services

• 237 (1) The definitions in this subsection apply in this section.

  federal body

  federal body means a department or a Crown corporation, within the meaning of section 2 of the Financial Administration Act. (organisme fédéral)

  payee

  payee means a person or partnership to whom an amount is paid or credited in respect of goods for sale or lease, or services rendered, by or on behalf of the person or the partnership. (bénéficiaire)

• (2) A federal body that pays or credits an amount to a payee shall file an information return in prescribed form in respect of the amount on or before March 31 in each year in respect of the preceding calendar year.

• (3) Subsection (2) does not apply in respect of an amount

  • (a) all or substantially all of which is paid or credited in the year in respect of goods for sale or lease by the payee;

  • (b) to which section 212 of the Act applies;

  • (c) that is not required to be included in computing the income of the payee, if the payee is an employee of the federal body;

  • (d) that is paid or credited in respect of services rendered outside Canada by a payee who was not resident in Canada during the period in which the services were rendered; or

  • (e) that is paid or credited in respect of a program administered under the Witness Protection Program Act or any other similar program.

Reporting of Payments in Respect of Construction Activities

• 238 (1) In this section, construction activities includes the erection, excavation, installation, alteration, modification, repair, improvement, demolition, destruction, dismantling or removal of all or any part of a building, structure, surface or sub-surface construction, or any similar property.

• (2) Every person or partnership that pays or credits, in a reporting period, an amount in respect of goods or services rendered on their behalf in the course of construction activities shall make an information return in the prescribed form in respect of that amount, if the person’s or partnership’s business income for that reporting period is derived primarily from those activities.

• (3) The reporting period may be either on a calendar year basis or a fiscal period basis. Once a period is chosen, it cannot be changed for subsequent years, unless the Minister authorizes it.

• (4) The return shall be filed within six months after the end of the reporting period to which it pertains.

• (5) Subsection (2) does not apply in respect of an amount

  • (a) all of which is paid or credited in the reporting period in respect of goods for sale or lease by the person or partnership;

  • (b) to which section 212 of the Act applies; or

  • (c) that is paid or credited in respect of services rendered outside Canada by a person or partnership who was not resident in Canada during the period in which the services were rendered.

PART IIIAnnuities and Life Insurance Policies

Capital Element of Annuity Payments

• 300 (1) For the purposes of paragraphs 32.1(3)(b) and 60(a) of the Act, where an annuity is paid under a contract (other than an income-averaging annuity contract or an annuity contract purchased pursuant to a deferred profit sharing plan or pursuant to a plan referred to in subsection 147(15) of the Act as a “revoked plan”) at a particular time, that part of the annuity payment determined in prescribed manner to be a return of capital is that proportion of a taxpayer’s interest in the annuity payment that the adjusted purchase price of the taxpayer’s interest in the contract at that particular time is of his interest, immediately before the commencement under the contract of payments to which paragraph 56(1)(d) of the Act applies, in the total of the payments

  • (a) to be made under the contract, in the case of a contract for a term of years certain; or

  • (b) expected to be made under the contract, in the case of a contract under which the continuation of the payments depends in whole or in part on the survival of an individual.

• (1.1) For the purposes of subsections (1) and (2), “annuity payment” does not include any portion of a payment under a contract the amount of which cannot be reasonably determined immediately before the commencement of payments under the contract except where the payment of such portion cannot be so determined because the continuation of the annuity payments under the contract depends in whole or in part on the survival of an individual.

• (2) For the purposes of this section, if the continuance of the annuity payments under a contract depends in whole or in part on the survival of an individual,

  • (a) the total of the payments expected to be made under the contract is

    • (i) in the case of a contract that provides for equal payments and does not provide for a guaranteed period of payment, to be equal to the product obtained by multiplying the total of the annuity payments expected to be received throughout a year under the contract by the complete expectations of life determined

      • (A) using the table of mortality known as the 1971 Individual Annuity Mortality Table as published in Volume XXIII of the Transactions of the Society of Actuaries, if the annuity rates in respect of the contract were fixed and determined before 2017, and

        • (I) annuity payments under the contract commenced before 2017, or

        • (II) on December 31, 2016, the contract would be a prescribed annuity contract if paragraph 304(1)(c) were read without reference to its subparagraph (i) and the contract cannot be terminated other than on the death of an individual on whose life payments under the contract are contingent, and

      • (B) in any other case, using the table of mortality known as the Annuity 2000 Basic Table as published in the Transactions of Society of Actuaries, 1995–96 Reports, and

    • (ii) in any other case, to be calculated in accordance with subparagraph (i) with such modifications as the circumstances may require;

  • (b) the age of the individual on any particular date as of which a calculation is being made is

    • (i) if the life insured was determined by the insurer that issued the contract to be a substandard life at the time the contract was issued and the Annuity 2000 Basic Table as published in the Transactions of Society of Actuaries, 1995–96 Reports applies to determine the total of the payments expected to be made under the contract, the age that is equal to the total of the age used for the purpose of determining the annuity rate under the policy at the date of issue of the contract and the number determined by subtracting the calendar year in which the contract was issued from the calendar year in which the particular date occurs, and

    • (ii) in any other case, determined by subtracting the calendar year of the individual’s birth from the calendar year in which the particular date occurs; and

  • (c) if, in the event of the death of the individual before the annual payments total a stated sum, the contract provides that the unpaid balance of the stated sum is to be paid in a lump sum or instalments, then for the purpose of determining the expected term of the contract, the contract is deemed to provide for the continuance of the payments under the contract for a minimum term certain equal to the nearest whole number of years required to complete the payment of the stated sum.

• (3) Where

  • (a) an annuity contract is a life annuity contract entered into before November 17, 1978 under which the annuity payments commence on the death of an individual,

  • (a.1) [Repealed, SOR/83-865, s. 1]

  • (b) an annuity contract (other than an annuity contract described in paragraph (a)) is

    • (i) a life annuity contract entered into before October 23, 1968, or

    • (ii) any other annuity contract entered into before January 4, 1968,

    under which the annuity payments commence

    • (iii) on the expiration of a term of years, and

    • (iv) before the later of January 1, 1970 and the tax anniversary date of the annuity contract,

  the adjusted purchase price of a taxpayer’s interest in the annuity contract shall be

  • (c) the lump sum, if any, that the person entitled to the annuity payments might have accepted in lieu thereof, at the date the annuity payments commence;

  • (d) if no lump sum described in paragraph (c) is provided for in the contract, the sum ascertainable from the contract as the present value of the annuity at the date the annuity payments commence; and

  • (e) if no lump sum described in paragraph (c) is provided for in the contract and no sum is ascertainable under paragraph (d),

    • (i) in the case of a contract issued under the Government Annuities Act, the premiums paid, accumulated with interest at the rate of four per cent per annum to the date the annuity payments commence, and

    • (ii) in the case of any other contract, the present value of the annuity payments at the date on which payments under the contract commence, computed by applying

      • (A) a rate of interest of four per cent per annum where the payments commence before 1972 and 5 1/2 per cent per annum where the payments commence after 1971, and

      • (B) the provisions of subsection (2) where the payments depend on the survival of a person.

• (4) Where an annuity contract would be described in paragraph (3)(b) if the reference in subparagraph (iv) thereof to “before the later of” were read as a reference to “on or after the later of”, the adjusted purchase price of a taxpayer’s interest in the annuity contract at a particular time shall be the greater of

  • (a) the aggregate of

    • (i) the amount that would be determined in respect of that interest under paragraph (3)(c), (d) or (e), as the case may be, if the date referred to therein was the tax anniversary date of the contract and not the date the annuity payments commence, and

    • (ii) the adjusted purchase price that would be determined in respect of that interest if the expression “before that time” in the descriptions of A, B, C, D and H in the definition adjusted cost basis in subsection 148(9) of the Act were read as “before that time and after the tax anniversary date”; and

  • (b) the amount determined under paragraph (2)(b) in respect of that interest.