Canada how does income tax work

A dependent spouse is typically eligible for an open work permit and can work for any employer in any occupation. A medical exam is required if the work is in healthcare, childcare, or similar fields. A dependent minor child is eligible to attend primary and secondary school in Canada with a Visitor Record or a Study Permit. Foreign nationals outside of the US whose immediate family member is temporarily residing in Canada as a worker, visitor or student or has been approved to work in Canada can travel to Canada if their travel is authorized in writing by IRCC and the purpose of their travel is family reunification.

Generally, there are four programs under which foreign workers can apply for Canadian permanent resident status:. High net worth candidates and entrepreneurs can also consider programs such as the Start-Up Visa or Self-Employed Class to obtain permanent residence in Canada.

What if circumstances change after the Work and Residence application process e. Any change in the terms of the employment, including job title, job role or salary may require a new work permit, in order to ensure compliance.

There is no formal cancellation requirement. For employer-specific work permits, the termination or conclusion of the employment duration with the Canadian employer will invalidate the work permit. The consequences for non-compliance with Canadian immigration law are serious for both employers and individuals.

Employers are subject to inspections by immigration authorities to verify that they have complied with the conditions imposed by the immigration regulations. The inspections may be random, or can be triggered by previous non-compliance, adverse publicity, or whistle-blowers. An employer may be subject to a system of Administrative Monetary Penalties for specific conduct that result in non-compliance. Moreover, a non-compliant employer may be banned from hiring foreign workers for a period of 1, 2, 5, or 10 years, or permanently.

An individual may be deemed inadmissible to Canada for non-compliance with Canadian immigration law. This means that the individual would not be able to visit, reside, or work in Canada. Individuals who are already residing in Canada, but who are found to be non-compliant with Canadian immigration law, may be issued a removal order. Individuals who are not fully vaccinated are required to complete a day mandatory quarantine, subject to certain exemptions.

Individuals who are exempt from the mandatory quarantine may include a person or any person in a class of persons whom the Chief Public Health Officer determines will provide an essential e. For those individuals who have to undergo a mandatory quarantine, employers have certain obligations to ensure foreign workers are meeting quarantine requirements.

For example, a foreign worker must be paid regular pay and benefits during their quarantine period. Employers —Employers should not do anything that prevents a worker from meeting quarantine requirements, such as not making the worker interact with colleagues. Given the rapidly changing COVID situation, entry requirements such as those relating to pre-departure COVID testing, mandatory quarantines, and more are changing on an increasingly frequent basis to ensure that compliance with health and safety measures put in place by the Canadian government.

As such, seeking assistance from legal counsel to obtain the most up-to-date information is highly recommended. List any other important items to note, or common obstacles faced, in Canada when it comes to the immigration processes. All rights reserved. A global survey of income tax, social security tax rates and tax legislation impacting expatriate employees. A global survey of income tax, social security tax rates and tax legislation impacting Aligning our thinking to your talent management objectives, we can support you with the planning and management of your international workforce.

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Canada — Taxation of international executives Taxation of international executives. Taxation of international executives. January Overview and Introduction Income Tax Special considerations for short-term assignments Other taxes and levies Immigration. Overview and Introduction. Back to top. Income Tax. Tax returns and compliance When are tax returns due? That is, what is the tax return due date?

What is the tax year-end? What are the compliance requirements for tax returns in Canada? Residents Individuals resident in Canada are subject to Canadian income tax on their worldwide income, regardless of where it is earned or where it is received, and they are eligible for a potential credit or deduction for foreign taxes paid on income derived from foreign sources. Tax rates What are the current income tax rates for residents and non-residents in Canada? Residents Federal income tax Federal tax is calculated by applying a progressive tax rate schedule to taxable income.

Residence rules For the purposes of taxation, how is an individual defined as a resident of Canada? Termination of residence Are there any tax compliance requirements when entering or leaving Canada? Departure tax Individuals are deemed by the Income Tax Act Canada to dispose of most property upon ceasing Canadian residency for notional proceeds equal to the fair market value of the subject property on the date they cease being residents of Canada for income tax purposes.

What if the assignee comes back for a trip after residency has terminated? Communication between immigration and taxation authorities Do the immigration authorities in Canada provide information to the local taxation authorities regarding when a person enters or leaves Canada? Not directly, but information may be shared between the two groups. An assignee must file a Canadian tax return if: tax is owed; or a refund is to be claimed because too much tax was withheld or paid in the tax year.

Economic employer approach Do the taxation authorities in Canada adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development OECD treaty? De minimus number of days Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? Types of taxable compensation What categories are subject to income tax in general situations? Taxable compensation includes the following items of employee compensation: Salary, wages, and other remuneration, including gratuities received in the year.

Bonuses of any kind, including signing bonuses. Benefits received from an employer such as premiums for life insurance and for disability insurance, personal living expenses, personal use of employer owned or leased motor vehicles, automobile, cost of living and other allowances, board and lodging, employer contributions to various plans for the benefit of the employee, etc. Allocations under employee profit sharing plans.

Stock option benefits, which are generally taxable on their exercise dates. Restricted Share Units, which are generally taxable on their vesting dates.

Restricted Stock Awards generally taxable on the date the employee has a legal right to the shares and enjoys all of the attributions of ownership i. Any other type of deferred employee compensation, whether received in cash or in some other type of property, such as shares. Employee loans forgiven by the employer. Employer contributions made to an employee benefit plan unless exempt under the Income Tax Act or under a relevant Tax Treaty.

Employer reimbursement of housing losses unless exempt under the Income Tax Act. Employer provided housing subsidies unless exempt under the Income Tax Act.

Deemed interest benefits on interest free or low interest rate employer loans. Intra-group statutory directors Will a non-resident of Canada who, as part of their employment within a group company, is also appointed as a statutory director i.

Tax-exempt income Are there any areas of income that are exempt from taxation in Canada? The employee is required to be away from their principal residence and to be present at the special work site for at least 36 hours. Certain employer provided housing allowances cost of utilities The cost of utilities paid for employees is considered a taxable benefit. Certain employer provided tax reimbursements The following are the usual methods of recognizing tax reimbursements paid by the employer: current-year gross-up current-year reimbursement 1-year rollover.

Certain employer provided relocation reimbursements The reimbursement of most actual relocation expenses is generally not taxable. Home leave Home leave is considered a taxable benefit. Certain employer provided education costs The cost of education provided to an employee that is mainly for the benefit of the employer is not taxable to the employee.

Certain bonus payments A bonus in respect of non-Canadian source employment is generally not subject to Canadian tax if paid before the individual becomes a resident of Canada, or after they cease to be resident in Canada e.

Certain interest subsidies If the employer provides a low-interest or interest-free loan to an individual, the individual is considered to have received a benefit from employment. Certain auto allowances Reasonable automobile allowances calculated on a per kilometer basis that are paid to employees who use their personally owned motor vehicles for business purposes are not considered a taxable benefit to those employees if the allowances do not exceed the rates set for each year by CRA For , the rates are CAD59 cents per kilometer for the first 5, kilometers driven and CAD53 cents per kilometer driven after that.

Expatriate concessions Are there any concessions made for expatriates in Canada? Adjustment in tax cost basis of assets held on arrival An individual is deemed by the Income Tax Act to have disposed of all of their assets other than Taxable Canadian Property and to have reacquired the same assets at their fair market value immediately before becoming residents of Canada. Special work site exemption See also section titled Tax-Exempt Income section with respect to the special work site provision.

Foreign Pension Plans Canada allows individuals who are temporarily working in Canada to continue to participate in qualifying foreign employer-sponsored pension plans or foreign Social Security Arrangements.

Gains from employee stock option exercises Stock option income is taxable in Canada if the individual is a resident when the options are exercised. The shares are qualifying shares generally common shares. The exercise price is not less than fair market value, at the time the options were granted, of the shares to be received on exercise. Stock options granted before July 1, will not be subject to the new rules.

Salary earned from working abroad Is salary earned from working abroad taxed in Canada? If so, how? Taxation of investment income and capital gains Are investment income and capital gains taxed in Canada? Yes, as described in the following paragraphs. Dividends, interest, and rental income Dividends and interest income are generally taxable in Canada in the calendar year in which the income is received.

Foreign exchange gains and losses When non-Canadian property is sold or deemed to have been sold, generally the gain for Canadian tax purposes must be calculated by converting the net proceeds into Canadian Dollars on the closing date or the deemed closing date and by converting the cost into Canadian Dollars using the exchange rate as of the date the property was purchased or was deemed to have been purchased.

Principal residence gains and losses Capital gains arising on the disposition of a principal residence are generally not subject to tax with respect to the years it was owned and lived in by an individual, or by a spouse or child of that individual, while the individual was a resident of Canada. Capital losses Capital losses can be used to reduce capital gains incurred during the year to a balance of zero. This term is defined in the Income Tax Act and includes: real or immovable property located within Canada capital property, intangible property and inventory used in carrying on a business in Canada an interest in a private corporation, partnership or trust which derived more than 50 percent of its value directly or indirectly from real property or resource property or timber property located in Canada at any time during the 60 months period ending on the disposition or deemed disposition date of the interest.

Personal use items When a taxpayer disposes of personal-use property that has an adjusted cost base or proceeds of disposition of more than CAD1,, capital gains or losses may be recognized.

Gifts There is no gift tax in Canada. Non-resident trusts Rules for non-resident trust expand the taxation of income earned by these trusts. Additional capital gains tax CGT issues and exceptions Are there capital gains tax exceptions in Canada?

If so, please discuss. Deemed disposal and acquisition Where a taxpayer ceases to be resident in Canada at any particular time, the taxpayer is deemed by the Income Tax Act to have disposed of certain capital properties owned immediately before departure for proceeds equal to their fair market value on the departure date.

A capital gains exemption of up to CAD, CAD1,, for the second and third categories listed below may be claimed against capital gains arising from the disposition, on or after 1 January of the following types of properties: qualified small business corporation shares qualified farm property qualified fishing property a reserve brought into income, from any of the above. General deductions from income What are the general deductions from income allowed in Canada?

Allowable deductions include the following. RRSP contributions that qualify under the Act are deductible for any given year if they are contributed in that year or within 60 days after the end of that year and the total does not exceed the individual's contribution room for that year.

Childcare expenses subject to certain limitations if they were incurred to allow the taxpayer and spouse to work, carry on business, attend school full-time or part-time, or to carry on grant-funded research.

In general, the lower net income including zero income spouse must claim the childcare expense. Interest, carrying charges, and investment counsel fees related to the earning of taxable investment income. Non-reimbursed moving expenses to and from a qualifying relocation within Canada. Child support payments paid under a pre-1 May written agreement or court order. Periodic alimony payments made to a former spouse pursuant to a court order or written agreement.

Tax reimbursement methods What are the tax reimbursement methods generally used by employers in Canada? The following are the usual methods of recognizing tax reimbursements paid by the employer: current-year gross-up current-year reimbursement 1-year rollover.

There are three possible ways to calculate the instalment amounts: The first method is to have the total instalments, paid in four equal payments, equal the taxes that are estimated will be owing for the year on sources of income not subject to withholding tax at source that is, equal to the expected balance due amount at the end of the current year. The third method is to have the March and June instalments equal to the total tax owing after source withholdings for the second prior year.

The September and December instalments then have to make up the difference so that the total instalments paid for the year equal the amount determined in method two. General tax credits What are the general tax credits that may be claimed in Canada? Non-residents may only claim general tax credits for the following items, if relevant, unless 90 percent or more of their net income for the relevant calendar year is subject to Canadian income tax: Canada Pension Plan CPP or Quebec Pension Plan QPP contributions Employment Insurance premiums Donations made to a Canadian registered charity.

Sample tax calculation This calculation assumes a married taxpayer resident in Ontario, Canada with two minor children whose 3-year assignment begins 1 January and ends 31 December Other assumptions All earned income is attributable to local sources.

Bonuses are paid at the end of each tax year and accrue evenly throughout the year. The employee pays all of the operating expenses for the automobile. The employee is a resident in Canada throughout the assignment.

Tax treaties and totalization agreements are ignored for the purpose of this calculation. Spouse has no income. Moving reimbursements are of the nature that they are considered non-taxable in Canada.

Calculation of taxable income Year-ended CAD CAD CAD Days in Canada during year Earned income subject to income tax Salary , , , Bonus 30, 30, 30, Cost-of-living allowance 10, 10, 10, Housing allowance 12, 12, 12, Company car 6, 6, 6, Moving expense reimbursemen1 0 0 0 Home leave 0 5, 0 Education allowance 3, 3, 3, Total earned income , , , Investment income 6, 6, 6, Total income , , , Deductions 0 0 0 Total taxable income , , , Calculation of tax liability Taxable income as above , , , Canadian income tax federal and provincial thereon 86, 88, 85, Less: Non-refundable tax credits 5, 5, 5, Total Canadian income tax 81, 83, 79, Employee contribution to Canada Pension Plan CPP 2, 2, 3, Employee contribution to Employment Insurance EI Special considerations for short-term assignments.

Residency rules Payroll considerations Taxable income Additional considerations For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year. Residency rules Are there special residency considerations for short-term assignments?

Payroll considerations Are there special payroll considerations for short-term assignments? Taxable income What income will be taxed during short-term assignments? Certain conditions must be met to qualify for excluding benefits based on the special work site rules.

These conditions include the following. The individual is required to work at a special work site on a temporary basis see commentary below. The residence must be too far from the special work site for daily commuting. The individual is required to be away from their ordinary residence, or at the special work site, for at least 36 hours.

Additional considerations Are there any additional considerations that should be considered before initiating a short- term assignment in Canada?

Employees should obtain proper work permits and immigration clearance before working in Canada. Other taxes and levies. There is no wealth tax in Canada. Real estate tax Are there real estate taxes in Canada? Unemployment tax Are there unemployment taxes in Canada? Other taxes Are there additional taxes in Canada that may be relevant to the general assignee?

Other Canadian taxes that may apply are described in the following paragraphs. Provincial Health Premiums Although these are not actual income taxes, the province of Ontario and the Northwest Territories and the Territory of Nunavut levy provincial health premiums on the income of individuals who are subject to income tax in those jurisdictions.

The Ontario Employer Health Tax annual rates vary from 0. For Manitoba, the first CAD1. Effective from 1 January onwards, the first CAD1. Business Visitor Visa Applications Processed at a Canadian Visa Office Abroad Assessment call with foreign national to determine strategy Gather documents from foreign national for business visitor visa application Prepare business visitor visa application 5 days Submit business visitor visa application at the Canadian Visa Office Abroad processing times vary Business Visitor Visa Applications Processed at the Port of Entry Assessment call with foreign national to determine strategy Gather documents from foreign national for business visitor visa application Prepare work permit application 5 days Submit business visitor visa application at the Port of Entry — This is typically processed immediately; however due to COVID, foreign nationals submitting a visitor visa application at the Port of Entry may be subject to additional delays.

However, on September 7, border restrictions have been loosened to allow foreign nationals to travel to Canada for business visits. Long-Term Assignments What are the main work permit categories for long-term assignments to Canada? Quarantine Requirements Fully vaccinated travelers who meet the following requirements are not required to complete a day quarantine period: Have received the full dose of a COVID vaccine that is approved in Canada.

The list of approved vaccines can be found here. The full dosage must have been received at least 14 days prior to travel. Vaccination record must be provided in English or French or in another language accompanied by a certified translation. Fully Vaccinated Travelers — Pre-Arrival All travelers five years of age or older, regardless of vaccination status, are required to test negative for COVID before travelling from another country to Canada. ArriveCAN App All travelers, whether entering Canada by land or air, are required to submit their travel and contact information, including a suitable quarantine plan and proof of vaccination if applicable electronically via ArriveCAN before crossing the border or boarding a flight.

Applying for a Work Permit at a Visa Office vs. Port of Entry When COVID began, foreign nationals requiring a work permit, whether they require a visa or not, could not board a plane departing from any country other than the United States if they do not have a valid work permit or a letter of introduction, which indicates that their application for a work permit has been approved.

Work Permits Processed at a Canadian Visa Office Abroad Gather documents Undergo a medical examination from a panel physician if required Obtain police certificates if required Submit work permit application to a Canadian Visa Office processing times vary , while high-skilled applications have typically been processed in 2 weeks in 80 percent of cases in the past, these applications are now subject to longer processing times due to COVID Attend in-person at a local Visa Application Center to provide biometrics data fingerprints and photograph Submit passport to the Visa Office for visa issuance Travel to Canada and obtain Work Permit document at the port of entry Work Permits Processed at the Port of Entry Gather documents Undergo a medical examination from a panel physician if required Obtain police certificates if required Submit work permit application in person at the Port of Entry processed immediately ; however, subject to additional delays due to COVID Provide biometrics data fingerprints and photograph in person at the port of entry Work Permit document issued immediately Depending on the work permit type, the maximum validity is 3 years with the possibility of renewing the permit.

COVID Considerations: Visitors who are currently in Canada since August 24, , have remained in Canada, and have a valid job offer can apply for an employer-specific work permit. To be eligible, a foreign national must: have valid status in Canada as a visitor on the day they apply; have remained in Canada with valid status; have a job offer; submit an application for an employer-specific work permit that is supported by a Labour Market Impact Assessment LMIA or an LMIA-exempt offer of employment, no later than March 31, ; and meet all other standard admissibility criteria.

D that is immediately before the transferor is subject to a loss restriction event, or. E if the transferor is a corporation,.

II for any other purposes, at which the winding-up other than a winding-up to which subsection 88 1 applies of the transferor begins, and.

Marginal note: Affiliation — subsection Marginal note: Restriction on deduction before available for use. Marginal note: Interpretation — available for use. Marginal note: Consideration given for depreciable property. Marginal note: Outlays not relating to property. Marginal note: Receipts not relating to property. Marginal note: Class B the capital cost of the property or goodwill acquired, as the case may be, is to be reduced by twice the amount by which the particular amount is reduced under clause A , and.

A the proceeds of disposition of the capital property, and. B the amount by which the proceeds of disposition of the qualified farm or fishing property exceed its cost. C if goodwill is acquired other than an acquisition in respect of which clause B applies on or after that day by the taxpayer — in circumstances under which any of subsections 24 2 , 70 5.

Marginal note: Benefit conferred on shareholder. A the voting rights attached to the particular class differ from the voting rights attached to the other class, and. B there are no other differences between the terms and conditions of the classes of shares that could cause the fair market value of a share of the particular class to differ materially from the fair market value of a share of the other class, and.

Marginal note: Forgiveness of shareholder debt. Marginal note: Interpretation — subsection 1. Marginal note: Division of corporation under foreign laws. A at the particular time, the original corporation is deemed to have distributed, and the shareholder is deemed to have received, as a dividend in kind in respect of the original shares, the new shares acquired by the shareholder at the particular time, and. B the amount of the dividend in kind received by the shareholder in respect of an original share is deemed to be equal to the fair market value, immediately after the particular time, of the new shares acquired by the shareholder at the particular time in respect of the original share, and.

Marginal note: Pertinent loan or indebtedness. Marginal note: Penalty for late-filed election. Marginal note: Back-to-back arrangement — application. A recourse in respect of the debt or other obligation is limited in whole or in part, either immediately or in the future and either absolutely or contingently, to a funding arrangement, or.

B it can reasonably be concluded that all or a portion of the particular funding arrangement was entered into or was permitted to remain outstanding because. I all or a portion of the debt or other obligation was entered into or was permitted to remain outstanding, or. II the funder anticipated that all or a portion of the debt or other obligation would become owing or remain outstanding, or.

A the existence of the specified right is required under the terms and conditions of the particular funding arrangement, or. B it can reasonably be concluded that all or a portion of the particular funding arrangement was entered into, or was permitted to remain in effect, because. I the specified right was granted, or. II the funder anticipated that the specified right would be granted; and. Marginal note: Back-to-back arrangement — consequences. Marginal note: Back-to-back arrangement — conditions for deemed repayment.

A there is a decrease in the fair market value of a property in respect of which a specified right was granted by the particular ultimate funder to a funder other than an ultimate funder under a funding arrangement in respect of the shareholder debt, or. B a right described in clause A is extinguished. Marginal note: Back-to-back arrangement — deemed repayment.

A an amount outstanding as or on account of a debt or other obligation that is owed by a funder other than an ultimate funder to an ultimate funder under a funding arrangement in respect of the shareholder debt, or. B the fair market value of a particular property in respect of which an ultimate funder has granted a specified right to a funder other than an ultimate funder under a funding arrangement in respect of the shareholder debt,.

Marginal note: Back-to-back arrangement — definitions. Marginal note: When s. Marginal note: Interest or dividend on income bond or debenture.

Marginal note: Idem, where corporation not resident. Marginal note: Deemed benefit to shareholder by corporation. Marginal note: Interest on small business development bonds. Marginal note: Rules for small business development bonds. VIII, s. A the issuer, or. B a corporation associated with the issuer, or. A an individual who controls, or is a member of a related group that controls, the issuer, or.

B a partnership any member of which, who is a majority interest partner of the partnership, controls, or is a member of a related group that controls, the issuer. Marginal note: Interest on small business bond. Marginal note: Rules for small business bonds. A a corporation that has made a joint election before that time in respect of a small business development bond, or. B a corporation that is associated with a corporation referred to in clause A , or.

A the individual, or. B a partnership of which the individual is a majority interest partner, or. A a corporation that is controlled by the individual or by a related group of which the individual is a member, or. A the partnership,. B an individual who is a majority interest partner of the partnership, or. C a partnership of which the individual referred to in clause B is a majority interest partner, or. A a corporation that is controlled by the individual referred to in clause B or by a related group of which the individual is a member, or.

B a corporation that is associated with a corporation referred to in clause A. Marginal note: Obligation issued at discount. Marginal note: Impaired indexed debt obligations. A the time, if any, before the particular time, at which the lessee last entered into an agreement to lease the property, and. B the particular time, or. A the amount referred to in paragraph B all amounts received or receivable by the lessee in respect of the cancellation or assignment of the lease or the sublease of the property.

A all amounts deemed under paragraph B all amounts paid or payable by or on behalf of the lessee in respect of the cancellation or assignment of the lease or the sublease of the property;. Marginal note: Amalgamations and windings-up. Marginal note: Amount owing by non-resident. A an amount determined under paragraph B the original debt was owing by an intermediate lender to an initial lender or by an intended borrower to an intermediate lender within the meanings of those terms assigned by subsection Marginal note: Anti-avoidance rule — indirect loan.

Marginal note: Exception to anti-avoidance rule — indirect loan. Marginal note: Anti-avoidance rule — loan through partnership. Marginal note: Anti-avoidance rule — loan through trust.

Marginal note: Anti-avoidance rule — loan to partnership. A income from an active business, as defined in subsection 95 1 , of the affiliate, or. B income that was included in computing the income from an active business of the affiliate under subsection 95 2 , or. Marginal note: Determination of whether related and controlled foreign affiliate status. Marginal note: Determination of whether related. Marginal note: Determination of whether persons related.

Marginal note: Determination of controlled foreign affiliate status. Marginal note: Extended definition of controlled foreign affiliate. Marginal note: Anti-avoidance rule — where rights or shares issued, acquired or disposed of to avoid tax. Marginal note: Deemed interest income — sections 15 and Marginal note: Unpaid claims under insurance policies.

Marginal note: Payments on discounted bonds. Marginal note: Personal and living expenses. Marginal note: Use of recreational facilities and club dues. Marginal note: Limitation re employee stock option expenses. Marginal note: Employee benefit plan contributions. Marginal note: Employee life and health trust.

Marginal note: Limitation re personal services business expenses. Marginal note: Limitation re cancellation of lease. Marginal note: Payments under different acts. Marginal note: Fees — individual saving plans.

Marginal note: Interest — authorized foreign bank. Marginal note: Underlying payments on qualified securities. Marginal note: Derivatives — lower of cost and market. Marginal note: Limit on certain interest and property tax. Marginal note: Where taxpayer member of partnership. Marginal note: Special rules for base level deduction. Marginal note: Costs relating to construction of building or ownership of land. A is immediately contiguous to the land subjacent to the building,. B is used, or is intended to be used, for a parking area, driveway, yard, garden or any other similar use, and.

C is necessary for the use or intended use of the building; and. Marginal note: Limitation on deduction of interest. A the average of all amounts each of which is the total amount of all equity contributions to the trust made before a calendar month that ends in the year, to the extent that the contributions were made by a specified non-resident beneficiary of the trust, and.

B the tax-paid earnings of the trust for the year,. C paid or payable to a person other than a specified non-resident beneficiary of the trust, and. A that is used by the corporation or trust in the year in, or held by it in the year in the course of, carrying on business in Canada, or. B that is an interest in real property, or a real right in immovables, in Canada, or an interest in, or for civil law a right in, timber resource properties and timber limits, in Canada, and in respect of which the corporation or trust files a return under this Part in accordance with subsection 1 in respect of the year,.

A a specified non-resident shareholder of the corporation or a specified non-resident beneficiary of the trust, or. B an authorized foreign bank, if the bank uses or holds the obligation at the particular time in its Canadian banking business, or. Marginal note: Specified shareholder or specified beneficiary. Marginal note: Property used in business — cost attribution.

Marginal note: Back-to-back loan arrangement. A recourse in respect of the debt or other obligation is limited in whole or in part, either immediately or in the future and either absolutely or contingently, to the particular debt or other obligation, or.

B it can reasonably be concluded that all or a portion of the particular amount became owing, or was permitted to remain owing, because. II the intermediary anticipated that all or a portion of the debt or other obligation would become owing or remain outstanding, or. A the existence of the specified right is required under the terms and conditions of the particular debt or other obligation, or.

II the intermediary anticipated that the specified right would be granted; and. A the intermediary is granted a security interest in respect of a property that is the intermediary debt or the particular property, as the case may be, and the security interest secures the payment of two or more debts or other obligations that include the debt or other obligation and the particular debt or other obligation, and.

B each security interest that secures the payment of a debt or other obligation referred to in clause A secures the payment of every debt or other obligation referred to in that clause. A the amount outstanding as or on account of the intermediary debt or the fair market value of the particular property referred to in subparagraph 6 c ii , as the case may be, and.

B the proportion of the particular amount that the amount outstanding or the fair market value, as the case may be, is of the total of all amounts each of which is. I an amount outstanding as or on account of an intermediary debt in respect of the particular debt or other obligation, owed to the particular non-resident or any other non-resident person that is, in respect of the taxpayer, described in the definition outstanding debts to specified non-residents in subsection 5 , or.

II the fair market value of a particular property referred to in subparagraph 6 c ii in respect of the particular debt or other obligation, and. Marginal note: Partnership debts and property. A at or before the end of the taxation year referred to in subsection 4 , and. B at a time when the member is a member of the partnership, and. B the fair market value of all interests in the partnership at that time;. Marginal note: Exception — foreign accrual property income.

Marginal note: Limitation respecting prepaid expenses. A where the taxpayer is an insurer, consideration for reinsurance, and. B consideration for insurance on the life of an individual under a group term life insurance policy where all or part of the consideration is for insurance that is or would be if the individual survived in respect of a period that ends more than 13 months after the consideration is paid, or.

Marginal note: Application of subsection 9 to insurers. Marginal note: Penalties, bonuses and rate-reduction payments. A where the repayment was in respect of all or part of the principal amount of the debt obligation that was borrowed money, except to the extent that the borrowed money was used by the taxpayer to acquire property, on borrowed money used in the year for the purpose for which the borrowed money that was repaid was used, and.

B where the repayment was in respect of all or part of the principal amount of the debt obligation that was either borrowed money used to acquire property or an amount payable for property acquired by the taxpayer, on the debt obligation to the extent that the property or property substituted therefor is used by the taxpayer in the year for the purpose of gaining or producing income therefrom or for the purpose of gaining or producing income from a business.

Marginal note: Interest on debt obligations. A the total of all amounts of interest payable on the debt obligation determined without reference to this subsection by the borrower in respect of taxation years ending after and before the year to the extent that the interest does not exceed a reasonable amount. B the total of all amounts of interest deemed by this subsection to have been payable on the debt obligation by the borrower in respect of taxation years ending before the year, and.

A the substituted property, or. B a property that is identical to the substituted property and that was acquired after the day that is 31 days before the period begins,. I a qualifying liquidation and dissolution within the meaning assigned by subsection 88 3.

II a designated liquidation and dissolution within the meaning assigned by subsection 95 1 of the transferor, and. B for any other purposes, at which the winding-up other than a winding-up to which subsection 88 1 applies of the transferor begins, and.

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