I-3 - Taxation Act

Section 127.1 Disposition versions

2010-10-27

127.1. In this division,

“active business” has the meaning assigned by subsection 1 of section 95 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement);

“controlled foreign affiliate”, at any time, of a taxpayer resident in Canada, means a corporation that would, at that time, be a controlled foreign affiliate of the taxpayer within the meaning of section 572 if that section were read as if “resident in Canada” were inserted after “any person” in subparagraphs ii and iv of its paragraph b;

“exempt loan or transfer” means

(a)  a loan made by a corporation resident in Canada where the interest rate charged on the loan is not less than the interest rate that a lender and a borrower would have been willing to agree to if they were dealing with each other at arm’s length at the time the loan was made;

(b)  a transfer of property by a corporation resident in Canada, other than a transfer of property made for the purpose of acquiring shares of the capital stock of a foreign affiliate of a corporation or a foreign affiliate of a person resident in Canada with whom the corporation was not dealing at arm’s length, or payment of an amount by a corporation resident in Canada pursuant to an agreement made on terms and conditions that persons who were dealing with each other at arm’s length at the time the agreement was entered into would have been willing to agree to;

(c)  a dividend paid by a corporation resident in Canada on shares of a class of its capital stock; or

(d)  a payment made by a corporation resident in Canada on a reduction of the paid-up capital in respect of shares of a class of its capital stock, not exceeding the total amount of the reduction;

“income from an active business” has the meaning assigned by subsection 1 of section 95 of the Income Tax Act;

“non-discretionary trust”, at any time, means a trust in which all interests were vested indefeasibly at the beginning of the trust’s taxation year that includes that time;

“settlor” in respect of a trust, at any time, means any person or partnership that has made a loan or transfer of property, either directly or indirectly in any manner whatever, to or for the benefit of the trust at or before that time, other than, where the person or partnership deals at arm’s length with the trust at that time,

(a)  a loan made by the person or partnership to the trust at a reasonable rate of interest; or

(b)  a transfer of property made by the person or partnership to the trust for fair market value consideration.

2001, c. 53, s. 41; 2004, c. 8, s. 22; 2010, c. 25, s. 13.

2006-03-01

127.1. In this division,

“active business” has the meaning assigned by subsection 1 of section 95 of the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement);

“controlled foreign affiliate”, at any time, of a taxpayer resident in Canada means a foreign affiliate of such taxpayer that is controlled by the taxpayer, by the taxpayer and not more than four other persons resident in Canada, by not more than four persons resident in Canada, other than the taxpayer, by one or more persons resident in Canada with whom the taxpayer does not deal at arm’s length, or by the taxpayer and one or more persons resident in Canada with whom the taxpayer does not deal at arm’s length;

“exempt loan or transfer” means

(a)  a loan made by a corporation resident in Canada where the interest rate charged on the loan is not less than the interest rate that a lender and a borrower would have been willing to agree to if they were dealing with each other at arm’s length at the time the loan was made;

(b)  a transfer of property by a corporation resident in Canada, other than a transfer of property made for the purpose of acquiring shares of the capital stock of a foreign affiliate of a corporation or a foreign affiliate of a person resident in Canada with whom the corporation was not dealing at arm’s length, or payment of an amount by a corporation resident in Canada pursuant to an agreement made on terms and conditions that persons who were dealing with each other at arm’s length at the time the agreement was entered into would have been willing to agree to;

(c)  a dividend paid by a corporation resident in Canada on shares of a class of its capital stock; or

(d)  a payment made by a corporation resident in Canada on a reduction of the paid-up capital in respect of shares of a class of its capital stock, not exceeding the total amount of the reduction;

“income from an active business” has the meaning assigned by subsection 1 of section 95 of the Income Tax Act;

“non-discretionary trust”, at any time, means a trust in which all interests were vested indefeasibly at the beginning of the trust’s taxation year that includes that time;

“settlor” in respect of a trust, at any time, means any person or partnership that has made a loan or transfer of property, either directly or indirectly in any manner whatever, to or for the benefit of the trust at or before that time, other than, where the person or partnership deals at arm’s length with the trust at that time,

(a)  a loan made by the person or partnership to the trust at a reasonable rate of interest; or

(b)  a transfer of property made by the person or partnership to the trust for fair market value consideration.

2001, c. 53, s. 41; 2004, c. 8, s. 22.