Archived - Notice of Ways and Means Motion to Implement Certain Provisions of the Budget Tabled in Parliament on February 23, 2005
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Budget Implementation Act, 2005, No. 2
Budget Implementation, 2005
THE MINISTER OF FINANCE
90350-2005-10-26
That it is expedient to implement certain provisions of the budget tabled in Parliament on February 23, 2005 as follows:
SHORT TITLE
Short title
1. This Act may be cited as the Budget Implementation Act, 2005, No. 2.
R.S., c. 1 (5th Supp.)
INCOME TAX ACT
2. (1) Clauses (F) to (H) of subparagraph (ii) of the description of A in paragraph 64(a) of the Income Tax Act are replaced by the following:
(F) where the taxpayer has an impairment in physical or mental functions, for the cost of note-taking services and to a person engaged in the business of providing such services, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires such services,
(G) where the taxpayer has an impairment in physical functions, for the cost of voice recognition software, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires that software,
(H) where the taxpayer has a learning disability or an impairment in mental functions, for the cost of tutoring services that are rendered to, and supplementary to the primary education of, the taxpayer and to a person ordinarily engaged in the business of providing such services to individuals who are not related to the person, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that disability or impairment, requires those services,
(2) Subparagraph (ii) of the description of A in paragraph 64(a) of the Act is amended by striking out the word "and" at the end of clause (I) and by adding the following after clause (J):
(K) where the taxpayer has a severe and prolonged impairment in physical or mental functions, for the cost of job coaching services (not including job placement or career counselling services) and to a person engaged in the business of providing such services if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires such services,
(L) where the taxpayer is blind or has a severe learning disability, for the cost of reading services and to a person engaged in the business of providing such services, if the taxpayer has been certified in writing by a medical practitioner to be a person who, because of that impairment or disability, requires those services,
(M) where the taxpayer is blind and profoundly deaf, for the cost of deaf-blind intervening services and to a person engaged in the business of providing such services,
(N) where the taxpayer has a speech impairment, for the cost of a device that is a Bliss symbol board, or a similar device, that is prescribed by a medical practitioner to help the taxpayer communicate by selecting the symbols or spelling out words,
(O) where the taxpayer is blind, for the cost of a device that is a Braille note-taker, prescribed by a medical practitioner to allow the taxpayer to take notes (that can be read back to them or printed or displayed in Braille) with the help of a keyboard,
(P) where the taxpayer has a severe and prolonged impairment in physical functions that markedly restricts their ability to use their arms or hands, for the cost of a device that is a page turner prescribed by a medical practitioner to help the taxpayer to turn the pages of a book or other bound document, and
(Q) where the taxpayer is blind, or has a severe learning disability, for the cost of a device or software that is prescribed by a medical practitioner and designed to enable the taxpayer to read print.
(3) Subsections (1) and (2) apply to the 2005 and subsequent taxation years.
3. (1) Subsection 67.1(1) of the Act is replaced by the following:
Expenses for food, etc.
67.1 (1) For the purposes of this Act, other than sections 62, 63, 118.01 and 118.2, an amount paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment is deemed to be 50% of the lesser of
(a) the amount actually paid or payable in respect thereof, and
(b) an amount in respect thereof that would be reasonable in the circumstances.
(2) Subsection (1) applies to the 2005 and subsequent taxation years.
4. (1) Subsection 87(2) of the Act is amended by adding the following before paragraph (t):
Tax deferred cooperative shares
(s) for the purpose of section 135.1, if the new corporation is, at the beginning of its first taxation year, an agricultural cooperative corporation (within the meaning assigned by subsection 135.1(1)),
(i) the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation that was an agricultural cooperative corporation at the end of the predecessor corporation's last taxation year, and
(ii) if, on the amalgamation, the new corporation issues a share (in this subparagraph referred to as the "new share") that is described in all of paragraphs (b) to (d) of the definition "tax deferred cooperative share" in subsection 135.1(1) to a taxpayer in exchange for a share of a predecessor corporation (in this subparagraph referred to as the "old share") that was, at the end of the predecessor corporation's last taxation year, a tax deferred cooperative share within the meaning assigned by that definition, and the amount of paid-up capital, and the amount, if any, that the taxpayer is entitled to receive on a redemption, acquisition or cancellation, of the new share are equal to those amounts, respectively, in respect of the old share,
(A) the new share is deemed to have been issued at the time the old share was issued, and
(B) in applying subsection 135.1(2), the taxpayer is deemed to have disposed of the old share for nil proceeds;
(2) Subsection (1) applies after 2005.
5. (1) The portion of subsection 117.1(1) of the Act before paragraph (a) is replaced by the following:
Annual adjustment (indexing)
117.1 (1) Each of the amounts expressed in dollars in subsection 117(2), the description of B in subsection 118(1), subsections 118(2) and 118.01(2), the descriptions of C and F in subsection 118.2(1), subsections 118.3(1), 122.5(3) and 122.51(1) and (2) and Part I.2 in relation to tax payable under this Part or Part I.2 for a taxation year shall be adjusted so that the amount to be used under those provisions for the year is the total of
(2) Subsection (1) applies to the 2006 and subsequent taxation years.
6. (1) The Act is amended by adding the following after section 118:
Definitions
118.01 (1) The following definitions apply in this section.
"adoption period"
« période d'adoption »
"adoption period", in respect of an eligible child of an individual, means the period that
(a) begins at the earlier of the time that the eligible child's adoption file is opened with a provincial ministry responsible for adoption (or with an adoption agency licensed by a provincial government) and the time, if any, that an application related to the adoption is made to a Canadian court; and
(b) ends at the later of the time an adoption order is issued by, or recognized by, a government in Canada in respect of that child, and the time that the child first begins to reside permanently with the individual.
"eligible adoption expense"
« dépense d'adoption admissible »
"eligible adoption expense", in respect of an eligible child of an individual, means an amount paid for expenses incurred during the adoption period in respect of the adoption of that child, including
(a) fees paid to an adoption agency licensed by a provincial government;
(b) court costs and legal and administrative expenses related to an adoption order in respect of that child;
(c) reasonable and necessary travel and living expenses of the child and the adoptive parents;
(d) document translation fees;
(e) mandatory fees paid to a foreign institution; and
(f) any other reasonable expenses related to the adoption required by a provincial government or an adoption agency licensed by a provincial government.
"eligible child"
« enfant admissible »
"eligible child", of an individual, means a child who has not attained the age of 18 years at the time that an adoption order is issued or recognized by a government in Canada in respect of the adoption of that child by that individual.
Adoption expense tax credit
(2) For the purpose of computing the tax payable under this Part by an individual for the taxation year that includes the end of the adoption period in respect of an eligible child of the individual, there may be deducted the amount determined by the formula
A x B
where
A is the appropriate percentage for the year; and
B is the lesser of
(a) $10,000, and
(b) the amount determined by the formula
C - D
where
C is the total of all eligible adoption expenses in respect of the eligible child, and
D is the total of all amounts each of which is the amount of a reimbursement or any other form of assistance (other than an amount that is included in computing the individual's income and that is not deductible in computing the individual's taxable income) that any individual is or was entitled to receive in respect of an amount included in computing the value of C.
Apportionment of credit
(3) Where more than one individual is entitled to a deduction under this section for a taxation year in respect the adoption of an eligible child, the total of all amounts so deductible shall not exceed the maximum amount that would be so deductible for the year by any one of those individuals for that child if that individual were the only individual entitled to deduct an amount for the year under this section, and if the individuals cannot agree as to what portion of the amount each can so deduct, the Minister may fix the portions.
(2) Subsection (1) applies to the 2005 and subsequent taxation years.
7. (1) The portion of the description of D in subsection 118.2(1) of the Act before the formula is replaced by the following:
D is the total of all amounts each of which is, in respect of a dependant of the individual (within the meaning assigned by subsection 118(6), other than a child of the individual who has not attained the age of 18 years before the end of the taxation year), the lesser of $10,000 and the amount determined by the formula
(2) Paragraph 118.2(2)(i) of the Act is replaced by the following:
(i) for, or in respect of, an artificial limb, an iron lung, a rocking bed for poliomyelitis victims, a wheel chair, crutches, a spinal brace, a brace for a limb, an iliostomy or colostomy pad, a truss for hernia, an artificial eye, a laryngeal speaking aid, an aid to hearing, an artificial kidney machine, phototherapy equipment for the treatment of psoriasis or other skin disorders, or an oxygen concentrator, for the patient;
(3) Paragraphs 118.2(2)(l.2) and (l.21) of the Act are replaced by the following:
(l.2) for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient to gain access to, or to be mobile or functional within, the dwelling, provided that such expenses
(i) are not of a type that would typically be expected to increase the value of the dwelling, and
(ii) are of a type that would not normally be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment;
(l.21) for reasonable expenses relating to the construction of the principal place of residence of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, that can reasonably be considered to be incremental costs incurred to enable the patient to gain access to, or to be mobile or functional within, the patient's principal place of residence, provided that such expenses
(i) are not of a type that would typically be expected to increase the value of the dwelling, and
(ii) are of a type that would not normally be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment;
(4) Subsection 118.2(2) of the Act is amended by adding the following after paragraph (l.42):
(l.43) on behalf of the patient who is blind or has a severe learning disability, for reading services, if
(i) the patient has been certified in writing by a medical practitioner to be a person who, because of that impairment, requires such services, and
(ii) the payment is made to a person in the business of providing such services;
(l.44) on behalf of the patient who is blind and profoundly deaf, for deaf-blind intervening services, if the payment is made to a person in the business of providing those services;
(5) Subsection 118.2(2) of the Act is amended by striking out the word "or" at the end of paragraph (q) and by adding the following after paragraph (r):
(s) for drugs obtained under Health Canada's Special Access Programme in accordance with sections C.08.010 and C.08.011 of the Food and Drug Regulations and purchased for use by the patient;
(t) for medical devices obtained under Health Canada's Special Access Programme in accordance with Part 2 of the Medical Devices Regulations and purchased for use by the patient; or
(u) on behalf of the patient who is authorized to possess marihuana for medical purposes under the Marihuana Medical Access Regulations or section 56 of the Controlled Drugs and Substances Act, for
(i) the cost of medical marihuana or marihuana seeds purchased from Health Canada, or
(ii) the cost of marihuana purchased from an individual who possesses, on behalf of that patient, a Designated-person Production license to produce marihuana under the Marihuana Medical Access Regulations or an Exemption for cultivation or production under section 56 of the Controlled Drugs and Substances Act.
(6) Subsections (1), (2), (4) and (5) apply to the 2005 and subsequent taxation years.
(7) Subsection (3) applies to expenses incurred after February 22, 2005.
8. (1) Paragraph 118.3(1)(a) of the Act is replaced by the following:
(a) an individual has one or more severe and prolonged impairments in physical or mental functions,
(2) The portion of subsection 118.3(1)(a.1) of the Act before subparagraph (i) is replaced by the following:
(a.1) the effects of the impairment or impairments are such that the individual's ability to perform more than one basic activity of daily living is significantly restricted where the cumulative effect of those restrictions is equivalent to having a marked restriction in the ability to perform a basic activity of daily living or are such that the individual's ability to perform a basic activity of daily living is markedly restricted or would be markedly restricted but for therapy that
(3) Paragraph 118.3(1)(a.2) of the Act is replaced by the following:
(a.2) in the case of an impairment in physical or mental functions the effects of which are such that the individual's ability to perform a single basic activity of daily living is markedly restricted or would be so restricted but for therapy referred to paragraph (a.1), a medical practitioner has certified in prescribed form that the impairment is a severe and prolonged impairment in physical or mental functions the effects of which are such that the individual's ability to perform a basic activity of daily living is markedly restricted or would be markedly restricted, but for therapy referred to in paragraph (a.1), where the medical practitioner is a medical doctor or, in the case of
(i) a sight impairment, an optometrist,
(ii) a speech impairment, a speech-language pathologist,
(iii) a hearing impairment, an audiologist,
(iv) an impairment with respect to an individual's ability in feeding or dressing themself, an occupational therapist,
(v) an impairment with respect to an individual's ability in walking, an occupational therapist, or after February 22, 2005, a physiotherapist, and
(vi) an impairment with respect to an individual's ability in mental functions necessary for everyday life, a psychologist,
(a.3) in the case of one or more impairments in physical or mental functions the effects of which are such that the individual's ability to perform more than one basic activity of daily living is significantly restricted, a medical practitioner has certified in prescribed form that the impairment or impairments are severe and prolonged impairments in physical or mental functions the effects of which are such that the individual's ability to perform more than one basic activity of daily living is significantly restricted and that the cumulative effect of those restrictions is equivalent to having a marked restriction in the ability to perform a single basic activity of daily living, where the medical practitioner is, in the case of
(i) an impairment with respect to the individual's ability in feeding or dressing themself, or in walking, a medical doctor or an occupational therapist, and
(ii) in the case of any other impairment, a medical doctor,
(4) The Act is amended by adding the following after subsection 118.3(1):
Time spent on therapy
(1.1) For the purpose of paragraph 118.3(1)(a.1), in determining whether therapy is required to be administered at least three times each week for a total duration averaging not less than an average of 14 hours a week, the time spent on administering therapy
(a) includes only time spent on activities that require the individual to take time away from normal everyday activities in order to receive the therapy,
(b) in the case of therapy that requires a regular dosage of medication that is required to be adjusted on a daily basis, includes (subject to paragraph (d)) time spent on activities that are directly related to the determination of the dosage of the medication,
(c) in the case of a child who is unable to perform the activities related to the administration of the therapy as a result of the child's age, includes the time, if any, spent by the child's primary caregivers performing or supervising those activities for the child, and
(d) does not include time spent on activities related to dietary or exercise restrictions or regimes (even if these restrictions or regimes are a factor in determining the daily dosage of medication), travel time, medical appointments, shopping for medication or recuperation after therapy.
(5) Subsections (1) to (4) are applicable to the 2005 and subsequent taxation years.
9. (1) Subsection 118.4(1) of the Act is amended by adding the following after paragraph (b):
(b.1) an individual is considered to have the equivalent of a marked restriction in a basic activity of daily living only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual's ability to perform more than one basic activity of daily living (including for this purpose, the ability to see) is significantly restricted, and the cumulative effect of those restrictions is tantamount to the individual's ability to perform a basic activity of daily living being markedly restricted;
(2) Subparagraph 118.4(1)(c)(i) of the Act is replaced by the following:
(i) mental functions necessary for everyday life,
(3) Subsection 118.4(1) of the Act is amended by adding the following after paragraph (c):
(c.1) mental functions necessary for everyday life include
(i) memory,
(ii) problem solving, goal-setting and judgement (taken together), and
(iii) adaptive functioning;
(4) The portion of subsection 118.4(2) of the Act before paragraph (a) is replaced with the following:
Reference to medical practitioners, etc.
(2) For the purposes of sections 63, 64, 118.2, 118.3 and 118.6, a reference to an audiologist, dentist, medical doctor, medical practitioner, nurse, occupational therapist, optometrist, pharmacist, physiotherapist, psychologist, or speech-language pathologist is a reference to a person authorized to practise as such,
(5) Subsections (1) to (3) are applicable to the 2005 and subsequent taxation years.
(6) Subsection (4) is applicable to the 2004 and subsequent taxation years, except that in its application before February 23, 2005, the portion of subsection 118.4(2) of the Act before paragraph (a), as enacted by subsection (4), is to be read as follows:
(2) For the purposes of sections 63, 64, 118.2, 118.3 and 118.6, a reference to an audiologist, dentist, medical doctor, medical practitioner, nurse, occupational therapist, optometrist, pharmacist, psychologist, or speech-language pathologist is a reference to a person authorized to practise as such,
10. (1) Subparagraph 118.91(b)(i) of the Act is replaced by the following:
(i) such of the deductions permitted under subsection 118(3) and sections 118.01, 118.1, 118.2, 118.5, 118.6, 118.62 and 118.7 as can reasonably be considered wholly applicable, and
(2) Subsection (1) applies to the 2005 and subsequent taxation years.
11. (1) Sections 118.92 to 118.94 of the Act are replaced by the following:
Ordering of credits
118.92 In computing an individual's tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsection 118(3) and sections 118.01, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62 and 121.
Credits in separate returns
118.93 Where a separate return of income with respect to a taxpayer is filed under subsection 70(2), 104(23) or 150(4) for a particular period and another return of income under this Part with respect to the taxpayer is filed for a period ending in the calendar year in which the particular period ends, for the purpose of computing the tax payable under this Part by the taxpayer in those returns, the total of all deductions claimed in all those returns under any of subsection 118(3) and sections 118.01 to 118.7 and 118.9 shall not exceed the total that could be deducted under those provisions for the year with respect to the taxpayer if no separate returns were filed under subsections 70(2), 104(23) and 150(4).
Tax payable by non-residents (credits restricted)
118.94 Sections 118, 118.01 and 118.2, subsections 118.3(2) and (3) and sections 118.6, 118.8 and 118.9 do not apply for the purpose of computing the tax payable under this Part for a taxation year by an individual who at no time in the year is resident in Canada unless all or substantially all of the individual's income for the year is included in computing the individual's taxable income earned in Canada for the year.
(2) Subsection (1) applies to the 2005 and subsequent taxation years.
12. (1) Paragraph 118.95(a) of the Act is replaced by the following:
(a) such of the deductions as the individual is entitled to under subsection 118(3) and sections 118.01, 118.1, 118.2, 118.5, 118.6, 118.62 and 118.7 as can reasonably be considered wholly applicable to the taxation year, and
(2) Subsection (1) applies to the 2005 and subsequent taxation years.
13. (1) Clause 128(2)(e)(iii)(A) of the Act is replaced by the following:
(A) under section 118, 118.01, 118.2, 118.3, 118.5, 118.6, 118.8 or 118.9,
(2) Subsection (1) applies to the 2005 and subsequent taxation years.
14. (1) The portion of subsection 135(1) of the Act before paragraph (a) is replaced by the following:
Deduction in computing income
135. (1) Notwithstanding anything in this Part, other than subsections (1.1) to (2.1) and 135.1(3), there may be deducted, in computing the income of a taxpayer for a taxation year, the total of the payments made, pursuant to allocations in proportion to patronage, by the taxpayer
(2) The portion of subsection 135(3) of the Act before paragraph (a) is replaced by the following:
Amount to be deducted or withheld from payment to customer
(3) Subject to subsection 135.1(6), a taxpayer who makes at any particular time in a calendar year a payment pursuant to an allocation in proportion to patronage to a person who is resident in Canada and is not exempt from tax under section 149 shall, notwithstanding any agreement or any law to the contrary, deduct or withhold from the payment an amount equal to 15% of the lesser of the amount of the payment and the amount, if any, by which
(3) The portion of subsection 135(4) of the Act before the definition "allocation in proportion to patronage" is replaced by the following:
Definitions
(4) For the purposes of this section and section 135.1,
(4) Subsection 135(7) of the Act is replaced by the following:
Payment to customer to be included in income
(7) Where a payment pursuant to an allocation in proportion to patronage (other than an allocation in respect of consumer goods or services) has been received by a taxpayer, the amount of the payment shall, subject to subsection 135.1(2), be included in computing the recipient's income for the taxation year in which the payment was received and, without restricting the generality of the foregoing, where a certificate of indebtedness or a share was issued to a person pursuant to an allocation in proportion to patronage, the amount of the payment by virtue of the issue thereof shall be included in computing the recipient's income for the taxation year in which the certificate or share was received and not in computing the recipient's income for the year in which the indebtedness was subsequently discharged or the share was redeemed.
(5) Subsections (1) to (4) apply after 2005.
15. (1) The Act is amended by adding the following after section 135:
Agricultural Cooperatives - Tax-Deferred Patronage Dividends
Definitions
135.1 (1) The following definitions apply in this section and section 135.
"agricultural business"
« entreprise d'agriculture »
"agricultural business" means a business, carried on in Canada, that consists of one or any combination of
(a) farming (including, if the person carrying on the business is a corporation described in paragraph (a) of the definition "agricultural cooperative corporation", the production, processing, storing and wholesale marketing, of the products of its members' farming activities); or
(b) the provision of goods or services (other than financial services) that are required for farming.
"agricultural cooperative corporation"
« coopérative agricole »
"agricultural cooperative corporation" at any time means a corporation
(a) that was incorporated or continued by or under the provisions of a law, of Canada or of a province, that provide for the establishment of the corporation as a cooperative corporation or that provide for the establishment of cooperative corporations; and
(b) that has at that time
(i) as its principal business an agricultural business, or
(ii) members, making up at least 75% of all members of the corporation, each of whom
(A) is an agricultural cooperative corporation, or
(B) has as their principal business a farming business.
"allowable disposition"
« disposition admissible »
"allowable disposition" means a disposition by a taxpayer of a tax deferred cooperative share less than five years after the day on which the share was issued if
(a) before the disposition,
(i) the agricultural cooperative corporation is notified in writing that the taxpayer has after the share was issued become disabled and permanently unfit for work, or terminally ill, or
(ii) the taxpayer ceases to be a member of the agricultural cooperative corporation; or
(b) the agricultural cooperative corporation is notified in writing that the share is held by a person on whom the share has devolved as a consequence of the death of the taxpayer.
"eligible member"
« membre admissible »
"eligible member" of an agricultural cooperative corporation means a member who carries on an agricultural business and who is
(a) an individual resident in Canada;
(b) an agricultural cooperative corporation;
(c) a corporation resident in Canada that carries on the business of farming in Canada; or
(d) a partnership that carries on the business of farming in Canada, all of the members of which are described in any of paragraphs (a) to (c) or this paragraph.
"tax deferred cooperative share"
« part à imposition diffèrée »
"tax deferred cooperative share" at any time, means a share
(a) issued, after 2005 and before 2016, by an agricultural cooperative corporation to a person or partnership that is at the time the share is issued an eligible member of the agricultural cooperative corporation, pursuant to an allocation in proportion to patronage;
(b) the holder of which is not entitled to receive on the redemption, cancellation or acquisition of the share by the agricultural cooperative corporation or by any person with whom the agricultural cooperative corporation does not deal at arm's length an amount that is greater than the amount that would, if this Act were read without reference to this section, be included under subsection 135(7) in computing the eligible member's income for their taxation year in which the share was issued;
(c) that has not before that time been deemed by subsection (4) to have been disposed of; and
(d) that is of a class
(i) the terms of which provide that the agricultural cooperative corporation shall not, otherwise than pursuant to an allowable disposition, redeem, acquire or cancel a share of the class before the day that is five years after the day on which the share was issued, and
(ii) that is identified by the agricultural cooperative corporation in prescribed form and manner as a class of tax deferred cooperative shares.
"tax paid balance"
« solde libéré d'impôt »
"tax paid balance" of a taxpayer at the end of a particular taxation year of the taxpayer, means the amount, if any, by which
(a) the total of
(i) the taxpayer's tax paid balance at the end of the immediately preceding taxation year, and
(ii) the amount, if any, that is included in computing the taxpayer's income under this Part for the particular taxation year because of an election described in subparagraph (2)(a)(ii),
exceeds
(b) the total of all amounts each of which is the taxpayer's proceeds of disposition of a tax deferred cooperative share that the taxpayer disposed of in the particular taxation year.
Income inclusion
(2) In computing the income of a taxpayer for a particular taxation year, there shall be included under subsection 135(7), in respect of the taxpayer's receipt, as an eligible member, of tax deferred cooperative shares of an agricultural cooperative corporation in the particular taxation year, only the total of
(a) the lesser of
(i) the total of all amounts, in respect of the taxpayer's receipt in the particular taxation year of tax deferred cooperative shares, that would, if this Act were read without reference to this section, be included under subsection 135(7) in computing the taxpayer's income for the particular taxation year, and
(ii) the greater of nil and the amount, if any, specified by the taxpayer in an election in prescribed form that is filed with the taxpayer's return of income for the particular taxation year, and
(b) the amount, if any, by which
(i) the total of all amounts each of which is the taxpayer's proceeds of disposition of a tax deferred cooperative share disposed of by the taxpayer in the particular taxation year
exceeds
(ii) the total of
(A) the taxpayer's tax paid balance at the end of the immediately preceding taxation year, and
(B) the amount, if any, that is included in computing the taxpayer's income for the particular taxation year because of an election described in subparagraph (2)(a)(ii).
Deductibility limit
(3) The amount that may be deducted under subsection 135(1) for a particular taxation year by an agricultural cooperative corporation in respect of payments, in the form of tax deferred cooperative shares, made pursuant to allocations in proportion to patronage shall not exceed 85% of the agricultural cooperative corporation's income of the taxation year attributable to business done with members.
Deemed disposition
(4) A taxpayer who holds a tax deferred cooperative share is deemed to have disposed of the share, for proceeds of disposition equal to the amount that would, if this Act were read without reference to this section, have been included under subsection 135(7), in respect of the share, in computing the taxpayer's income for the taxation year in which the share was issued, at the earliest time at which
(a) the paid-up capital of the share is reduced otherwise than by way of a redemption of the share; or
(b) the taxpayer pledges, assigns or in any way alienates the share as security for indebtedness of any kind.
Reacquisition
(5) A taxpayer who is deemed by subsection (4) to have disposed at any time of a tax deferred cooperative share is deemed to have reacquired the share, immediately after that time, at a cost equal to the taxpayer's proceeds of disposition from that disposition.
Exclusion from withholding obligation
(6) Subsection 135(3) does not apply to a payment pursuant to an allocation in proportion to patronage that is paid by an agricultural cooperative corporation through the issuance of a tax deferred cooperative share.
Withholding on redemption
(7) If a share that was, at the time it was issued, a tax deferred cooperative share of an agricultural cooperative corporation is redeemed, acquired or cancelled by the agricultural cooperative corporation, or by a person or partnership with whom the agricultural cooperative corporation does not deal at arm's length, the agricultural cooperative corporation or the person or partnership, as the case may be, shall withhold and forthwith remit to the Receiver General, on account of the shareholder's tax liability, 15% from the amount otherwise payable on the redemption, acquisition or cancellation.
Application of subsections 84(2) and (3)
(8) Subsections 84(2) and (3) do not apply to a tax deferred cooperative share.
(2) Subsection (1) applies after 2005, except that paragraph 135.1(4)(b) of the Act, as enacted by subsection (1), does not apply to any indebtedness entered into before 2006.
16. (1) The portion of subsection 136(2) of the Act before paragraph (a) is replaced by the following:
Definition of "cooperative corporation"
(2) In this section, "cooperative corporation" means a corporation that was incorporated or continued by or under the provisions of a law, of Canada or of a province, that provide for the establishment of the corporation as a cooperative corporation or that provide for the establishment of cooperative corporations, for the purpose of marketing (including processing incident to or connected to the marketing) natural products belonging to or acquired from its members or customers, of purchasing supplies, equipment or household necessaries for or to be sold to its members or customers or of performing services for its members or customers, if
(2) Subsection (1) applies after June 2005.
17. (1) The portion of subsection 227(5) of the Act before paragraph (a) is replaced by the following:
Payments by trustees, etc.
(5) Where a specified person in relation to a particular person (in this subsection referred to as the "payer") has any direct or indirect influence over the disbursements, property, business or estate of the payer and the specified person, alone or together with another person, authorizes or otherwise causes a payment referred to in subsection 135(3), 135.1(7) or 153(1), or on or in respect of which tax is payable under Part XII.5 or XIII, to be made by or on behalf of the payer, the specified person
(2) Paragraph 227(5)(a.1) of the Act is replaced by the following:
(a.1) is, for the purposes of subsections 135.1(7) and 211.8(2), deemed to be a person who redeemed, acquired or cancelled a share and made the payment as a consequence of the redemption, acquisition or cancellation;
(3) Subparagraph 227(5)(b)(i) of the Act is replaced by the following:
(i) all amounts payable by the payer because of any of subsections 135(3), 135.1(7), 153(1) and 211.8(2) and section 215 in respect of the payment, and
(4) The portion of subsection 227(8.3) of the Act before paragraph (a) is replaced by the following:
Interest on amounts not deducted or withheld
(8.3) A person who fails to deduct or withhold any amount as required by subsection 135(3), 135.1(7), 153(1) or 211.8(2) or section 215 shall pay to the Receiver General interest on the amount at the prescribed rate, computed
(5) Paragraph 227(8.3)(b) of the Act is replaced by the following:
(b) in the case of an amount required by subsection 135(3) or 135.1(7) or section 215 to be deducted or withheld, from the day on which the amount was required to be deducted or withheld to the day of payment of the amount to the Receiver General; and
(6) Subsection 227(8.4) of the Act is replaced by the following:
Liability to pay amount not deducted or withheld
(8.4) A person who fails to deduct or withhold any amount as required under subsection 135(3) or 135.1(7) in respect of a payment made to another person or under subsection 153(1) in respect of an amount paid to another person who is non-resident or who is resident in Canada solely because of paragraph 250(1)(a) is liable to pay as tax under this Act on behalf of the other person the whole of the amount that should have been so deducted or withheld and is entitled to deduct or withhold from any amount paid or credited by the person to the other person or otherwise to recover from the other person any amount paid by the person as tax under this Part on behalf of the other person.
(7) Subsections (1) to (6) apply after 2005.
18. (1) Subsection 227.1(1) of the Act is replaced by the following:
Liability of directors for failure to deduct
227.1 (1) Where a corporation has failed to deduct or withhold an amount as required by subsection 135(3) or 135.1(7) or section 153 or 215, has failed to remit such an amount or has failed to pay an amount of tax for a taxation year as required under Part VII or VIII, the directors of the corporation at the time the corporation was required to deduct, withhold, remit or pay the amount are jointly and severally, or solidarily, liable, together with the corporation, to pay that amount and any interest or penalties relating to it.
(2) Subsection (1) applies after 2005.