,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,transf] ( ,"rs 6,9come
,numb]3 ,,it-#ddj;,r#b
,date3 ,june #bj1 #aiie
,ref];e3 ,subsec;n #ef7#d7 7al subsec;ns
  #hb7#b71 #adg.c7#e7 & #bab7#ab77

  ,9t]pret,n bullet9s 7,,it's7 provide
,rev5ue ,canada's te*nical 9t]pret,ns (
9come tax law4 ,due 6_! te*nical nature1
,,it's >e us$ prim>ily 0de"p;tal /aff1
tax speciali/s1 & o!r 9dividuals :o h an
9t]e/ 9 tax matt]s4 ,= ^? r1d]s :o pref]
a less te*nical explan,n (! law1 !
,de"p;t (f]s o!r public,ns1 s* z tax
guides & pamphlets4
  ,:ile ! ,,it's d n h ! =ce ( law1 !y c
g5],y 2 reli$ ^u z reflect+ ! ,de"p;t's
9t]pret,n (! law 6be appli$ on a 3si/5t
basis 0de"p;tal /aff4 ,9 cases ":     #a
             ,,it-#ddj;,r#b          a#a
an ,,it has n yet be5 revis$ 6reflect
legislative *anges1 r1d]s %d ref] 6!
am5d$ legisl,n & xs e6ective date4
,simil>ly1 c\rt deci.ns subsequ5t 6!
date (! ,,it %d 2 3sid]$ :5 det]m9+ !
relevancy (! -;ts 9 ! ,,it4
  ,an 9t]pret,n describ$ 9 an ,,it
applies z (! date ! ,,it is publi%$1
un.s o!rwise specifi$4 ,:5 "! is a *ange
9 a previ\s 9t]pret,n &! *ange is
b5eficial 6taxpay]s1 x is usu,y e6ective
= all future assess;ts & reassess;ts4
,if ! *ange is n fav\ra# 6taxpay]s1 x w
norm,y 2 e6ective =! curr5t & subsequ5t
tax,n ye>s or = transac;ns 5t]$ 96af !
date (! ,,it4
  ,a *ange 9 a de"p;tal 9t]pret,n may al
2 ann\nc$ 9 ! ,9come ,tax ,te*nical
,news4
  ,if y h any -;ts reg>d+ matt]s 4cuss$
9 ? ,,it1 pl1se s5d !m to3


                                      #b
             ,,it-#ddj;,r#b          b#a
  ,director1 ,busi;s & ,public,ns
    ,divi.n
  ,9come ,tax ,rul+s ,directorate
  ,policy & ,legisl,n ,bran*
  ,rev5ue ,canada
  ,ottawa ,,on ,k#a;,a #j;,l#e
  
  ,9t]pret,n bullet9s c 2 f.d on !
,rev5ue ,canada ,9t]net site at3
_+www.rc.gc.ca_:

                 ,3t5ts
    
,applic,n
,summ>y
,4cus.n & ,9t]pret,n
  ,g5]al 7p>agraphs #a1 #b7
  ,p5.n ,b5efits 7p>agraphs #c1 #d7
  ,subsec;n #ef7#d7 ,n ,applica#
    7p>agraphs #e-g7
  ,o!r 7p>agraphs #h-aj7
,explan,n ( ,*anges

                                      #c
               ,applic,n             c#a
    
  ,? bullet9 replaces & c.els ,9t]pret,n
,bullet9 ,,it-#ddj;,r dat$ ,novemb] #cj1
#aihi4

                ,summ>y
    
  ,? bullet9 4cusses subsec;n #ef7#d71 :
provides a rule direct$ ag/ pot5tial
avoid.e ( tax "? ! transf] (a "r 69come
2t "pies n d1l+ at >m's l5g?4 ,g5],y1 "u
? provi.n1 ! 9come 9 "q 3t9ues 6be tax$
9 ! h&s (! transf]or4 ,! -;ts 2l expla9
! applic,n ( subsec;n #ef7#d7 & relat$
tax 3sequ;es4

          ,4cus.n & ,9t]pret,n
    
         ,g5]al 7p>agrpah #a-b7
    
#a4 ,subsec;n #ef7#d7 applies ": a
  taxpay] 7transf]or7 has transf]r$ or
  assign$ 6a p]son 7transf]ee7 ) :om !
  transf]or 0 n d1l+ at >m's l5g?     #d
             ,,it-#ddj;,r#b          d#a
  7see p>agraph #b 2l7 ! "r 6an am.t :1
  _h ! "r n be5 s transf]r$ or assign$1
  wd 2 9clud$ 9 ! 9come (! transf]or4 ,!
  am.t t is 9clud$ 9 9come1 =! #aiib &
  subsequ5t tax,n ye>s1 is ! "p (! am.t
  t relates 6! p]iod 9 ! ye> "?\t : !
  transf]or is resid5t 9 ,canada4 ,see !
  curr5t v].n ( ,,it-#bba1 ,det]m9,n (
  an ,9dividual's ,resid;e ,/atus1 = m
  9=m,n on resid5cy4 ,! "r 6an am.t z
  ref]r$ 6in subsec;n #ef7#d7 is -monly
  call$ a "r 69come4 ,a transf] or
  assign;t 9cludes a sale :e!r or n !
  sale is at fair m>ket value4 ,!
  subsec;n s]ves z an ob/acle 6swit*+
  9come f ! transf]or 6! transf]ee
  0provid+ t ! am.t >is+ f ! "r 2 9clud$
  9 ! transf]or's 9come4
--------------------------------------#b
#b4 ,9 det]m9+ :e!r a transf]or &
  transf]ee >e d1l+ ) ea* o!r at >m's
  l5g?1 pl1se ref] 6! curr5t v].n (
  ,,it-#dai1 ,m1n+ ( ,>m's ,l5g?4
  ,sp\ses >e deem$1 0virtue ( _!      #e
             ,,it-#ddj;,r#b          a#b
  m>ital rel,n%ip1 n 6be d1l+ ) ea* o!r
  at >m's l5g? & ?us subsec;n #ef7#d7 wd
  usu,y apply ": a "r 69come is
  transf]r$ f "o sp\se 6ano!r4 ,subsec;n
  #beb7#d71 : applies af #aiib1 exp&s !
  m1n+ ( 8sp\se0 69clude a p]son (!
  opposite sex :o at a "picul> "t lives
  )! taxpay] 9 a 3jugal rel,n%ip & ei
  has s liv$ )! taxpay] "?\t a #ab-mon?
  p]iod 5d+ 2f t "t1 or ! two 9dividuals
  >e ! natural or adoptive p>5ts (! same
  *4

             ,p5.n ,b5efits
    
#c4 ,subsec;n #ef7#d7 does n apply 6any
  por;n (a retire;t p5.n t ! taxpay]
  assigns "u sec;n #fe.a (! ,canada
  ,p5.n ,plan or "u a -p>a# provi.n (a
  prov9cial p5.n plan z def9$ 9 sec;n #c
  (! ,canada ,p5.n ,plan4 ,! ,quebec
  ,p5.n ,plan is ! only prov9cial p5.n
  plan t has a -p>a# provi.n4
                                      #f
             ,,it-#ddj;,r#b          b#b
#d4 ,g5],y1 ! p5.n b5efits legisl,n (a
  prov9ce provides ! t]ms "u : a por;n
  (! p5.n b5efits (a memb] (a p5.n plan
  may 2 pd 6a sp\se or =m] sp\se "u a
  dome/ic 3tract1 a writt5 sep>,n
  agree;t1 or a divorce decree or c\rt
  ord] "u a prov9cial family law act
  relat+ 6! divi.n ( prop]ty on !
  br1kd[n (a m>riage4 ,subsec;n
  #adg.c7#e7 p]mits a direct transf] (a
  lump sum am.t f "o regi/]$ p5.n plan
  6ano!r1 or 6a regi/]$ retire;t sav+s
  plan or a regi/]$ retire;t 9come fund
  =! b5efit (! sp\se or =m] sp\se (a
  plan memb]4 ,subsec;n #adg.c7#e7
  applies ": ! sp\se or =m] sp\se is
  5titl$ 6an am.t "u a decree1 ord] or
  judg;t (a -pet5t tribunal1 or "u a
  writt5 agree;t1 relat+ 6! divi.n (
  prop]ty 2t ! memb] (! plan &! sp\se or
  =m] sp\se 9 settle;t ( "rs >is+ \ (1
  or on a br1kd[n (1 _! m>riage4 ,": !
  sp\se or =m] sp\se (a plan memb] rcvs
  an am.t f ! regi/]$ p5.n plan1      #g
             ,,it-#ddj;,r#b          c#b
  regi/]$ retire;t sav+s plan or regi/]$
  retire;t 9come fund1 subsec;n #ef7#d7
  w n apply 69clude ! am.t 9 ! 9come (!
  plan memb]4

     ,subsec;n #ef7#d7 ,n ,applica#
            7p>agraphs #e-g7
    
#e4 ,subsec;n #ef7#d7 does n apply 6an
  am.t t is 9come f prop]ty ": !
  transf]or has al transf]r$ or assign$
  ! prop]ty4 ,al? a "r 6an am.t 3/itutes
  prop]ty z def9$ 9 subsec;n #bdh7#a7 &
  cd 2 assign$ z s*1 9 ord] 6fall "u ?
  exempt+ provi.n ( subsec;n #ef7#d7 !
  prop]ty m/ 2 sep>ate & 4t9ct f ! 9come
  : >ises f x s t x wd 2 possi# 6transf]
  "o :ile reta9+ ! o!r4 ,= example1 a
  life 9t]e/ cr1t$ "u a tru/ or te/a;t>y
  9/ru;t is 3sid]$ 6be a prop]ty sep>ate
  & 4t9ct f ! 9come : >ises f x4
  ,3sequ5tly1 ": a life t5ant transf]s a
  life 9t]e/ 9 an e/ate 6"o or m (!
  p]sons 5titl$ 6! residual 9t]e/ 9   #h
             ,,it-#ddj;,r#b          d#b
  ! e/ate1 subsec;n #ef7#d7 does n apply
  s9ce "! is a transf] ( prop]ty z well
  z a transf] (! "r 69come4
#f4 ,:ile subsec;n #ef7#d7 does n apply
  6an am.t t is 9come f prop]ty ": !
  transf]or has al transf]r$ or assign$
  ! prop]ty1 o!r provi.ns (! ,act1 s* z1
  sec;n #gd.a1 may apply 6attribute !
  9come f ! prop]ty 6! transf]or4 ,=a
  4cus.n ( sec;n #gd.a1 see ! curr5t
  v].ns ( ,,it-#eaj1 ,transf]s & ,loans
  ( ,prop]ty made af ,may #bb1 #aihe 6a
  ,relat$ ,m9or1 & ,,it-#eaa1 ,9t]sp\sal
  & ,c]ta9 ,o!r ,transf]s & ,loans (
  ,prop]ty4
#g4 ,! "r 6an am.t 9 ! 3text ( p>agraph
  #a abv ref]s 6! "r 69come1 z oppos$
  6losses1 f all s\rces4 ,h["e1 ": an
  am.t ( 9come 6: subsec;n #ef7#d7
  applies is 9ve/$ or o!rwise us$ 0!
  transf]ee 6e>n fur!r 9come1 subsec;n
  #ef7#d7 w n apply 69clude ! fur!r am.t
  ( 9come 9 ! 9come (! transf]or4
                                      #i
         ,o!r 7p>agraphs #h-aj7      e#b
    
#h4 ,": a taxa# divid5d rcvd 0!
  transf]ee f a taxa# ,canadian corpor,n
  is 9clud$ 9 ! transf]or's 9come
  0virtue ( subsec;n #ef7#d71 ! divid5d
  is deem$ 0subsec;n #hb7#b7 6h be5 rcvd
  0! transf]or = purposes (! gross-up &
  divid5d tax cr$it provi.ns4
#i4 ,": an am.t pd or cr$it$ 6a
  transf]ee :o is a non-resid5t (
  ,canada is 9clud$ 9 ! transf]or's
  9come 0virtue ( subsec;n #ef7#d7 & is
  subject 6tax "u ,"p ;,i (! ,act1
  subsec;n #bab7#ab7 provides t ! am.t
  is n subject 6non-resid5t )hold+ tax
  "u ,"p ,,xiii (! ,act4
#aj4 ,an am.t 6: subsec;n #ef7#d7
  applies cd 2 9clud$ 9 ! 9come ( bo? !
  transf]or & transf]ee4 ,h["e1 ": !
  transf] or assign;t (! "r 6an am.t t
  is 9come does n 3/itute a delib]ate
  attempt 6evade or avoid tax1 ! am.t w
  2 9clud$ only 9 ! 9come (! transf]or4
                                     #aj
          ,explan,n ( ,*anges        f#b
    
               ,9troduc;n
    
  ,! purpose (! ,explan,n ( ,*anges is
6expla9 ! r1sons =! revi.ns 6an
9t]pret,n bullet94 ,x \tl9es revi.ns t
we h made z a result ( *anges 6! law1 z
well z *anges reflect+ new or revis$
de"p;tal 9t]pret,ns4

                ,ov]view
    
  ,": a transf]or transf]s a "r 6rcv
9come 6a transf]ee ) :om ! transf]or
does n d1l at >m's l5g?1 9come rcvd "u !
"r g5],y is 9come (! transf]or r ?an !
transf]ee4
  ,! bullet9 reflects am5d;ts 6subsec;n
#ef7#d7 result+ f ,s4,c4 #aiid1 c4 #ba
7=m]ly ,bill ;,c-#bg7 & a4s 9t]pretative
-;ts4 ,! am5d;ts 6subsec;n #ef7#d7 apply
6! #aiib & subsequ5t tax,n ye>s4

                                     #aa
      ,legislative & ,o!r ,*anges    g#b
    
  ,p>agraph #a reflects a ,bill ;,c-#bg
am5d;t 6subsec;n #ef7#d7 6provide t only
! 9come t relates 6a p]iod "?\t : !
transf]or is resid5t 9 ,canada is 9clud$
9 ! transf]or's 9come4
  ,p>agraph #b has be5 revis$
69corporate ! exp&$ m1n+ ( 8sp\se0 9
subsec;n #beb7#d7 & 6delete ! -;ts 3c]n+
! exemp;n f ! applic,n ( subsec;n
#ef7#d7 :5 p5.n 9come is assign$ 0a
taxpay] "u sec;n #fe.a (! ,canada ,p5.n
,plan or "u a -p>a# provi.n (a prov9cial
p5.n plan4
  ,p>agraph #c 3ta9s ! delet$ -;ts f !
=m] p>agraph #b4 ,x al reflects a ,bill
;,c-#bg am5d;t 6subsec;n #ef7#d71 :
rep1l$ ! ref];e to 8prescrib$ prov9cial
p5.n plan40
  ,p>agraph #d is a new p>agraph 6expla9
t1 "u ! p5.n b5efits legisl,n (a
prov9ce1 a por;n (! p5.n b5efits (a
memb] (a p5.n plan may 2 pd 6a sp\se or
a =m] sp\se (! memb] on ! br1kd[n    #ab
             ,,it-#ddj;,r#b          h#b
( _! m>riage4 ,! p>agraph al describes
subsec;n #adg.c7#e7 : p]mits1 on !
br1kd[n (a m>riage1 ! transf] ( an am.t
f ! regi/]$ p5.n plan ( "o sp\se 6!
regi/]$ p5.n plan1 regi/]$ retire;t
sav+s plan or regi/]$ retire;t 9come
fund (! o!r sp\se4
  ,p>agraph #f is a new p>agraph :
obs]ves t :ile subsec;n #ef7#d7 does n
apply 69come f prop]ty if ! transf]or
has al transf]r$ or assign$ ! prop]ty1
o!r provi.ns (! ,act may require !
transf]or 6report ! 9come4
  ,p>agraph #h 7=m] p>agraph #e7 has be5
revis$ 6delete -;ts on ! 9t]e/ & divid5d
9come deduc;n : appli$ 2f #aihh4







                                     #ac