PART X
TAXES ON DEFERRED PROFIT

Sharing Plans and Revoked Plans

198. (1) Every trust governed by a deferred profit sharing plan or revoked plan that

(a) acquires a non-qualified investment, or

(b) uses or permits to be used any property of the trust as security for a loan,

shall pay a tax equal to the fair market value of

(c) the non-qualified investment at the time it was acquired by the trust, or

(d) the property used as security at the time it commenced to be so used.

(2) A trustee of a trust liable to pay tax under subsection 198(1) shall remit the amount of the tax to the Receiver General within 10 days of the day on which the non-qualified investment is acquired or the property is used as security for a loan, as the case may be.

(3) Where a trustee of a trust liable to pay tax under subsection 198(1) does not remit to the Receiver General the amount of the tax within the time specified in subsection 198(2), the trustee is personally liable to pay on behalf of the trust the full amount of the tax and is entitled to recover from the trust any amount paid by the trustee as tax under this section.

(4) Where a trust disposes of a property that, when acquired, was a non-qualified investment, the trust is, on application in accordance with section 202, entitled to a refund of an amount equal to the lesser of

(a) the amount of the tax imposed under this section as a result of the acquisition of the property, and

(b) the proceeds of disposition of the property.

(5) Where a loan, for which a trust has used or permitted to be used trust property as security, ceases to be extant, the trust is, on application in accordance with section 202, entitled to a refund of an amount equal to the amount remaining, if any, when

(a) the net loss (exclusive of payments by the trust as or on account of interest) sustained by the trust in consequence of its using or permitting to be used the property as security for the loan and not as a result of a change in the fair market value of the property

is deducted from

(b) the tax imposed under this section in consequence of the trust's using or permitting to be used the property as security for the loan.

(6) For the purposes of this section,

(a) the acquisition of an interest in or the payment of an amount under a life insurance policy shall be deemed not to be the acquisition of a non-qualified investment, and

(b) the disposition of an interest in a life insurance policy shall be deemed not to be the disposition of a non-qualified investment,

except that where a trust governed by a deferred profit sharing plan or revoked plan makes a payment under or to acquire an interest in a life insurance policy, other than a life insurance policy under which

(c) the trust is, or by virtue of the payment about to become, the only person entitled to any rights or benefits under the policy (other than the rights or benefits of the insurer),

(d) the cash surrender value of the policy (exclusive of accumulated dividends) is or will be, at or before the end of the year in which the insured person attains 69 years of age, if all premiums under the policy are paid, not less than the maximum total amount (exclusive of accumulated dividends) payable by the insurer under the policy, and

(e) the total of the premiums payable in any year under the policy is not greater than the total of the amounts that, if the annual premiums had been payable in monthly instalments, would have been payable as such instalments in the 12 months commencing with the date the policy was issued,

the making of the payment shall be deemed to be the acquisition of a non-qualified investment at a cost equal to the amount of the payment.

(6.1) A life insurance policy giving an option to the policyholder to receive annuity payments that otherwise complies with paragraph 198(6)(d) shall be deemed,

(a) where the option has not been exercised, to comply with that paragraph; and

(b) where at a particular time the option is exercised, to have been disposed of at that time for an amount equal to the cash surrender value of the policy immediately before that time, and an annuity contract shall be deemed to have been acquired at that time at a cost equal to that amount.

(7) Notwithstanding subsection 198(6), where the total of all payments made in a year by a trust governed by a deferred profit sharing plan or revoked plan under or to acquire interests in life insurance policies in respect of which the trust is the only person entitled to any rights or benefits (other than the rights or benefits of the insurer) does not exceed an amount equal to 25% of the total of all amounts paid by employers to the trust in the year under the plan for the benefit of beneficiaries thereunder, the making of the payments under or to acquire interests in such policies shall be deemed, for the purposes of this section, not to be the acquisition of non-qualified investments.

(8) Where a trust surrenders, cancels, assigns or otherwise disposes of its interest in a life insurance policy,

(a) the trust shall be deemed, for the purposes of subsection 198(4), to have disposed of each non-qualified investment that, by virtue of payments under the policy, it was deemed by subsection 198(6) to have acquired; and

(b) the proceeds of the disposition shall be deemed to be the amount, if any, by which

(i) the amount received by the trust in consequence of the surrender, cancellation, assignment or other disposition of its interest in the policy

exceeds the total of

(ii) each amount paid by the trust under or to acquire an interest in the policy, the payment of which is deemed by this section not to be the acquisition of a non-qualified investment, and

(iii) the cash surrender value on December 21, 1966 of the interest of the trust in the policy on that date.

S.C. 1970-71-72, c. 63, s. 1"198"; S.C. 1974-75-76, c. 26, s. 113; S.C. 1977-78, c. 1, s. 90; S.C. 1979, c. 5, s. 57; S.C. 1980-81-82-83, c. 48, s. 115; S.C. 1997, c. 25, s. 54.

199. (1) Every trust governed by a deferred profit sharing plan or revoked plan shall pay a tax

(a) for 1967, equal to the amount, if any, by which 20% of the initial base of the trust exceeds the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before 1968;

(b) for 1968, equal to the amount, if any, by which 40% of the initial base of the trust exceeds the total of

(i) the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before 1969, and

(ii) the tax payable by the trust determined under paragraph 199(1)(a);

(c) for 1969, equal to the amount, if any, by which 60% of the initial base of the trust exceeds the total of

(i) the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before 1970, and

(ii) the tax payable by the trust determined under paragraphs 199(1)(a) and 199(1)(b); and

(d) for 1970, equal to the amount, if any, by which 100% of the initial base of the trust exceeds the total of

(i) the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before 1971, and

(ii) the tax payable by the trust determined under paragraphs 199(1)(a), 199(1)(b) and 199(1)(c).

(2) Where at the end of a year,

(a) the total of all taxes paid by a trust under subsection 199(1)

exceeds

(b) the total of

(i) all refunds made to the trust under this subsection, and

(ii) the amount, if any, by which the initial base of the trust exceeds the proceeds of disposition of its initial non-qualified investments disposed of after December 21, 1966 and before the end of the year,

the trust is, on application in accordance with section 202, entitled to a refund equal to the amount by which the total described in paragraph 199(2)(a) exceeds the total described in paragraph 199(2)(b).

S.C. 1970-71-72, c. 63, s. 1"199".

200. For the purposes of this Part, a distribution by a trust of a non-qualified investment to a beneficiary of the trust shall be deemed to be a disposition of that non-qualified investment and the proceeds of disposition of that non-qualified investment shall be deemed to be its fair market value at the time of the distribution.

S.C. 1970-71-72, c. 63, s. 1"200".

201. Every trust governed by a deferred profit sharing plan or a revoked plan shall, for each calendar year after 1990, pay a tax equal to 50% of the total of all amounts each of which is, by reason of subsection 147(18), an amount taxable under this section for the year.

S.C. 1970-71-72, c. 63, s. 1"201"; S.C. 1976-77, c. 4, s. 68; S.C. 1990, c. 35, s. 20.

202. (1) Within 90 days from the end of each year after 1965, a trustee of every trust governed by a deferred profit sharing plan or revoked plan shall

(a) file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand therefor;

(b) estimate in the return the amount of tax payable by the trust under this Part for the year;

(c) estimate in the return the amount of any refund to which the trust is entitled under this Part for the year; and

(d) pay to the Receiver General the unpaid balance of the trust's tax for the year minus any refund to which it is entitled under this Part, or apply in the return for any amount owing to it.

(2) Where a trustee of a trust has made application for an amount owing to it pursuant to subsection 202(1), the Minister shall

(a) consider the application;

(b) determine the amount of any refund; and

(c) send to the trustee a notice of refund and any amount owing to the trust, or a notice that no refund is payable.

(3) Subsection 150(2), sections 152 and 158, subsections 161(1) and 161(11), sections 162 to 167 and Division J of Part I are applicable to this Part with such modifications as the circumstances require and, for the purposes of the application of those provisions to this Part, a notice of refund under this section shall be deemed to be a notice of assessment.

(4) Subsections 164(3) to 164(4) are applicable, with such modifications as the circumstances require, to refunds of tax under subsection 198(4) or 198(5) or 199(2).

(5) In addition to the interest payable under subsection 161(1), where a taxpayer is required by section 198 to pay a tax and has failed to pay all or any part thereof on or before the day on or before which the tax was required to be paid, the taxpayer shall pay to the Receiver General interest at the prescribed rate on the amount that the taxpayer failed to pay computed from the day on or before which the amount was required to be paid to the day of payment or to the beginning of the period in respect of which the taxpayer is required by subsection 161(1) to pay interest thereon, whichever is earlier.

(6) For the purposes of subsections 161(1) and 202(5), where a trust is liable to pay tax under this Part on the acquisition by it of a non-qualified investment or on the use of its property as security for a loan, it shall, except to the extent that the tax has previously been paid, be deemed to have paid tax on the date on which the property is disposed ofor on which the loan ceases to be extant, as the case may be, in an amount equal to the refund referred to in subsection 198(4) in respect of that property or subsection 198(5) in respect of the loan, as the case may be.

S.C. 1970-71-72, c. 63, s. 1"202"; S.C. 1977-78, c. 32, s. 44; S.C. 1980-81-82-83, c. 48, s. 115; S.C. 1984, c. 1, s. 96; S.C. 1985, c. 45, s. 107; S.C. 1986, c. 6, s. 105.

203. Instead of making a refund to which a trust is entitled under subsection 198(4) or 198(5) or 199(2), the Minister may, where the trust is liable or about to become liable to make another payment under this Act, apply the amount of the refund or any part thereof to that other liability and notify a trustee of the trust of that action.

S.C. 1970-71-72, c. 63, s. 1"203".

204. In this Part,

"equity share" means

(a) a share, other than an excluded share or a non-participating share, the owner of which has, as owner thereof, a right

(i) to a dividend, and

(ii) to a part of the surplus of the corporation after repayment of capital and payment of dividend arrears on the redemption of the share, a reduction of the capital of the corporation or the winding-up of the corporation,

at least as great, in any event, as the right of the owner of any other share, other than a non-participating share, of the corporation, when the magnitude of the right in each case is expressed as a rate based on the paid-up capital value of the share to which the right relates, or

(b) a share, other than an excluded share or a non-participating share, the owner of which has, as owner thereof, a right

(i) to a dividend, after a dividend at a rate not in excess of 12% per annum of the paid-up capital value of each share has been paid to the owners of shares of a class other than the class to which that share belongs, and

(ii) to a part of the surplus of the corporation after repayment of capital and payment of dividend arrears on the redemption of the share, a reduction of the capital of the corporation or the winding-up of the corporation, after a payment of a part of the surplus at a rate not in excess of 10% of the paid-up capital value of each share has been made to the owners of shares of a class other than the class to which that share belongs,

at least as great, in any event, as the right of the owner of any other share, other than a non-participating share, of the corporation, when the magnitude of the right in each case is expressed as a rate based on the paid-up capital value of the share to which the right relates;

"excluded share" means each share of the capital stock of a private corporation where

(a) the paid-up capital of the corporation that is represented by all its issued and outstanding shares that would, but for this definition, be equity shares is less than 50% of the paid-up capital of the corporation that is represented by all its issued and outstanding shares other than non-participating shares, or

(b) a non-participating share of the corporation is issued and outstanding and the owner of which has, as owner thereof, a right to a dividend

(i) at a fixed annual rate in excess of 12%, or

(ii) at an annual rate not in excess of a fixed maximum annual rate, if the fixed maximum annual rate is in excess of 12%,

when the right to the dividend is expressed as a rate based on the paid-up capital value of the share to which the right relates;

"initial base" of a trust means the total of the values of all initial non-qualified investments held by the trust on December 21, 1966 when each such investment is valued at the lower of

(a) its cost to the trust, and

(b) its fair market value on December 21, 1966;

"initial non-qualified investment" of a trust means an investment held by the trust on December 21, 1966 that was, on that date, a non-qualified investment but does not include

(a) any interest in a life insurance policy, or

(b) an equity share that would be a qualified investment if the date of acquisition of the share were December 21, 1966;

"non-participating share" means

(a) in the case of a private corporation, a share the owner of which is not entitled to receive, as owner thereof, any dividend, other than a dividend, whether cumulative or not,

(i) at a fixed annual rate or amount, or

(ii) at an annual rate or amount not in excess of a fixed annual rate or amount, and

(b) in the case of a corporation other than a private corporation, any share other than a common share;

"non-qualified investment" means property that is not a qualified investment for a trust governed by a deferred profit sharing plan or revoked plan within the meaning of the definition "qualified investment" in this subsection;

"paid-up capital value" of a share means the amount determined by the formula

A/B

where

A is the paid-up capital of the corporation that is represented by the shares of the class to which that share belongs, and

B is the number of shares of that class that are in fact issued and outstanding;

"qualified investment" for a trust governed by a deferred profit sharing plan or revoked plan means

(a) money (other than money the fair market value of which exceeds its stated value as legal tender in the country of issuance or money that is held for its numismatic value) and deposits (within the meaning assigned by the Canada Deposit Insurance Corporation Act or with a branch in Canada of a bank) of such money standing to the credit of the trust,

(b) bonds, debentures, notes, mortgages, hypothecary claims or similar obligations described in clause 212(1)(b)(ii)(C), whether issued before, on or after April 15, 1966,

(c) bonds, debentures, notes or similar obligations (other than those described in paragraph 147(2)(c))

(i) issued by a corporation the shares of which are listed on a prescribed stock exchange in Canada, or

(ii) issued by an authorized foreign bank and payable at a branch in Canada of the bank,

(d) shares listed on a prescribed stock exchange in Canada,

(e) equity shares of a corporation by which, before the date of acquisition by the trust of the shares, payments have been made in trust to a trustee under the plan for the benefit of beneficiaries thereunder, if the shares are of a class in respect of which

(i) there is no restriction on their transferability, and

(ii) in each of 4 taxation years of the corporation in the period of the corporation's 5 consecutive taxation years that ended less than 12 months before the date of acquisition of the shares by the trust, and in the corporation's last taxation year in that period, the corporation

(A) paid a dividend on each share of the class of an amount not less than 4% of the cost per share of the shares to the trust, or

(B) had earnings attributable to the shares of the class of an amount not less than the amount obtained when 4% of the cost per share to the trust of the shares is multiplied by the total number of shares of the class that were outstanding immediately after the acquisition,

(f) guaranteed investment certificates issued by a trust company incorporated under the laws of Canada or of a province,

(g) investment contracts described in subparagraph (b)(ii) of the definition "retirement savings plan" in subsection 146(1) and issued by a corporation approved by the Governor in Council for the purposes of that subparagraph,

(h) shares listed on a prescribed stock exchange in a country other than Canada, and

(i) such other investments as may be prescribed by regulations of the Governor in Council made on the recommendation of the Minister of Finance;

"revoked plan" means a deferred profit sharing plan the registration of which has been revoked by the Minister pursuant to subsection 147(14) or 147(14.1).

S.C. 1970-71-72, c. 63, s. 1"204"; S.C. 1974-75-76, c. 26, s. 114; S.C. 1980-81-82-83, c. 48, s. 93; S.C. 1980-81-82-83, c. 140, s. 113; S.C. 1994, c. 7, Sch. III, s. 20(F); S.C. 2001, c. 17, ss. 168, 223.

PART X.1
TAX IN RESPECT OF OVER-CONTRIBUTIONS

to Deferred Income Plans

204.1. (1) Where, at the end of any month after May, 1976, an individual has an excess amount for a year in respect of registered retirement savings plans, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of that portion of the total of all those excess amounts that has not been paid by those plans to the individual before the end of that month.

(2) For the purposes of subsection 204.1(1), where an amount in respect of a plan has been included in computing an individual's income pursuant to paragraph 146(12)(b), that amount shall be deemed to have been paid to the individual by the plan at the time referred to in that paragraph.

(2.1) Where, at the end of any month after December, 1990, an individual has a cumulative excess amount in respect of registered retirement savings plans, the individual shall, in respect of that month, pay a tax under this Part equal to 1% of that cumulative excess amount.

(3) Where, at the end of any month after May, 1976, a trust governed by a deferred profit sharing plan has an excess amount, the trust shall, in respect of that month, pay a tax under this Part equal to 1% of the excess amount.

(4) Where an individual would, but for this subsection, be required to pay a tax under subsection 204.1(1) or 204.1(2.1) in respect of a month and the individual establishes to the satisfaction of the Minister that

(a) the excess amount or cumulative excess amount on which the tax is based arose as a consequence of reasonable error, and

(b) reasonable steps are being taken to eliminate the excess,

the Minister may waive the tax.

S.C. 1976-77, c. 4, s. 69; S.C. 1990, c. 35, s. 21.

204.2. (1) "Excess amount for a year in respect of registered retirement savings plans" of an individual at a particular time means,

(a) where the excess amount is for a year after 1990, nil; and

(b) where the excess amount is for a year before 1991, the amount, if any, by which the total of

(i) all amounts paid by the individual to such plans under which the individual or the individual's spouse or common-law partner is the annuitant, other than amounts

(A) to which paragraph 60(j), 60(j.01), 60(j.1), 60(j.2) or 60(l) applies or would, if the individual were resident in Canada throughout the year, apply, or

(B) transferred to the plan in accordance with any of subsections 146(16), 147(19) and 147.3(1) and 147.3(4) to 147.3(7), and

(ii) all gifts made to such a plan under which the individual is the annuitant, other than gifts made thereto by the individual's spouse or common-law partner,

in the year and before the particular time, exceeds the total of

(iii) all amounts that may be deducted in computing the individual's income for the immediately preceding year in respect of those payments, and

(iv) the greater of $5,500 and the amount that may be deducted in computing the individual's income for the year in respect of those payments.

(1.1) The cumulative excess amount of an individual in respect of registered retirement savings plans at any time in a taxation year is the amount, if any, by which

(a) the amount of the individual's undeducted RRSP premiums at that time

exceeds

(b) the amount determined by the formula

A + B + R + C + D + E

where

A is the individual's unused RRSP deduction room at the end of the preceding taxation year,

B is the amount, if any, by which

(i) the lesser of the RRSP dollar limit for the year and 18% of the individual's earned income (as defined in subsection 146(1)) for the preceding taxation year

exceeds the total of all amounts each of which is

(ii) the individual's pension adjustment for the preceding taxation year in respect of an employer, or

(iii) a prescribed amount in respect of the individual for the year,

C is, where the individual attained 18 years of age in a preceding taxation year, $2,000, and in any other case, nil,

D is the group RRSP amount in respect of the individual at that time,

E is, where the individual attained 18 years of age before 1995, the individual's transitional amount at that time, and in any other case, nil, and

R is the individual's total pension adjustment reversal for the year.

(1.2) For the purposes of subsection 204.2(1.1) and the description of K in paragraph 204.2(1.3)(a), the amount of undeducted RRSP premiums of an individual at any time in a taxation year is the amount determined by the formula

H + I - J

where

H

is for taxation years ending before 1992, nil, and for taxation years ending after 1991, the amount, if any, by which

(a) the amount of the individual's undeducted RRSP premiums at the end of the immediately preceding taxation year

exceeds

(b) the total of the amounts deducted under subsections 146(5) and 146(5.1) in computing the individual's income for the immediately preceding taxation year, to the extent that each amount was deducted in respect of premiums paid under registered retirement savings plans in or before that preceding year,

I

is the total of all amounts each of which is

(a) a premium (within the meaning assigned by subsection 146(1)) paid by the individual in the year and before that time under a registered retirement savings plan under which the individual or the individual's spouse or common-law partner was the annuitant (within the meaning assigned by subsection 146(1)) at the time the premium was paid, other than

(i) an amount paid to the plan in the first 60 days of the year and deducted in computing the individual's income for the immediately preceding taxation year,

(ii) an amount paid to the plan in the year and deducted under paragraph 60(j), 60(j.1), 60(j.2) or 60(l) in computing the individual's income for the year or the immediately preceding taxation year,

(iii) an amount transferred to the plan on behalf of the individual in accordance with any of subsections 146(16), 147(19) and 147.3(1) and 147.3(4) to 147.3(7) or in circumstances to which subsection 146(21) applies,

(iv) an amount deductible under subsection 146(6.1) in computing the individual's income for the year or a preceding taxation year,

(v) where the individual is a non-resident person, an amount that would, if the individual were resident in Canada throughout the year and the immediately preceding taxation year, be deductible under paragraph 60(j), 60(j.1), 60(j.2) or 60(l) in computing the individual's income for the year or the immediately preceding taxation year, or

(vi) an amount paid to the plan in the year that is not deductible in computing the individual's income for the year because of subparagraph 146(5)(a)(iv.1) or 146(5.1)(a)(iv), or

(b) a gift made in the year and before that time to a registered retirement savings plan under which the individual is the annuitant (within the meaning assigned by subsection 146(1)), other than a gift made thereto by the individual's spouse or common-law partner, and

J

is the amount, if any, by which

(a) the total of all amounts each of which is an amount (other than the portion thereof that reduces the amount on which tax is payable by the individual under subsection 204.1(1)) received by the individual in the year and before that time out of or under a registered retirement savings plan or a registered retirement income fund and included in computing the individual's income for the year

exceeds

(b) the amount deducted under paragraph 60(l) in computing the individual's income for the year.

(1.3) For the purposes of this section, the group RRSP amount in respect of an individual at any time in a taxation year is the lesser of

(a) the lesser of the value of F and the amount determined by the formula

F - (G - K)

where

F is the lesser of

(i) the total of all amounts each of which is a qualifying group RRSP premium paid by the individual, to the extent that the premium is included in determining the value of I in subsection 204.2(1.2) in respect of the individual at that time, and

(ii) the RRSP dollar limit for the following taxation year,

G is the amount that would be determined under paragraph 204.2(1.1)(b) in respect of the individual at that time if the values of C, D and E in that paragraph were nil, and

K is

(i) where the year is the 1996 taxation year, the amount, if any, by which the amount of the individual's undeducted RRSP premiums at the beginning of the year exceeds the individual's cumulative excess amount in respect of registered retirement savings plans at the end of the 1995 taxation year, and

(ii) in any other case, the group RRSP amount in respect of the individual at the end of the preceding taxation year, and

(b) the amount that would be the individual's cumulative excess amount in respect of registered retirement savings plans at that time if the value of D in paragraph 204.2(1.1)(b) were nil.

(1.31) For the purpose of the description of F in paragraph 204.2(1.3)(a), a qualifying group RRSP premium paid by an individual is a premium paid under a registered retirement savings plan where

(a) the plan is part of a qualifying arrangement,

(b) the premium is an amount to which the individual is entitled for services rendered by the individual (whether or not as an employee), and

(c) the premium was remitted to the plan on behalf of the individual by the person or body of persons that is required to remunerate the individual for the services, or by an agent for that person or body,

but does not include the part, if any, of a premium that, by making (or failing to make) an election or exercising (or failing to exercise) any other right under the arrangement after beginning to participate in the arrangement and within 12 months before the time the premium was paid, the individual could have prevented from being paid under the plan and that would not as a consequence have been required to be remitted on behalf of the individual to another registered retirement savings plan or to a registered pension plan in respect of a money purchase provision of the plan.

(1.32) For the purpose of paragraph 204.2(1.31)(a), a qualifying arrangement is an arrangement under which premiums that satisfy the conditions in paragraphs 204.2(1.31)(b) and 204.2(1.31)(c) are remitted to registered retirement savings plans on behalf of two or more individuals, but does not include an arrangement where it is reasonable to consider that one of the main purposes of the arrangement is to reduce tax payable under this Part.

(1.4) For the purposes of subsection 204.2(1.2),

(a) where an amount in respect of a registered retirement savings plan has been included in computing an individual's income pursuant to paragraph 146(12)(b), that amount shall be deemed to have been received by the individual out of the plan at the time referred to in that paragraph; and

(b) where an amount in respect of a registered retirement income fund has been included in computing an individual's income pursuant to paragraph 146.3(11)(b), that amount shall be deemed to have been received by the individual out of the fund at the time referred to in that paragraph.

(1.5) For the purpose of the description of E in paragraph 204.2(1.1)(b), an individual's transitional amount at any time in a taxation year is the lesser of

(a) $6,000, and

(b) where the value of L is nil, nil, and in any other case, the amount determined by the formula

L - M

where

L is the amount, if any, by which

(i) the amount that would be determined under subsection 204.2(1.2) to be the amount of the individual's undeducted RRSP premiums at that time if

(A) the value of I in that subsection were determined for the 1995 taxation year without including premiums paid after February 26, 1995,

(B) the value of I in that subsection were nil for the 1996 and subsequent taxation years, and

(C) the value of J in that subsection were determined for the 1995 and subsequent taxation years without including the part, if any, of an amount received by the individual out of or under a registered retirement savings plan or registered retirement income fund that can reasonably be considered to be in respect of premiums paid after February 26, 1995 by the individual under a registered retirement savings plan

exceeds

(ii) the total of all amounts each of which is an amount deducted under subsection 146(5) or 146(5.1) in computing the individual's income for a preceding taxation year, to the extent that the amount was deducted in respect of premiums paid after that year (other than premiums paid before February 27, 1995), and

M is the amount that would be determined by the formula in paragraph 204.2(1.1)(b) in respect of the individual at that time if the values of D and E in that paragraph were nil and section 257 did not apply to that formula.

(2) Notwithstanding paragraph 146(12)(a), for the purposes of this Part, where a registered retirement savings plan ceases to exist and a payment or transfer of funds out of that plan has been made to which subsection 146(16) applied, if an individual's excess amount for a year in respect of registered retirement savings plans would have been greater had that plan not ceased to exist, for the purpose of computing the excess amount for a year in respect of registered retirement savings plans for so long as the individual or the individual's spouse or common-law partner is the annuitant under any registered retirement savings plan under which an annuity has not commenced to be paid to the annuitant, the plan that ceased to exist shall be deemed to remain in existence and the individual or the individual's spouse or common-law parnter, as the case may be, shall be deemed to continue to be the annuitant thereunder.

(3) Where a retirement savings plan under which an individual or the individual's spouse or common-law partner is the annuitant (within the meaning assigned by subsection 146(1)) is accepted by the Minister for registration, for the purpose of determining

(a) the amount of undeducted RRSP premiums of the individual at any time, and

(b) the excess amount for a year in respect of registered retirement savings plans of the individual at any time,

the retirement savings plan shall be deemed to have become a registered retirement savings plan on the later of the day on which the plan came into existence and May 25, 1976.

(4) "Excess amount" at any time for a trust governed by a deferred profit sharing plan means the total of all amounts each of which is

(a) such portion of the total of all contributions made to the trust before that time and after May 25, 1976 by a beneficiary under the plan, other than

(i) contributions that have been deducted by the beneficiary under paragraph 60(k) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952,

(ii) amounts transferred to the plan on behalf of the beneficiary in accordance with subsection 147(19), or

(iii) the portion of the contributions (other than contributions referred to in subparagraphs 204.2(4)(a)(i) and 204.2(4)(a)(ii)) made by the beneficiary in each calendar year before 1991 not in excess of $5,500,

as has not been returned to the beneficiary before that time; or

(b) a gift received by the trust before that time and after May 25, 1976.

S.C. 1976-77, c. 4, s. 69; S.C. 1979, c. 5, s. 58; S.C. 1980-81-82-83, c. 140, s. 114; S.C. 1984, c. 45, s. 84; S.C. 1986, c. 55, s. 71; S.C. 1990, c. 35, s. 22; S.C. 1994, c. 7, Sch. VIII, s. 117; S.C. 1994, c. 21, s. 92; S.C. 1995, c. 3, s. 49; S.C. 1996, c. 21, s. 51; S.C. 1998, c. 19, s. 49; S.C. 2000, c. 12, s. 142.

204.3. (1) Within 90 days after the end of each year after 1975, a taxpayer to whom this Part applies shall

(a) file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand therefor;

(b) estimate in the return the amount of tax, if any, payable by the taxpayer under this Part in respect of each month in the year; and

(c) pay to the Receiver General the amount of tax, if any, payable by the taxpayer under this Part in respect of each month in the year.

(2) Subsections 150(2) and 150(3), sections 152 and 158, subsections 161(1) and 161(11), sections 162 to 167 and Division J of Part I are applicable to this Part with such modifications as the circumstances require.

S.C. 1976-77, c. 4, s. 69; S.C. 1980-81-82-83, c. 48, s. 115; S.C. 1986, c. 6, s. 106.

PART X.2
TAX IN RESPECT OF REGISTERED INVESTMENTS

204.4. (1) In this Part, "registered investment" means a trust or a corporation that has applied in prescribed form as of a particular date in the year of application and has been accepted by the Minister as of that date as a registered investment for one or more of the following:

(a) registered retirement savings plans,

(b) (Repealed by S.C. 1986, c. 6, s. 107(1).)

204.4(1)(c) registered retirement income funds, and

(d) deferred profit sharing plans

and that has not been notified by the Minister that it is no longer registered under this Part.

(2) The Minister may accept for registration for the purposes of this Part any applicant that is

(a) a trust that has as its sole trustee a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee if, on the particular date referred to in subsection 204.4(1),

(i) all the property of the applicant is held in trust for the benefit of not fewer than 20 beneficiaries and

(A) not fewer than 20 beneficiaries are taxpayers described in paragraph 205(a) or 205(c), or

(B) not fewer than 100 beneficiaries are taxpayers described in paragraph 205(b) or 205(e),

(ii) the total of

(A) the fair market value at the time of acquisition of its

(I) shares, marketable securities and cash, and

(II) bonds, debentures, mortgages, hypothecary claims, notes and other similar obligations, and

(B) the amount by which the fair market value at the time of acquisition of its real property that may reasonably be regarded as being held for the purpose of producing income from property exceeds the total of all amounts each of which is owing by it on account of its acquisition of the real property

is not less than 80% of the amount by which the fair market value at the time of acquisition of all its property exceeds the total of all amounts each of which is owing by it on account of its acquisition of real property,

(iii) the fair market value at the time of acquisition of its shares, bonds, mortgages, hypothecary claims and other securities of any one corporation or debtor (other than bonds, mortgages, hypothecary claims and other securities of or guaranteed by Her Majesty in right of Canada or a province or Canadian municipality) is not more than 10% of the amount by which the fair market value at the time of acquisition of all its property exceeds the total of all amounts each of which is an amount owing by it on account of its acquisition of real property,

(iv) the amount by which

(A) the fair market value at the time of acquisition of any one of its real properties

exceeds

(B) the total of all amounts each of which is owing by it on account of its acquisition of the real property

is not more than 10% of the amount by which the fair market value at the time of acquisition of all its property exceeds the total of all amounts each of which is owing by it on account of its acquisition of real property,

(v) not less than 95% of the income of the applicant for its most recently completed fiscal period, or where no such period exists, that part of its current fiscal period before the particular date, was derived from investments described in subparagraph 204.4(2)(a)(ii),

(vi) the total value of all interests in the applicant owned by all trusts or corporations described in paragraph 205(a) or 205(c) to which any one employer, either alone or together with persons with whom the employer was not dealing at arm's length, has made contributions does not exceed 25% of the value of all its property,

(vii) the total value of all interests in the applicant owned by all trusts described in paragraph 205(b) or 205(e) to which any one taxpayer, either alone or together with persons with whom the taxpayer was not dealing at arm's length, has made contributions does not exceed 25% of the value of all its property, and

(viii) the applicant does not hold property acquired by it after May 26, 1975 that is

(A) a mortgage or hypothecary claim (other than a mortgage or hypothecary claim insured under the National Housing Act or by a corporation that offers its services to the public in Canada as an insurer of mortgages and that is approved as a private insurer of mortgages by the Superintendent of Financial Institutions pursuant to the powers assigned to the Superintendent under subsection 6(1) of the Office of the Superintendent of Financial Institutions Act), or an interest therein, in respect of which the mortgagor or hypothecary debtor is the annuitant under a registered retirement savings plan or a registered retirement income fund, or a person with whom the annuitant is not dealing at arm's length, if any of the funds of a trust governed by such a plan or fund have been used to acquire an interest in the applicant, or

(B) a bond, debenture, note or similar obligation issued by a cooperative corporation (within the meaning assigned by subsection 136(2)) or a credit union that has granted any benefit or privilege to any annuitant or beneficiary under a plan or fund referred to in subsection 204.4(1) that is dependent on or related to

(I) ownership by a trust governed by any such plan or fund of shares, bonds, debentures, notes or similar obligations of the cooperative corporation or credit union, or

(II) ownership by the applicant of shares, bonds, debentures, notes or similar obligations of the cooperative corporation or credit union if the trust governed by any such plan or fund has used any of its funds to acquire an interest in the applicant;

(b) a trust that

(i) would be a trust described in paragraph 204.4(2)(a) if that paragraph were read without reference to subparagraphs 204.4(2)(a)(i), 204.4(2)(a)(vi) and 204.4(2)(a)(vii), and

(ii) holds only prescribed investments for the type of plan or fund in respect of which it has applied for registration;

(c) a mutual fund trust;

(d) a trust that

(i) would be a mutual fund trust if paragraph 132(6)(c) were not applicable, and

(ii) holds only prescribed investments for the type of plan or fund in respect of which it has applied for registration;

(e) a mutual fund corporation or investment corporation; or

(f) a corporation that

(i) would be a mutual fund corporation or investment corporation if it could have elected to be a public corporation under paragraph (b) of the definition "public corporation" in subsection 89(1) had the conditions prescribed therefor required only that a class of shares of its capital stock be qualified for distribution to the public, and

(ii) holds only prescribed investments for the type of plan or fund in respect of which it has applied for registration.

(3) The Minister shall notify a registered investment that it is no longer registered

(a) on being satisfied that, at a date subsequent to its registration date, it no longer satisfies one or more of the conditions necessary for it to be acceptable for registration under this Part, other than a condition the failure of which to satisfy would make it liable for tax under section 204.6; or

(b) within 30 days after receipt of a request in prescribed form from the registered investment for termination of its registration.

(4) Notwithstanding a notification to a taxpayer under subsection 204.4(3), for the purposes of sections 204.6 and 204.7 and Part XI, the taxpayer shall be deemed to be a registered investment for each month or part thereof after the notification during which an interest in, or a share of the capital stock of, the taxpayer continues, by virtue of having been a registered investment, to be a qualified investment for a plan or fund referred to in subsection 204.4(1).

(5) Where a registered investment has been notified pursuant to paragraph 204.4(3)(a) and within 3 months from the date of notification it satisfies the Minister that it is acceptable for registration under this Part, the Minister may declare the notification to be a nullity.

(6) Where at any time in a year a particular trust described in paragraph 204.4(2)(a) or 204.4(2)(b) has substantially the same beneficiaries and can reasonably be regarded as being a continuation of another trust that was a registered investment in the year or the immediately preceding year, for the purposes of this Part, the particular trust shall be deemed to be the same trust as the other trust.

(7) Where at the end of any month a registered investment could qualify for acceptance at that time under subsection 204.4(2), it shall be deemed for the purposes of section 204.6 to have been registered under the first of the following paragraphs under which it is registrable regardless of the paragraph under which it was accepted for registration by the Minister:

(a) paragraph 204.4(2)(c) or 204.4(2)(e), as the case may be;

(b) paragraph 204.4(2)(a);

(c) paragraph 204.4(2)(d) or 204.4(2)(f), as the case may be; and

(d) paragraph 204.4(2)(b).

S.C. 1980-81-82-83, c. 48, s. 94; S.C. 1980-81-82-83, c. 140, s. 115; S.C. 1985, c. 45, s. 108; S.C. 1986, c. 6, s. 107; S.C. 2001, c. 17, s. 224.

204.5. Each year the Minister shall cause to be published in the Canada Gazette a list of all registered investments as of December 31 of the preceding year.

S.C. 1980-81-82-83, c. 48, s. 94.

204.6. (1) Where at the end of any month a taxpayer that is a registered investment described in paragraph 204.4(2)(b), 204.4(2)(d) or 204.4(2)(f) holds property that is not a prescribed investment for that taxpayer, it shall, in respect of that month, pay a tax under this Part equal to 1% of the fair market value at the time of its acquisition of each such property.

(2) Where at the end of any month a taxpayer that is a registered investment described in paragraph 204.4(2)(a) or (b) holds property that is a share, bond, mortgage, hypothecary claim or other security of a corporation or debtor (other than bonds, mortgages, hypothecary claims and other securities of or guaranteed by Her Majesty in right of Canada or a province or Canadian municipality), it shall, in respect of that month, pay a tax under this Part equal to 1% of the amount, if any, by which

(a) the total of all amounts each of which is the fair market value of such a property at the time of its acquisition

exceeds

(b) 10% of the amount by which

(i) the total of all amounts each of which is the fair market value, at the time of acquisition, of one of its properties

exceeds

(ii) the total of all amounts each of which is an amount owing by the trust at the end of the month in respect of the acquisition of real property.

(3) Where at the end of any month a taxpayer that is a registered investment described in paragraph 204.4(2)(a) holds real property, it shall, in respect of that month, pay a tax under this Part equal to 1% of the total of all amounts each of which is the amount by which the excess of

(a) the fair market value at the time of its acquisition of any one real property of the taxpayer

over

(b) the total of all amounts each of which was an amount owing by it at the end of the month on account of its acquisition of the real property

was greater than 10% of the amount by which the total of all amounts each of which is the fair market value at the time of its acquisition of a property held by it at the end of the month exceeds the total of all amounts each of which was an amount owing by it at the end of the month on account of its acquisition of real property.

S.C. 1980-81-82-83, c. 48, s. 94; S.C. 1980-81-82-83, c. 140, s. 116; S.C. 2001, c. 17, s. 225.

204.7. (1) Within 90 days from the end of each taxation year commencing after 1980, a registered investment shall

(a) file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand therefor;

(b) estimate in the return the amount of tax, if any, payable by it under this Part for the year; and

(c) pay to the Receiver General the amount of tax, if any, payable by it under this Part for the year.

(2) Where the trustee of a registered investment that is liable to pay tax under this Part does not remit to the Receiver General the amount of the tax within the time specified in subsection 204.7(1), the trustee is personally liable to pay on behalf of the registered investment the full amount of the tax and is entitled to recover from the registered investment any amount paid by the trustee as tax under this section.

(3) Subsections 150(2) and 150(3), sections 152 and 158, subsections 161(1) and 161(11), sections 162 to 167 and Division J of Part I are applicable to this Part with such modifications as the circumstances require.

S.C. 1980-81-82-83, c. 48, s. 94; S.C. 1986, c. 6, s. 108.