PART I — Income Tax · DIVISION E — Computation of Tax · SUBDIVISION C — Rules Applicable to all Taxpayers

Definitions

Not yet annotated · Text current to 2026-06-21 · section last amended 2026-03-26

Current text

The following definitions apply in this section.

designated province means a province specified by the Minister of Finance for a calendar year. (province déterminée)

eligible farming expenses, of a taxpayer for a designated province for a taxation year, means the amount determined by the formula

A × B

where

(a)

nil, if the total of all amounts deducted in the year by the taxpayer in computing income under this Part from farming activities, excluding any deductions arising from inventory adjustments under section 28 and from transactions with persons that do not deal at arm’s length with the taxpayer, is less than $25,000, and

(b)

in any other case, the total of all amounts deducted in the year by the taxpayer in computing income under this Part from farming activities, excluding any deductions arising from inventory adjustments under section 28 and from transactions with persons that do not deal at arm’s length with the taxpayer; and

is the taxpayer’s relevant proportion for the designated province for the taxation year. (dépenses agricoles admissibles)

farming activities means a farming business, including or excluding activities prescribed by regulation. (activités agricoles)

payment rate, for a calendar year for a designated province, means the rate specified by the Minister of Finance for the calendar year for the designated province. (taux de paiement)

relevant proportion, of eligible farming expenses of a taxpayer for a designated province for a taxation year, means

(a)

if the taxpayer is an individual, the proportion determined by the formula

A ÷ B

where

is the individual’s income for the year from farming activities that is deemed to have been earned in the year in the designated province in accordance with Part XXVI of the Income Tax Regulations, and

is the whole of the individual’s income from farming activities for the year;

(b)

if the taxpayer is a corporation, the proportion determined by the formula

C ÷ D

where

is the corporation’s taxable income that is deemed to have been earned in the year in the designated province in accordance with Part IV of the Income Tax Regulations, and

is the whole of the corporation’s taxable income for the year; and

(c)

if the taxpayer is a partnership, the proportion determined by the formula

E ÷ F

where

is the partnership’s income for the fiscal period of the partnership from farming activities that would be deemed to have been earned in the year in the designated province, computed in accordance with Part XXVI of the Income Tax Regulations as if the partnership were an individual, and

is the whole of the partnership’s income from farming activities for the fiscal period of the partnership. (proportion pertinente)

Deemed payment on account of tax

(2)

A taxpayer (other than a partnership) that files a prescribed form containing prescribed information with their return of income for a taxation year is deemed, on their balance-due day for the year, to have paid on account of their tax payable under this Part for the year, the total of all amounts each of which is an amount, for each designated province and for each calendar year a portion of which falls within the taxation year, determined by the formula

(A × B) × (C ÷ D)

where

is the payment rate for the calendar year for the designated province;

is the taxpayer’s eligible farming expenses for the designated province for the taxation year;

is the number of days within the taxation year that fall within the calendar year; and

is the number of days in the taxation year.

Deemed payment on account of tax — partnership

(3)

If a taxpayer (other than a partnership) is a member of a partnership at the end of a fiscal period of the partnership that ends in a taxation year of the taxpayer — and the partnership files a prescribed form containing prescribed information for that fiscal period and the taxpayer files a prescribed form containing prescribed information with its return of income for the taxation year — the taxpayer is deemed, on the taxpayer’s balance-due day for the taxation year, to have paid on account of their tax payable under this Part for the year, the total of all amounts each of which is an amount, for each designated province and for each calendar year a portion of which falls within the partnership’s fiscal period, determined by the formula

(A × B) × (C ÷ D) × E

where

is the payment rate for the calendar year for the designated province;

is the partnership’s eligible farming expenses for the designated province for the fiscal period;

is the number of days within the fiscal period that fall within the calendar year;

is the number of days in the fiscal period; and

is the specified proportion of the taxpayer for the fiscal period.

Partnerships

(4)

For the purposes of this section,

(a)

a taxpayer includes a partnership;

(b)

the fiscal period of a partnership is deemed to be its taxation year; and

(c)

if a taxpayer is a member of a particular partnership that is a member of another partnership, the taxpayer is deemed

(i)

to be a member of the other partnership, and

(ii)

to have a specified proportion in the other partnership for a fiscal period of the other partnership equal to its specified proportion of the particular partnership — for the last fiscal period of the particular partnership that ends in the fiscal period of the other partnership — multiplied by the particular partnership’s specified proportion of the other partnership for the fiscal period of the other partnership.

Authority to specify

(5)

For the purposes of this section, the Minister of Finance may specify for a calendar year

(a)

the designated provinces; and

(b)

the payment rate for a designated province.

Payment rate not specified

(6)

For the purposes of this section, if the Minister of Finance does not specify the payment rate for a designated province under paragraph (5)(b), the payment rate is deemed to be nil.

When assistance received

(7)

For the purposes of this Act, and for greater certainty, an amount that a taxpayer is deemed under subsection (2) or (3) to have paid for a taxation year is assistance received by the taxpayer from a government immediately before the end of the year.

Relevant proportion — special rule

(8)

For purposes of determining the relevant proportion of eligible farming expenses of a taxpayer for a designated province in a taxation year,

(a)

if the income of an individual or partnership from farming activities for the year is nil, the income for the year from farming activities that is deemed to have been earned in the year in the designated province shall be computed in accordance with Part XXVI of the Income Tax Regulations as if the individual or partnership earned $1,000,000 of income from farming activities; and

(b)

if the taxable income of a corporation is nil, the corporation’s taxable income that is deemed to have been earned in the year in the designated province shall be computed in accordance with Part IV of the Income Tax Regulations as if the corporation had taxable income for the year in the amount of $1,000,000.

Deemed rebate in respect of fuel charges

(9)

An amount for a designated province included in the total of all amounts deemed by this section to have been paid on account of tax payable for a taxation year is deemed to have been paid during the taxation year as a rebate in respect of charges levied under Part 1 of the Greenhouse Gas Pollution Pricing Act in respect of the designated province.

Source: Justice Laws Website. Not an official version.

Historic text

Immediately preceding version, in force from 2022-06-09 to 2026-03-25:

Show the text in force 2022-06-09 to 2026-03-25

Definitions

127.42 (1) The following definitions apply in this section.
designated province
designated province means a province specified by the Minister of Finance for a calendar year. (province déterminée)
eligible farming expenses
eligible farming expenses, of a taxpayer for a designated province for a taxation year, means the amount determined by the formula
A × B
where
Ais
- (a) nil, if the total of all amounts deducted in the year by the taxpayer in computing income under this Part from farming activities, excluding any deductions arising from inventory adjustments under section 28 and from transactions with persons that do not deal at arm’s length with the taxpayer, is less than $25,000, and
- (b) in any other case, the total of all amounts deducted in the year by the taxpayer in computing income under this Part from farming activities, excluding any deductions arising from inventory adjustments under section 28 and from transactions with persons that do not deal at arm’s length with the taxpayer; and
Bis the taxpayer’s relevant proportion for the designated province for the taxation year. (dépenses agricoles admissibles)
farming activities
farming activities means a farming business, including or excluding activities prescribed by regulation. (activités agricoles)
payment rate
payment rate, for a calendar year for a designated province, means the rate specified by the Minister of Finance for the calendar year for the designated province. (taux de paiement)
relevant proportion
relevant proportion, of eligible farming expenses of a taxpayer for a designated province for a taxation year, means
- (a) if the taxpayer is an individual, the proportion determined by the formula
  A ÷ B
  where
  Ais the individual’s income for the year from farming activities that is deemed to have been earned in the year in the designated province in accordance with Part XXVI of the Income Tax Regulations, andBis the whole of the individual’s income from farming activities for the year;
- (b) if the taxpayer is a corporation, the proportion determined by the formula
  C ÷ D
  where
  Cis the corporation’s taxable income that is deemed to have been earned in the year in the designated province in accordance with Part IV of the Income Tax Regulations, andDis the whole of the corporation’s taxable income for the year; and
- (c) if the taxpayer is a partnership, the proportion determined by the formula
  E ÷ F
  where
  Eis the partnership’s income for the fiscal period of the partnership from farming activities that would be deemed to have been earned in the year in the designated province, computed in accordance with Part XXVI of the Income Tax Regulations as if the partnership were an individual, andFis the whole of the partnership’s income from farming activities for the fiscal period of the partnership. (proportion pertinente)
Deemed payment on account of tax
(2) A taxpayer (other than a partnership) that files a prescribed form containing prescribed information with their return of income for a taxation year is deemed, on their balance-due day for the year, to have paid on account of their tax payable under this Part for the year, the total of all amounts each of which is an amount, for each designated province and for each calendar year a portion of which falls within the taxation year, determined by the formula
(A × B) × (C ÷ D)
where
Ais the payment rate for the calendar year for the designated province;Bis the taxpayer’s eligible farming expenses for the designated province for the taxation year;Cis the number of days within the taxation year that fall within the calendar year; andDis the number of days in the taxation year.
Deemed payment on account of tax — partnership
(3) If a taxpayer (other than a partnership) is a member of a partnership at the end of a fiscal period of the partnership that ends in a taxation year of the taxpayer — and the partnership files a prescribed form containing prescribed information for that fiscal period and the taxpayer files a prescribed form containing prescribed information with its return of income for the taxation year — the taxpayer is deemed, on the taxpayer’s balance-due day for the taxation year, to have paid on account of their tax payable under this Part for the year, the total of all amounts each of which is an amount, for each designated province and for each calendar year a portion of which falls within the partnership’s fiscal period, determined by the formula
(A × B) × (C ÷ D) × E
where
Ais the payment rate for the calendar year for the designated province;Bis the partnership’s eligible farming expenses for the designated province for the fiscal period;Cis the number of days within the fiscal period that fall within the calendar year;Dis the number of days in the fiscal period; andEis the specified proportion of the taxpayer for the fiscal period.
Partnerships
(4) For the purposes of this section,
- (a) a taxpayer includes a partnership;
- (b) the fiscal period of a partnership is deemed to be its taxation year; and
- (c) if a taxpayer is a member of a particular partnership that is a member of another partnership, the taxpayer is deemed
  - (i) to be a member of the other partnership, and
  - (ii) to have a specified proportion in the other partnership for a fiscal period of the other partnership equal to its specified proportion of the particular partnership — for the last fiscal period of the particular partnership that ends in the fiscal period of the other partnership — multiplied by the particular partnership’s specified proportion of the other partnership for the fiscal period of the other partnership.
Authority to specify
(5) For the purposes of this section, the Minister of Finance may specify for a calendar year
- (a) the designated provinces; and
- (b) the payment rate for a designated province.
Payment rate not specified
(6) For the purposes of this section, if the Minister of Finance does not specify the payment rate for a designated province under paragraph (5)(b), the payment rate is deemed to be nil.
When assistance received
(7) For the purposes of this Act, and for greater certainty, an amount that a taxpayer is deemed under subsection (2) or (3) to have paid for a taxation year is assistance received by the taxpayer from a government immediately before the end of the year.
Relevant proportion — special rule
(8) For purposes of determining the relevant proportion of eligible farming expenses of a taxpayer for a designated province in a taxation year,
- (a) if the income of an individual or partnership from farming activities for the year is nil, the income for the year from farming activities that is deemed to have been earned in the year in the designated province shall be computed in accordance with Part XXVI of the Income Tax Regulations as if the individual or partnership earned $1,000,000 of income from farming activities; and
- (b) if the taxable income of a corporation is nil, the corporation’s taxable income that is deemed to have been earned in the year in the designated province shall be computed in accordance with Part IV of the Income Tax Regulations as if the corporation had taxable income for the year in the amount of $1,000,000.

[NOTE: Application provisions are not included in the consolidated text
see relevant amending Acts and regulations.]
2022, c. 5, s. 5

This version on Justice Laws

Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 127.42 links to the one before it.

Enacting and amending legislation

2022, c. 5, s. 5
2026, c. 3, s. 49

Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.

Cross-references

This section refers to

s. 28

References are generated from the statutory text and list other sections of the Act only.

Citation

Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 127.42.