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s. 142.51

PART I — Income Tax · DIVISION F — Special Rules Applicable in Certain Circumstances · Financial Institutions · Mark-to-Market Properties

Definitions

Not yet annotated · Text current to 2026-06-21 · section last amended 2023-01-01

Current text

(1)

The following definitions apply for the purposes of this section and subsections 142.5(8.1) and (8.2).

base year of a taxpayer means the taxpayer’s taxation year that immediately precedes its transition year. (année de base)

transition amount of a taxpayer for the taxpayer’s transition year is the positive or negative amount determined by the formula

A – B

where

A

is the total of all amounts each of which is the fair market value, at the end of the taxpayer’s base year, of a transition property of the taxpayer; and

B

is the total of all amounts each of which is the cost amount to the taxpayer, at the end of the taxpayer’s base year, of a transition property of the taxpayer. (montant transitoire)

transition property of a taxpayer means a property that

(a)

was a specified debt obligation held by the taxpayer at the end of the taxpayer’s base year;

(b)

was not a mark-to-market property of the taxpayer for the taxpayer’s base year, but would have been a mark-to-market property of the taxpayer for the taxpayer’s base year if the property had been carried at the property’s fair market value in the taxpayer’s balance sheet as at the end of each taxation year of the taxpayer that ends after the taxpayer last acquired the property (otherwise than by reason of a reacquisition under subsection 142.5(2)) and before the commencement of the taxpayer’s transition year; and

(c)

was a mark-to-market property of the taxpayer for the transition year of the taxpayer. (bien transitoire)

transition year of a taxpayer means the taxpayer’s first taxation year that begins after 2022. (année transitoire)

Transition year income inclusion

(2)

If a taxpayer is an insurer in its transition year, there shall be included in computing the taxpayer’s income for its transition year the absolute value of the negative amount, if any, of the taxpayer’s transition amount.

Transition year income deduction

(3)

If a taxpayer is an insurer in its transition year, there shall be deducted in computing the taxpayer’s income for its transition year the positive amount, if any, of the taxpayer’s transition amount.

Transition year income inclusion reversal

(4)

If an amount has been included under subsection (2) in computing a taxpayer’s income for its transition year, there shall be deducted in computing the taxpayer’s income for each particular taxation year of the taxpayer that ends after the beginning of the transition year, and in which particular taxation year the taxpayer is an insurer, the amount determined by the formula

A × B/1825

where

A

is the amount included under subsection (2) in computing the taxpayer’s income for the transition year; and

B

is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Transition year income deduction reversal

(5)

If an amount has been deducted under subsection (3) in computing a taxpayer’s income for its transition year, there shall be included in computing the taxpayer’s income, for each particular taxation year of the taxpayer ending after the beginning of the transition year, and in which particular taxation year the taxpayer is an insurer, the amount determined by the formula

A × B/1825

where

A

is the amount deducted under subsection (3) in computing the taxpayer’s income for the transition year; and

B

is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Winding-up

(6)

If a taxpayer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the “parent”), and immediately after the winding-up the parent is an insurer, in applying subsections (4) and (5) in computing the income of the taxpayer and of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the “start day”) on which assets of the taxpayer were distributed to the parent on the winding-up,

(a)

the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the taxpayer in respect of

(i)

any amount included under subsection (2) or deducted under subsection (3) by the taxpayer in computing the taxpayer’s income for its transition year,

(ii)

any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the start day, and

(iii)

any amount that would — in the absence of this subsection and if the taxpayer existed and was an insurer on each day that is the start day or a subsequent day and on which the parent is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income for its transition year; and

(b)

the taxpayer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (4) and (5) without reference to the start day and days after the start day.

Amalgamations

(7)

If there is an amalgamation (within the meaning assigned by subsection 87(1)) of a taxpayer with one or more other corporations to form one corporation (referred to in this subsection as the “new corporation”), and immediately after the amalgamation the new corporation is an insurer, in applying subsections (4) and (5) in computing the income of the new corporation for particular taxation years of the new corporation that begin on or after the day on which the amalgamation occurred, the new corporation is, on and after that day, deemed to be the same corporation as and a continuation of the taxpayer in respect of

(a)

any amount included under subsection (2) or deducted under subsection (3) in computing the taxpayer’s income for its transition year of the taxpayer;

(b)

any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the day on which the amalgamation occurred; and

(c)

any amount that would — in the absence of this subsection and if the taxpayer existed and was an insurer on each day that is the day on which the amalgamation occurred or a subsequent day and on which the new corporation is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income.

Application of subsection (9)

(8)

Subsection (9) applies if, at any time, a taxpayer (referred to in this subsection and subsection (9) as the “transferor”) transfers, to a corporation (referred to in this subsection and subsection (9) as the “transferee”) that is related to the transferor, property in respect of a business carried on by the transferor in Canada (referred to in this subsection and subsection (9) as the “transferred business”) and

(a)

subsection 138(11.5) or (11.94) applies to the transfer; or

(b)

subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee is an insurer.

Transfer of a business

(9)

If this subsection applies in respect of the transfer, at any time, of property

(a)

the transferee is, at and after that time, deemed to be the same corporation as and a continuation of the transferor in respect of

(i)

any amount included under subsection (2) or deducted under subsection (3) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,

(ii)

any amount deducted under subsection (4) or included under subsection (5) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business, and

(iii)

any amount that would — in the absence of this subsection and if the transferor existed and was an insurer on each day that includes that time or is a subsequent day and on which the transferee is an insurer — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the transferor’s income that can reasonably be attributed to the transferred business; and

(b)

in determining, in respect of the day that includes that time or any subsequent day, any amount that is required under subsection (4) or (5) to be deducted or included in computing the transferor’s income for each particular taxation year from the transferred business, the description of A in the formulas in those subsections is deemed to be nil.

(10)

[Repealed, 2022, c. 19, s. 28]

Ceasing to carry on a business

(11)

If at any time, a taxpayer ceases to be an insurer

(a)

there shall be deducted, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formula

A – B

where

A

is the amount included under subsection (2) in computing the taxpayer’s income for its transition year, and

B

is the total of all amounts each of which is an amount deducted under subsection (4) in computing the income of the taxpayer for a taxation year that began before that time; and

(b)

there shall be included, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formula

C – D

where

C

is the amount deducted under subsection (3) in computing the taxpayer’s income for its transition year, and

D

is the total of all amounts each of which is an amount included under subsection (5) in computing the taxpayer’s income for a taxation year that began before that time.

Ceasing to exist

(12)

If at any time a taxpayer ceases to exist (otherwise than as a result of a merger to which subsection 87(2) applies or a winding-up to which subsection 88(1) applies), for the purposes of subsection (11), the taxpayer is deemed to have ceased to be an insurer at the earlier of

(a)

the time (determined without reference to this subsection) at which the taxpayer ceased to be an insurer, and

(b)

the time that is immediately before the end of the last taxation year of the taxpayer that ended at or before the time at which the taxpayer ceased to exist.

Application of subsection (13.1)

(13)

Subsection (13.1) applies to a taxpayer for a particular taxation year of the taxpayer if

(a)

the taxpayer holds a transition property in the particular taxation year;

(b)

the property was a mark-to-market property of the taxpayer for the taxation year preceding the particular taxation year; and

(c)

the property is not a mark-to-market property of the taxpayer for the particular taxation year.

Ceasing to be mark-to-market property

(13.1)

If this subsection applies to a taxpayer for a particular taxation year of the taxpayer, for purposes of this section

(a)

the taxpayer is deemed to have ceased to be an insurer at the particular time that is the beginning of the particular taxation year; and

(b)

the time immediately before the particular time shall be deemed to be the end of the taxation year that ends immediately before the particular taxation year.

Source: Justice Laws Website. Not an official version.

Historic text

Immediately preceding version, in force from 2009-03-12 to 2022-12-31:

Show the text in force 2009-03-12 to 2022-12-31


Definitions

  • 142.51 (1) The following definitions apply for the purposes of this section and subsections 142.5(8.1) and (8.2).

    base year

    base year of a taxpayer means the taxpayer’s taxation year that immediately precedes its transition year. (année de base)

    transition amount

    transition amount of a taxpayer for the taxpayer’s transition year is the positive or negative amount determined by the formula

    A – B

    where

    Ais the total of all amounts each of which is the fair market value, at the end of the taxpayer’s base year, of a transition property of the taxpayer; andBis the total of all amounts each of which is the cost amount to the taxpayer, at the end of the taxpayer’s base year, of a transition property of the taxpayer. (montant transitoire)
    transition property

    transition property of a taxpayer means a property that

    • (a) was a specified debt obligation held by the taxpayer at the end of the taxpayer’s base year;

    • (b) was not a mark-to-market property of the taxpayer for the taxpayer’s base year, but would have been a mark-to-market property of the taxpayer for the taxpayer’s base year if the property had been carried at the property’s fair market value in the taxpayer’s balance sheet as at the end of each taxation year of the taxpayer that ends after the taxpayer last acquired the property (otherwise than by reason of a reacquisition under subsection 142.5(2)) and before the commencement of the taxpayer’s transition year; and

    • (c) was a mark-to-market property of the taxpayer for the transition year of the taxpayer. (bien transitoire)

    transition year

    transition year of a taxpayer means the taxpayer’s first taxation year that begins after September 2006. (année transitoire)

  • Transition year income inclusion

    (2) If a taxpayer is a financial institution in its transition year, there shall be included in computing the taxpayer’s income for its transition year the absolute value of the negative amount, if any, of the taxpayer’s transition amount.

  • Transition year income deduction

    (3) If a taxpayer is a financial institution in its transition year, there shall be deducted in computing the taxpayer’s income for its transition year the positive amount, if any, of the taxpayer’s transition amount.

  • Transition year income inclusion reversal

    (4) If an amount has been included under subsection (2) in computing a taxpayer’s income for its transition year there shall be deducted in computing the taxpayer’s income for each particular taxation year of the taxpayer that ends after the beginning of the transition year, and in which particular taxation year the taxpayer is a financial institution, the amount determined by the formula

    A × B/1825

    where

    Ais the amount included under subsection (2) in computing the taxpayer’s income for the transition year; andBis the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

  • Transition year income deduction reversal

    (5) If an amount has been deducted under subsection (3) in computing a taxpayer’s income for its transition year, there shall be included in computing the taxpayer’s income, for each particular taxation year of the taxpayer ending after the beginning of the transition year, and in which particular taxation year the taxpayer is a financial institution, the amount determined by the formula

    A × B/1825

    where

    Ais the amount deducted under subsection (3) in computing the taxpayer’s income for the transition year; andBis the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

  • Winding-up

    (6) If a taxpayer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the “parent”), and immediately after the winding-up the parent is a financial institution, in applying subsections (4) and (5) in computing the income of the taxpayer and of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the “start day”) on which assets of the taxpayer were distributed to the parent on the winding-up,

    • (a) the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the taxpayer in respect of

      • (i) any amount included under subsection (2) or deducted under subsection (3) by the taxpayer in computing the taxpayer’s income for its transition year,

      • (ii) any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the start day, and

      • (iii) any amount that would — in the absence of this subsection and if the taxpayer existed and was a financial institution on each day that is the start day or a subsequent day and on which the parent is a financial institution — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income for its transition year; and

    • (b) the taxpayer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (4) and (5) without reference to the start day and days after the start day.

  • Amalgamations

    (7) If there is an amalgamation (within the meaning assigned by subsection 87(1)) of a taxpayer with one or more other corporations to form one corporation (referred to in this subsection as the “new corporation”), and immediately after the amalgamation the new corporation is a financial institution, in applying subsections (4) and (5) in computing the income of the new corporation for particular taxation years of the new corporation that begin on or after the day on which the amalgamation occurred, the new corporation is, on and after that day, deemed to be the same corporation as and a continuation of the taxpayer in respect of

    • (a) any amount included under subsection (2) or deducted under subsection (3) in computing the taxpayer’s income for its transition year of the taxpayer;

    • (b) any amount deducted under subsection (4) or included under subsection (5) in computing the taxpayer’s income for a taxation year of the taxpayer that begins before the day on which the amalgamation occurred; and

    • (c) any amount that would — in the absence of this subsection and if the taxpayer existed and was a financial institution on each day that is the day on which the amalgamation occurred or a subsequent day and on which the new corporation is a financial institution — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the taxpayer’s income.

  • Application of subsection (9)

    (8) Subsection (9) applies if, at any time, a taxpayer (referred to in this subsection and subsection (9) as the “transferor”) transfers, to a corporation (referred to in this subsection and subsection (9) as the “transferee”) that is related to the transferor, property in respect of a business carried on by the transferor in Canada (referred to in this subsection and subsection (9) as the “transferred business”) and

    • (a) subsection 138(11.5) or (11.94) applies to the transfer; or

    • (b) subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee is a financial institution.

  • Transfer of a business

    (9) If this subsection applies in respect of the transfer, at any time, of property

    • (a) the transferee is, at and after that time, deemed to be the same corporation as and a continuation of the transferor in respect of

      • (i) any amount included under subsection (2) or deducted under subsection (3) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,

      • (ii) any amount deducted under subsection (4) or included under subsection (5) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business, and

      • (iii) any amount that would — in the absence of this subsection and if the transferor existed and was a financial institution on each day that includes that time or is a subsequent day and on which the transferee is a financial institution — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the transferor’s income that can reasonably be attributed to the transferred business; and

    • (b) in determining, in respect of the day that includes that time or any subsequent day, any amount that is required under subsection (4) or (5) to be deducted or included in computing the transferor’s income for each particular taxation year from the transferred business, the description of A in the formulas in those subsections is deemed to be nil.

  • Continuation of a partnership

    (10) If subsection 98(6) deems a partnership (in this subsection referred to as the “new partnership”) to be a continuation of another partnership (in this subsection referred to as the “predecessor partnership”) and, at the time that is immediately after the predecessor partnership ceases to exist, the new partnership is a financial institution, in applying subsections (4) and (5) in computing the income of the new partnership for particular taxation years of the new partnership that begin on or after the day on which it comes into existence, the new partnership is, on and after that day, deemed to be the same partnership as and a continuation of the predecessor partnership in respect of

    • (a) any amount included under subsection (2) or deducted under subsection (3) in computing the predecessor partnership’s income for its transition year;

    • (b) any amount deducted under subsection (4) or included under subsection (5) in computing the predecessor partnership’s income for a taxation year of the predecessor partnership that begins before the day on which the new partnership comes into existence; and

    • (c) any amount that would — in the absence of this subsection and if the predecessor partnership existed and was a financial institution on each day that is the day on which the new partnership comes into existence or a subsequent day and on which the new partnership is a financial institution — be required to be deducted or included, in respect of any of those days, under subsection (4) or (5) in computing the predecessor partnership’s income.

  • Ceasing to carry on a business

    (11) If at any time, a taxpayer ceases to be a financial institution

    • (a) there shall be deducted, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formula

      A – B

      where

      Ais the amount included under subsection (2) in computing the taxpayer’s income for its transition year, andBis the total of all amounts each of which is an amount deducted under subsection (4) in computing the income of the taxpayer for a taxation year that began before that time; and

    • (b) there shall be included, in computing the income of the taxpayer for the taxation year of the taxpayer that includes the time that is immediately before that time, the amount determined by the formula

      C – D

      where

      Cis the amount deducted under subsection (3) in computing the taxpayer’s income for its transition year, andDis the total of all amounts each of which is an amount included under subsection (5) in computing the taxpayer’s income for a taxation year that began before that time.

  • Ceasing to exist

    (12) If at any time a taxpayer ceases to exist (otherwise than as a result of a merger to which subsection 87(2) applies, a winding-up to which subsection 88(1) applies or a continuation to which subsection 98(6) applies), for the purposes of subsection (11), the taxpayer is deemed to have ceased to be a financial institution at the earlier of

    • (a) the time (determined without reference to this subsection) at which the taxpayer ceased to be a financial institution, and

    • (b) the time that is immediately before the end of the last taxation year of the taxpayer that ended at or before the time at which the taxpayer ceased to exist.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 2009, c. 2, s. 48

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 142.51 links to the one before it.

Enacting and amending legislation

  • 2009, c. 2, s. 48
  • 2022, c. 19, s. 28

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. 85s. 87s. 88s. 138s. 142.5

Referred to in

s. 87

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. 142.51.