Section 149 — Income Tax Act: Miscellaneous exemptions

No tax is payable under this Part on the taxable income of a person for a period when that person was an officer or servant of the government of a country other than Canada whose duties require that person to reside in Canada if, immediately before assuming those duties, the person resided outside Canada, if that country grants a similar privilege to an officer or servant of Canada of the same class, if the person was not, at any time in the period, engaged in a business or performing the duties of an office or employment in Canada other than the person’s position with that government, and if the person was not during the period a Canadian citizen; a member of the family of a person described in paragraph 149(1)(a) who resides with that person, or a servant employed by a person described in that paragraph, if the country of which the person described in paragraph 149(1)(a) is an officer or servant grants a similar privilege to members of the family residing with and servants employed by an officer or servant of Canada of the same class, in the case of a member of the family, if that member was not at any time lawfully admitted to Canada for permanent residence, or at any time in the period engaged in a business or performing the duties of an office or employment in Canada, in the case of a servant, if, immediately before assuming his or her duties as a servant of a person described in paragraph 149(1)(a), the servant resided outside Canada and, since first assuming those duties in Canada, has not at any time engaged in a business in Canada or been employed in Canada other than by a person described in that paragraph, and if the member of the family or servant was not during the period a Canadian citizen; a municipality in Canada, or a municipal or public body performing a function of government in Canada; a corporation, commission or association all of the shares (except directors’ qualifying shares) or of the capital of which was owned by one or more persons each of which is Her Majesty in right of Canada or Her Majesty in right of a province; a corporation, commission or association not less than 90% of the shares (except directors’ qualifying shares) or of the capital of which was owned by one or more persons each of which is Her Majesty in right of Canada or Her Majesty in right of a province; a corporation all of the shares (except directors’ qualifying shares) or of the capital of which was owned by one or more persons each of which is a corporation, commission or association to which this paragraph or paragraph (d) applies for the period; a corporation, commission or association not less than 90% of the shares (except directors’ qualifying shares) or of the capital of which was owned by one or more persons each of which is Her Majesty in right of Canada or a province or a person to which paragraph (d) or (d.2) applies for the period, or one or more municipalities in Canada in combination with one or more persons each of which is Her Majesty in right of Canada or a province or a person to which paragraph 149(1)(d) or 149(1)(d.2) applies for the period; a corporation all of the shares (except directors’ qualifying shares) or of the capital of which was owned by one or more persons each of which is a corporation, commission or association to which this paragraph or any of paragraphs (d) to (d.3) applies for the period; subject to subsections (1.2) and (1.3), a corporation, commission or association not less than 90% of the capital of which was owned by one or more entities each of which is a municipality in Canada, or a municipal or public body performing a function of government in Canada, if the income for the period of the corporation, commission or association from activities carried on outside the geographical boundaries of the entities does not exceed 10% of its income for the period; subject to subsections (1.2) and (1.3), a particular corporation all of the shares (except directors’ qualifying shares) or of the capital of which was owned by one or more entities (referred to in this paragraph as “qualifying owners”) each of which is, for the period, a corporation, commission or association to which paragraph (d.5) applies, a corporation to which this paragraph applies, a municipality in Canada, or a municipal or public body performing a function of government in Canada, if no more than 10% of the particular corporation’s income for the period is from activities carried on outside if a qualifying owner is a municipality in Canada, or a municipal or public body performing a function of government in Canada, the geographical boundaries of each such qualifying owner, if paragraph (d.5) applies to a qualifying owner, the geographical boundaries of the municipality, or municipal or public body, referred to in that paragraph in its application to each such qualifying owner, and if this paragraph applies to a qualifying owner, the geographical boundaries of the municipality, or municipal or public body, referred to in subparagraph (i) or paragraph (d.5), as the case may be, in their respective applications to each such qualifying owner; an agricultural organization, a board of trade or a chamber of commerce, no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof; a registered charity; a registered Canadian amateur athletic association; a registered journalism organization; the Association of Universities and Colleges of Canada, incorporated by the Act to incorporate Association of Universities and Colleges of Canada, chapter 75 of the Statutes of Canada, 1964-65; a corporation that was constituted exclusively for the purpose of providing low-cost housing accommodation for the aged, no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof; a corporation that was constituted exclusively for the purpose of carrying on or promoting scientific research and experimental development, no part of whose income was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof, that has not acquired control of any other corporation and that, during the period, did not carry on any business, and expended amounts in Canada each of which is an expenditure on scientific research and experimental development (within the meaning that would be assigned by paragraph 37(8)(a) if subsection 37(8) were read without reference to paragraph 37(8)(d)) directly undertaken by or on behalf of the corporation, or a payment to an association, university, college or research institute or other similar institution, described in clause 37(1)(a)(ii)(A) or 37(1)(a)(ii)(B) to be used for scientific research and experimental development, and the total of which is not less than 90% of the amount, if any, by which the corporation’s gross revenue for the period exceeds the total of all amounts paid in the period by the corporation because of subsection 149(7.1); a labour organization or society or a benevolent or fraternal benefit society or order; a club, society or association that, in the opinion of the Minister, was not a charity within the meaning assigned by subsection 149.1(1) and that was organized and operated exclusively for social welfare, civic improvement, pleasure or recreation or for any other purpose except profit, no part of the income of which was payable to, or was otherwise available for the personal benefit of, any proprietor, member or shareholder thereof unless the proprietor, member or shareholder was a club, society or association the primary purpose and function of which was the promotion of amateur athletics in Canada; a mutual insurance corporation that received its premiums wholly from the insurance of churches, schools or other charitable organizations; a limited-dividend housing company (within the meaning of that expression as defined in section 2 of the National Housing Act ), all or substantially all of the business of which is the construction, holding or management of low-rental housing projects; a trust governed by a registered pension plan; a corporation incorporated and operated throughout the period either solely for the administration of a registered pension plan, or for the administration of a registered pension plan and for no other purpose other than acting as trustee of, or administering, a trust governed by a retirement compensation arrangement, where the terms of the arrangement provide for benefits only in respect of individuals who are provided with benefits under the registered pension plan, and accepted by the Minister as a funding medium for the purpose of the registration of the pension plan; a corporation incorporated before November 17, 1978 solely in connection with, or for the administration of, a registered pension plan, that has at all times since the later of November 16, 1978 and the date on which it was incorporated limited its activities to acquiring, holding, maintaining, improving, leasing or managing capital property that is real property or an interest in real property —

or immovables or a real right in immovables — owned by the corporation, another corporation described by this subparagraph and subparagraph (iv) or a registered pension plan, and investing its funds in a partnership that limits its activities to acquiring, holding, maintaining, improving, leasing or managing capital property that is real property or an interest in real property —

or immovables or a real right in immovables — owned by the partnership, made no investments other than in real property or an interest in real property —

or immovables or a real right in immovables —

or investments that a pension plan is permitted to make under the Pension Benefits Standards Act, 1985 or a similar law of a province, and borrowed money solely for the purpose of earning income from real property or an interest in real property or from immovables or a real right in immovables, that throughout the period limited its activities to acquiring Canadian resource properties by purchase or by incurring Canadian exploration expense or Canadian development expense, or holding, exploring, developing, maintaining, improving, managing, operating or disposing of its Canadian resource properties, made no investments other than in Canadian resource properties, property to be used in connection with Canadian resource properties described in clause 149(1)(o.2)(ii.1)(A), loans secured by Canadian resource properties for the purpose of carrying out any activity described in clause 149(1)(o.2)(ii.1)(A) with respect to Canadian resource properties, or investments that a pension fund or plan is permitted to make under the Pension Benefits Standards Act, 1985 or a similar law of a province, and borrowed money solely for the purpose of earning income from Canadian resource properties, or that made no investments other than investments that a pension fund or plan was permitted to make under the Pension Benefits Standards Act, 1985 or a similar law of a province, and the assets of which were at least 98% cash and investments, that had not accepted deposits or issued bonds, notes, debentures or similar obligations, and that had derived at least 98% of its income for the period that is a taxation year of the corporation from, or from the disposition of, investments if, at all times since the later of November 16, 1978 and the date on which it was incorporated, all of the shares, and rights to acquire shares, of the capital stock of the corporation are owned by one or more registered pension plans, one or more trusts all the beneficiaries of which are registered pension plans, one or more related segregated fund trusts (within the meaning assigned by paragraph 138.1(1)(a)) all the beneficiaries of which are registered pension plans, or one or more prescribed persons, or in the case of a corporation without share capital, all the property of the corporation has been held exclusively for the benefit of one or more registered pension plans, and for the purposes of subparagraph 149(1)(o.2)(iv), where a corporation has been formed as a result of the merger of two or more other corporations, it shall be deemed to be the same corporation as, and a continuation of, each such other corporation and the shares of the merged corporations shall be deemed to have been altered, in form only, by virtue of the merger and to have continued in existence in the form of shares of the corporation formed as a result of the merger; a corporation that is prescribed to be a small business investment corporation; a trust that is prescribed to be a master trust and that elects to be such a trust under this paragraph in its return of income for its first taxation year ending in the period; the Pension Benefits Guarantee Fund under the Pension Benefits Act , R.S.O. 1990, c. P.8, and any corporation established solely for investing the assets of the Pension Benefits Guarantee Fund; a trust under an employees profit sharing plan to the extent provided by section 144; a trust under a registered supplementary unemployment benefit plan to the extent provided by section 145; an RCA trust (within the meaning assigned by subsection 207.5(1)); a trust under a registered retirement savings plan to the extent provided by section 146; a trust under a deferred profit sharing plan to the extent provided by section 147; a trust governed by an eligible funeral arrangement; a cemetery care trust; [Repealed, 2017, c. 20, s. 24] a trust governed by a registered education savings plan to the extent provided by section 146.1; a trust governed by a registered disability savings plan to the extent provided by section 146.4; a trust governed by a TFSA to the extent provided by section 146.2; a trust governed by a pooled registered pension plan to the extent provided under section 147.5; a trust governed by a FHSA to the extent provided by section 146.6; an amateur athlete trust; a trust established as required under a law of Canada or of a province in order to provide funds out of which to compensate persons for claims against an owner of a business identified in the relevant law where that owner is unwilling or unable to compensate a customer or client, if no part of the property of the trust, after payment of its proper trust expenses, is available to any person other than as a consequence of that person being a customer or client of a business so identified; a trust governed by a registered retirement income fund to the extent provided by section 146.3; a trust established pursuant to the terms of a collective agreement between an employer or an association of employers and employees or their labour organization for the sole purpose of providing for the payment of vacation or holiday pay, if no part of the property of the trust, after payment of its reasonable expenses, is available at any time after 1980, or paid after December 11, 1979 to any person (other than a person described in paragraph 149(1)(k)) otherwise than as a consequence of that person being an employee or an heir or legal representative thereof; a qualifying environmental trust; a trust that was created because of a requirement imposed by section 56 of the Environment Quality Act , R.S.Q., c. Q-2, that is resident in Canada, and in which the only persons that are beneficially interested are Her Majesty in right of Canada, Her Majesty in right of a province, or a municipality (as defined in section 1 of that Act) that is exempt because of this subsection from tax under this Part on all of its taxable income; or a trust that was created because of a requirement imposed by subsection 9(1) of the Nuclear Fuel Waste Act , S.C. 2002, c. 23, that is resident in Canada, and in which the only persons that are beneficially interested are Her Majesty in right of Canada, Her Majesty in right of a province, a nuclear energy corporation (as defined in section 2 of that Act) all the shares of the capital stock of which are owned by one or more persons described in clause (A) or (B), the waste management organization established under section 6 of that Act if all the shares of its capital stock are owned by one or more nuclear energy corporations described in clause (C), or Atomic Energy of Canada Limited, being the company incorporated or acquired in accordance with subsection 10(2) of the Atomic Energy Control Act , R.S.C. 1970, c. A-19. Where at a particular time a corporation, commission or association (in this subsection referred to as “the entity”) would, but for this subsection, be described in any of paragraphs (1)(d) to (d.6), one or more other persons (other than Her Majesty in right of Canada or a province, a municipality in Canada or a person which, at the particular time, is a person described in any of subparagraphs (1)(d) to (d.6)) have at the particular time one or more rights in equity or otherwise, either immediately or in the future and either absolutely or contingently to, or to acquire, shares or capital of the entity, and the exercise of the rights referred to in paragraph (b) would result in the entity not being a person described in any of paragraphs (1)(d.1) to (d.6) at the particular time, the entity is deemed not to be, at the particular time, a person described in any of paragraphs (1)(d) to (d.6). Subsection (1) does not apply in respect of a person’s taxable income for a particular taxation year that begins after 1998 where paragraph (1)(d) did not apply in respect of the person’s taxable income for the person’s last taxation year that began before 1999; paragraph (1)(d.2), (d.3) or (d.4) would, but for this subsection, have applied in respect of the person’s taxable income for the person’s first taxation year that began after 1998; there has been no change in the direct or indirect control of the person during the period that began at the beginning of the person’s first taxation year that began after 1998, and ends at the end of the particular year; the person elects in writing before 2002 that this subsection apply; and the person has not notified the Minister in writing before the particular year that the election has been revoked. If at any time there is an amalgamation (within the meaning assigned by subsection 87(1)) of a corporation (in this subsection referred to as the “parent”) and one or more other corporations (each of which in this subsection is referred to as the “subsidiary”) each of which is a subsidiary wholly-owned corporation of the parent, and immediately before that time the parent is a person to which subsection (1) does not apply by reason of the application of subsection (1.11), the new corporation is deemed, for the purposes of subsection (1.11), to be the same corporation as, and a continuation of, the parent. For the purposes of paragraphs (1)(d.5) and (d.6), income of a corporation, a commission or an association from activities carried on outside the geographical boundaries of a municipality or of a municipal or public body does not include income from activities carried on under an agreement that meets the following conditions: the agreement is in writing between the corporation, commission or association, and a person who is His Majesty in right of Canada or of a province, a municipality, a municipal or public body or a corporation to which any of paragraphs (1)(d) to (d.6) applies and that is controlled by His Majesty in right of Canada or of a province, by a municipality in Canada or by a municipal or public body in Canada, the agreement is applicable within the geographical boundaries of if the person is His Majesty in right of Canada or a corporation controlled by His Majesty in right of Canada, Canada, if the person is His Majesty in right of a province or a corporation controlled by His Majesty in right of a province, the province, if the person is a municipality in Canada or a corporation controlled by a municipality in Canada, the municipality, and if the person is a municipal or public body or a corporation controlled by such a body, the area described in subsection (11) in respect of the person, the income earned from the activities carried on under the agreement is paid from the party described in clause (i)(B) to the party described in clause (i)(A), and the activities under the agreement are activities normally carried out by a local government; or in a province as a producer of electrical energy or natural gas, or a distributor of electrical energy, heat, natural gas or water, where the activities are regulated under the laws of the province. Paragraphs (1)(d) to (d.6) do not apply in respect of a person’s taxable income for a period in a taxation year if at any time during the period the person is a corporation shares of the capital stock of which are owned by one or more other persons that, in total, give them more than 10% of the votes that could be cast at a meeting of shareholders of the corporation, other than shares that are owned by one or more persons each of which is Her Majesty in right of Canada or of a province, a municipality in Canada, a municipal or public body performing a function of government in Canada, or a corporation, a commission or an association, to which any of paragraphs (1)(d) to (d.6) apply; or the person is, or would be if the person were a corporation, controlled, directly or indirectly in any manner whatever, by a person, or by a group of persons that includes a person, who is not Her Majesty in right of Canada or of a province, a municipality in Canada, a municipal or public body performing a function of government in Canada, or a corporation, a commission or an association, to which any of paragraphs (1)(d) to (d.6) apply. For the purposes of paragraphs 149(1)(e), 149(1)(i), 149(1)(j) and 149(1)(l), in computing the part, if any, of any income that was payable to or otherwise available for the personal benefit of any person or the total of any amounts that is not less than a percentage specified in any of those paragraphs of any income for a period, the amount of such income shall be deemed to be the amount thereof determined on the assumption that the amount of any taxable capital gain or allowable capital loss is nil. Subsection 149(1) does not apply in respect of the taxable income of a benevolent or fraternal society or order from carrying on a life insurance business or, for greater certainty, from the sale of property used by it in the year in, or held by it in the year in the course of, carrying on a life insurance business. For the purposes of subsection 149(3), the taxable income of a benevolent or fraternal benefit society or order from carrying on a life insurance business shall be computed on the assumption that it had no income or loss from any other sources. [Repealed, 2017, c. 20, s. 24] Notwithstanding subsections (1) and (2), where a club, society or association was for any period, a club, society or association described in paragraph (1)(l) the main purpose of which was to provide dining, recreational or sporting facilities for its members (in this subsection referred to as the “club”), a trust is deemed to have been created on the later of the commencement of the period and the end of 1971 and to have continued in existence throughout the period, and, throughout that period, the following rules apply: the property of the club shall be deemed to be the property of the trust; where the club is a corporation, the corporation shall be deemed to be the trustee having control of the trust property; where the club is not a corporation, the officers of the club shall be deemed to be the trustees having control of the trust property; tax under this Part is payable by the trust on its taxable income for each taxation year; the income and taxable income of the trust for each taxation year shall be computed on the assumption that it had no incomes or losses other than incomes and losses from property, and taxable capital gains and allowable capital losses from dispositions of property, other than property used exclusively for and directly in the course of providing the dining, recreational or sporting facilities provided by it for its members; in computing the taxable income of the trust for each taxation year there may be deducted, in addition to any other deductions permitted by this Part, $2,000, and no deduction shall be made under section 112 or 113; and the provisions of Subdivision K of Division B (except subsections 104(1) and 104(2)) do not apply in respect of the trust. Where it is necessary for the purpose of this section to ascertain the taxable income of a taxpayer for a period that is a part of a taxation year, the taxable income for the period shall be deemed to be the proportion of the taxable income for the taxation year that the number of days in the period is of the number of days in the taxation year. A corporation the taxable income of which for a taxation year is exempt from tax under this Part because of paragraph 149(1)(j) shall file with the Minister a prescribed form containing prescribed information on or before its filing-due date for the year. Where a corporation fails to file the prescribed form as required by subsection 149(7) for a taxation year, it is liable to a penalty equal to the amount determined by the formula A × B where A is the greater of $500, and 2% of its taxable income for the year; and B is the lesser of 12, and the number of months in whole or in part that are in the period that begins on the day on or before which the prescribed form is required to be filed and ends on the day it is filed. For the purpose of paragraph 149(1)(j), a corporation is controlled by another corporation if more than 50% of its issued share capital (having full voting rights under all circumstances) belongs to the other corporation, or the other corporation and persons with whom the other corporation does not deal at arm’s length, but a corporation shall be deemed not to have acquired control of a corporation if it has not purchased (or otherwise acquired for a consideration) any of the shares in the capital stock of that corporation; and there shall be included in computing a corporation’s income and in determining its gross revenue the amount of all gifts received by the corporation and all amounts contributed to the corporation to be used for scientific research and experimental development. In determining the gross revenue of a corporation for the purpose of determining whether it is described by paragraph 149(1)(j) for a taxation year, there may be deducted an amount not exceeding its gross revenue for the year computed without including or deducting any amount under this subsection; and there shall be included any amount that has been deducted under this subsection for the preceding taxation year. If at any time (in this subsection referred to as that time ), a person — that is a corporation or, if that time is after September 12, 2013, a trust — becomes or ceases to be exempt from tax under this Part on its taxable income, the following rules apply: the taxation year of the person that would, but for this paragraph, have included that time is deemed to end immediately before that time, a new taxation year of the person is deemed to begin at that time and, for the purpose of determining the person’s fiscal period after that time, the person is deemed not to have established a fiscal period before that time; for the purpose of computing the person’s income for its first taxation year that ends after that time, the person is deemed to have deducted under sections 20, 138 and 140 in computing the person’s income for its taxation year that ended immediately before that time, the greatest amount that could have been claimed or deducted by the person for that year as a reserve under those sections; the person is deemed to have disposed, at the time (in this subsection referred to as the “disposition time”) that is immediately before the time that is immediately before that time, of each property held by the person immediately before that time for an amount equal to its fair market value at that time and to have reacquired the property at that time at a cost equal to that fair market value; and for the purposes of applying sections 37, 65 to 66.4, 66.7, 111 and 126, subsections 127(5) to (36) and section 127.3 to the person, the person is deemed to be a new corporation or trust, as the case may be, the first taxation year of which began at that time. [Repealed, 2016, c. 12, s. 54] For the purpose of this section, the geographical boundaries of a municipal or public body performing a function of government are the geographical boundaries that encompass the area in respect of which an Act of Parliament or an agreement given effect by an Act of Parliament recognizes or grants to the body a power to impose taxes; or if paragraph (a) does not apply, the geographical boundaries within which that body has been authorized by the laws of Canada or of a province to exercise that function. Every person who, because of paragraph 149(1)(e) or 149(1)(l), is exempt from tax under this Part on all or part of the person’s taxable income shall, within 6 months after the end of each fiscal period of the person and without notice or demand therefor, file with the Minister an information return for the period in prescribed form and containing prescribed information, if the total of all amounts each of which is a taxable dividend or an amount received or receivable by the person as, on account of, in lieu of or in satisfaction of, interest, rentals or royalties in the period exceeds $10,000; at the end of the person’s preceding fiscal period the total assets of the person (determined in accordance with generally accepted accounting principles) exceeded $200,000; or an information return was required to be filed under this subsection by the person for a preceding fiscal period.