Tax wiki
s. 127.2
PART I — Income Tax · DIVISION E — Computation of Tax · SUBDIVISION C — Rules Applicable to all Taxpayers
Share-purchase tax credit
Not yet annotated · Text current to 2026-06-21 · section last amended 2004-08-31
Current text
There may be deducted from the tax otherwise payable under this Part by a taxpayer for a taxation year an amount not exceeding the total of
the taxpayer’s share-purchase tax credit for the year, and
the taxpayer’s unused share-purchase tax credit for the taxation year immediately following the year.
Persons exempt from tax
(2)Where a taxpayer who was throughout a taxation year a person described in any of paragraphs 149(1)(e) to (y) files with the taxpayer’s return of income under this Part for the year a prescribed form containing prescribed information, the taxpayer shall be deemed to have paid, on the day on which the return is filed, an amount, on account of the taxpayer’s tax under this Part for the year, equal to the taxpayer’s share-purchase tax credit for the year.
Trust
(3)Where, in a particular taxation year of a taxpayer who is a beneficiary under a trust, an amount is included in computing the share-purchase tax credit of the trust for its taxation year ending in that particular taxation year, the trust may, in its return of income for its taxation year ending in that particular taxation year, designate as attributable to the taxpayer such portion of that amount
as may, having regard to all the circumstances (including the terms and conditions of the trust arrangement), reasonably be considered to be attributable to the taxpayer, and
as was not designated by the trust in respect of any other beneficiary of that trust,
and, where the trust so designates such a portion, an amount equal to that portion shall be
added in computing the share-purchase tax credit of the taxpayer for the particular taxation year, and
deducted in computing the share-purchase tax credit of the trust for its taxation year ending in the particular taxation year.
Exclusion of certain trusts
(3.1)For the purposes of subsection 127.2(3), a trust does not include a trust that is
governed by an employee benefit plan or a revoked deferred profit sharing plan; or
exempt from tax under section 149.
Partnership
(4)Where, in a taxation year of a taxpayer who is a member of a partnership, an amount is included in computing the share-purchase tax credit of the partnership for its fiscal period ending in that year, such portion of that amount as may reasonably be considered to be the taxpayer’s share thereof shall be
added in computing the share-purchase tax credit of the taxpayer for that year; and
deducted in computing the share-purchase tax credit of the partnership for that fiscal period.
Cooperative corporation
(5)Where at any particular time in a taxation year a taxpayer that is a cooperative corporation (within the meaning assigned by subsection 136(2)) has, as required by subsection 135(3), deducted or withheld an amount from a payment made by it to any person pursuant to an allocation in proportion to patronage, the taxpayer may deduct from the amount otherwise required by subsection 135(3) to be remitted to the Receiver General, an amount not exceeding the amount, if any, by which
the amount that would, but for this subsection, be its share-purchase tax credit for the taxation year in which it made the payment if that year had ended immediately before the particular time
exceeds
the total of all amounts each of which is the amount deducted by virtue of this subsection from any amount otherwise required to be remitted by subsection 135(3) in respect of payments made by it before the particular time and in the taxation year,
and the amount, if any, so deducted from the amount otherwise required to be remitted by subsection 135(3) shall be
deducted in computing the share-purchase tax credit of the taxpayer for the taxation year, and
deemed to have been remitted by the taxpayer to the Receiver General on account of tax under this Part of the person to whom that payment was made.
Definition of
(7)In this section, tax otherwise payable under this Part by a taxpayer means the amount that would, but for this section and section 120.1, be the tax payable under this Part by the taxpayer.
Deemed cost of acquisition
(8)For the purposes of this Act, where, at any time in a taxation year, a taxpayer has acquired a share and is the first registered holder of the share, other than a broker or dealer in securities, and an amount is, at any time, designated by a corporation under subsection 192(4) in respect of the share, the following rules apply:
the taxpayer shall be deemed to have acquired the share at a cost to the taxpayer equal to the amount by which
its cost to the taxpayer as otherwise determined
exceeds
the amount so designated in respect of the share; and
where the amount determined under subparagraph 127.2(8)(a)(ii) exceeds the amount determined under subparagraph 127.2(8)(a)(i), the excess shall
where the share is a capital property to the taxpayer, be deemed to be a capital gain of the taxpayer for the year from the disposition of that property, and
in any other case, be included in computing the income of the taxpayer for the year,
and the cost to the taxpayer of the share shall be deemed to be nil.
Partnership
(9)For the purposes of this section and subsection 193(5), a partnership shall be deemed to be a person and its taxation year shall be deemed to be its fiscal period.
Election re first holder
(10)Where a share of a public corporation has been lawfully distributed to the public in accordance with a prospectus, registration statement or similar document filed with a public authority in Canada pursuant to and in accordance with the law of Canada or of any province, and, where required by law, accepted for filing by such a public authority, the corporation, if it has designated an amount under subsection 192(4) in respect of the share, may, in the prescribed form required to be filed under that subsection, elect that, for the purposes of this section, the first person, other than a broker or dealer in securities, to have acquired the share (and no other person) shall be considered to be the first person to be a registered holder of the share.
Calculation of consideration
(11)For greater certainty,
for the purposes of this section and Part VII, the amount of consideration for which a share is acquired and issued includes the amount of any consideration for the designation under subsection 192(4) in respect of the share; and
the amount received by a corporation as consideration for a designation under subsection 192(4) in respect of a share issued by it shall not be included in computing its income.
Source: Justice Laws Website. Not an official version.
Historic text
This section has not been amended since the start of the point-in-time record on 31 August 2004.
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 127.2 links to the one before it.
Enacting and amending legislation
- 1984, c. 1, s. 73, c. 45, s. 45; 1988, c. 55, s. 108
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
Citation
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 127.2.