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Taxation Act, 2007

S.O. 2007, CHAPTER 11
Schedule A

Consolidation Period: From December 15, 2009 to the e-Laws currency date.

Last amendment: 2009, c. 34, Sched. U.

SKIP TABLE OF CONTENTS

CONTENTS

PART I
INTERPRETATION AND APPLICATION

Interpretation

Definitions

1.  (1)  In this Act,

“agreeing province” means a province that has entered into an agreement with the Government of Canada under which the Government of Canada will collect taxes payable under the income tax statute of that province and will make payments to that province in respect of the taxes so collected; (“province participante”)

“assessment” includes a reassessment and an additional assessment; (“cotisation”)

“basic rate of tax” means, with respect to a corporation for a taxation year, the corporation’s basic rate of tax for the year as determined under subsection 29 (2); (“taux d’imposition de base”)

“Canadian-controlled private corporation” means a corporation that would be a Canadian-controlled private corporation for the purposes of the Federal Act if the definition of that expression in subsection 125 (7) of that Act were read without reference to clause (d) of the definition; (“société privée sous contrôle canadien”)

“collection agreement” means a collection agreement referred to in section 161; (“accord de perception”)

“deputy head” means the Deputy Minister of Finance or, if a collection agreement is in effect, the Commissioner of Revenue appointed under section 25 of the Canada Revenue Agency Act (Canada); (“sous-ministre”)

“designated corporation” means, with respect to a particular corporation,

(a) a corporation that amalgamated with one or more other corporations to form the particular corporation, if section 87 of the Federal Act applies to the amalgamation,

(b) a corporation that winds up into the particular corporation, if subsection 88 (1) of the Federal Act applies to the winding-up, or

(c) a corporation that is a designated corporation with respect to a corporation that is itself a designated corporation with respect to the particular corporation; (“société désignée”)

“Federal Act” means the Income Tax Act (Canada); (“loi fédérale”)

“federal application rule” means a provision of an Act of Parliament or of the Federal regulations, other than subsection 248 (11) of the Federal Act, that,

(a) affects the application of a provision of the Federal Act or the Federal regulations, or

(b) makes a provision, or the repeal or amendment of a provision, of the Federal Act or Federal regulations apply,

(i) to specified taxation years,

(ii) to specified fiscal periods,

(iii) after a specified time, or

(iv) to transactions or events that occur before or after a specified time or in specified taxation years or specified fiscal periods; (“règle d’application fédérale”)

“Federal Minister” means the Minister of National Revenue for Canada; (“ministre fédéral”)

“Federal regulations” means the regulations made under the Federal Act; (“règlement fédéral”)

“income” means,

(a) in respect of a corporation for a taxation year,

(i) the corporation’s income for the year as determined for the purposes of the Federal Act, if the taxation year ends after December 31, 2008, or

(ii) the corporation’s income for the year as determined for the purposes of Part II of the Corporations Tax Act or the Federal Act, as the context requires, if the taxation year ends before January 1, 2009, or

(b) in respect of an individual for a taxation year,

(i) the total determined under paragraph 114 (a) of the Federal Act in the case of an individual in respect of whom section 114 of the Federal Act applies,

(ii) the amount that would be the individual’s taxable income earned in Canada for the year under subsection 115 (1) of the Federal Act if that subsection ended with clause (1) (c), in the case of an individual not resident in Canada throughout the year, or

(iii) the individual’s income for the year as determined in accordance with and for the purposes of the Federal Act in any other case; (“revenu”)

“income tax statute” means, with reference to a province, the law of that province that imposes a tax similar to the tax imposed under Division B of Part II; (“loi de l’impôt sur le revenu”)

“individual” means a person other than a corporation and includes a trust referred to in subdivision k of Division B of Part I of the Federal Act; (“particulier”)

“limited partner” means, in respect of a partnership, a member of the partnership whose liability as a member of the partnership is limited by operation of a law governing the partnership arrangement, but does not include a member of a partnership whose liability as a member of the partnership is limited solely by operation of a provision of a statute of Canada or a province that limits the member’s liability only for debts, obligations and liabilities of the partnership or a member of the partnership, arising from negligent acts or omissions, from misconduct or from fault of another member of the partnership or an employee, an agent or a representative of the partnership in the course of the partnership business while the partnership is a limited liability partnership; (“commanditaire”)

“Minister of Finance” means the Minister of Finance for Ontario or such other member of the Executive Council as is designated under the Executive Council Act to administer this Act; (“ministre des Finances”)

“notice of assessment” includes a notice of a reassessment and a notice of an additional assessment; (“avis de cotisation”)

“Ontario allocation factor” means, with respect to a corporation for a taxation year ending after December 31, 2008, the fraction equal to “A/B” where,

(a) “A” equals,

(i) the corporation’s Ontario taxable income for the taxation year if the corporation’s taxable income or taxable income earned in Canada, as the case may be, for the taxation year is a positive amount, or

(ii) the amount that would be the corporation’s Ontario taxable income for the taxation year if the corporation’s taxable income or taxable income earned in Canada were $1,000, in any other case, and

(b) “B” equals,

(i) the corporation’s taxable income or taxable income earned in Canada, as the case may be, for the taxation year if it is a positive amount, or

(ii) $1,000, in any other case; (“coefficient de répartition de l’Ontario”)

“Ontario allocation factor” means, in respect of a corporation for a taxation year ending before January 1, 2009, the corporation’s Ontario allocation factor for the year as determined under subsection 12 (1) of the Corporations Tax Act; (“coefficient de répartition de l’Ontario”)

“Ontario Health Premium” means the tax described in Division C of Part II; (“contribution-santé de l’Ontario”)

“Ontario Minister” means the Minister of Finance or, if a collection agreement is in effect, means,

(a) the Receiver General for Canada, in relation to the remittance of an amount as or on account of tax or other amounts payable under this Act, or

(b) the Federal Minister, in relation to any other matter except the administration and enforcement of Part V.2 and section 127.1; (“ministre ontarien”)

“Ontario taxable income” means, with respect to a corporation for a taxation year, the corporation’s taxable income earned in the year in Ontario, as determined under the Federal regulations made under subsection 124 (4) of the Federal Act; (“revenu imposable gagné en Ontario”)

“overpayment” means, with respect to a taxpayer for a taxation year, the taxpayer’s overpayment for the year, as determined under subsection 164 (7) of the Federal Act for the purposes of this Act; (“paiement en trop”)

“permanent establishment”,

(a) has the meaning assigned by subsection 400 (2) of the Federal regulations in the case of a corporation, and

(b) has the meaning assigned by subsection 2600 (2) of the Federal regulations in the case of an individual; (“établissement stable”)

“prescribed” means, unless the context indicates otherwise,

(a) “prescribed” as defined in subsection 248 (1) of the Federal Act, in the application of any provision of the Federal Act, other than subsection 153 (1), that applies for the purposes of this Act, and

(b) prescribed by the regulations or determined in accordance with rules prescribed by the regulations in any other case; (“prescrit”)

“province” means a province of Canada and includes each territory of Canada; (“province”)

“provision” includes, in respect of a statute or regulation, a definition in a provision of the statute or regulation; (“disposition”)

“qualifying environmental trust” means a qualifying environmental trust, as defined in subsection 248 (1) of the Federal Act, that is resident in Ontario; (“fiducie pour l’environnement admissible”)

“Receiver General for Canada” means the Receiver General for Canada, but in any provision of the Federal Act that is incorporated by reference in this Act, unless a collection agreement is entered into, a reference to the Receiver General for Canada shall be read and construed for the purposes of this Act as a reference to the Minister of Finance; (“receveur général du Canada”)

“regulation” means, unless the context indicates otherwise, a regulation made under this Act. (“règlement”) 2007, c. 11, Sched. A, s. 1 (1); 2008, c. 7, Sched. S, s. 1; 2008, c. 24, s. 4.

Rules re residency

(2)  The following rules apply in determining where an individual is resident in a taxation year for the purposes of this Act:

1. If the individual would, but for this paragraph, be resident in more than one province at a particular time in the year and can reasonably be considered to have had a principal place of residence at that time in one province, the individual is deemed to have resided at that time only in that province.

2. If the individual died in the year, a reference in this Act or the regulations to the “last day” of the year shall, subject to paragraph 3, be read as a reference to the last day in the year when the individual was alive.

3. If the individual resided in Canada at any time in the year, but ceased to reside in Canada before the end of the year, a reference in this Act or the regulations to the “last day” of the year shall be read as a reference to the last day in the year when the individual resided in Canada. 2007, c. 11, Sched. A, s. 1 (2).

Meaning of “tax payable” re individual

(3)  References in this Act to the tax payable by an individual under this Act shall be read as references to the tax payable by the individual as fixed by assessment under this Act, subject to any variation on an objection or appeal under this Act. 2007, c. 11, Sched. A, s. 1 (3).

Meaning of “tax payable” re corporation

(4)  The tax payable by a corporation under any division of Part III means the tax payable by the corporation under that division as fixed by assessment under this Act, subject to any variation on an objection or appeal under this Act. 2007, c. 11, Sched. A, s. 1 (4).

Application of Part XVII of the Federal Act

(5)  Part XVII of the Federal Act applies for the purposes of this Act with the following exceptions:

1. The definition of “qualifying share” in subsection 248 (1), subsections 248 (2) and (11) and section 260 of the Federal Act do not apply for the purposes of this Act.

2. The definitions of “employed” and “gross revenue” in subsection 248 (1) of the Federal Act do not apply for the purposes of this Act except as they apply for the purposes of provisions of the Federal Act or Federal regulations that apply for the purposes of this Act.

3. A definition in Part XVII of the Federal Act of a word or expression does not apply to the extent that it is at variance with a definition of the same word or expression in this Act that applies in the particular case. 2007, c. 11, Sched. A, s. 1 (5).

Act to be interpreted consistently with Federal Act

(6)  In any case of doubt, the provisions of this Act shall be applied and interpreted in a manner consistent with similar provisions of the Federal Act. 2007, c. 11, Sched. A, s. 1 (6).

Modifications of federal provisions

(7)  If a provision of the Federal Act or the Federal regulations (in this subsection referred to as the “Federal provision”) is stated in this Act or the regulations to apply for one or more purposes of this Act or the regulations, the Federal provision, as amended from time to time, applies with such modifications as are provided by this Act or the regulations or as the circumstances require as though it had been enacted as a provision of this Act or made as a regulation under this Act and the following rules apply, in addition to those modifications, unless the context indicates otherwise, in applying the Federal provision for those purposes:

1. A reference in the Federal provision to tax or another amount payable under Part I of the Federal Act shall be read as a reference to tax or another amount payable under this Act.

2. If the Federal provision contains a reference to tax under any of Parts I.1 to XIV of the Federal Act, the Federal provision shall be read without reference to tax under any of those Parts and without reference to any portion of the Federal provision that applies only to or in respect of tax under any of those Parts.

3. If the Federal provision contains a reference to any of Parts I.1 to XIV of the Federal Act or to a provision in any of those Parts, the Federal provision shall be read without reference to that Part or that provision, as the case may be, and without reference to any portion of the Federal provision that applies only because of the application of any of those Parts or a provision in any of those Parts.

4. Subject to paragraph 5, a reference in the Federal provision to one or more provisions of the Federal Act shall be read as a reference to the provisions of this Act that are the same as or similar to those provisions of the Federal Act.

5. A reference in the Federal provision to one or more provisions of the Federal Act or the Federal regulations that are stated to apply for one or more purposes of this Act shall be read as a reference to those provisions as they apply for the purposes of this Act.

6. A Federal provision that contains a reference to the Bankruptcy and Insolvency Act (Canada) shall be read without reference to that Act.

7. A reference in the Federal provision to “Her Majesty” or “Her Majesty in right of Canada” shall be read as or include a reference to “the Crown in right of Ontario”.

8. A reference in the Federal provision to “Receiver General” shall be read as a reference to the Minister of Finance to the extent that the reference relates to a taxation year of a taxpayer for which a collection agreement is not in effect.

9. A reference in the Federal provision to a word or expression set out in Column 1 of the Table to this subsection shall be read as or to include a reference to the word or expression set out in the same row in Column 2 of the Table:

TABLE
WORDS AND EXPRESSIONS

2007, c. 11, Sched. A, s. 1 (7).

Rules for applying Federal provisions

(8)  Subject to subsection (7), the following rules apply where a provision of the Federal Act or the Federal regulations (in this subsection referred to as the “Federal provision”) is stated in this Act or the regulations to apply for one or more purposes of this Act or the regulations:

1. Every federal application rule that applies in respect of the Federal provision applies, with necessary modifications, in the application of the Federal provision for the purposes of this Act or the regulations.

2. Despite paragraph 1 and subject to paragraph 3, any word or expression in the Federal provision that is defined in subsection (1) has the meaning assigned by that subsection unless the context indicates otherwise.

3. If a word or expression in the Federal provision has a meaning for the purposes of that provision that is assigned by a provision of the Federal Act or the Federal regulations that applies for the purposes of this Act or the regulations, the word or expression has the meaning assigned by that provision in the Federal Act or the Federal regulations.

4. If no federal application rule described in clause (b) of the definition of “federal application rule” in subsection (1) applies to the Federal provision or to an amendment or the repeal of the Federal provision, the Federal provision or the amendment or repeal of the Federal provision, as the case may be, applies for the purposes of this Act and the regulations on the day the Federal provision or the amendment or repeal comes into force. 2007, c. 11, Sched. A, s. 1 (8).

Application

2.  This Act applies only in respect of taxation years ending after December 31, 2008. 2007, c. 11, Sched. A, s. 2.

PART II
INDIVIDUALS — INCOME AND OTHER PERSONAL TAXES

Division A — Interpretation and Liability for Tax

Definitions

3.  (1)  In this Part,

“basic personal income tax” means, in respect of an individual for a taxation year, the amount of tax determined in respect of the individual for the year under section 6 or 7; (“impôt de base sur le revenu”)

“former Act” means the Income Tax Act; (“ancienne loi”)

“highest tax rate” means 11.16 per cent; (“taux d’imposition le plus élevé”)

“income earned in Ontario” means, in respect of an individual for a taxation year, the amount of the individual’s income for the year that would be determined to be earned in the year in Ontario if the rules for determining the amount of the individual’s income earned in the year in a province under subsection 120 (4) of the Federal Act applied; (“revenu gagné en Ontario”)

“income earned outside Ontario” means, in respect of an individual for a taxation year, the amount, if any, by which the individual’s income for the year exceeds the individual’s income earned in Ontario for the year; (“revenu gagné hors de l’Ontario”)

“lowest tax rate” means,

(a) 6.05 per cent in respect of taxation years ending before January 1, 2010, and

(b) 5.05 per cent in respect of taxation years ending after December 31, 2009; (“taux d’imposition le moins élevé”)

“middle tax rate” means 9.15 per cent; (“taux d’imposition moyen”)

“Ontario allocation factor” means, in respect of an individual for a taxation year, the ratio of the amount of the individual’s income earned in Ontario for the year to the amount of the individual’s income for the year; (“coefficient de répartition de l’Ontario”)

“tax base” means, in respect of an individual for a taxation year,

(a) the individual’s taxable income for the year if the individual is resident in Canada at any time in the year, or

(b) the individual’s taxable income earned in Canada for the year if the individual is not resident in Canada throughout the year. (“assiette fiscale”) 2007, c. 11, Sched. A, s. 3 (1); 2009, c. 34, Sched. U, s. 1.

References to basic personal income tax under former Act

(2)  A reference in any provision in this Part to an individual’s basic personal income tax for a taxation year ending before January 1, 2009 shall be read as a reference to the amount that would have been the individual’s tax payable for that year under subsection 4 (3) of the former Act if that amount were calculated before any deduction permitted under section 4 of that Act and before the addition of any additional taxes payable for that year under any of sections 2.2, 3 and 4.3 to 4.8 of that Act. 2007, c. 11, Sched. A, s. 3 (2).

Liability for tax

4.  (1)  The following individuals shall pay taxes in accordance with this Part for a taxation year ending after December 31, 2008:

1. Every individual who is resident in Ontario on the last day of the year and who has no income earned outside Ontario for the year.

2. Every individual who is resident in Ontario on the last day of the year and who has income earned outside Ontario for the year.

3. Every individual who is not resident in Ontario on the last day of the year but who has income earned in Ontario for the year. 2007, c. 11, Sched. A, s. 4 (1).

Tax exemption

(2)  Despite any other provision of this Part, an individual who is exempt from tax under Part I of the Federal Act for a period of time by reason of section 149 of that Act is exempt, to the same extent and for the same period of time, from taxes imposed by this Part, other than taxes under subsection 5 (2). 2007, c. 11, Sched. A, s. 4 (2).

Taxes payable

(3)  An individual’s tax payable under this Part for a taxation year is the sum of,

(a) the individual’s tax payable under Division B for the year; and

(b) the individual’s tax payable under Division C for the year. 2007, c. 11, Sched. A, s. 4 (3).

If individual is a bankrupt

(4)  Subsection 128 (2) of the Federal Act applies for the purposes of this Act. 2009, c. 18, Sched. 28, s. 1.

Division B — Personal Income Tax

Subdivision a — Tax Calculation

Personal income tax calculation

5.  (1)  The amount of an individual’s personal income tax payable under this Division for a taxation year is the amount determined as follows:

1. Determine the amount, if any, by which the individual’s basic personal income tax for the year, as determined under this subdivision, exceeds the sum of all non-refundable tax credits under subdivision b that are deducted by the individual for the year.

2. Determine the amount of the individual’s additional tax, if any, payable for the year under subdivision c.

3. Add the amounts determined under paragraphs 1 and 2.

4. Determine the amount, if any, by which the amount determined under paragraph 3 exceeds the sum of all tax credits under subdivision d that are deducted by the individual for the year.

5. Add the following amounts:

i. the amount, if any, determined under paragraph 4,

ii. the amount, if any, of the individual’s surtax for the year, as determined under subdivision e, and

iii. the amount of tax, if any, determined under subdivision f in respect of the individual for the year.

6. The individual’s personal income tax payable under this Division for the year is the amount, if any, by which the total determined under paragraph 5 exceeds the sum of all tax credits under subdivision g deducted by the individual for the year. 2007, c. 11, Sched. A, s. 5 (1).

Tax payable, qualifying environmental trusts

(2)  Despite subsection (1), the amount of tax payable under this Division for a taxation year by an individual that is a qualifying environmental trust at the end of the year is the amount determined by multiplying the amount of the trust’s income for the year for the purposes of Part XII.4 of the Federal Act by the percentage that would be the basic rate of tax for a corporation that has the same taxation year. 2007, c. 11, Sched. A, s. 5 (2).

Basic personal income tax

6.  (1)  The basic personal income tax for a taxation year of an individual is the amount determined under the following rules:

1. If the individual’s tax base for the year does not exceed $36,848, the amount of tax payable by the individual is calculated by multiplying the individual’s tax base for the year by the lowest tax rate for the year.

2. If the individual’s tax base for the year exceeds $36,848, but does not exceed $73,698, the amount of tax payable by the individual is calculated using the formula,

A + B

in which,

“A” is the amount calculated by multiplying $36,848 by the lowest tax rate for the year, and

“B” is the amount calculated by multiplying the amount by which the individual’s tax base for the year exceeds $36,848 by the middle tax rate for the year.

3. If the individual’s tax base for the year exceeds $73,698, the amount of tax payable by the individual is calculated using the formula,

A + C + D

in which,

“A” is the amount calculated by multiplying $36,848 by the lowest tax rate for the year,

“C” is the amount calculated by multiplying $36,850 by the middle tax rate for the year, and

“D” is the amount calculated by multiplying the amount by which the individual’s tax base for the year exceeds $73,698 by the highest tax rate for the year.

2007, c. 11, Sched. A, s. 6 (1); 2009, c. 18, Sched. 28, s. 2.

Resident with income earned outside Ontario or non-resident

(2)  Despite subsection (1), the basic personal income tax for a taxation year of an individual described in paragraph 2 or 3 of subsection 4 (1) is the amount that would otherwise be determined under subsection (1) to be the individual’s basic personal income tax for the year multiplied by the individual’s Ontario allocation factor for the year. 2007, c. 11, Sched. A, s. 6 (2).

Basic personal income tax, inter vivos trust

7.  (1)  Despite section 6, the basic personal income tax for a taxation year of an individual that is an inter vivos trust to which subsection 122 (1) of the Federal Act applies is calculated by multiplying the trust’s tax base for the year by the highest tax rate for the year. 2007, c. 11, Sched. A, s. 7 (1).

Inter vivos trust with income earned outside Ontario or non-resident

(2)  Despite section 6 and subsection (1), the basic personal income tax for a taxation year of an inter vivos trust that is an individual described in paragraph 2 or 3 of subsection 4 (1) is the amount that would otherwise be determined under subsection (1) to be the trust’s basic personal income tax for the year multiplied by the trust’s Ontario allocation factor for the year. 2007, c. 11, Sched. A, s. 7 (2).

Subdivision b — Non-Refundable Tax credits

Rules for non-refundable tax credits

8.  The following rules apply in determining the amount of any tax credits deductible by an individual under this subdivision:

1. A trust is not entitled to a tax credit under this subdivision for a taxation year other than a tax credit for charitable donations under subsection 9 (21).

2. In calculating the total amount of tax credits that an individual, other than a trust, may deduct under this subdivision, the individual shall deduct the tax credits to which he or she is entitled under section 9 in the same order as the subsections relating to those tax credits are listed in that section.

3. A reference to an individual’s basic personal income tax for a taxation year is deemed to be a reference to the amount that would be the individual’s basic personal income tax for the year if the individual’s Ontario allocation factor were one.

4. A reference in a subsection of section 9 to a tax credit under another subsection of that section is deemed to be a reference to that other tax credit as it would be determined before the application of section 10.

5. No pension tax credit under subsection 9 (10) or adoption expense tax credit under subsection 9 (11) may be deducted for a taxation year by an individual described in paragraph 3 of subsection 4 (1).

6. Subsections 118 (4), (5) and (6), 118.01 (3) and 118.3 (3) of the Federal Act apply for the purposes of section 9.

7. An individual who becomes bankrupt in a calendar year is entitled to deduct only the amounts described in the following subparagraphs in computing his or her tax payable under this Division for each taxation year that ends in the calendar year:

i. the portions of any tax credits the individual would otherwise be entitled to deduct under subsections 9 (2), (3), (4), (5), (6), (7), (8), (12), (13), (17) and (18) for the taxation year that can reasonably be considered applicable to the taxation year, and

ii. any tax credits the individual would otherwise be entitled to deduct under subsections 9 (9), (10), (11), (15), (16), (20), (21) and (22) for the taxation year that can reasonably be considered wholly applicable to the taxation year.

8. If paragraph 7 applies, the sum of all amounts deductible by the individual for all taxation years of the individual ending in a calendar year shall not exceed the total amount that, if the individual had not become bankrupt in the calendar year, would have been deductible for the taxation year that would have otherwise coincided with the calendar year.

9. An individual who is resident in Canada for only part of a taxation year is entitled to deduct only the amounts described in the following subparagraphs in computing his or her tax payable under this Division for the year:

i. the portions of any tax credits the individual would otherwise be entitled to deduct under subsections 9 (2), (3), (4), (5), (6), (7), (8), (12), (13), (17) and (18) for the year that can reasonably be considered to apply to any period during the year throughout which the individual was resident in Canada, computed as though that period were the whole taxation year, and

ii. any tax credits the individual would otherwise be entitled to deduct under subsections 9 (9), (10), (11), (15), (16), (20), (21) and (22) for the year that can reasonably be considered to be wholly applicable to any period in the year throughout which the individual was resident in Canada, computed as though that period were the whole taxation year.

10. If paragraph 9 applies, the sum of all amounts deductible by the individual for a taxation year shall not exceed the total amount that would have been deductible for the year if the individual had been resident in Canada throughout the year.

10.1 An individual who is not resident in Canada at any time in a taxation year is entitled to deduct only the amounts described in subsections 9 (9), (12), (14), (15), (21) and (22) in computing his or her tax payable under this Division for the year, unless all or substantially all of the individual’s income for the year is included in computing his or her taxable income earned in Canada for the year.

11. If a separate return of income with respect to an individual is filed under subsection 70 (2), 104 (23) or 150 (4) of the Federal Act, as it applies for the purposes of this Act, for a particular period and another return of income with respect to the individual is filed under this Act for a period ending in the calendar year in which the particular period ends, the sum of all amounts claimed in the returns under subsections 9 (9), (10), (11), (12), (13), (14), (15), (16), (18), (20), (21) and (22) shall not exceed the total that could be deducted under those subsections with respect to the individual for a taxation year that coincides with the calendar year.

12. For the purposes of determining the amount of tuition and education tax credits under subsection 9 (19) that may be transferred for a taxation year from a spouse, common-law partner, child or grandchild, the person transferring the tax credits shall designate the amount of tuition and education tax credits to be transferred for the year and the maximum amount that may be deducted under subsection 9 (17) or (18) by an individual for a year in respect of these transferred tax credits must not exceed that amount.

13. For the purposes of determining an individual’s entitlement to a deduction under subsection 9 (14) for a taxation year, if the individual was resident in a province other than Ontario on the last day of the preceding taxation year, the amount of the individual’s unused tuition and education tax credits at the end of that preceding year is the amount that would be his or her unused tuition and education tax credits at the end of the preceding year,

i. as determined under the comparable provision of a taxing statute of the other province, calculated as if the percentage applied under the relevant provisions of that statute were, at all material times, the lowest tax rate instead of the percentage applied under those provisions, or

ii. as determined under section 118.61 of the Federal Act, calculated as if the percentage applied under sections 118.5 and 118.6 of that Act in calculating the individual’s tuition and education tax credits were, at all material times, the lowest tax rate instead of the appropriate percentage, if there is no comparable provision of a taxing statute of the other province.

14. A particular person who is resident in a province other than Ontario on the last day of a taxation year is deemed to be resident in Ontario on that day for the purposes of determining the amount of unused tax credits that may be transferred from him or her to an individual who is resident in Ontario on that day. 2007, c. 11, Sched. A, s. 8; 2009, c. 18, Sched. 28, s. 3.

Non-refundable tax credits

9.  (1)  Subject to the rules in section 8, an individual may deduct, in computing the amount of his or her tax payable under this Division for a taxation year, the tax credits described in this section to which the individual is entitled for the year. 2007, c. 11, Sched. A, s. 9 (1).

Personal tax credit

(2)  If an individual is entitled to a deduction under paragraph 118 (1) (a), (b) or (c) of the Federal Act for a taxation year, the individual is entitled to a personal tax credit for the year calculated by multiplying the lowest tax rate for the year by $8,881. 2007, c. 11, Sched. A, s. 9 (2); 2009, c. 18, Sched. 28, s. 4 (1).

Tax credit for spouse or common-law partner

(3)  If an individual is entitled to a deduction under paragraph 118 (1) (a) of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year for a spouse or common-law partner calculated using the formula,

A × [$7,541 – (B – $754)]

in which,

“A” is the lowest tax rate for the year, and

“B” is the greater of $754 and the income for the year of the individual’s spouse or common-law partner or, if the individual and the individual’s spouse or common-law partner are living separate and apart at the end of that year by reason of a breakdown of their marriage or common-law partnership, the income of the spouse or common-law partner while married or in the common-law partnership and not separated during the year.

2009, c. 18, Sched. 28, s. 4 (2).

Tax credit for wholly dependent person

(4)  If an individual is entitled to a deduction under paragraph 118 (1) (b) of the Federal Act for a taxation year in respect of a wholly dependent person, the individual is entitled to a tax credit for the year in respect of the person calculated using the formula,

A × [$7,541 – (C – $754)]

in which,

“A” is the lowest tax rate for the year, and

“C” is the greater of $754 and the income for the year of the person referred to in paragraph 118 (1) (b) of the Federal Act whom the individual supported.

2009, c. 18, Sched. 28, s. 4 (2).

Tax credit for in-home care of a relative

(5)  If an individual is entitled to a deduction under paragraph 118 (1) (c.1) of the Federal Act for a taxation year in respect of a relative, the individual is entitled to a tax credit for the year for in-home care of the relative calculated using the formula,

A × ($18,507 – D)

in which,

“A” is the lowest tax rate for the year, and

“D” is the greater of the relative’s income for the year and $14,321.

2009, c. 18, Sched. 28, s. 4 (2).

Tax credit for infirm dependant

(6)  If an individual is entitled to a deduction under paragraph 118 (1) (d) of the Federal Act for a taxation year in respect of a dependant, the individual is entitled to a tax credit for the year in respect of the dependant calculated using the formula,

A × ($10,136 – E)

in which,

“A” is the lowest tax rate for the year, and

“E” is the greater of the dependant’s income for the year and $5,950.

2009, c. 18, Sched. 28, s. 4 (2).

Additional tax credit for infirm dependant

(7)  If an individual is entitled to a deduction under paragraph 118 (1) (e) of the Federal Act for a taxation year in respect of a wholly dependent person, the individual is entitled to a tax credit for the year in respect of the person calculated using the formula,

F – G

in which,

“F” is the individual’s tax credit that would be determined for the year in respect of the person under subsection (5) or (6), as the case may be, if paragraph 118 (4) (c) of the Federal Act did not apply for the purposes of subsection 118 (1) of that Act, and

“G” is the individual’s tax credit determined for the year in respect of the person under subsection (4).

2007, c. 11, Sched. A, s. 9 (7).

Age tax credit

(8)  If an individual is entitled to a deduction under subsection 118 (2) of the Federal Act for a taxation year, the individual is entitled to an age tax credit for the year calculated using the formula,

A × ($4,336 – H)

in which,

“A” is the lowest tax rate for the year, and

“H” is 15 per cent of the amount, if any, by which the individual’s income for the year would exceed $32,280 if no amount were included in his or her income in respect of a gain from a disposition of property to which section 79 of the Federal Act applies.

2009, c. 18, Sched. 28, s. 4 (3).

Tax credit for EI premiums and CPP / QPP contributions

(9)  If the individual is entitled to a deduction under section 118.7 of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year in respect of any premiums under the Employment Insurance Act (Canada) and any contributions under the Canada Pension Plan, or under a provincial pension plan defined in section 3 of that Act, equal to the amount that would be determined in respect of the individual for the year under section 118.7 of the Federal Act if the reference in that section to the appropriate percentage were read as a reference to the lowest tax rate. 2007, c. 11, Sched. A, s. 9 (9).

Pension tax credit

(10)  If an individual is entitled to a deduction under subsection 118 (3) of the Federal Act for a taxation year, the individual is entitled to a pension tax credit for the year calculated using the formula,

A × I

in which,

“A” is the lowest tax rate for the year, and

“I” is the lesser of $1,228 and,

(a) the amount of the individual’s pension income for the year for the purposes of subsection 118 (3) of the Federal Act, if the individual has reached 65 years of age by the end of the year, or

(b) the amount of the individual’s qualified pension income for the year for the purposes of that subsection, in any other case.

2007, c. 11, Sched. A, s. 9 (10); 2009, c. 18, Sched. 28, s. 4 (4).

Adoption expense tax credit

(11)  If an individual is entitled to a deduction under subsection 118.01 (2) of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year for adoption expenses in respect of an eligible child calculated using the formula,

A × J

in which,

“A” is the lowest tax rate for the year, and

“J” is the lesser of,

(a) $10,835, and

(b) the amount calculated using the formula,

K – L

in which,

“K” is the total of all eligible adoption expenses in respect of the eligible child included in computing a deduction under subsection 118.01 (2) of the Federal Act for the year, and

“L” is the sum of all amounts each of which is the amount of a reimbursement or another form of assistance, other than an amount that is included in computing the individual’s income and that is not deductible in computing the individual’s taxable income, that any individual is or was entitled to receive in respect of an amount included in computing the amount of “K”.

2007, c. 11, Sched. A, s. 9 (11); 2009, c. 18, Sched. 28, s. 4 (5).

Mental or physical impairment tax credit

(12)  If an individual is entitled to a deduction under subsection 118.3 (1) of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year in respect of a mental or physical impairment calculated using the formula,

A × ($7,175 + M)

in which,

“A” is the lowest tax rate for the year, and

“M” is,

(a) if the individual has not reached 18 years of age by the end of the taxation year, the amount, if any, by which $4,185 exceeds the amount, if any, by which the sum of all amounts each of which is an amount paid in the year for the care or supervision of the individual that is included in computing a deduction for a taxation year under section 63, 64 or 118.2 of the Federal Act exceeds $2,451, or

(b) in any other case, nil.

2009, c. 18, Sched. 28, s. 4 (6).

Tax credit for dependant with a mental or physical impairment

(13)  If an individual is entitled to a deduction under subsection 118.3 (2) of the Federal Act for a taxation year in respect of a dependant who has a mental or physical impairment, the individual is entitled to a tax credit for the year in respect of that dependant in the amount, if any, by which “N” exceeds “P” where,

“N” is the amount the dependant is entitled to deduct for the year under subsection (12), and

“P” is the amount, if any, by which the dependant’s basic personal income tax for the year exceeds the sum of the tax credits to which the dependant is entitled for the year under subsections (2), (3), (4), (5), (6), (7), (8), (9) and (10). 2007, c. 11, Sched. A, s. 9 (13).

Tax credit for unused tuition and education tax credits

(14)  If an individual is entitled to a deduction under subsection 118.61 (2) of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year in respect of unused tuition and education tax credits equal to the lesser of,

(a) the amount, if any, by which the individual’s basic personal income tax for the year exceeds the sum of the tax credits to which the individual is entitled for the year under subsections (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (12) and (13); and

(b) the amount of the individual’s unused tuition and education tax credits at the end of the preceding taxation year calculated using the formula,

Q + (R – S ) – (T + U)

in which,

“Q” is the amount of the individual’s unused tuition and education tax credits at the end of the taxation year ending immediately before the preceding taxation year, as determined under this clause or under subsection 4.0.1 (14) of the former Act, as the case may be,

“R” is the sum of the individual’s tuition tax credit and education tax credit for the preceding taxation year, as determined under subsections (15) and (16) or under subsections 4.0.1 (17) and (18) of the former Act, as the case may be,

“S” is the lesser of “R” and the amount, if any, by which the individual’s basic personal income tax for the preceding taxation year exceeds the sum of the tax credits to which the individual is entitled for that year,

(a) under this subsection and subsections (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (12) and (13), if that taxation year ended after December 31, 2008, or

(b) under paragraphs 1 to 12 of subsection 4 (3.1) of the former Act, in any other case,

“T” is the amount that may be deducted under this subsection or paragraph 12 of subsection 4 (3.1) of the former Act, as the case may be, for the preceding taxation year, and

“U” is the sum of the tuition and education tax credits transferred for the preceding taxation year by the individual to the individual’s spouse, common-law partner, parent or grandparent.

2007, c. 11, Sched. A, s. 9 (14).

Tuition tax credit

(15)  If an individual is entitled to a deduction under subsection 118.5 (1) of the Federal Act for a taxation year, the individual is entitled to a tuition tax credit for the year equal to the amount that would be determined in respect of the individual for the year under subsection 118.5 (1) of the Federal Act if the references in that subsection to the appropriate percentage were read as references to the lowest tax rate. 2007, c. 11, Sched. A, s. 9 (15).

Education tax credit

(16)  If an individual is entitled to a deduction under subsection 118.6 (2) of the Federal Act for a taxation year, the individual is entitled to an education tax credit for the year calculated using the formula,

A × (V + W)

in which,

“A” is the lowest tax rate for the year,

“V” is the amount calculated by multiplying $478 by the number of months in the taxation year during which the individual is enrolled as a full-time student in a qualifying educational program at a designated educational institution for the purposes of section 118.6 of the Federal Act, and

“W” is the amount calculated by multiplying $143 by the number of months in the taxation year, other than months described in the definition of “V”, in which the individual is enrolled at a designated educational institution in a specified educational program, for the purposes of section 118.6 of the Federal Act, that provides that each student in the program spend not less than 12 hours in the month on courses in the program.

2007, c. 11, Sched. A, s. 9 (16); 2009, c. 18, Sched. 28, s. 4 (7).

Transfer of tax credits from a spouse or common-law partner

(17)  If an individual is entitled to a deduction under section 118.8 of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year in respect of a transfer of tax credits from his or her spouse or common-law partner calculated using the formula,

X + Y – Z

in which,

“X” is the amount, if any, calculated under subsection (19) for the year,

“Y” is the sum of the tax credits that the spouse or common-law partner is entitled to deduct for the year under subsections (8), (10) and (12), and

“Z” is the amount, if any, by which “AA” exceeds “BB” where,

“AA” is the amount, if any, by which the basic personal income tax of the spouse or common-law partner for the year exceeds the sum of tax credits the spouse or common-law partner is entitled to deduct for the year under subsections (2), (9) and (14), and

“BB” is the lesser of,

(a) the sum of the tuition tax credit and the education tax credit that the spouse or common-law partner is entitled to deduct for the year under subsections (15) and (16), and

(b) the amount, if any, by which the basic personal income tax of the spouse or common-law partner for the year exceeds the sum of the tax credits the spouse or common-law partner is entitled to deduct for the year under subsections (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (12), (13) and (14).

2007, c. 11, Sched. A, s. 9 (17).

Transfer of tuition and education tax credits from a child or grandchild

(18)  If an individual is entitled to a deduction under section 118.9 of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year in respect of a transfer of tuition and education tax credits from a child or grandchild in the amount calculated under subsection (19). 2007, c. 11, Sched. A, s. 9 (18).

Calculation of transferred tuition and education tax credits

(19)  For the purposes of subsection (17) or (18), the amount of tuition and education tax credits transferred for a taxation year by a person to an individual is calculated using the formula,

CC – DD

in which,

“CC” is the lesser of,

(a) $6,141 multiplied by the lowest tax rate for the year, and

(b) the sum of the tuition tax credit and the education tax credit that the person transferring the tax credits is entitled to deduct for the year under subsections (15) and (16), and

“DD” is the amount, if any, by which the basic personal income tax of the person transferring the tax credits exceeds the sum of the tax credits the person is entitled to deduct for the year under subsections (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (12), (13) and (14).

2007, c. 11, Sched. A, s. 9 (19); 2009, c. 18, Sched. 28, s. 4 (8).

Medical expense tax credit

(20)  If an individual is entitled to a deduction under subsection 118.2 (1) of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year for medical expenses calculated using the formula,

A × [(EE – FF) + GG]

in which,

“A” is the lowest tax rate for the year,

“EE” is the sum of the individual’s medical expenses in respect of the individual, the individual’s spouse or common-law partner or the individual’s child who has not reached 18 years of age by the end of the taxation year, that are included in determining the individual’s medical expense credit for the year under subsection 118.2 (1) of the Federal Act,

“FF” is the lesser of $2,010 and 3 per cent of the individual’s income for the year, and

“GG” is the sum of all amounts each of which,

(a) is in respect of a dependant of the individual, within the meaning assigned by subsection 118 (6) of the Federal Act, other than a child of the individual who has not reached 18 years of age by the end of the year, and

(b) is the lesser of $10,835 and the amount that would be determined in respect of the dependant by the formula “E – F” in subsection 118.2 (1) of the Federal Act, if the dollar amount set out in the description of “FF” in this subsection were substituted for the dollar amount set out in the description of “F” in subsection 118.2 (1) of the Federal Act.

2007, c. 11, Sched. A, s. 9 (20); 2009, c. 18, Sched. 28, s. 4 (9, 10).

Charitable donation tax credit

(21)  If an individual is entitled to a deduction under subsection 118.1 (3) of the Federal Act for a taxation year and deducts an amount under that subsection, the individual is entitled to a tax credit for the year for charitable and other gifts calculated using the formula,

(A × HH) + [II × (JJ – HH)]

in which,

“A” is the lowest tax rate for the year,

“HH” is the lesser of $200 and that part of the individual’s total gifts for the year under section 118.1 of the Federal Act that was used to determine the amount deducted by the individual for the year under subsection 118.1 (3) of that Act,

“II” is the highest tax rate for the year, and

“JJ” is that part of the individual’s total gifts for the year under section 118.1 of the Federal Act that was used to determine the amount deducted by the individual for the year under subsection 118.1 (3) of the Federal Act.

2008, c. 7, Sched. S, s. 2.

Student loan interest tax credit

(22)  If an individual is entitled to a deduction under section 118.62 of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year for interest on a student loan equal to the amount that would be determined in respect of the individual for the year under section 118.62 of the Federal Act if the reference in that section to the appropriate percentage were read as a reference to the lowest tax rate. 2007, c. 11, Sched. A, s. 9 (22).

Apportionment of non-refundable tax credits

10.  Despite section 9, an individual described in paragraph 2 or 3 of subsection 4 (1) is entitled to deduct, in computing tax payable under this Division for a taxation year, an amount in respect of each tax credit described in subsections 9 (2) to (9) and (12) to (22) not exceeding the amount calculated using the formula,

A × B

in which,

“A” is the amount of the tax credit determined without reference to this section, and subsections 6 (2) and 7 (2), and

“B” is the individual’s Ontario allocation factor for the year.

2007, c. 11, Sched. A, s. 10.

Subdivision c — Additional Taxes

Minimum tax

11.  (1)  This section applies if the tax payable by an individual under Part I of the Federal Act for a taxation year is determined under section 127.5 of that Act. 2007, c. 11, Sched. A, s. 11 (1).

Same

(2)  Every individual to whom this section applies for a taxation year shall pay an additional tax for the year calculated using the formula,

(A – B) × C × D

in which,

“A” is the amount, if any, by which the individual’s minimum amount for the year as determined under section 127.51 of the Federal Act exceeds the special foreign tax credit of the individual for the year, as determined under subsection 127.54 (2) of the Federal Act,

“B” is the amount that, but for section 120 of the Federal Act, would be determined under Division E of Part I of the Federal Act to be the individual’s tax payable under the Federal Act for the year,

“C” is the percentage calculated by dividing the lowest tax rate for the year by the percentage in paragraph 117 (2) (a) of the Federal Act, and

“D” is the individual’s Ontario allocation factor for the year.

2007, c. 11, Sched. A, s. 11 (2).

Tax on split income

12.  (1)  This section applies to an individual for a taxation year if,

(a) the individual is resident in Ontario on the last day of the taxation year;

(b) the individual is a specified individual in relation to the taxation year; and

(c) the individual is liable to pay an amount of tax under subsection 120.4 (2) of the Federal Act for the taxation year. 2007, c. 11, Sched. A, s. 12 (1).

Additional tax

(2)  Every individual to whom this section applies for a taxation year shall pay an additional tax for the year calculated by multiplying the highest tax rate for the year by the individual’s split income for the year. 2007, c. 11, Sched. A, s. 12 (2).

Minimum tax amount

(3)  Despite any other provision of this Part, if an individual is a specified individual in relation to a taxation year the tax payable under this Division for the year by the individual shall not be less than the amount, if any, by which “A” exceeds “B” where,

“A” is the amount required to be added under subsection (2), and

“B” is the total of all amounts each of which is an amount,

(a) that may be deducted under sections 13 or 21 in computing the individual’s tax payable under this Division for the taxation year, and

(b) that can reasonably be considered to be in respect of an amount included in computing the individual’s split income for the taxation year. 2007, c. 11, Sched. A, s. 12 (3).

Subdivision d — Additional Tax Credits before Surtax

Dividend tax credit

13.  (1)  In determining the amount of tax payable under this Division for a taxation year, an individual who is resident in Ontario on the last day of the year may deduct a dividend tax credit equal to the sum of,

(a) for a taxation year ending before January 1, 2010, 38.4828 per cent of the amount determined in respect of the individual for the year under paragraph 121 (a) of the Federal Act;

(a.1) for a taxation year ending after December 31, 2009, 33.75 per cent of the amount determined in respect of the individual for the year under paragraph 121 (a) of the Federal Act; and

(b) the specified percentage of the amount determined in respect of the individual for the year under paragraph 121 (b) of the Federal Act. 2007, c. 11, Sched. A, s. 13 (1); 2009, c. 34, Sched. U, s. 2 (1).

Specified percentage

(2)  For the purposes of clause (1) (b), the specified percentage is,

(a) 39.0182 per cent for a taxation year ending before January 1, 2010;

(b) 35.6073 per cent for a taxation year ending after December 31, 2009 and before January 1, 2011;

(c) 38.9403 per cent for a taxation year ending after December 31, 2010 and before January 1, 2012; and

(d) 42.6105 per cent for a taxation year ending after December 31, 2011. 2008, c. 19, Sched. U, s. 1; 2009, c. 34, Sched. U, s. 2 (2-4).

Overseas employment tax credit

14.  In determining the amount of tax payable under this Division for a taxation year, an individual who is resident in Ontario on the last day of the year may deduct a tax credit for overseas employment calculated using the formula,

A/B × C

in which,

“A” is the highest tax rate for the year,

“B” is the percentage in paragraph 117 (2) (d) of the Federal Act, and

“C” is the amount deductible by the individual for the year under section 122.3 of the Federal Act.

2007, c. 11, Sched. A, s. 14; 2009, c. 34, Sched. U, s. 3.

Tax credit for minimum tax

15.  (1)  In determining the amount of tax payable under this Division for a taxation year, an individual may deduct a tax credit in respect of minimum tax not exceeding the lesser of,

(a) the amount of the individual’s basic personal income tax for the year, less all amounts deductible for the year under subdivision b and sections 13 and 14; and

(b) the amount of the individual’s carryforward amount for the year in respect of minimum tax, as determined under the prescribed rules. 2007, c. 11, Sched. A, s. 15 (1); 2008, c. 7, Sched. S, s. 3.

Restriction

(2)  No amount may be deducted by an individual for a taxation year under this section if the individual is required to pay an amount under section 11 for the same year. 2007, c. 11, Sched. A, s. 15 (2).

Subdivision e — Ontario Surtax

Ontario surtax

16.  (1)  The amount of an individual’s surtax for a taxation year is the sum of,

(a) 20 per cent of the amount, if any, by which the gross tax amount of the individual for the year exceeds,

(i) $4,257 if the year ends before January 1, 2010, or

(ii) $4,006 if the year ends after December 31, 2009; and

(b) 36 per cent of the amount, if any, by which the gross tax amount of the individual for the year exceeds,

(i) $5,370 if the year ends before January 1, 2010, or

(ii) $5,127 if the year ends after December 31, 2009. 2009, c. 34, Sched. U, s. 4.

Gross tax amount

(2)  The gross tax amount of an individual for a taxation year for the purposes of subsection (1) is the amount of tax that would be payable by the individual for the year under this Division if that amount were determined without reference to this section and sections 17 to 22. 2007, c. 11, Sched. A, s. 16 (2).

Subdivision f — Averaging and Adjustments

Qualifying lump-sum amount

17.  There shall be added, in computing the tax payable for a taxation year under this Division by an individual who resides in Ontario on the last day of the taxation year, an amount equal to 38.5 per cent of the amount added under section 120.31 of the Federal Act in computing the individual’s tax payable for the year under the Federal Act. 2007, c. 11, Sched. A, s. 17.

CPP or QPP benefits

18.  There shall be added, in computing the tax payable for a taxation year under this Division by an individual who resides in Ontario on the last day of the taxation year, an amount equal to 38.5 per cent of the amount added under section 120.3 of the Federal Act in computing the individual’s tax payable under the Federal Act for the year. 2007, c. 11, Sched. A, s. 18.

Additional tax amount, section 40 ITAR

19.  There shall be added, in computing the tax payable under this Division for a taxation year by an individual who resides in Ontario on the last day of the taxation year, an amount equal to 38.5 per cent of the amount of the individual’s tax payable for the year under section 40 of the Income Tax Application Rules (Canada). 2007, c. 11, Sched. A, s. 19.

Subdivision g — Additional Tax Credits after Surtax

Ontario tax reduction

20.  (1)  Except as otherwise provided in subsection (9), an individual may deduct in computing his or her tax payable under this Division for a taxation year a tax credit equal to the amount, if any, by which twice the individual’s personal amount for the year exceeds the amount of tax otherwise payable by the individual for the year. 2007, c. 11, Sched. A, s. 20 (1).

Who includes amount in respect of qualified dependant, etc.

(2)  If an individual resides with a cohabiting spouse or common-law partner on December 31 in the taxation year and if the individual’s income for the year exceeds the income of the cohabiting spouse or common-law partner for the year, the individual may include an eligible amount in his or her personal amount for the taxation year with respect to a person who is,

(a) a qualified dependant at any time in the taxation year in respect of whom the individual or the cohabiting spouse or common-law partner was an eligible individual; or

(b) a dependant of the individual or the cohabiting spouse or common-law partner who has a mental or physical infirmity. 2007, c. 11, Sched. A, s. 20 (2).

Personal amount

(3)  An individual’s personal amount for a taxation year is the amount calculated using the formula:

A + B + C

in which,

“A” is the amount of the basic reduction for the year,

“B” is the sum of all amounts each of which is an eligible amount for the year for a dependant of the individual who was under 18 years of age at any time in the year, and

“C” is the sum of all amounts each of which is an eligible amount for the year in respect of a dependant of the individual who has a mental or physical infirmity.

2007, c. 11, Sched. A, s. 20 (3).

Basic reduction

(4)  The basic reduction for a taxation year is $205. 2007, c. 11, Sched. A, s. 20 (4); 2009, c. 18, Sched. 28, s. 6 (1).

Eligible amount, dependant

(5)  The eligible amount for a dependant described in subsection (3) for a taxation year is $379. 2007, c. 11, Sched. A, s. 20 (5); 2009, c. 18, Sched. 28, s. 6 (2).

Rules, dependants

(6)  An individual may include an amount in respect of a dependant in the calculation of “B” in subsection (3) for a taxation year only if,

(a) the dependant was a qualified dependant at any time in the year; and

(b) the individual or the individual’s cohabiting spouse or common-law partner, if any, with whom the individual resided on December 31 in the year was the eligible individual in respect of the dependant,

(i) immediately before the dependant ceased to be a qualified dependant of the eligible individual, and the dependant did not become the qualified dependant of any other eligible individual during the year, or

(ii) at the end of the year, in any other case. 2007, c. 11, Sched. A, s. 20 (6).

Rules, dependants with a mental or physical infirmity

(7)  Subject to subsection (8), an individual may include an eligible amount in respect of a dependant who has a mental or physical infirmity in the calculation of “C” in subsection (3) for a taxation year only if no other person has included an eligible amount in respect of the dependant in the calculation of “B” or “C” in subsection (3) in the determination of that person’s personal amount for the year and,

(a) if the dependant had reached 18 years of age by December 31 in the year, the individual or the individual’s cohabiting spouse or common-law partner, if any, with whom the individual resided on that day is entitled to a deduction in respect of the dependant under subsection 9 (4), (5), (6) or (13) for the year;

(b) if the dependant had not reached 18 years of age by December 31 in the year, the individual or the individual’s cohabiting spouse or common-law partner, if any, with whom the individual resided on that day is entitled to a deduction in respect of the dependant under subsection 9 (13) or would have been entitled to a deduction in respect of the dependant under subsection 9 (5) or (6) for the year if the dependant had reached 18 years of age by December 31 in the year; or

(c) if the dependant is the individual’s cohabiting spouse or common-law partner at any time in the year, is entitled to a deduction under subsection 9 (12) for the year and is transferring some or all of the deduction to the individual under subsection 9 (17). 2007, c. 11, Sched. A, s. 20 (7); 2008, c. 7, Sched. S, s. 4 (1-3).

Rules, non-cohabiting spouses, etc.

(8)  If two individuals who are not cohabiting spouses or common-law partners are each entitled to deduct and are deducting an amount under subsection 9 (6) or (13) for a taxation year in respect of the same dependant who is at least 19 years old, the following rules apply:

1. The individual who is deducting more than 50 per cent of the amount deductible under subsection 9 (6) or (13) in respect of the dependant may include an amount in respect of the dependant in the calculation of “C” in subsection (3) for the year.

2. If each individual is deducting 50 per cent of the amount deductible under subsection 9 (6) or (13) in respect of the dependant, only the individual with the lower income may include an amount in respect of the dependant in the calculation of “C” in subsection (3) for the year. 2007, c. 11, Sched. A, s. 20 (8); 2008, c. 7, Sched. S, s. 4 (4-6).

Exception

(9)  No tax credit may be deducted under this section for a taxation year by an individual if,

(a) the individual’s tax payable under Part I of the Federal Act for the year is determined under Division E.1 of that Part;

(b) the individual is not resident in Canada at the beginning of the year;

(c) the individual is resident outside Ontario on December 31 in the year; or

(d) the individual’s tax return for the year is filed on his or her behalf by a trustee in bankruptcy under paragraph 128 (2) (e) or (h) of the Federal Act. 2007, c. 11, Sched. A, s. 20 (9).

Definitions

(10)  In this section,

“cohabiting spouse or common-law partner” has the meaning assigned by section 122.6 of the Federal Act; (“conjoint ou conjoint de fait visé”)

“eligible individual” has the meaning assigned by section 122.6 of the Federal Act; (“particulier admissible”)

“qualified dependant” has the meaning assigned by section 122.6 of the Federal Act; (“personne à charge admissible”)

“tax otherwise payable” means, in respect of an individual for a taxation year, the amount of tax that would be payable under this Division by the individual for the year if that amount were determined without reference to this section and sections 21 and 22. (“impôt payable par ailleurs”) 2007, c. 11, Sched. A, s. 20 (10).

Foreign tax credit

21.  (1)  An individual who was resident in Ontario on the last day of a taxation year, and who had income for the year that included income earned in a country other than Canada in respect of which an amount of non-business-income tax was paid by the individual to the government of that country for the year, may deduct in computing the individual’s tax payable under this Division for the year a foreign tax credit equal to the lesser of “A” and “B” where,

“A” is the amount, if any, by which the non-business-income tax paid by the individual for the year to the government of each country other than Canada exceeds the sum of,

(a) all amounts, if any, deductible by the individual from tax under the Federal Act for the year under subsection 126 (1), (2.2), (2.21) or (2.22) of that Act, and

(b) the individual’s special foreign tax credit for the year under subsection 127.54 (2) of the Federal Act, and

“B” is the amount, if any, determined by multiplying the tax otherwise payable by the individual for the taxation year by the ratio of “C” to “D” where,

“C” is the amount, if any, determined in respect of the individual for the year under subparagraph 126 (1) (b) (i) of the Federal Act, and

“D” is the amount, if any, by which “E” exceeds “F” where,

“E” is,

(a) if section 114 of the Federal Act is not applicable to the individual for the year, the individual’s income earned in Ontario for the year, or

(b) if section 114 of the Federal Act is applicable to the individual for the year, the amount that would be the individual’s income earned in Ontario for the year if the amount determined under the Federal Act were equal to the individual’s income determined under paragraph 114 (a) of the Federal Act, and

“F” is the amount, if any, determined under subclause 126 (1) (b) (ii) (A) (III) of the Federal Act in respect of the individual for the year. 2007, c. 11, Sched. A, s. 21 (1).

Rules re foreign tax credit

(2)  The following rules apply in respect of an individual’s foreign tax credit for a taxation year:

1. Subsection 126 (6) of the Federal Act and the definition of “non-business-income tax” in subsection 126 (7) of the Federal Act apply for the purposes of subsection (1).

2. For the purposes of subsection (1), the expression “tax otherwise payable” by an individual for a taxation year means the amount of tax that would be payable under this Division by the individual for the year if that amount were determined without reference to this section and sections 13, 14 and 22. 2007, c. 11, Sched. A, s. 21 (2).

Investment corporation tax credit

22.  (1)  In determining the amount of tax payable for a taxation year under this Division, an individual who is resident in Ontario on the last day of the year and who has been issued one or more tax credit certificates under the Community Small Business Investment Funds Act in respect of the year with respect to investments in shares issued by one or more corporations registered under Part III of that Act, may deduct from the amount of his or her tax otherwise payable for the year a tax credit equal to the lesser of “A” and “B” where,

“A” is the sum of the tax credits listed on those tax credit certificates issued in respect of the year, and

“B” is the maximum tax credit permitted for the year in respect of investments made by the individual in corporations registered under Part III of that Act. 2007, c. 11, Sched. A, s. 22 (1).

Interpretation, maximum tax credit

(2)  The maximum tax credit permitted for a taxation year in respect of investments made by an individual in corporations registered under Part III of the Community Small Business Investment Funds Act is,

(a) for the 2009 taxation year, unless otherwise prescribed, the sum of,

(i) the lesser of $1,125 and the amount equal to 15 per cent of the equity capital received from the individual during 2009 or during the first 60 days of 2010 by the corporations on the issue of Class A shares, and

(ii) the lesser of $375 and the amount equal to 5 per cent of the equity capital received from the individual during 2009 or during the first 60 days of 2010 by the corporations on the issue of Class A shares, if the shares were issued by the corporations as research oriented investment funds under subsection 16.1 (2) of the Community Small Business Investment Funds Act;

(b) for the 2010 taxation year, unless otherwise prescribed, the sum of,

(i) the lesser of $750 and the amount equal to 10 per cent of the equity capital received from the individual during 2010 or during the first 60 days of 2011 by the corporations on the issue of Class A shares, and

(ii) the lesser of $375 and the amount equal to 5 per cent of the equity capital received from the individual during 2010 or during the first 60 days of 2011 by the corporations on the issue of Class A shares, if the shares were issued by the corporations as research oriented investment funds under subsection 16.1 (2) of the Community Small Business Investment Funds Act; or

(c) for the 2011 taxation year, unless otherwise prescribed, the sum of,

(i) the lesser of $375 and the amount equal to 5 per cent of the equity capital received from the individual during 2011 or during the first 60 days of 2012 by the corporations on the issue of Class A shares, and

(ii) the lesser of $375 and the amount equal to 5 per cent of the equity capital received from the individual during 2011 or during the first 60 days of 2012 by the corporations on the issue of Class A shares, if the shares were issued by the corporations as research oriented investment funds under subsection 16.1 (2) of the Community Small Business Investment Funds Act. 2008, c. 7, Sched. S, s. 5.

Interpretation

(3)  For the purposes of subsection (1), the expression “tax otherwise payable” by an individual for a taxation year means the amount of tax that would be payable for the year under this Division if that amount were determined without reference to this section. 2007, c. 11, Sched. A, s. 22 (3).

Subdivision h - Indexing and Rounding

Annual adjustment

23.  (1)  Subject to the regulations, each amount expressed in dollars in the following provisions shall be adjusted in accordance with this section for every taxation year ending after December 31, 2009:

1. Subsection 6 (1).

2. Subsections 9 (2) to (6), (8), (10), (11), (12), (16), (19) and (20).

3. Paragraphs 118.2 (2) (b.1), (l.5) and (l.7) of the Federal Act, as they apply in determining the amount of an individual’s medical expense tax credit deductible under subsection 9 (20).

4. Subclauses 16 (1) (a) (ii) and (b) (ii).

5. Subsections 20 (4) and (5).

6. Subsection 101.1 (3).

7. Subsection 101.2 (3).

8. Subsection 104.11 (5). 2007, c. 11, Sched. A, s. 23 (1); 2009, c. 18, Sched. 28, s. 7; 2009, c. 34, Sched. U, s. 5 (1, 2).

Exception

(1.1)  Subsection (1) does not apply to an amount in a provision listed in any of paragraphs 4, 6, 7 and 8 of subsection (1) for the 2010 taxation year. 2009, c. 34, Sched. U, s. 5 (3).

Calculation of adjusted amount

(2)  Each amount referred to in subsection (1) shall be adjusted to the amount calculated using the formula,

A + [A × (B/C – 1)]

in which,

“A” is the amount that would have been used for the preceding taxation year if it had not been rounded to a whole dollar,

“B” is the Consumer Price Index for the 12-month period that ended on September 30 of the previous year, and

“C” is the Consumer Price Index for the 12-month period preceding the 12-month period mentioned in the description of “B”.

2007, c. 11, Sched. A, s. 23 (2).

Same

(3)  For the purposes of subsection (2), the amount of “(B/C – 1)” shall be adjusted each year in such manner as may be prescribed and rounded to the nearest thousandth or, if the result obtained is equidistant between two consecutive thousandths, to the higher thousandth. 2007, c. 11, Sched. A, s. 23 (3).

Rounding

(4)  If an amount as adjusted under this section is not a multiple of one dollar, it shall be rounded to the nearest multiple of one dollar or, if the amount is equidistant between two consecutive whole dollar amounts, to the higher dollar amount. 2007, c. 11, Sched. A, s. 23 (4).

Consumer Price Index

(5)  In this section, the Consumer Price Index for any 12-month period is the result arrived at by,

(a) determining the sum of the Consumer Price Index for Ontario as published by Statistics Canada under the authority of the Statistics Act (Canada), adjusted in the prescribed manner, for each month in that period;

(b) dividing the sum obtained under clause (a) by 12; and

(c) rounding the result obtained under clause (b) to the nearest one-thousandth or, if the result obtained is equidistant from two consecutive thousandths, to the higher thousandth. 2007, c. 11, Sched. A, s. 23 (5).

Division C — Ontario Health Premium

Liability for Ontario Health Premium

24.  (1)  An individual who, in respect of a taxation year, is described in paragraph 1 or 2 of subsection 4 (1) shall pay an Ontario Health Premium for that year. 2007, c. 11, Sched. A, s. 24 (1).

Calculation of Ontario Health Premium

(2)  An individual’s Ontario Health Premium for a taxation year is calculated using the formula in the following paragraph that applies to the individual for the year:

1. If the individual’s taxable income for the year does not exceed $20,000, the individual’s Ontario Health Premium for the year is nil.

2. If the individual’s taxable income for the year exceeds $20,000 but does not exceed $36,000, the individual’s Ontario Health Premium for the year is the amount calculated using the formula,

0.06 × A

in which,

“A” is the lesser of $5,000 and the amount of the individual’s taxable income in excess of $20,000 for the year.

3. If the individual’s taxable income for the year exceeds $36,000 but does not exceed $48,000, the individual’s Ontario Health Premium for the year is the amount calculated using the formula,

B + (0.06 × C)

in which,

“B” is $300, and

“C” is the lesser of $2,500 and the amount of the individual’s taxable income in excess of $36,000 for the year.

4. If the individual’s taxable income for the year exceeds $48,000 but does not exceed $72,000, the individual’s Ontario Health Premium for the year is the amount calculated using the formula,

D + (0.25 × E)

in which,

“D” is $450, and

“E” is the lesser of $600 and the amount of the individual’s taxable income in excess of $48,000 for the year.

5. If the individual’s taxable income for the year exceeds $72,000 but does not exceed $200,000, the individual’s Ontario Health Premium for the year is the amount calculated using the formula,

F + (0.25 × G)

in which,

“F” is $600, and

“G” is the lesser of $600 and the amount of the individual’s taxable income in excess of $72,000 for the year.

6. If the individual’s taxable income for the year exceeds $200,000, the individual’s Ontario Health Premium for the year is the amount calculated using the formula,

H + (0.25 × I)

in which,

“H” is $750, and

“I” is the lesser of $600 and the amount of the individual’s taxable income in excess of $200,000 for the year.

2007, c. 11, Sched. A, s. 24 (2).

Exception, trust

(3)  Despite subsection (1), an individual is not required to pay an Ontario Health Premium if the individual is a trust. 2007, c. 11, Sched. A, s. 24 (3).

Bankruptcy

(4)  The following rules apply if an individual is bankrupt in a taxation year:

1. The individual’s taxable income for the year for the purposes of this section is deemed to be the sum of all amounts, each of which is his or her taxable income for a taxation year ending in the calendar year of bankruptcy.

2. The individual’s Ontario Health Premium for the year shall be allocated to and payable in respect of each taxation year ending in the calendar year of bankruptcy, in amounts reasonably proportionate to the taxable income of the individual for each taxation year ending in the year of bankruptcy. 2007, c. 11, Sched. A, s. 24 (4).

Death

(5)  For the purposes of this section, the taxable income of an individual shall not include income that is reported in a return filed as a result of an election made under subsection 70 (2), 104 (23) or 150 (4) of the Federal Act. 2007, c. 11, Sched. A, s. 24 (5).

Report about revenue from the Ontario Health Premium

25.  The Public Accounts for each fiscal year shall include information about the use of the revenue from the Ontario Health Premium. 2007, c. 11, Sched. A, s. 25.

PART III
CORPORATE TAX

Division A — General

Interpretation

Definitions

26.  (1)  In this Part,

“adjusted taxable income” means, in respect of a corporation,

(a) for a taxation year that ended before January 1, 2009, the corporation’s taxable income or taxable income earned in Canada for the year, as the case may be, determined under the Corporations Tax Act, or

(b) for a taxation year ending after December 31, 2008, the amount that would be the corporation’s taxable income or taxable income earned in Canada for the year if,

(i) the amount of the corporation’s adjusted Crown royalties for the year, as determined under subsection 36 (2), were added in determining the corporation’s income for the purposes of the Federal Act for the year, and

(ii) the amount of the corporation’s notional resource allowance for the year under subsection 36 (3) were deducted in determining the corporation’s income for the purposes of the Federal Act for the year; (“revenu imposable rajusté”)

“amalgamated corporation” means a corporation that is a “new corporation” for the purposes of section 87 of the Federal Act; (société issue de la fusion”)

“Canadian reserve liabilities” has the meaning assigned by subsection 2400 (1) of the Federal regulations; (“passif de réserve canadienne”)

“Ontario small business income” means, in respect of a corporation for a taxation year, the amount determined for the year under subsection 31 (3); (“revenu tiré d’une petite entreprise exploitée en Ontario”)

“parent corporation” means a corporation that is a “parent” under subsection 88 (1) of the Federal Act; (“société mère”)

“predecessor corporation” means a corporation that is a predecessor corporation referred to in section 87 of the Federal Act and includes a corporation that was a predecessor corporation of a predecessor corporation; (“société remplacée”)

“small business deduction rate” means, in respect of a corporation for a taxation year, the percentage determined for the corporation for the year under subsection 31 (4); (“taux de la déduction accordée aux petites entreprises”)

“subsidiary corporation” means, except for the purposes of Division D, a corporation that is a “subsidiary” under subsection 88 (1) of the Federal Act; (“filiale”)

“taxable income” means, in respect of a corporation for a taxation year,

(a) the corporation’s taxable income for the year as determined for the purposes of Part II of the Corporations Tax Act or the Federal Act, as the context requires, if the taxation year ended before January 1, 2009, or

(b) the corporation’s taxable income for the year as determined for the purposes of the Federal Act, if the taxation year ends after December 31, 2008; (“revenu imposable”)

“total reserve liabilities” has the meaning assigned by section 8600 of the Federal regulations. (“passif total de réserve”) 2007, c. 11, Sched. A, s. 26 (1).

Ontario domestic factor, corporation resident in Canada

(2)  For the purposes of this Part, the Ontario domestic factor for a taxation year of a corporation that is resident in Canada is the ratio of “A” to “B” where,

“A” is equal to,

(a) the corporation’s Ontario taxable income for the year if the corporation’s taxable income for the year is a positive amount, or

(b) in any other case, the amount that would be the corporation’s Ontario taxable income for the year if the corporation’s taxable income for the year were $1,000, and

“B” is equal to,

(a) the corporation’s taxable income earned in the year in a province as determined under the Federal regulations made for the purposes of subsection 124 (4) of the Federal Act, if the corporation’s taxable income for the year is a positive amount, or

(b) in any other case, the amount that would be the corporation’s taxable income earned in the year in a province as determined under the Federal regulations made for the purposes of subsection 124 (4) of the Federal Act if the corporation’s taxable income for the year were $1,000. 2007, c. 11, Sched. A, s. 26 (2).

Canadian allocation factor, corporation resident in Canada

(3)  For the purposes of this Part, the Canadian allocation factor for a taxation year of a corporation that is resident in Canada is the ratio of “C” to “D” where,

“C” is equal to,

(a) the corporation’s taxable income earned in the year in a province, as determined under the Federal regulations made for the purposes of subsection 124 (4) of the Federal Act, if the corporation’s taxable income for the year is a positive amount, or

(b) the amount that would be the corporation’s taxable income earned in the year in a province, as determined under the Federal regulations made for the purposes of subsection 124 (4) of the Federal Act if the corporation’s taxable income for the year were $1,000, in any other case, and

“D” is equal to,

(a) the corporation’s taxable income for the year if it is a positive amount, or

(b) $1,000, in any other case. 2007, c. 11, Sched. A, s. 26 (3).

Non-resident corporation

(4)  For the purposes of this Part, if a corporation is a non-resident corporation,

(a) its Ontario domestic factor for a taxation year is equal to its Ontario allocation factor for the year; and

(b) its Canadian allocation factor for a taxation year is one. 2007, c. 11, Sched. A, s. 26 (4).

Foreign allocation factor

(5)  For the purposes of this Part, the foreign allocation factor for a taxation year of a corporation that is resident in Canada is one minus the corporation’s Canadian allocation factor for the year. 2007, c. 11, Sched. A, s. 26 (5).

Regulations

(6)  A reference in any provision in this Part to something prescribed, determined or defined by the regulations shall be read as a reference to the thing as prescribed, determined or defined by the regulations made for the purposes of the corresponding provision of the Corporations Tax Act unless a regulation has been made under this Act to prescribe, determine or define the thing. 2007, c. 11, Sched. A, s. 26 (6).

Same

(7)  A regulation made under the Corporations Tax Act that applies for the purposes of this Part shall be read with such modifications as may be required. 2007, c. 11, Sched. A, s. 26 (7).

Obligation to pay tax

27.  (1)  Every corporation that has a permanent establishment in Ontario at any time in a taxation year shall, at the time and in the manner required by this Act, pay to the Crown in right of Ontario the taxes for the taxation year imposed by this Part. 2007, c. 11, Sched. A, s. 27 (1).

Exception

(2)  Despite subsection (1), if a corporation is exempt from tax by reason of section 149 of the Federal Act, the following rules apply:

1. The corporation is exempt from tax determined under Division B for the same period of time and to the same extent that it is exempt from tax imposed under Part I of the Federal Act by reason of that section.

2. The corporation is exempt from taxes determined under Divisions C, D and E for the same period of time it is totally exempt from tax imposed under Part I of the Federal Act by reason of that section. 2007, c. 11, Sched. A, s. 27 (2).

If corporation is a bankrupt

28.  Subsection 128 (1) of the Federal Act applies for the purposes of this Act. 2007, c. 11, Sched. A, s. 28.

Division B — Corporate Income Tax

Subdivision a — General Corporate Income Tax, Tax Credits and Surtax

Basic income tax

29.  (1)  Every corporation that has a permanent establishment in Ontario at any time in a taxation year shall, in determining the amount of its tax payable under this Division for the taxation year, add the amount of its basic income tax for the year, calculated by multiplying its Ontario taxable income for the year by its basic rate of tax. 2007, c. 11, Sched. A, s. 29 (1).

Basic rate of tax

(2)  A corporation’s basic rate of tax for a taxation year is the sum of,

(a) 14 per cent multiplied by the ratio of the number of days in the taxation year that are before July 1, 2010 to the total number of days in the taxation year;

(b) 12 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2010 and before July 1, 2011 to the total number of days in the taxation year;

(c) 11.5 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2011 and before July 1, 2012 to the total number of days in the taxation year;

(d) 11 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2012 and before July 1, 2013 to the total number of days in the taxation year; and

(e) 10 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2013 to the total number of days in the taxation year. 2009, c. 34, Sched. U, s. 6.

Change in tax status

30.  If at any time a corporation becomes or ceases to be exempt from tax under Part I of the Federal Act on its taxable income otherwise than by reason of paragraph 149 (1) (t) of the Federal Act, the corporation is deemed to be a new corporation whose first taxation year begins at that time for the purposes of applying this Division to the corporation to determine the amount, if any, deductible in computing the amount of the corporation’s tax payable under this Division. 2007, c. 11, Sched. A, s. 30.

Ontario small business deduction

31.  (1)  A corporation may, in computing the amount of its tax payable under this Division for a taxation year, deduct an Ontario small business deduction if,

(a) the corporation has made a deduction under section 125 of the Federal Act for the year; or

(b) the corporation would have been entitled to a deduction under section 125 of the Federal Act if its business limit for the year under paragraph 125 (1) (c) of that Act had been determined without reference to subsection 125 (5.1) of that Act. 2007, c. 11, Sched. A, s. 31 (1).

Calculation of Ontario small business deduction

(2)  A corporation’s Ontario small business deduction for a taxation year is the amount determined by multiplying its Ontario small business income for the year by its small business deduction rate for the year. 2007, c. 11, Sched. A, s. 31 (2).

Ontario small business income

(3)  A corporation’s Ontario small business income for a taxation year is the amount calculated using the formula,

A × B

in which,

“A” is the least of,

(a) the amount determined under paragraph 125 (1) (a) of the Federal Act in respect of the corporation for the year,

(b) the amount determined under paragraph 125 (1) (b) of the Federal Act in respect of the corporation for the year, and

(c) the corporation’s Ontario business limit for the year, and

“B” is the corporation’s Ontario domestic factor for the year.

2007, c. 11, Sched. A, s. 31 (3).

Small business deduction rate

(4)  A corporation’s small business deduction rate for a taxation year is the sum of,

(a) 8.5 per cent multiplied by the ratio of the number of days in the taxation year that are before July 1, 2010 to the total number of days in the taxation year;

(b) 7.5 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2010 and before July 1, 2011 to the total number of days in the taxation year;

(c) 7 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2011 and before July 1, 2012 to the total number of days in the taxation year;

(d) 6.5 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2012 and before July 1, 2013 to the total number of days in the taxation year; and

(e) 5.5 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2013 to the total number of days in the taxation year. 2009, c. 34, Sched. U, s. 7.

Ontario business limit

(5)  The amount of a corporation’s Ontario business limit for a taxation year is the amount that would be the corporation’s business limit under paragraph 125 (1) (c) of the Federal Act for the year if,

(a) the references to $400,000 in subsections 125 (2) and (3) of that Act were read as references to $500,000; and

(b) the Federal Act were read without reference to subsection 125 (5.1) of that Act. 2008, c. 7, Sched. S, s. 6.

Specified partnership income

(6)  In applying subparagraph 125 (1) (a) (ii) of the Federal Act for the purposes of this section, the reference to “specified partnership income” in that subparagraph shall be read as a reference to the amount that would be determined under the definition of “specified partnership income” in subsection 125 (7) of that Act in respect of a partnership if, in the description of “M” in that definition,

(a) the reference to $400,000 were read as $500,000; and

(b) the reference to $1,096 were read as $1,370. 2008, c. 7, Sched. S, s. 6.

Surtax re Ontario small business deduction

32.  (1)  Every corporation that has claimed an Ontario small business deduction for a taxation year shall, in computing the amount of its tax payable under this Division for the year, add the amount, if any, of the corporation’s surtax for the year equal to the lesser of,

(a) the amount claimed as a deduction by the corporation under subsection 31 (1) for the year; and

(b) the amount calculated using the formula,

A × (B + C – $500,000) × D/$500,000

in which,

“A” is the corporation’s small business surtax rate for the year as set out in subsection (3),

“B” is the amount of the corporation’s adjusted taxable income for the year,

“C” is the sum of all amounts each of which is the adjusted taxable income of another corporation with which the corporation was associated at any time during the year, for the last taxation year of that associated corporation that ended at or before the end of the corporation’s taxation year, and

“D” is the amount of the corporation’s Ontario small business income for the year.

2007, c. 11, Sched. A, s. 32 (1); 2008, c. 7, Sched. S, s. 7 (1).

Rules for short taxation years and associated corporations

(2)  The following rules apply in calculating the amount, if any, of a corporation’s surtax for a taxation year under subsection (1):

1. If the taxation year of the corporation is less than 51 weeks, the adjusted taxable income of the corporation for the year is deemed to be the amount of its adjusted taxable income for the year as otherwise determined multiplied by the ratio of 365 to the number of days in the taxation year.

2. If the taxation year of a corporation (called in this subsection the “associated corporation”) that was associated with the corporation during the corporation’s taxation year is less than 51 weeks and is the only taxation year of the associated corporation ending in the corporation’s taxation year, the adjusted taxable income of the associated corporation for that taxation year is deemed to be the amount of its adjusted taxable income for the year as otherwise determined multiplied by the ratio of 365 to the number of days in that taxation year.

3. If the associated corporation has two or more taxation years ending in the corporation’s taxation year, the adjusted taxable income of the associated corporation for its last taxation year ending in the corporation’s taxation year is deemed to be the sum of all amounts, each of which is the adjusted taxable income of the associated corporation for each taxation year ending in the corporation’s taxation year and during which the associated corporation was at any time associated with the corporation multiplied by the ratio of 365 to the total number of days in all of those taxation years. 2007, c. 11, Sched. A, s. 32 (2).

Small business surtax rate

(3)  A corporation’s small business surtax rate for a taxation year is 4.25 per cent multiplied by the ratio of the number of days in the taxation year before July 1, 2010 to the total number of days in the taxation year. 2009, c. 34, Sched. U, s. 8.

Associated corporations

(4)  If two corporations would, but for subsection 256 (2) of the Federal Act, not be associated with each other at any time but are each associated with, or are deemed to be associated with, a third corporation at a particular time, the two corporations are deemed for the purposes of this section to be associated with each other at the particular time unless,

(a) the third corporation is not a Canadian-controlled private corporation at the particular time; or

(b) the third corporation elects under subsection 256 (2) of the Federal Act not to be associated with either of the two corporations for its taxation year that includes the particular time. 2007, c. 11, Sched. A, s. 32 (4).

Tax credit for manufacturing, processing, etc.

33.  (1)  A corporation may, in computing the amount of its tax payable under this Division for a taxation year ending before July 1, 2013, deduct a tax credit calculated using the formula,

A × B × X

in which,

“A” is the amount of the corporation’s tax credit base for the year,

“B” is the corporation’s Ontario domestic factor for the year, and

“X” is the sum of,

(a) 0.02 multiplied by the ratio of the number of days in the taxation year that are before July 1, 2011 to the total number of days in the taxation year,

(b) 0.015 multiplied by the ratio of the number of days in the taxation year that are after June 30, 2011 and before July 1, 2012 to the total number of days in the taxation year, and

(c) 0.01 multiplied by the ratio of the number of days in the taxation year that are after June 30, 2012 and before July 1, 2013.

2009, c. 34, Sched. U, s. 9.

Tax credit base

(2)  For the purposes of this section, a corporation’s tax credit base for a taxation year is the sum of “C” and “D” where,

“C” is the least of,

(a) the amount of the corporation’s adjusted business income for the year,

(b) the amount of the corporation’s eligible Canadian profits for the year, if the corporation is not a Canadian-controlled private corporation throughout the year,

(c) the amount, if any, by which the amount of the corporation’s eligible Canadian profits for the year exceeds the corporation’s Ontario adjusted small business income for the year, if the corporation is a Canadian-controlled private corporation throughout the year, and

(d) the amount, if any, by which the corporation’s adjusted taxable income for the year exceeds,

(i) if the corporation was a Canadian-controlled private corporation throughout the year, the sum of,

(A) the corporation’s Ontario adjusted small business income for the year,

(B) the amount determined by multiplying the corporation’s adjusted taxable income for the year by the corporation’s foreign allocation factor for the year, and

(C) the corporation’s aggregate investment income for the year, as determined under subsection 129 (4) of the Federal Act,

(ii) if the corporation is resident in Canada but not a Canadian-controlled private corporation throughout the year, the amount determined by multiplying the corporation’s adjusted taxable income for the year by the corporation’s foreign allocation factor for the year, or

(iii) nil, in any other case, and

“D” is the amount, if any, by which the least of the following amounts exceeds the amount of “C” for the year:

1. The amount determined under clause (a) of the definition of “C” in respect of the corporation for the year.

2. The amount that would be the amount determined under clause (b) or (c) of the definition of “C”, as the case may be, in respect of the corporation for the year if,

i. the definition of “manufacturing or processing” in subsection 125.1 (3) of the Federal Act were read without reference to paragraph (h) of that definition (other than for the purpose of the application of subsection (5) and section 5201 of the Federal regulations), and

ii. paragraph 5 of subsection (7) applied for the purposes of determining the amount of “C”.

3. The amount determined under clause (d) of the definition of “C” in respect of the corporation for the year. 2007, c. 11, Sched. A, s. 33 (2).

Adjusted business income

(3)  The adjusted business income of a corporation for a taxation year is the amount, if any, by which “E” exceeds “F” where,

“E” is the sum of all amounts each of which is the adjusted income of the corporation for the year from an active business carried on in Canada, and

“F” is the sum of all amounts each of which is the adjusted loss of the corporation for the year from an active business carried on in Canada. 2007, c. 11, Sched. A, s. 33 (3).

Eligible Canadian profits

(4)  For the purposes of subsection (2), a corporation’s eligible Canadian profits for a taxation year is the sum of,

(a) its Canadian manufacturing and processing profits for the year as determined under subsection 125.1 (3) of the Federal Act;

(b) its mining income for the year, to the extent it is not included in the amount referred to in clause (a); and

(c) the sum of all amounts each of which is the corporation’s income for the year from farming, fishing or logging in Canada, to the extent it is not included in computing an amount referred to in clause (a) or (b). 2007, c. 11, Sched. A, s. 33 (4).

Exception

(5)  Despite subsection (4), the amount of a corporation’s eligible Canadian profits for a taxation year is equal to its adjusted business income for that year, if,

(a) the amount by which the sum of its income from all active businesses for the year exceeds the amount that would otherwise be determined under subsection (4) as its eligible Canadian profits for the year is not greater than 20 per cent of the corporation’s adjusted business income for the year; and

(b) the corporation’s adjusted business income for the year does not exceed $250,000. 2007, c. 11, Sched. A, s. 33 (5).

Ontario adjusted small business income

(6)  For the purposes of this Part, a corporation’s Ontario adjusted small business income for a taxation year is the amount, if any, calculated using the formula,

in which,

“B” is the corporation’s Ontario domestic factor for the year,

“G” is the amount that would be the corporation’s Ontario small business income for the year if its Ontario domestic factor for the year were one,

“H” is the amount, if any, of the corporation’s surtax payable for the year under section 32, and

“I” is the corporation’s small business deduction rate for the year.

2007, c. 11, Sched. A, s. 33 (6).

Interpretation

(7)  The following rules apply for the purposes of this section:

1. A corporation’s income for a taxation year from farming, fishing, industrial mining operations or logging in Canada is determined in accordance with sections 5200, 5202 and 5204 of the Federal regulations as if,

i. the references in those sections to “manufacturing or processing” were references to “farming”, “fishing”, “industrial mining operations” or “logging”, as the case may be,

ii. qualified activities referred to in those sections were those activities related to the earning of income from farming, fishing, industrial mining operations or logging in Canada, as the case may be,

iii. the definition of “industrial mining operations” that applies for the purposes of this section applied for the purposes of those sections, and

iv. in the case of activities related to the earning of income from farming in Canada, the cost of capital of the corporation included the cost of land owned by the corporation and used by it in its farming business in Canada and the annual rental cost incurred by the corporation for land leased by it and used by it in its farming business in Canada.

2. A corporation’s mining income for a taxation year is the sum of,

i. the amount, if any, by which its mining profits for the year exceed the amount deducted under section 1201 of the Federal regulations in computing the corporation’s income for the year, and

ii. its income for the year from industrial mining operations in Canada, other than income included under subparagraph i.

3. Subject to paragraph 4, the amount of a corporation’s mining profits for a taxation year is the amount, if any, by which the sum of the amounts determined under the following subparagraphs exceeds the sum of all adjusted losses for the year from the sources described in subparagraph i:

i. the total of the corporation’s adjusted income for the year from,

A. the production and processing in Canada of,

1. ore, other than iron ore or tar sands ore, from a mineral resource in Canada operated by it to any stage that is not beyond the prime metal stage or its equivalent, and

2. iron ore from a mineral resource in Canada operated by the corporation to any stage that is not beyond the pellet stage or its equivalent, and

B. the processing in Canada of,

1. ore, other than iron ore or tar sands ore, from a mineral resource in Canada not operated by the corporation to any stage that is not beyond the prime metal stage or its equivalent, and

2. iron ore from a mineral resource in Canada not operated by the corporation to any stage that is not beyond the pellet stage or its equivalent, and

ii. if the corporation owns all the issued and outstanding shares of the capital stock of a railway company throughout the year, the amount that may reasonably be considered to be the railway company’s income for its taxation year ending in that year from the transportation of the portion of the corporation’s ore that is described in sub-subparagraph i A.

4. A corporation’s mining profits for a taxation year shall be determined as if the corporation’s adjusted incomes and adjusted losses were computed on the assumption that the corporation had during the year no adjusted income or adjusted loss except from the sources described in subparagraph 3 i and was allowed no deductions in computing its adjusted income for the year other than,

i. amounts deducted or deductible under section 66, 66.1, 66.2, 66.4 or 66.7 of the Federal Act or subsection 17 (2) or (6) or section 29 of the Income Tax Application Rules (Canada) for the year to the extent they have not been taken into account in computing the corporation’s gross resource profits for the year under subsection 1204 (1) of the Federal regulations in respect of production from Canadian fossil fuel sources, and

ii. any other deductions for the year that may reasonably be regarded as applicable to the sources of income described in subparagraph 3 i, other than a deduction permitted under section 1201 of the Federal regulations.

5. For the purposes of determining the amount described in paragraph 2 of the definition of “D” in subsection (2),

i. electrical energy and steam are deemed to be goods, and

ii. subject to paragraph (l) of the definition of “manufacturing and processing” in subsection 125.1 (3) of the Federal Act, the generation of electrical energy for sale and the production of steam are deemed to be manufacturing or processing. 2007, c. 11, Sched. A, s. 33 (7).

Definitions

(8)  In this section,

“adjusted income” or “adjusted loss” from a business means, in respect of a corporation for a taxation year, the amount that would be the corporation’s income or loss from the business if, in computing that amount,

(a) the amount of the corporation’s adjusted Crown royalties for the year in respect of the business, as determined under subsection 36 (2), were added, and

(b) the corporation’s notional resource allowance for the year in respect of the business, under subsection 36 (3), were subtracted; (“revenu rajusté”, “perte rajustée”)

“Canadian fossil fuel source” has the prescribed meaning; (“source canadienne de combustible fossile”)

“industrial mining operations” has the prescribed meaning; (“activités minières industrielles”)

“logging” includes the sale of standing timber, the sale of the right to cut standing timber, the sale of logs, the delivery of logs to a sawmill, pulp or paper plant or other place for processing or manufacturing, the delivery of logs to a carrier for export, the export of logs, the acquisition of standing timber, the cutting of logs from standing timber and any combination of those operations. (“exploitation forestière”) 2007, c. 11, Sched. A, s. 33 (8).

Foreign tax credit

34.  (1)  A corporation that is resident in Canada throughout a taxation year and has foreign investment income for the year may, in computing its tax payable under this Division for the year, deduct a foreign tax credit equal to the lesser of,

(a) the amount calculated under subsection (2) for the year; and

(b) the amount calculated under subsection (3) for the year. 2007, c. 11, Sched. A, s. 34 (1).

Same

(2)  For the purposes of clause (1) (a), the amount is determined by multiplying the corporation’s Ontario domestic factor for the taxation year by the amount, if any, by which “A” exceeds “B” where,

“A” is the portion of the non-business-income tax paid for the year by the corporation to the government of a country other than Canada that relates to foreign investment income of the corporation for the year that is not from a share of the capital stock of a foreign affiliate of the corporation, and

“B” is the amount deductible by the corporation in respect of the foreign investment income for the year under subsection 126 (1) of the Federal Act. 2007, c. 11, Sched. A, s. 34 (2); 2008, c. 7, Sched. S, s. 8 (1).

Same

(3)  For the purposes of clause (1) (b), the amount is calculated using the formula,

C × D × E

in which,

“C” is the portion of the corporation’s foreign investment income for the taxation year described in the definition of “A” in subsection (2),

“D” is the corporation’s basic rate of tax for the year, and

“E” is the corporation’s Ontario allocation factor for the year.

2007, c. 11, Sched. A, s. 34 (3).

Authorized foreign bank

(3.1)  For the purposes of this section, an authorized foreign bank is deemed to be resident in Canada for a taxation year with respect to its Canadian banking business for the year and may deduct a foreign tax credit under subsection (1) that is calculated,

(a) as if the reference in the definition of “A” in subsection (2) to “foreign investment income of the corporation” were a reference to only that part of the bank’s foreign investment income that relates to its Canadian banking business; and

(b) as if the references to “country other than Canada” in the definition of “A” in subsection (2) and in the definition of “foreign investment income” in subsection (5) were references to a country that is neither Canada nor any country in which the bank was resident at any time in the year. 2008, c. 7, Sched. S, s. 8 (2).

Application of Federal Act

(4)  Subsection 126 (6) of the Federal Act and the definition of “non-business income tax” in subsection 126 (7) of that Act apply for the purposes of this section. 2007, c. 11, Sched. A, s. 34 (4).

Definition

(5)  In this section,

“foreign investment income” means, in respect of a corporation, income from sources in a country other than Canada in respect of which the corporation paid non-business-income tax to the government of that country. 2007, c. 11, Sched. A, s. 34 (5).

Credit union tax reduction

35.  A corporation that was a credit union throughout a taxation year may, in computing its tax payable under this Division for the year, deduct the amount, if any, calculated using the formula,

in which,

“A” is the small business deduction rate for the corporation for the year,

“B” is the lesser of,

(a) the corporation’s taxable income or taxable income earned in Canada, as the case may be, for the year, and

(b) the amount, if any, by which 4/3 of its maximum cumulative reserve at the end of the year, as determined under section 137 of the Federal Act, exceeds its preferred-rate amount at the end of its previous taxation year, as determined under that section,

“C” is,

(a) the corporation’s Ontario adjusted small business income for the year, as determined under subsection 33 (6), if the corporation is a Canadian-controlled private corporation throughout the year, or

(b) nil, in any other case, and

“D” is the corporation’s Ontario domestic factor for the year.

2007, c. 11, Sched. A, s. 35.

Subdivision b — Crown Royalties and Resource Tax Credit

Additional tax re crown royalties

36.  (1)  Every corporation that has a permanent establishment in Ontario at any time in a taxation year shall, in computing the amount of its tax payable under this Division for the year, add the amount calculated using the formula,

(A – B) × C × D

in which,

“A” is the amount of the corporation’s adjusted Crown royalties for the year,

“B” is the corporation’s notional resource allowance for the year,

“C” is the corporation’s basic rate of tax for the year, and

“D” is the corporation’s Ontario allocation factor for the year.

2007, c. 11, Sched. A, s. 36 (1).

Adjusted Crown royalties

(2)  The amount of a corporation’s adjusted Crown royalties for a taxation year is the amount, if any, by which “E” exceeds “F” where,

“E” is the sum of,

(a) all additional amounts that, if the Corporations Tax Act were to apply for the year, would be added in computing the corporation’s income for the year for the purposes of that Act because of the application of any of subsections 11.0.1 (2), (3) or (5) or 26 (4.1), paragraph 1 of subsection 26 (7) or subsection 31 (1.2) of that Act, and

(b) all amounts each of which would, if the Corporations Tax Act were to apply for the year, be a reduction in the corporation’s share of a loss from a partnership in the year for the purposes of that Act because of the application of subsection 31 (1.2) of that Act, and

“F” is the sum of all amounts each of which would, if the Corporations Tax Act were to apply for the year, be a reduction in the amount added in computing the corporation’s income for the year for the purposes of that Act because of the application of paragraph 2 of subsection 26 (7) of that Act. 2007, c. 11, Sched. A, s. 36 (2).

Notional resource allowance

(3)  A corporation’s notional resource allowance for a taxation year shall be determined in the prescribed manner. 2007, c. 11, Sched. A, s. 36 (3).

Resource tax credit

37.  (1)  A corporation may, in computing its tax payable under this Division for a taxation year, deduct a resource tax credit equal to the lesser of the corporation’s tax payable under this Division for the year, determined without reference to this section, sections 33, 34, 35 and 39, subsection 47 (3) and section 53, and the amount calculated using the formula,

E + [(B – A) × C × D]

in which,

“A” is the amount of the corporation’s adjusted Crown royalties for the year as determined under subsection 36 (2),

“B” is the corporation’s notional resource allowance for the year under subsection 36 (3),

“C” is the corporation’s basic rate of tax for the year,

“D” is the corporation’s Ontario allocation factor for the year, and

“E” is the corporation’s resource credit balance at the beginning of the year.

2007, c. 11, Sched. A, s. 37 (1).

Resource credit balance

(2)  For the purposes of the definition of “E” in subsection (1), a corporation’s resource credit balance at the beginning of a taxation year is the amount calculated using the formula,

F – G

in which,

“F” is the sum of all amounts each of which is the amount in respect of the corporation for a previous taxation year that would be calculated using the formula in subsection (1) if the corporation’s resource credit balance at the beginning of that year were nil, and

“G” is the sum of all amounts each of which is an amount the corporation was entitled to deduct under subsection (1) in computing its tax payable under this Division for a previous taxation year.

2007, c. 11, Sched. A, s. 37 (2).

Rules for determining resource credit balance

(3)  The following additional rules apply for the purposes of this section in determining the amount of a corporation’s resource credit balance at the beginning of a taxation year:

1. An amalgamated corporation is deemed to be the same corporation as and a continuation of each of its predecessor corporations.

2. A parent corporation is deemed, after the last taxation year of its subsidiary corporation, to be the same corporation as and a continuation of the subsidiary corporation. 2007, c. 11, Sched. A, s. 37 (3).

Subdivision c — Ontario Research and Development Tax Credit

Definitions

38.  (1)  In this subdivision,

“contract payment” means a payment that is a contract payment for the purposes of section 127 of the Federal Act; (“paiement contractuel”)

“current portion” means, in respect of a corporation’s Ontario research and development tax credit at the end of a taxation year, the sum of,

(a) all amounts each of which is added under clause (a) or (b) of the definition of “A” in subsection (2) in computing the corporation’s Ontario research and development tax credit at the end of the year, and

(b) all amounts each of which is added under clause (d) or (e) of the definition of “A” in subsection (2) in computing the corporation’s Ontario research and development tax credit at the end of the year by reason of a repayment made by the corporation in the year; (“portion de l’année”)

“eligible expenditure” means, in respect of a corporation, an expenditure attributable to a permanent establishment in Ontario that would be a qualified expenditure for the purposes of section 127 of the Federal Act in respect of scientific research and experimental development carried on in Ontario if that section were read without reference to subsections (18) to (21) of that section; (“dépense admissible”)

“government assistance” has the same meaning as in section 127 of the Federal Act, except that a tax credit under this subdivision is deemed not to be government assistance; (“aide gouvernementale”)

“non-government assistance” has the same meaning as in section 127 of the Federal Act. (“aide non gouvernementale”) 2007, c. 11, Sched. A, s. 38 (1).

Ontario research and development tax credit

(2)  Subject to subsections (3) and 43 (2), the amount of a corporation’s Ontario research and development tax credit at the end of a taxation year for the purposes of this subdivision is the amount, if any, by which “A” exceeds “B” where,

“A” is the sum of,

(a) 4.5 per cent of the corporation’s Ontario SR & ED expenditure pool at the end of the year,

(b) the sum of amounts required by subsection 40 (1) to be added in computing the corporation’s Ontario research and development tax credit at the end of the year,

(c) the sum of all amounts each of which is an amount determined under clause (a) or (b) in respect of the corporation for any of the 20 taxation years preceding or the three taxation years following the year,

(d) the sum of all amounts each of which is 4.5 per cent of that part of a repayment, other than a repayment to which clause (e) applies, made by the corporation in the year or in any of the 20 taxation years preceding or the three taxation years following the year that can reasonably be considered to be, for the purposes of section 41, a repayment of government assistance, non-government assistance or a contract payment that reduced, for the purposes of this subdivision, an eligible expenditure incurred by the corporation, and

(e) the sum of all amounts each of which is 4.5 per cent of one-quarter of that part of a repayment made by the corporation in the year or in any of the 20 taxation years preceding or the three taxation years following the year that can reasonably be considered to be, for the purposes of section 41, a repayment of government assistance, non-government assistance or a contract payment that reduced, for the purposes of this subdivision, an eligible expenditure incurred by the corporation in respect of first term shared-use-equipment or second term shared-use-equipment and, for the purposes of this clause, a repayment made by the corporation in any taxation year preceding the first taxation year that ends coincidentally with the first period or the second period in respect of first term shared-use-equipment or second term shared-use-equipment, respectively, is deemed to have been incurred by the corporation in that first taxation year, and

“B” is the sum of,

(a) the sum of all amounts each of which is an amount deducted under section 39 in computing the corporation’s tax payable under this Division for a preceding taxation year in respect of the current portion of the corporation’s Ontario research and development tax credit at the end of the year or at the end of any of the 20 taxation years preceding or the two taxation years following the year,

(b) the amount determined under subsection 44 (1) where control of the corporation has been acquired by a person or group of persons at any time before the end of the year, and

(c) the amount determined under subsection 44 (2) where control of the corporation has been acquired by a person or group of persons at any time after the end of the year. 2007, c. 11, Sched. A, s. 38 (2).

Amounts to be excluded in calculation of credit

(3)  In determining the amount of a corporation’s Ontario research and development tax credit at the end of a taxation year, no amount shall be included in an amount determined under any of clauses (a), (b), (c), (d) or (e) of the definition of “A” in subsection (2) in respect of an eligible expenditure that would, if the Federal Act were read without reference to subsections 78 (4) and 127 (26) of that Act, be incurred by the corporation in the course of earning income in a particular taxation year, if,

(a) any of the income is exempt income or is exempt from tax under this Division; or

(b) the corporation does not file with the Federal Minister a form containing the information in respect of the amount as required by paragraph (m) of the definition of “investment tax credit” in subsection 127 (9) of the Federal Act on or before the day that is one year after the corporation’s filing-due date for the particular year. 2007, c. 11, Sched. A, s. 38 (3).

Ontario SR & ED expenditure pool

(4)  The amount of a corporation’s Ontario SR & ED expenditure pool at the end of a taxation year for the purposes of this subdivision is nil for a taxation year ending before January 1, 2009 and, for a taxation year ending after December 31, 2008, is the amount calculated using the formula,

C + D – E

in which,

“C” is the sum of all amounts each of which is an eligible expenditure incurred by the corporation in the year,

“D” is the sum of all amounts each of which is an amount determined under paragraph 2 of section 42 for the year in respect of the corporation, and in respect of which the corporation has, for the purposes of the value of “B” in the definition of “SR & ED qualified expenditure pool” in subsection 127 (9) of the Federal Act, filed with the Federal Minister a prescribed form containing prescribed information by the day that is 12 months after the corporation’s filing-due date for the year, and

“E” is the sum of all amounts each of which is an amount determined under paragraph 1 of section 42 for the year in respect of the corporation.

2007, c. 11, Sched. A, s. 38 (4).

Application of certain provisions of s. 127 of the Federal Act

(5)  For the purposes of this subdivision, the definitions of “first period”, “first term shared-use-equipment”, “second period” and “second term shared-use-equipment” in subsection 127 (9) of the Federal Act and subsections 127 (11.2), (17) and (26) of the Federal Act apply. 2007, c. 11, Sched. A, s. 38 (5).

Application of other provisions of the Federal Act

(6)  A provision of the Federal Act or Federal regulations, other than a provision in section 127 of the Federal Act, that applies for the purposes of applying a provision in section 127 of that Act for the purposes of that Act applies for the purposes of this subdivision, unless otherwise provided in this subdivision. 2007, c. 11, Sched. A, s. 38 (6).

Rules re corporate reorganization

(7)  The following rules apply for the purposes of this subdivision:

1. A corporation formed as a result of an amalgamation or merger of two or more predecessor corporations is deemed to be the same corporation as and a continuation of each of its predecessor corporations except for the purposes of determining the amount of tax payable under this Division by the predecessor corporations.

2. A parent corporation is deemed, after the last taxation year of its subsidiary corporation, to be the same corporation as and a continuation of the subsidiary corporation except for the purposes of determining,

i. the amount of tax payable under this Division by the parent corporation for a taxation year ending at or before the end of the last taxation year of its subsidiary, and

ii. the amount of tax payable under this Division by the subsidiary corporation. 2007, c. 11, Sched. A, s. 38 (7).

Ontario research and development tax credit deduction

39.  (1)  A corporation may, in computing the amount of its tax payable under this Division for a taxation year, deduct an amount in respect of its Ontario research and development tax credit at the end of the year not exceeding the sum of,

(a) the lesser of,

(i) the amount that would be the corporation’s Ontario research and development tax credit at the end of the year if,

(A) clauses (c), (d) and (e) of the definition of “A” in subsection 38 (2) were read without reference to the expression “or the three taxation years following”,

(B) clause (a) of the definition of “B” in subsection 38 (2) were read without reference to the expression “or the two taxation years following”, and

(C) the definition of “B” in subsection 38 (2) were read without clause (c), and

(ii) the corporation’s tax payable under this Division for the year, determined without reference to this section and section 53; and

(b) the lesser of,

(i) the amount, if any, by which the amount determined for the year under subclause (a) (ii) exceeds the amount determined for the year under subclause (a) (i), and

(ii) the corporation’s eligible future balance at the end of the year. 2007, c. 11, Sched. A, s. 39 (1).

Eligible future balance

(2)  For the purposes of subclause (1) (b) (ii), a corporation’s eligible future balance at the end of a taxation year is equal to the amount, if any, by which “A” exceeds “B” where,

“A” is the amount, if any, by which the corporation’s Ontario research and development tax credit at the end of the year exceeds the amount determined for the year under subclause (1) (a) (i), and

“B” is the sum of,

(a) the lesser of,

(i) the portion of the amount of “A” attributable to the first taxation year after the taxation year, and

(ii) the amount that would be deductible under this section for the first taxation year after the taxation year if that amount were determined without reference to clause (1) (b),

(b) the lesser of,

(i) the portion of the amount of “A” attributable to the second taxation year after the taxation year, and

(ii) the amount that would be deductible under this section for the second taxation year after the taxation year if that amount were determined without reference to clause (1) (b), and

(c) the lesser of,

(i) the portion of the amount of “A” attributable to the third taxation year after the taxation year, and

(ii) the amount that would be deductible under this section for the third taxation year after the taxation year if that amount were determined without reference to clause (1) (b). 2007, c. 11, Sched. A, s. 39 (2).

Partnerships

Allocation of partnership’s tax credit to corporate partner

40.  (1)  Subject to subsections 38 (3) and 45 (3), if a corporation is a member of a partnership, other than a specified member, in a particular taxation year and an amount is determined in respect of the partnership for its fiscal period that ends in the particular year under clause (a) or (d) of the definition of “A” in subsection 38 (2), the portion of that amount that can reasonably be considered to be the corporation’s share shall be added in computing the amount of the corporation’s Ontario research and development tax credit at the end of the particular year. 2007, c. 11, Sched. A, s. 40 (1).

Rules re partnerships

(2)  The following rules apply in respect of partnerships for the purposes of this subdivision:

1. In determining an amount in respect of a partnership under clause (a) or (d) of the definition of “A” in subsection 38 (2) for a fiscal period,

i. subsection 38 (3) and sections 42, 43 and 44 do not apply, and

ii. the partnership is deemed to be a corporation and the fiscal period is deemed to be a taxation year.

2. Section 41 applies as if,

i. a partnership were a corporation and each fiscal period were a taxation year, and

ii. a partnership’s filing-due date for a taxation year is the day that would be its filing-due date for the taxation year if it were a corporation.

3. If a fiscal period of a partnership ends in 2008, the fiscal period is deemed to end after December 31, 2008 for the purposes of determining the Ontario SR & ED expenditure pool of a corporation that is a member of the partnership. 2007, c. 11, Sched. A, s. 40 (2).

Specified amount

(3)  For the purposes of this section, a partnership’s specified amount for a fiscal period is the amount, if any, by which the sum of the amounts determined under clauses (a) and (d) of the definition of “A” in subsection 38 (2) in respect of the partnership for the fiscal period exceeds the amount deducted under subsection 45 (3) in respect of the partnership for the fiscal period in computing the amount determined under subsection (1) in respect of the partnership. 2007, c. 11, Sched. A, s. 40 (3).

Allocation to corporate partners of unallocated amounts

(4)  For the purposes of subsection (1), if a corporation is a member of a partnership, other than a specified member, throughout a fiscal period of the partnership, there shall be added to the amount, if any, that can reasonably be considered to be the corporation’s share of the partnership’s specified amount for the fiscal period the amount, if any, that is such portion of the amount determined under subsection (5) in respect of that fiscal period as is reasonable in the circumstances having regard to the investment in the partnership, including debt obligations of the partnership, of each of the members of the partnership,

(a) who was a member of the partnership throughout the fiscal period; and

(b) who was not a specified member of the partnership during that fiscal period. 2007, c. 11, Sched. A, s. 40 (4).

Amount of unallocated partnership tax credits

(5)  For the purposes of subsection (4), the amount determined under this subsection in respect of a fiscal period of a partnership is the amount by which the partnership’s specified amount for the fiscal period exceeds the sum of,

(a) the sum of all amounts each of which is an amount determined under subsection (1) to be a partner’s share of the partnership’s specified amount for the fiscal period; and

(b) the portion of the partnership’s specified amount for the fiscal period that is attributable to,

(i) the interests in the partnership of individuals who are not specified members of the partnership,

(ii) the interest of another partnership in the partnership, and

(iii) if the fiscal period ends in 2008, the interest in the partnership of each person having a taxation year ending in 2008 in which the fiscal period ends. 2007, c. 11, Sched. A, s. 40 (5).

Reduction of eligible expenditures, receipt of assistance

41.  (1)  If, on or before the filing-due date for a taxation year of a corporation, the corporation has received, is entitled to receive or can reasonably be expected to receive a particular amount that is government assistance, non-government assistance or a contract payment that can reasonably be considered to be in respect of scientific research and experimental development, the amount by which the particular amount exceeds all amounts applied for preceding taxation years under this subsection or subsection (2) or (3) in respect of the particular amount shall be applied to reduce the corporation’s eligible expenditures otherwise incurred in the year that can reasonably be considered to be in respect of the scientific research and experimental development. 2007, c. 11, Sched. A, s. 41 (1).

Same

(2)  If, on or before the filing-due date for a taxation year of a corporation, the corporation (in this subsection referred to as the “recipient”) has received, is entitled to receive or can reasonably be expected to receive a particular amount that is government assistance, non-government assistance or a contract payment that can reasonably be considered to be in respect of scientific research and experimental development and the particular amount exceeds the sum of the following amounts, the particular amount shall be applied to reduce the sum otherwise determined that is referred to in paragraph 3:

1. All amounts applied for preceding taxation years under this subsection or subsection (1) or (3) in respect of the particular amount, determined before the application of subsection (4) in respect of the recipient’s taxation year.

2. The sum of all amounts each of which would be an eligible expenditure that is incurred by the recipient in its taxation year and that can reasonably be considered to be in respect of the scientific research and experimental development if subsection (1) did not apply to the particular amount.

3. The sum of all amounts each of which would, but for the application of this subsection to the particular amount, be an eligible expenditure,

i. that was incurred by another corporation in a taxation year of the other corporation that ended in the recipient’s taxation year, and

ii. that can reasonably be considered to be in respect of the scientific research and experimental development to the extent that it was performed by the other corporation at a time when the other corporation was not dealing at arm’s length with the recipient. 2007, c. 11, Sched. A, s. 41 (2).

Agreement to allocate

(3)  If a particular amount for a taxation year is determined under subsection 127 (20) of the Federal Act as a consequence of an agreement referred to in that subsection between a corporation (in this subsection referred to as the “transferor”) and another corporation (the “transferee”) and subsection 127 (22) of the Federal Act does not apply to the agreement, the lesser of the following two amounts shall be applied to reduce the eligible expenditures otherwise determined that are described in paragraph 2:

1. The portion, if any, of the amount specified in the agreement that can reasonably be considered to be in respect of the amount described in paragraph 2.

2. The sum of all amounts each of which would, but for the agreement, be an eligible expenditure,

i. that was incurred by the transferee in a particular taxation year of the transferee that ended in the transferor’s taxation year, and

ii. that can reasonably be considered to be in respect of the scientific research and experimental development to which the particular amount relates to the extent that it was performed by the transferee at a time when the transferee was not dealing at arm’s length with the transferor. 2007, c. 11, Sched. A, s. 41 (3).

Failure to allocate

(4)  If, on or before the filing-due date for a taxation year of a corporation (in this subsection referred to as the “recipient”), the recipient has received, is entitled to receive or can reasonably be expected to receive a particular amount that is government assistance, non-government assistance or a contract payment that can reasonably be considered to be in respect of scientific research and experimental development and subsection (2) does not apply to the particular amount in respect of the year, the lesser of the following two amounts is deemed for the purposes of this subdivision to be an amount of government assistance received by another corporation in respect of the scientific research and experimental development at the end of a particular taxation year of the other corporation that ends in the recipient’s taxation year:

1. The sum of all amounts each of which is an eligible expenditure,

i. that was incurred by the other corporation in the particular taxation year, and

ii. that can reasonably be considered to be in respect of the scientific research and experimental development to the extent that it was performed by the other corporation at a time when the other corporation was not dealing at arm’s length with the recipient.

2. The amount, if any, by which the particular amount exceeds the amount that would be the sum of the amounts applied for the year and preceding taxation years under subsection (1), (2) or (3) in respect of the particular amount, if that sum were determined without reference to the application of this subsection for the year. 2007, c. 11, Sched. A, s. 41 (4); 2009, c. 33, Sched. 16, s. 12.

Repayment of assistance

(5)  For the purposes of clause (d) of the definition of “A” in subsection 38 (2), an amount of government assistance, non-government assistance or a contract payment that satisfies all of the following conditions is deemed to be the amount of a repayment by the corporation in a taxation year of the government assistance, non-government assistance or contract payment, as the case may be:

1. The amount was applied under this section to reduce an eligible expenditure that was incurred by the corporation.

2. The amount was not received by the corporation.

3. The amount ceased in the taxation year to be an amount that the corporation can reasonably be expected to receive. 2007, c. 11, Sched. A, s. 41 (5).

Transfer of eligible expenditures

42.  If a particular amount is deemed under subsection 127 (13) of the Federal Act to be an amount determined in respect of a corporation (in this section called the “transferor”) for a taxation year under paragraph 127 (13) (d) of that Act as a consequence of an agreement or amended agreement referred to in subsection 127 (13) of that Act between the transferor and another corporation (in this section called the “transferee”) and subsection 127 (15) of that Act does not apply to the agreement, the following rules apply:

1. There shall be included in the value of “E” in the calculation of the transferor’s Ontario SR & ED expenditure pool under subsection 38 (4) the portion, if any, of the particular amount that may reasonably be considered to be in respect of the amount that, but for the agreement, would be the transferor’s Ontario SR& ED pool at the end of the year.

2. If subsection 127 (16) of the Federal Act does not apply in respect of the agreement, the amount determined under paragraph 1 is deemed to be an amount determined in respect of the transferee for the purposes of determining the value of “D” in the calculation of the transferee’s Ontario SR & ED expenditure pool under subsection 38 (4) for the transferee’s first taxation year that ends at or after the end of the year. 2007, c. 11, Sched. A, s. 42.

Waiver of tax credit

43.  (1)  A corporation may waive its eligibility for all or a portion of the current portion of its Ontario research and development tax credit at the end of a taxation year by delivering a written waiver identifying the amounts referred to in clause (a) or (b) of the definition of “current portion” in subsection 38 (1) with its return required to be delivered under this Act for the year or in an amended return for that year. 2007, c. 11, Sched. A, s. 43 (1).

Same

(2)  If a corporation files a waiver under subsection (1) in respect of a taxation year, each amount that is relevant to the calculation of an amount identified in the waiver is deemed never to have been paid or incurred for the purposes of the application of this subdivision to the corporation. 2007, c. 11, Sched. A, s. 43 (2).

Control acquired before the end of the year

44.  (1)  If control of a corporation has been acquired by a person or group of persons at any time (in this subsection referred to as “that time”) before the end of a taxation year of the corporation, the amount determined for the purposes of clause (b) of the definition of “B” in subsection 38 (2) is the amount, if any, by which “A” exceeds “B” where,

“A” is the amount, if any, by which “C” exceeds “D” where,

“C” is the sum of all amounts added in computing the corporation’s Ontario research and development tax credit at the end of the year in respect of the current portion of its Ontario research and development tax credit at the end of a taxation year ending before that time, and

“D” is the sum of all amounts each of which is an amount included by the corporation under clause (a) of the definition of “B” in subsection 38 (2) in computing its Ontario research and development tax credit at the end of the year under that subsection, to the extent that the amount may reasonably be considered to have been included in respect of the current portion of its Ontario research and development tax credit at the end of a taxation year ending before that time, and

“B” is the amount that, but for sections 39 and 53, would be the corporation’s tax payable under this Division for the year multiplied by the ratio of “E” to “F” where,

“E” is, if throughout the year the corporation carried on a particular business in the course of which an eligible expenditure was made before that time in respect of which an amount is included in computing its Ontario research and development tax credit at the end of the year, the amount, if any, by which “G” exceeds “H” where,

“G” is the sum of all amounts each of which is,

(a) its income for the year from the particular business, or

(b) its income for the year from any other business substantially all the income of which was derived from the sale, leasing, rental or development of properties or the rendering of services similar to the properties sold, leased, rented or developed, or the services rendered, as the case may be, by the corporation in carrying on the particular business before that time, and

“H” is the sum of all amounts each of which is an amount deducted under paragraph 111 (1) (a) or (d) of the Federal Act for the year by the corporation in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of the particular business or the other business, and

“F” is the greater of,

(a) the amount determined as “E” for the year, and

(b) the corporation’s taxable income or taxable income earned in Canada, as the case may be, for the year. 2007, c. 11, Sched. A, s. 44 (1).

Control acquired after the end of the year

(2)  If control of a corporation has been acquired by a person or group of persons at any time (in this subsection referred to as “that time”) after the end of a particular taxation year of the corporation, the amount determined for the purposes of clause (c) of the definition of “B” in subsection 38 (2) is the amount, if any, by which “I” exceeds “J” where,

“I” is the sum of all amounts each of which is an amount included in computing the corporation’s Ontario research and development tax credit at the end of the particular year in respect of the current portion of its Ontario research and development tax credit at the end of a taxation year ending after that time, and

“J” is the amount that, but for sections 39 and 53, would be the corporation’s tax payable under this Division for the particular year multiplied by the ratio of “K” to “L” where,

“K” is, if the corporation has made an eligible expenditure in the course of carrying on a particular business throughout a taxation year that ends after that time, in respect of which an amount is included in computing its Ontario research and development tax credit at the end of the particular year, the amount, if any, by which “M” exceeds “N” where,

“M” is the sum of all amounts each of which is,

(a) its income for the particular year from the particular business, or

(b) if the corporation carried on the particular business in the particular year, its income for the particular year from any other business substantially all the income of which was derived from the sale, leasing, rental or development of properties or the rendering of services similar to the properties sold, leased, rented or developed, or the services rendered, as the case may be, by the corporation in carrying on the particular business before that time, and

“N” is the sum of all amounts each of which is an amount deducted under paragraph 111 (1) (a) or (d) of the Federal Act for the particular year by the corporation in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of the particular business or the other business, and

“L” is the greater of,

(a) the amount determined as “K” for the particular year, and

(b) the corporation’s taxable income or taxable income earned in Canada, as the case may be, for the particular year. 2007, c. 11, Sched. A, s. 44 (2).

Recapture of tax credit

Definition

45.  (1)  In this section,

“eligible property” means,

(a) in respect of a corporation, property,

(i) the cost of which was incurred by the corporation in a taxation year ending after December 31, 2008, and

(ii) all or part of the cost of which is an eligible expenditure of the corporation, or

(b) in respect of a partnership, property,

(i) the cost of which was incurred by the partnership in a fiscal period ending in a taxation year of a corporate member of the partnership that ends after December 31, 2008, and

(ii) all or part of the cost of which would be an eligible expenditure of the partnership if the partnership were a corporation. 2007, c. 11, Sched. A, s. 45 (1).

Amount of recapture

(2)  There shall be added in computing a corporation’s tax payable under this Division for a taxation year 23.56 per cent of the sum of all amounts each of which is an amount that would be added under subsection 127 (27), (29) or (34) of the Federal Act in computing the corporation’s tax payable under Part I of the Federal Act for the year in respect of an eligible property of the corporation if the definition of “investment tax credit” in subsection 127 (9) of the Federal Act were read without reference to paragraph (e) of that definition. 2007, c. 11, Sched. A, s. 45 (2).

Same, tax credit earned through partnership

(3)  There shall be deducted in computing the amount determined under subsection 40 (1) in respect of a partnership at the end of a particular fiscal period 23.56 per cent of the sum of all amounts each of which would be deducted pursuant to subsection 127 (28) or (35) of the Federal Act in computing an amount under subsection 127 (8) of the Federal Act in respect of an eligible property of the partnership at the end of the particular fiscal period, if,

(a) the definition of “investment tax credit” in subsection 127 (9) of the Federal Act were read without reference to paragraph (e) of that definition; and

(b) the amount that would be determined under subsection 127 (8) of the Federal Act, without reference to subsections 127 (28) and (35) of the Federal Act, were a sufficiently high amount. 2007, c. 11, Sched. A, s. 45 (3).

Same

(4)  If a corporation is a member of a partnership and the sum of all amounts each of which is determined in respect of an eligible property of the partnership for a fiscal period under subsection (3) exceeds the amount that would be determined in respect of the partnership under subsection 40 (1) for the fiscal period if subsection (3) did not apply, the portion of the excess that can reasonably be considered to be the corporation’s share of the excess shall be added in computing the corporation’s tax payable under this Division for the corporation’s taxation year in which the fiscal period ends. 2007, c. 11, Sched. A, s. 45 (4).

Tiered partnership

(5)  If a corporation is a member of a particular partnership that is a member of another partnership and an amount would be added to the particular partnership’s tax payable under this Division for the year pursuant to subsection (4) if the particular partnership were a corporation and its fiscal period were its taxation year, that amount is deemed to be an amount that is required by subsection (3) to be deducted in computing the amount under subsection 40 (1) in respect of the particular partnership at the end of the fiscal period. 2007, c. 11, Sched. A, s. 45 (5).

Subdivision d — Transitional Tax Debits and Credits

Definitions

46.  (1)  In this subdivision,

“adjusted basic rate” means, in respect of a specified corporation for a taxation year, the product determined by multiplying the corporation’s basic rate of tax for the year by the corporation’s Ontario allocation factor for the year; (“taux de base rajusté”)

“completion time” means, in respect of a winding-up of a subsidiary corporation, the end of the subsidiary corporation’s taxation year during which, for the purposes of paragraph 88 (1) (e.2) of the Federal Act, its assets were distributed to its parent corporation on the winding-up; (“date de réalisation”)

“eligible amalgamation” means, in respect of a particular corporation, an amalgamation or merger of the particular corporation and one or more other corporations to form a new corporation where,

(a) the amalgamation or merger occurs after December 31, 2008 and does not occur at the new corporation’s transition time,

(b) the new corporation has a permanent establishment in Ontario immediately after the amalgamation or merger,

(c) the particular corporation has a permanent establishment in Ontario immediately before the amalgamation or merger,

(d) the particular corporation was a specified corporation at its transition time or, by operation of subsection 51 (1), was a specified corporation at any time before the amalgamation or merger,

(e) the amalgamation or merger occurs in the amortization period of the new corporation,

(f) the amalgamation or merger would occur before the end of the amortization period of the particular corporation if,

(i) subclause (2) (b) (ii) were read without reference to the words “for any reason other than an eligible amalgamation or eligible post-2008 winding-up of the corporation”, and

(ii) the new corporation were considered to be the same corporation as and a continuation of the particular corporation, and

(g) the amortization period of the new corporation does not end immediately after the beginning of its reference period; (“fusion admissible”)

“eligible post-2008 winding-up” means, in respect of a subsidiary corporation, a winding-up of the subsidiary corporation in the course of which assets are distributed to the subsidiary corporation’s parent corporation where,

(a) the completion time of the winding-up is after December 31, 2008,

(b) for the purposes of paragraph 88 (1) (e.2) of the Federal Act, the parent corporation’s taxation year during which it received the assets of the subsidiary corporation on the winding-up ended after December 31, 2008,

(c) the subsidiary corporation has a permanent establishment in Ontario during its taxation year ending at the completion time,

(d) the parent corporation has a permanent establishment in Ontario during the taxation year in which, for the purposes of paragraph 88 (1) (e.2) of the Federal Act, it received the assets of the subsidiary corporation on the winding-up, and

(e) the time immediately after the completion time is in the amortization period of the subsidiary corporation and is in the amortization period of the parent corporation; (“liquidation postérieure à 2008 admissible”)

“eligible pre-2009 winding-up” means, in respect of a subsidiary corporation, a winding-up of the subsidiary corporation where,

(a) the completion time of the winding-up is after December 31, 2008 and, for the purposes of paragraph 88 (1) (e.2) of the Federal Act, the parent corporation’s taxation year during which it received the assets of the subsidiary corporation on the winding-up ended before January 1, 2009, or

(b) the completion time is before January 1, 2009 and, for the purposes of paragraph 88 (1) (e.2) of the Federal Act, the parent corporation’s taxation year during which it received the assets of the subsidiary corporation on the winding-up ended after December 31, 2008; (“liquidation antérieure à 2009 admissible”)

“federal SR & ED transitional balance” means, in respect of a corporation, its federal SR & ED transitional balance as determined under section 49; (“solde transitoire au titre de la recherche et du développement selon les règles fédérales”)

“new corporation” means a corporation formed as a result of an amalgamation or merger of two or more corporations; (“nouvelle société”)

“reference period” means, in respect of a corporation, the period,

(a) that begins at the beginning of the corporation’s first taxation year ending after December 31, 2008, and

(b) that ends at the earlier of,

(i) the time that is five calendar years after the time immediately before the corporation’s first taxation year ending after December 31, 2008, and

(ii) the end of 2013; (“période de référence”)

“total federal balance” means, in respect of a corporation, its total federal balance as determined under section 48; (“solde fédéral total”)

“total Ontario balance” means, in respect of a corporation, its total Ontario balance as determined under section 48; (“solde ontarien total”)

“transition time” means, in respect of a corporation,

(a) the beginning of the corporation’s first taxation year that begins after 2008 if the previous taxation year is deemed under subsection 249 (3) of the Federal Act to end on the last day of 2008, or

(b) the beginning of the corporation’s taxation year that includes the beginning of 2009 in any other case; (“date de transition”)

“unused credit balance” means, in respect of a corporation, the amount in respect of the corporation determined under subsection 50 (4). (“solde créditeur inutilisé”) 2007, c. 11, Sched. A, s. 46 (1); 2008, c. 7, Sched. S, s. 9 (1, 2).

Amortization period

(2)  A corporation’s amortization period for the purposes of this subdivision is the period that begins at the beginning of the corporation’s reference period and that ends at the later of,

(a) the time immediately after the beginning of the corporation’s reference period; and

(b) the earliest of,

(i) the end of the corporation’s reference period,

(ii) the time immediately before the first time in the corporation’s reference period when the corporation ceases to have a permanent establishment in Ontario for any reason other than an eligible amalgamation or eligible post-2008 winding-up of the corporation,

(iii) the time immediately before the first time in the corporation’s reference period when the corporation becomes exempt from tax under Part I of the Federal Act,

(iv) the time immediately before the first time in the corporation’s reference period when the corporation is a party to a transaction or event if it may reasonably be considered, without reference to this subclause, that one of the main purposes of the transaction or event, or a series of transactions or events of which that transaction or event is a part, was to reduce or avoid the inclusion of an amount to be added under this subdivision in computing the corporation’s tax payable under this Division or to increase an amount determined for the corporation under subsection 50 (1),

(v) the time immediately after the beginning of the corporation’s reference period if,

(A) the corporation or another corporation that is a designated corporation with respect to it was a party to a transaction or event at any time before the beginning of the corporation’s reference period, and

(B) it may reasonably be considered, without reference to this subclause, that one of the main purposes of the transaction or event, or a series of transactions or events of which that transaction or event was a part, was to reduce or avoid the inclusion of an amount to be added under this subdivision in computing the corporation’s tax payable under this Division or to increase an amount determined for the corporation under subsection 50 (1), and

(vi) the end of the taxation year for which the corporation makes an election under subsection 47 (2), if the corporation makes an election under that subsection. 2007, c. 11, Sched. A, s. 46 (2); 2008, c. 7, Sched. S, s. 9 (3).

Early termination of amortization period

(3)  Despite subsection (2), a specified corporation’s amortization period that would, but for this subsection, end after the end of a taxation year shall be deemed to end at the end of that taxation year if,

(a) the Ontario Minister assesses or reassesses the corporation for the year on the basis that the corporation’s amortization period ends at the end of that year;

(b) the corporation does not object to this treatment within 90 days of its last assessment of tax payable under this Division for the year; and

(c) the amount that would be determined under clause (b) of the definition of “B” in subsection 50 (2) in respect of the corporation for the year would be a positive amount of not more than $1,000 if “F” and “G”, as defined in subsection 50 (2), were each equal to one. 2007, c. 11, Sched. A, s. 46 (3).

Determining the number of days

(4)  For the purposes of this subdivision, February 29, 2008 and February 29, 2012 shall not be counted in determining the number of days in a period that would otherwise include either or both of those days. 2007, c. 11, Sched. A, s. 46 (4).

Specified corporation

(5)  A corporation is a specified corporation for the purposes of this subdivision if the following conditions are satisfied:

1. The corporation is not exempt at or immediately before its transition time from tax payable under Part I of the Federal Act.

2. Unless a taxation year of the corporation is deemed under subsection 249 (3) of the Federal Act to end on the last day of 2008, the corporation has a taxation year that ends before 2009 and a taxation year that includes the beginning of 2009.

2.1 If a taxation year of the corporation is deemed under subsection 249 (3) of the Federal Act to end on the last day of 2008, the corporation has a taxation year that begins after December 31, 2008.

3. The corporation has a permanent establishment in Ontario at its transition time.

4. The corporation had a permanent establishment in Ontario at any time in its last taxation year ending before 2009 and was subject to tax under Part II of the Corporations Tax Act for that year.

5. If assets of the corporation have been distributed in the course of a winding-up, the winding-up is not an eligible pre-2009 winding-up. 2007, c. 11, Sched. A, s. 46 (5); 2008, c. 7, Sched. S, s. 9 (4).

Transitional tax debits and credits

Liability for additional tax

47.  (1)  There shall be added in computing a specified corporation’s tax under this Division for a taxation year the amount of additional tax determined as follows:

1. If a regulation is in force limiting the amount of additional tax to be added under this subdivision in computing a specified corporation’s tax under this Division for the taxation year, the amount of the additional tax for the year is the sum of the amount determined under subsection 48 (3) in respect of the corporation for the year if the corporation made an election referred to in clause (b) of the definition of “I” in paragraph 1 of subsection 48 (4) and the lesser of,

i. the maximum amount of additional tax determined in respect of the corporation under that regulation for the year, and

ii. the amount determined under subsection 48 (1) in respect of the corporation for the year.

2. If no regulation described in paragraph 1 is in force in respect of the corporation for the year, the amount of the additional tax for the year is the sum of,

i. the amount determined under subsection 48 (3) in respect of the corporation for the year if an election referred to in clause (b) of the definition of “I” in paragraph 1 of subsection 48 (4) is made, and

ii. the amount determined under subsection 48 (1) in respect of the corporation for the year. 2007, c. 11, Sched. A, s. 47 (1).

Election to pre-pay additional tax

(2)  A specified corporation may elect in writing in its return for the year to terminate its amortization period in the year and calculate the amount to be included under subsection (1) in computing its tax under this Division for the year on the basis that its amortization period ended in the year if,

(a) the corporation’s Ontario allocation factor for the year is at least 90 per cent; or

(b) the amount by which “C” in subsection 48 (1) exceeds “D” in that subsection in respect of the corporation for the year is not more than $10,000. 2007, c. 11, Sched. A, s. 47 (2).

Tax credit

(3)  There may be deducted in computing a specified corporation’s tax payable under this Division for every taxation year that includes a part of the corporation’s amortization period the amount determined for the year under subsection 50 (1). 2007, c. 11, Sched. A, s. 47 (3).

Amount of additional tax

48.  (1)  For the purposes of subparagraphs 1 ii and 2 ii of subsection 47 (1), the amount determined under this subsection is calculated using the formula,

A/B × (C – D) × E

in which,

“A” is,

(a) nil, if the corporation’s amortization period ends before the taxation year,

(a.1) the total number of days in the corporation’s reference period that are on or after the first day of the taxation year, if the corporation’s amortization period ends in the taxation year by reason of subclause 46 (2) (b) (ii), (iii), (iv), (v) or (vi), or

(b) the number of days in the corporation’s reference period that are in the taxation year, in any other case,

“B” is the number of days in the corporation’s reference period,

“C” is the corporation’s total federal balance at the end of the taxation year,

“D” is the corporation’s total Ontario balance at the end of the taxation year, and

“E” is the corporation’s tax rate for the taxation year for the purposes of this section.

2007, c. 11, Sched. A, s. 48 (1); 2008, c. 7, Sched. S, s. 10 (1).

Tax rate

(2)  A corporation’s tax rate for a particular taxation year for the purposes of this section is determined under the following rules:

1. If the corporation’s amortization period ends in the particular taxation year by reason of subclause 46 (2) (b) (iv), the tax rate is,

i. if the particular year is not the corporation’s first taxation year, the corporation’s adjusted basic rate for the particular year determined as if the corporation’s Ontario allocation factor for the particular year were equal to the greater of the corporation’s Ontario allocation factor for the particular year and the corporation’s Ontario allocation factor for its previous taxation year, or

ii. if the particular year is the corporation’s first taxation year, the corporation’s adjusted basic rate for the particular year determined as if the corporation’s Ontario allocation factor for the particular year were equal to the greater of,

A. the corporation’s Ontario allocation factor for the particular year, and

B. the greatest of all amounts each of which is the Ontario allocation factor of another corporation that is a designated corporation with respect to it, for a taxation year of the designated corporation that ends in the calendar year in which the corporation’s particular year ends or in the previous calendar year.

2. If the corporation’s amortization period ends in the particular year by reason of subclause 46 (2) (b) (v), the corporation’s tax rate for the year is the corporation’s adjusted basic rate for the year determined as if the corporation’s Ontario allocation factor for the year were equal to the greatest of,

i. its Ontario allocation factor for the particular year,

ii. all amounts each of which is the corporation’s Ontario allocation factor for a taxation year ending in a calendar year before 2009 in or before which a transaction or event, or all or part of a series of transactions or events, occurred that resulted in subclause 46 (2) (b) (v) applying for the purposes of determining the corporation’s amortization period, and

iii. all amounts each of which is the Ontario allocation factor of a corporation that is a designated corporation with respect to it for a taxation year of the designated corporation that ends in a calendar year described in subparagraph ii.

3. If neither paragraph 1 nor 2 applies for the taxation year, the tax rate is the corporation’s adjusted basic rate for the taxation year. 2007, c. 11, Sched. A, s. 48 (2); 2008, c. 7, Sched. S, s. 10 (2, 3).

Same

(3)  For the purposes of paragraphs 1 and 2 of subsection 47 (1), the amount determined under this subsection in respect of a corporation for a taxation year is the lesser of,

(a) the corporation’s post-2008 SR & ED balance at the end of the year, as determined under section 49; and

(b) the corporation’s federal SR & ED transitional balance at the end of the year, as determined under section 49. 2007, c. 11, Sched. A, s. 48 (3).

Total federal balance

(4)  For the purposes of the definition of “C” in subsection (1), a corporation’s total federal balance at a particular time is, subject to the regulations, the sum of the following amounts:

1. If the corporation was a specified corporation at its transition time, the amount calculated using the formula,

F + G + H + I + J – K + L + M + N + P + 0.5Q + R + S + S.1

in which,

“F” is the sum of all amounts each of which is, for the purposes of the Federal Act, the corporation’s undepreciated capital cost of a class of depreciable property immediately before its transition time,

“G” is,

(a) nil, if the corporation is non-resident immediately before its transition time, or

(b) in any other case, the sum of all amounts each of which,

(i) would be deductible under paragraph 110.1 (1) (a) of the Federal Act in computing the corporation’s taxable income for its last taxation year ending before its transition time if that paragraph were read without reference to the portion of that paragraph following subparagraph (viii), or

(ii) is deductible under any of paragraphs 110.1 (1) (a.1), (b), (c) and (d) of the Federal Act in computing the corporation’s taxable income for its last taxation year ending before its transition time,

“H” is the sum of all amounts each of which is, for the purposes of the Federal Act, the corporation’s cumulative eligible capital immediately before its transition time in respect of a business,

“I” is,

(a) nil, if control of the corporation was acquired, for the purposes of subsection 37 (6.1) of the Federal Act, by a person or group of persons at the corporation’s transition time,

(b) if clause (a) does not apply and the corporation elects in writing in its return for its first taxation year ending after December 31, 2008 to have this clause apply, the amount, if any, by which “I.1” exceeds the lesser of “I.2” and “I.3” where,

“I.1” is the amount, if any, by which the amount that would be deductible under subsection 37 (1) of the Federal Act in computing the corporation’s income for its last taxation year ending before its transition time if subsection 37 (6.1) of the Federal Act were read without reference to paragraph (b) of that subsection exceeds the portion of that amount deducted in computing the corporation’s income for its last taxation year ending before the transition time,

“I.2” is the amount, if any, by which “I.1” exceeds “W” in respect of the corporation under paragraph 1 of subsection (6), and

“I.3” is the amount, if any, by which the amount that would be the corporation’s total federal balance at its transition time if the election had not been made exceeds the corporation’s total Ontario balance at its transition time, or

(c) the amount of “I.1” in clause (b) in respect of the corporation in any other case,

“J” is,

(a) nil, if control of the corporation was acquired, for the purposes of subsection 66.7 (10) of the Federal Act, by a person or group of persons at the corporation’s transition time, or

(b) in any other case, the sum of,

(i) the corporation’s cumulative Canadian exploration expense immediately before its transition time, as determined for the purposes of the Federal Act,

(ii) the corporation’s cumulative Canadian development expense immediately before its transition time, as determined for the purposes of the Federal Act, and

(iii) the corporation’s cumulative Canadian oil and gas property expense immediately before its transition time, as determined for the purposes of the Federal Act,

“K” is the sum of all amounts each of which is the portion of the amount of “F”, “G”, “H” or “J” that was deducted by the corporation under the Federal Act in computing its income or taxable income for its last taxation year ending before its transition time,

“L” is the amount that would be deductible under paragraph 111 (1) (a) of the Federal Act in computing the corporation’s taxable income for its first taxation year ending after December 31, 2008 if,

(a) that paragraph did not refer to non-capital losses for taxation years following that taxation year,

(b) subsection 111 (5) of the Federal Act were read without reference to the exception provided under paragraph (a) of that subsection,

(c) subsection 88 (1.1) of the Federal Act were read without reference to the exception provided under paragraph (e) of that subsection, and

(d) the corporation had sufficient incomes from all sources,

“M” is the amount that would be deductible under paragraph 111 (1) (b) of the Federal Act in computing the corporation’s taxable income for its first taxation year ending after December 31, 2008 if,

(a) that paragraph did not refer to net capital losses for taxation years following that taxation year, and

(b) the corporation had sufficient incomes from all sources and sufficient taxable capital gains,

“N” is the sum of all amounts each of which is, for the purposes of the Federal Act, the adjusted cost base to the corporation at its transition time of a partnership interest owned by the corporation,

“P” is the sum of all amounts each of which was deducted as a reserve under paragraph 20 (1) (l), (l.1), (m), (m.1), (n) or (o), subsection 32 (1), section 61.4 or subparagraph 138 (3) (a) (i), (ii) or (iv) of the Federal Act, as it applies for the purposes of the Corporations Tax Act, for the corporation’s last taxation year ending before its transition time,

“Q” is the sum of all amounts each of which was deducted as a reserve under subparagraph 40 (1) (a) (iii) or 44 (1) (e) (iii) of the Federal Act, as it applies for the purposes of the Corporations Tax Act, for the corporation’s last taxation year ending before its transition time,

“R” is the sum of all amounts each of which would be the gain to the corporation under subsection 40 (3) of the Federal Act, as it applies for the purposes of the Corporations Tax Act, from a disposition of a partnership interest at its transition time if paragraph 40 (3) (a) of the Federal Act were read at its transition time without reference to the words “(except paragraph 53 (2) (c))”,

“S” is the sum of all amounts each of which is such portion of an amount, other than a reserve, that was deducted by the corporation under the Corporations Tax Act in computing the corporation’s income, taxable income or taxable income earned in Canada for a taxation year ending on or after December 13, 2006 and before the corporation’s transition time,

(a) that the corporation was entitled to deduct for that year in computing its income, taxable income or taxable income earned in Canada under the Federal Act,

(b) that was not deducted for that year or any subsequent taxation year ending before January 1, 2009 for the purposes of the Federal Act, and

(c) that would not result in a reduction in the amount of the corporation’s total Ontario balance at its transition time if it had not been deducted for that year for the purposes of the Corporations Tax Act and had been deducted instead for the purposes of that Act for its last taxation year ending before its transition time, and

“S.1” is the amount, if any, specified by the corporation under paragraph 28 (1) (b) of the Federal Act in respect of its last taxation year ending before its transition time.

2. The sum of all amounts each of which is an amount required under subsection 51 (1) or section 52 to be added at or before the particular time to the corporation’s total federal balance.

2007, c. 11, Sched. A, s. 48 (4); 2008, c. 7, Sched. S, s. 10 (4).

Reduction of total federal balance

(5)  Despite subsection (4), a corporation’s total federal balance at a particular time shall be reduced by the sum of all amounts each of which is an amount required under subsection 52 (4) to be deducted at or before the particular time in computing the corporation’s total federal balance. 2007, c. 11, Sched. A, s. 48 (5).

Total Ontario balance

(6)  For the purposes of the definition of “D” in subsection (1), a corporation’s total Ontario balance at a particular time is, subject to the regulations, the sum of:

1. If the corporation was a specified corporation at its transition time, the amount calculated using the formula,

T + U + V + W + X – Y + Z + AA + BB + CC + 0.5DD + EE + EE.1 + FF

in which,

“T” is the sum of all amounts each of which is, for the purposes of the Corporations Tax Act, the corporation’s undepreciated capital cost of a class of depreciable property immediately before its transition time,

“U” is,

(a) nil, if the corporation is non-resident immediately before its transition time, or

(b) in any other case, the sum of all amounts each of which,

(i) would be deductible under paragraph 110.1 (1) (a) of the Federal Act, as it applies for the purposes of the Corporations Tax Act, in computing the corporation’s taxable income for its last taxation year ending before its transition time if that paragraph were read without reference to the portion of that paragraph following subparagraph (viii), or

(ii) is deductible under paragraph 110.1 (1) (a.1), (b), (c) or (d) of the Federal Act, as it applies for the purposes of the Corporations Tax Act, in computing the corporation’s taxable income for its last taxation year ending before its transition time,

“V” is the sum of all amounts each of which is, for the purposes of the Corporations Tax Act, the corporation’s cumulative eligible capital immediately before its transition time in respect of a business,

“W” is,

(a) nil, if control of the corporation was acquired, for the purposes of subsection 37 (6.1) of the Federal Act, by a person or group of persons at the corporation’s transition time, or

(b) in any other case, the sum of the corporation’s adjusted Ontario SR & ED incentive balance at the end of its taxation year ending immediately before its transition time and the amount, if any, by which “W.1” exceeds “W.2” where,

“W.1” is the amount that would be deductible under subsection 37 (1) of the Federal Act, as that subsection applies for the purposes of the Corporations Tax Act, in computing the corporation’s income for its last taxation year ending before its transition time if subsection 37 (6.1) of the Federal Act were read without reference to paragraph (b) of that subsection, and

“W.2” is the amount in respect of the amount described in the definition of “W.1” that was deducted by the corporation under the Corporations Tax Act in computing its income for its last taxation year ending before its transition time,

“X” is,

(a) nil, if control of the corporation was acquired, for the purposes of subsection 66.7 (10) of the Federal Act, by a person or group of persons at the corporation’s transition time, or

(b) in any other case, the sum of,

(i) the corporation’s cumulative Canadian exploration expense immediately before its transition time, as determined for the purposes of the Corporations Tax Act,

(ii) the corporation’s cumulative Canadian development expense immediately before its transition time, as determined for the purposes of the Corporations Tax Act, and

(iii) the corporation’s cumulative Canadian oil and gas property expense immediately before its transition time, as determined for the purposes of the Corporations Tax Act,

“Y” is the sum of all amounts each of which is the portion of the amount of “T”, “U”, “V” or “X” deducted under the Corporations Tax Act in computing the corporation’s income or taxable income for its last taxation year ending before its transition time,

“Z” is the amount that would be deductible under paragraph 111 (1) (a) of the Federal Act, as it applies for the purposes of the Corporations Tax Act, in computing the corporation’s taxable income for its first taxation year ending after December 31, 2008 if,

(a) that paragraph did not refer to non-capital losses for taxation years following that taxation year,

(b) subsection 111 (5) of the Federal Act were read without reference to the exception provided under paragraph (a) of that subsection,

(c) subsection 88 (1.1) of the Federal Act were read without reference to the exception provided under paragraph (e) of that subsection, and

(d) the corporation had, for the purposes of the Corporations Tax Act, sufficient incomes from all sources,

“AA” is the amount that would be deductible under paragraph 111 (1) (b) of the Federal Act, as it applies for the purposes of the Corporations Tax Act, in computing the corporation’s taxable income for its first taxation year ending after December 31, 2008 if,

(a) that paragraph did not refer to net capital losses for taxation years following that taxation year, and

(b) the corporation had, for the purposes of the Corporations Tax Act, sufficient incomes from all sources and sufficient taxable capital gains,

“BB” is the sum of all amounts each of which is, for the purposes of the Corporations Tax Act, the adjusted cost base to the corporation at its transition time of a partnership interest owned by the corporation,

“CC” is the sum of all amounts each of which was deducted as a reserve under paragraph 20 (1) (l), (l.1), (m), (m.1), (n) or (o), subsection 32 (1), section 61.4 or subparagraph 138 (3) (a) (i), (ii) or (iv) of the Federal Act for the corporation’s last taxation year ending before its transition time,

“DD” is the sum of all amounts each of which was deducted as a reserve under subparagraph 40 (1) (a) (iii) or 44 (1) (e) (iii) of the Federal Act for the corporation’s last taxation year ending before its transition time,

“EE” is the sum of all amounts each of which would be the gain to the corporation under subsection 40 (3) of the Federal Act from a disposition of a partnership interest at its transition time if paragraph 40 (3) (a) of the Federal Act were read at its transition time without reference to the words “(except paragraph 53 (2) (c))”,

“EE.1” is the amount, if any, specified by the corporation under paragraph 28 (1) (b) of the Federal Act, as it applies for the purposes of the Corporations Tax Act, in respect of its last taxation year ending before its transition time, and

“FF” is the amount determined under the prescribed rules.

2. The sum of all amounts each of which is an amount required under subsection 51 (1) or section 52 to be added to the corporation’s total Ontario balance at or before the particular time.

2007, c. 11, Sched. A, s. 48 (6); 2008, c. 7, Sched. S, s. 10 (5).

Reduction of total Ontario balance

(7)  Despite subsection (6), a corporation’s total Ontario balance at a particular time shall be reduced by the sum of all amounts each of which is an amount required under subsection 52 (4) to be deducted at or before the particular time in computing the corporation’s total Ontario balance. 2007, c. 11, Sched. A, s. 48 (7).

Additional rules

(8)  The following rules apply for the purposes of determining a corporation’s total federal balance or total Ontario balance:

1. If the corporation has a transition time and is non-resident immediately before that time,

i. no amount referred to in paragraph 1 of subsection (4) or paragraph 1 of subsection (6) that is or would have been relevant or potentially relevant in the calculation of income from a business shall be included in the corporation’s total federal balance or total Ontario balance under either of those paragraphs unless the business is carried on in Canada and it is not a treaty-protected business,

ii. no amount referred to in paragraph 1 of subsection (4) or paragraph 1 of subsection (6) that is or would have been relevant or potentially relevant in the calculation of a capital gain from the disposition of a property shall be included in the corporation’s total federal balance or total Ontario balance under either of those paragraphs unless the property is taxable Canadian property and is not treaty-protected property, and

iii. no amount referred to in paragraph 1 of subsection (4) or paragraph 1 of subsection (6) that is or would have been relevant or potentially relevant in the calculation of income from property shall be included in the corporation’s total federal balance or total Ontario balance under either of those paragraphs.

2. If the corporation has a transition time and is a life insurer resident in Canada immediately before its transition time,

i. no amount referred to paragraph 1 of subsection (4) or paragraph 1 of subsection (6) that is or would have been relevant or potentially relevant in the calculation of income carried on from an insurance business shall be included in the corporation’s total federal balance or total Ontario balance under either of those paragraphs unless the corporation carries on its insurance business in Canada, and

ii. no amount referred to in paragraph 1 of subsection (4) or paragraph 1 of subsection (6) that is or would have been relevant or potentially relevant in the calculation of a capital gain from the disposition of a property used or held by the corporation in the course of carrying on an insurance business shall be included in the corporation’s total federal balance or total Ontario balance under either of those paragraphs unless the property is designated insurance property.

3. The amount determined under the definition of “S” in paragraph 1 of subsection (4),

i. is determined for a parent corporation as if the parent corporation were the same corporation and a continuation of a subsidiary corporation if the parent corporation’s transition time is after the end of the taxation year in which, for the purposes of paragraph 88 (1) (e.2) of the Federal Act, it received the assets of the subsidiary corporation in the course of a winding-up, and

ii. is determined in respect of a corporation that is formed as a result of an amalgamation or merger before its transition time as if the corporation were the same corporation as and a continuation of each of its predecessor corporations. 2007, c. 11, Sched. A, s. 48 (8).

Calculation of amounts for purposes of s. 48

Definitions

49.  (1)  In this section,

“adjusted gross federal investment tax credit” means, in respect of a corporation at the end of a taxation year, the sum of all amounts each of which would be determined in respect of the corporation under paragraph (a.1), (b), (c), (e), (e.1) or (e.2) of the definition of “investment tax credit” in subsection 127 (9) of the Federal Act at the end of the year in respect of qualified Ontario SR & ED expenditures if every amount added under paragraph (c), (e), (e.1) or (e.2) of that definition in respect of taxation years following the year or in respect of taxation years ending before the time control of the corporation was last acquired by a person or group of persons were not taken into account; (“crédit d’impôt à l’investissement fédéral brut rajusté”)

“federal current SR & ED deficit” means, in respect of a corporation for a taxation year, the amount, if any, that would be the amount by which the total of the amounts determined in respect of the corporation for the year under paragraphs 37 (1) (d) and (e) of the Federal Act exceeds the total of the amounts determined in respect of the corporation for the year under paragraphs 37 (1) (a), (b), (c) and (c.2) of the Federal Act if all amounts determined under those paragraphs for preceding taxation years were not taken into account; (“déficit de l’année au titre de la recherche et du développement selon les règles fédérales”)

“federal current SR & ED limit” means, in respect of a corporation for a taxation year, the amount, if any, that would be the amount by which the sum of the amounts determined in respect of the corporation for the year under paragraphs 37 (1) (a), (b), (c) and (c.2) of the Federal Act exceeds the sum of the amounts determined in respect of the corporation for the year under paragraphs 37 (1) (d) and (e) of the Federal Act if all amounts determined under those paragraphs for preceding taxation years were not taken into account; (“plafond de l’année au titre de la recherche et du développement selon les règles fédérales”)

“qualified Ontario SR & ED expenditure” means a qualified Ontario SR & ED expenditure for the purposes of section 11.2 of the Corporations Tax Act. (“dépense admissible de recherche et de développement en Ontario”) 2007, c. 11, Sched. A, s. 49 (1).

Post-2008 SR & ED balance

(2)  For the purposes of clause 48 (3) (a), a corporation’s post-2008 SR & ED balance at the end of a taxation year is the amount calculated using the formula,

(A + B ) × 0.14 × C

in which,

“A” is,

(a) if the year ends before January 1, 2016, the amount, if any, by which the amount deducted under subsection 37 (1) of the Federal Act in computing the corporation’s income for the year exceeds the corporation’s cumulative post-2008 SR & ED limit at the end of the year, or

(b) in any other case, the amount deducted under subsection 37 (1) of the Federal Act in computing the corporation’s income for the year,

“B” is the corporation’s federal current SR & ED deficit for the year, and

“C” is the corporation’s relevant Ontario allocation factor.

2007, c. 11, Sched. A, s. 49 (2).

Cumulative post-2008 SR & ED limit

(3)  For the purposes of subsection (2), a corporation’s cumulative post-2008 SR & ED limit at the end of a taxation year is the amount, if any, by which the sum of all amounts each of which is the corporation’s federal current SR & ED limit for the year or a preceding taxation year ending after December 31, 2008 exceeds the amount determined by the formula,

in which,

“C” is the corporation’s relevant Ontario allocation factor,

“D” is the sum of all amounts each of which is deducted under subsection 37 (1) of the Federal Act in computing the corporation’s income for a preceding taxation year ending after December 31, 2008,

“E” is the sum of all amounts determined under subsection 48 (3) in respect of the corporation for a preceding taxation year, and

“F” is the portion, if any, of the value of “E” that may reasonably be considered to be attributable to the value of “B” in subsection (2).

2007, c. 11, Sched. A, s. 49 (3).

Federal SR & ED transitional balance

(4)  For the purposes of clause 48 (3) (b), a corporation’s federal SR & ED transitional balance at a particular time is the amount calculated using the formula,

(0.14 × C × G) + H – I

in which,

“C” is the corporation’s relevant Ontario allocation factor,

“G” is,

(a) the lesser of the amounts determined as “I.2” and “I.3” in clause (b) of the definition of “I” in paragraph 1 of subsection 48 (4) in respect of the corporation, if the corporation makes an election referred to in clause (b) of that definition, or

(b) nil, in any other case,

“H” is the sum of all amounts each of which is required by subsection 51 (1) to be added in computing the corporation’s federal SR & ED transitional balance at or before the particular time, and

“I” is the sum of all amounts each of which is determined under subsection 48 (3) in respect of the corporation for a taxation year ending before the particular time.

2007, c. 11, Sched. A, s. 49 (4).

Relevant Ontario allocation factor

(5)  For the purposes of this section, the relevant Ontario allocation factor of a corporation is the greatest of,

(a) the corporation’s Ontario allocation factor for its taxation year that includes its transition time;

(b) the corporation’s Ontario allocation factor for the taxation year ending in 2006, 2007 or 2008 for which the corporation had the greatest Ontario allocation factor; and

(c) the greatest of all amounts each of which is the weighted Ontario allocation factor for 2006, 2007 or 2008 of the corporation and every corporation, if any, that is a designated corporation with respect to it. 2007, c. 11, Sched. A, s. 49 (5); 2008, c. 7, Sched. S, s. 11 (1).

Exception

(5.1)  Despite subsection (5), if a corporation does not have a taxation year that includes the beginning of 2009, its relevant Ontario allocation factor is its Ontario allocation factor for its first taxation year ending after December 31, 2008. 2008, c. 7, Sched. S, s. 11 (2).

Weighted Ontario allocation factor

(6)  For the purposes of clause (5) (c), the weighted Ontario allocation factor of two or more corporations for a calendar year is the total of all amounts each of which is calculated in respect of each corporation using the formula,

J × K/L

in which,

“J” is equal to an Ontario allocation factor of the corporation for a taxation year ending in the calendar year,

“K” is equal to the sum of,

(a) the total qualified Ontario SR & ED expenditures incurred by the corporation in that taxation year, and

(b) the total of all amounts each of which is the corporation’s share of qualified Ontario SR & ED expenditures incurred by a partnership in a fiscal period ending in that taxation year, and

“L” is the sum of the amounts of “K” for each of the corporations determined under this subsection.

2007, c. 11, Sched. A, s. 49 (6).

Adjusted Ontario SR & ED incentive balance

(7)  For the purposes of clause (b) of the definition of “W” in paragraph 1 of subsection 48 (6), a corporation’s adjusted Ontario SR & ED incentive balance at the end of a taxation year is the amount calculated using the formula,

in which,

“M” is equal to the corporation’s adjusted gross federal investment tax credit at the end of the year,

“N” is the amount, if any, by which “Q” exceeds “R” where,

“Q” is the amount, if any, by which the corporation’s adjusted gross federal investment tax credit at the end of the year exceeds the amount that would be the corporation’s adjusted gross federal investment tax credit at the end of the following taxation year if the definition of “investment tax credit” in subsection 127 (9) of the Federal Act were read,

(a) without reference to paragraph (a.1),

(b) without reference to the words “at the end of the year or” in paragraph (e),

(c) without reference to the words “in the year or” in paragraph (e.1), and

(d) without reference to the words “in the year or” in paragraph (e.2), and

“R” is the sum of,

(a) all amounts deducted by the corporation under subsection 127 (5) or (6) of the Federal Act for the year in respect of the corporation’s adjusted gross federal investment tax credit at the end of the year, and

(b) all amounts deemed to have been deducted by the corporation under subsection 127 (5) of the Federal Act for the year by operation of subsection 127.1 (3) of the Federal Act in respect of the corporation’s adjusted gross federal investment tax credit at the end of the year,

“P” is the sum of,

(a) all amounts deducted by the corporation under subsection 127 (5) or (6) of the Federal Act for a previous taxation year in respect of the corporation’s adjusted gross federal investment tax credit at the end of the year, and

(b) all amounts deemed to have been deducted by the corporation under subsection 127 (5) of the Federal Act for a previous taxation year by operation of subsection 127.1 (3) of the Federal Act in respect of the corporation’s adjusted gross federal investment tax credit at the end of the year, and

“C” is the corporation’s relevant Ontario allocation factor.

2007, c. 11, Sched. A, s. 49 (7).

Amount of tax credit

50.  (1)  For the purposes of subsection 47 (3), the amount that may be deducted in computing a specified corporation’s tax payable under this Division for a taxation year that includes a part of the corporation’s amortization period is determined in the following manner:

1. If a regulation is in force limiting the amount of the tax credit that may be deducted under this subdivision in computing a specified corporation’s tax payable under this Division for a taxation year, the amount of the specified corporation’s tax credit for the year is the sum of,

i. the lesser of,

A. the maximum amount of the tax credit determined in respect of the corporation under that regulation for the year, and

B. the amount determined in respect of the corporation for the year under subsection (2), and

ii. the amount, if any, of the corporation’s unused credit balance that is deductible for the year under subsection (3).

2. If no regulation described in paragraph 1 is in force in respect of the corporation for the year, the amount of the specified corporation’s tax credit for the year is the sum of,

i. the amount determined in respect of the corporation for the year under subsection (2), and

ii. the amount, if any, of the corporation’s unused credit balance that is deductible for the year under subsection (3). 2007, c. 11, Sched. A, s. 50 (1).

Same

(2)  For the purposes of sub-subparagraph 1 i B and subparagraph 2 i of subsection (1), the amount determined in respect of the specified corporation for a taxation year is the lesser of “A” and “B” where,

“A” is the amount calculated using the formula,

C × D/E

in which,

“C” is the amount of tax that would be payable by the corporation for the year under this Division if that amount were determined without reference to section 39, subsection 47 (3), and sections 53 and 53.2,

“D” is the number of days in the corporation’s amortization period that are in the taxation year, and

“E” is the number of days in the taxation year, and

“B” is,

(a) if the corporation’s amortization period ends in the taxation year and is shorter than the corporation’s reference period because of subclause 46 (2) (b) (ii), (iii) or (vi) or subsection 46 (3), the amount calculated using the formula,

F/G × (H – I) × J

in which,

“F” is the number of days in the corporation’s reference period that are after the beginning of the taxation year,

“G” is the number of days in the corporation’s reference period,

“H” is the corporation’s total Ontario balance at the end of the taxation year,

“I” is the corporation’s total federal balance at the end of the taxation year, and

“J” is the corporation’s adjusted basic rate for the taxation year, or

(b) in any other case, the amount that would be determined under clause (a) if “F” were the number of days in the corporation’s amortization period that are in the taxation year.

2007, c. 11, Sched. A, s. 50 (2); 2009, c. 34, Sched. U, s. 10.

Deduction in respect of unused credit balance

(3)  For the purposes of subparagraphs 1 ii and 2 ii of subsection (1), the amount of a specified corporation’s unused credit balance that is deductible in computing its tax payable under this Division for a taxation year is the lesser of,

(a) the amount, if any, by which the amount of “A” in subsection (2) in respect of the corporation for the year exceeds the amount determined in respect of the corporation for the year under subparagraph 1 i or 2 i of subsection (1), whichever is applicable; and

(b) the corporation’s unused credit balance for the year. 2007, c. 11, Sched. A, s. 50 (3).

Unused credit balance

(4)  For the purposes of clause (3) (b), a corporation’s unused credit balance for a taxation year that includes any part of the corporation’s amortization period is the amount calculated using the formula,

K + L – M

in which,

“K” is the amount, if any, by which the sum of all amounts each of which is the amount, if any, by which “N” exceeds “P” where,

“N” is the amount of “B” under subsection (2) in respect of the corporation for a previous taxation year that ended after December 31, 2008 and that was in the corporation’s amortization period, and

“P” is the amount determined under subparagraph 1 i or 2 i of subsection (1), as the case may be, in respect of the corporation for that previous year,

“L” is the sum of all amounts each of which is required to be added under subparagraph 3 iv or 4 iv of subsection 51 (1) in computing the corporation’s unused credit balance for the taxation year or a previous taxation year, and

“M” is the sum of all amounts each of which is an amount determined under subsection (3) in respect of the corporation for a previous taxation year.

2007, c. 11, Sched. A, s. 50 (4).

Rules and adjustments if amalgamation or winding-up

51.  (1)  The following rules apply for the purposes of this subdivision:

1. A new corporation formed as a result of an amalgamation or merger that occurs at the new corporation’s transition time is deemed to be the same corporation as, and a continuation of, each of its predecessor corporations,

i. that is not exempt from tax under Part I of the Federal Act for its last taxation year ending immediately before the new corporation’s transition time, and

ii. that has a permanent establishment in Ontario immediately before the new corporation’s transition time.

2. Except as provided in paragraph 1, a new corporation that is formed as a result of an amalgamation or merger at or after the new corporation’s transition time is deemed to be a different corporation from each of its predecessor corporations.

3. If a new corporation is formed as a result of an amalgamation or merger of two or more corporations that is an eligible amalgamation in respect of at least one of the predecessor corporations (referred to as an “eligible predecessor corporation”),

i. the new corporation shall, after the eligible amalgamation, be deemed to be a specified corporation,

ii. the sum of all amounts each of which is an amount determined under subsection (2) in respect of an eligible predecessor corporation shall be added immediately after the eligible amalgamation to the amount of the new corporation’s total federal balance,

iii. the sum of all amounts each of which is an amount determined under subsection (3) in respect of an eligible predecessor corporation shall be added immediately after the eligible amalgamation to the amount of the new corporation’s total Ontario balance,

iv. there shall be added in computing the new corporation’s unused credit balance for a taxation year the sum of all amounts each of which is the amount that would have been the unused credit balance of an eligible predecessor corporation for the taxation year beginning at the time of the eligible amalgamation if the eligible predecessor corporation had had a taxation year beginning at that time, and

v. there shall be added in computing the new corporation’s federal SR & ED transitional balance the sum of all amounts each of which is the amount that would have been the federal SR & ED transitional balance of an eligible predecessor corporation at the time of the eligible amalgamation if the eligible predecessor corporation had had a taxation year beginning at that time.

3.1 If a new corporation is formed as a result of an amalgamation or merger to which paragraph 3 does not apply, and the amalgamation or merger would be an eligible amalgamation in respect of at least one of the predecessor corporations (referred to as an “eligible predecessor corporation”) if clauses (e) to (g) of the definition of “eligible amalgamation” in subsection 46 (1) were not taken into account,

i. the new corporation is deemed to be a specified corporation, and

ii. there shall be added in computing the new corporation’s federal SR & ED transitional balance the sum of all amounts each of which is the amount that would have been the federal SR & ED transitional balance of an eligible predecessor corporation at the time of the amalgamation or merger if the eligible predecessor corporation had had a taxation year beginning at that time.

4. If property of a subsidiary corporation is distributed in the course of an eligible post-2008 winding-up to its parent corporation,

i. the parent corporation is deemed, after the completion time of the winding-up, to be a specified corporation,

ii. the subsidiary corporation is deemed not to have any taxation year that begins after the completion time of the winding-up,

iii. the amount determined under subsection (4) shall be added in computing the amount of the parent corporation’s total federal balance and the amount determined under subsection (5) shall be added in computing the amount of the parent corporation’s total Ontario balance after the completion time of the winding-up,

iv. in determining the parent corporation’s unused credit balance after the completion time of the winding-up, there shall be included the amount that would have been the subsidiary corporation’s unused credit balance for the taxation year immediately following the year that includes the completion time if the subsidiary corporation had continued in existence and subparagraph ii were not taken into account, and

v. there shall be added in determining the parent corporation’s federal SR & ED transitional balance after the completion time of the winding-up the amount that would be the subsidiary corporation’s federal SR & ED transitional balance immediately after the completion time if the subsidiary corporation had continued to exist.

4.1 If property of a subsidiary corporation is distributed in the course of a winding-up to which paragraph 4 does not apply, and the winding-up would be an eligible post-2008 winding-up if clause (e) of the definition of “eligible post-2008 winding-up” in subsection 46 (1) were not taken into account,

i. the parent corporation is deemed, after the completion time of the winding-up, to be a specified corporation, and

ii. there shall be added in computing the parent corporation’s federal SR & ED transitional balance after the completion time of the winding-up the amount that would be the subsidiary corporation’s federal SR & ED transitional balance immediately after the completion time if the subsidiary corporation had continued to exist.

5. If property of a subsidiary corporation is distributed in the course of an eligible pre-2009 winding-up to its parent corporation in circumstances to which clause (b) of the definition of “eligible pre-2009 winding-up” in subsection 46 (1) applies,

i. the parent corporation is deemed, after the completion time of the winding-up, to be a specified corporation if the subsidiary corporation had a permanent establishment in Ontario at any time in the taxation year of the subsidiary corporation ending at the completion time, and

ii. the amount determined under subsection (6) shall be added immediately after the completion time in computing the amount of the parent corporation’s total federal balance, and the amount determined under subsection (7) shall be added immediately after the completion time in computing the amount of the parent corporation’s total Ontario balance. 2007, c. 11, Sched. A, s. 51 (1); 2008, c. 7, Sched. S, s. 12 (1).

Amount to be added to total federal balance, eligible amalgamation

(2)  For the purposes of subparagraph 3 ii of subsection (1), the amount is calculated using the formula,

A × (1 – B/C)

in which,

“A” is the total federal balance of the eligible predecessor corporation, determined immediately before the eligible amalgamation,

“B” is the number of days in the eligible predecessor corporation’s reference period that are before the eligible amalgamation, and

“C” is the total number of days in the eligible predecessor corporation’s reference period.

2007, c. 11, Sched. A, s. 51 (2).

Amount to be added to total Ontario balance, eligible amalgamation

(3)  For the purposes of subparagraph 3 iii of subsection (1), the amount is calculated using the formula,

D × (1 – B/C)

in which,

“D” is the total Ontario balance of the eligible predecessor corporation, determined immediately before the eligible amalgamation, and

“B” and “C” have the meanings assigned by subsection (2).

2007, c. 11, Sched. A, s. 51 (3).

Amount to be added to total federal balance, eligible post-2008 winding-up

(4)  For the purposes of subparagraph 4 iii of subsection (1), the amount to be added to the parent corporation’s total federal balance is calculated using the formula,

E × F/G × H/I

in which,

“E” is the subsidiary corporation’s total federal balance at the completion time of the winding-up,

“F” is the number of days in the subsidiary corporation’s reference period that are after the end of the subsidiary corporation’s taxation year ending at the completion time,

“G” is the total number of days in the subsidiary corporation’s reference period,

“H” is the total number of days in the parent corporation’s reference period, and

“I” is the number of days in the parent corporation’s reference period that are after the beginning of the parent corporation’s taxation year that includes the time that is immediately after the completion time.

2007, c. 11, Sched. A, s. 51 (4).

Amount to be added to total Ontario balance, eligible post-2008 winding-up

(5)  For the purposes of subparagraph 4 iii of subsection (1), the amount to be added to the parent corporation’s total Ontario balance is calculated using the formula,

J × F/G × H/I

in which,

“J” is the subsidiary corporation’s total Ontario balance at the completion time of the winding-up, and

“F”, “G”, “H” and “I” have the meanings assigned by subsection (4).

2007, c. 11, Sched. A, s. 51 (5).

Amount to be added to total federal balance, eligible pre-2009 winding-up

(6)  For the purposes of subparagraph 5 ii of subsection (1), the amount to be added to the parent corporation’s total federal balance is the subsidiary corporation’s total federal balance immediately after the completion time, determined,

(a) as if the subsidiary corporation continued to exist;

(b) as if the subsidiary corporation’s next taxation year ending after that time ended no earlier than January 1, 2009; and

(c) as if any property that is deemed under paragraph 88 (1) (a.2) of the Federal Act not to have been disposed of had been retained until the completion time. 2007, c. 11, Sched. A, s. 51 (6); 2008, c. 7, Sched. S, s. 12 (2).

Amount to be added to total Ontario balance, eligible pre-2009 winding-up

(7)  For the purposes of subparagraph 5 ii of subsection (1), the amount to be added to the parent corporation’s total Ontario balance is the subsidiary corporation’s total Ontario balance immediately after the completion time, determined,

(a) as if the subsidiary corporation continued to exist;

(b) as if the subsidiary corporation’s next taxation year ending after that time ended no earlier than January 1, 2009; and

(c) as if any property that is deemed under paragraph 88 (1) (a.2) of the Federal Act not to have been disposed of had been retained until the completion time. 2007, c. 11, Sched. A, s. 51 (7); 2008, c. 7, Sched. S, s. 12 (3).

Treatment of specified pre-2009 transfers

Definitions

52.  (1)  In this section,

“adjusted cost” means,

(a) with respect to property of a transferee that is eligible capital property for the purposes of the Federal Act, three-quarters of the cost amount to the transferee of the property, as determined for the purposes of the Federal Act or the Corporations Tax Act, as the case may be, and

(b) with respect to any other property of the transferee, the cost amount to the transferee of the property, as determined for the purposes of the Federal Act or the Corporations Tax Act, as the case may be; (“coût rajusté”)

“adjusted proceeds” means,

(a) with respect to property of a transferor that is eligible capital property for the purposes of the Federal Act, three-quarters of the transferor’s proceeds of disposition in respect of the property, as determined for the purposes of the Federal Act or the Corporations Tax Act, as the case may be, and

(b) with respect to any other property of the transferor, the transferor’s proceeds of disposition in respect of the property, as determined for the purposes of the Federal Act or the Corporations Tax Act, as the case may be; (“produit rajusté”)

“relevant time” means, in respect of a disposition of property, the time that is immediately after the disposition; (“moment pertinent”)

“transferee” means a corporation that receives a property on a disposition by a transferor; (“cessionnaire”)

“transferor” means a corporation that disposes of a property. (“cédant”) 2007, c. 11, Sched. A, s. 52 (1); 2008, c. 7, Sched. S, s. 13 (1).

Addition to total federal balance and total Ontario balance

(2)  If all of the conditions set out in subsection (3) are satisfied, a transferee that receives property on a disposition by a transferor shall,

(a) add the amount of the transferor’s adjusted proceeds in respect of the property, as determined under the Federal Act, in determining its total federal balance at the relevant time; and

(b) add the amount of the transferor’s adjusted proceeds in respect of the property, as determined under the Corporations Tax Act, in determining its total Ontario balance at the relevant time. 2007, c. 11, Sched. A, s. 52 (2); 2008, c. 7, Sched. S, s. 13 (2).

Same

(3)  For the purposes of subsection (2), the conditions are as follows:

1. The transferee and the transferor do not deal at arm’s length with each other at the time of the disposition.

2. The transferee was a specified corporation at its transition time.

3. The relevant time is after the transferee’s transition time.

4. If the disposition is in respect of an eligible pre-2009 winding-up and the transferor is the subsidiary corporation of the transferee, the relevant time is not after the completion time.

5. If the property had been received by the transferee immediately before its transition time, the transaction would have resulted in an increase in one or both of,

i. the amount otherwise determined of the transferee’s total federal balance at its transition time, determined as if no election had been made under clause (b) of the definition of “I” in paragraph 1 of subsection 48 (4), and

ii. the amount otherwise determined of the transferee’s total Ontario balance at its transition time.

6. The relevant time is included in a taxation year of the transferor that ends before January 1, 2009 during which the transferor has a permanent establishment in Ontario.

7. The proceeds of disposition under the Federal Act do not equal the proceeds of disposition under the Corporations Tax Act. 2007, c. 11, Sched. A, s. 52 (3).

Deduction from total federal balance and total Ontario balance

(4)  If all of the conditions set out in subsection (5) are satisfied, a transferor that disposes of property to a transferee shall,

(a) subtract the property’s adjusted cost to the transferee at the relevant time, as determined under the Federal Act, in determining its total federal balance at the relevant time; and

(b) subtract the property’s adjusted cost to the transferee at the relevant time, as determined under the Corporations Tax Act, in determining its total Ontario balance at the relevant time. 2007, c. 11, Sched. A, s. 52 (4); 2008, c. 7, Sched. S, s. 13 (3).

Same

(5)  For the purposes of subsection (4), the conditions are as follows:

1. The transferee and the transferor do not deal at arm’s length with each other at the time of the disposition.

2. The transferor was a specified corporation at its transition time.

3. The relevant time is after the transferor’s transition time.

4. If the disposition had been made by the transferor immediately before its transition time, the transaction would have resulted in a decrease in one or both of,

i. the amount otherwise determined of the transferor’s total federal balance at its transition time, determined as if no election had been made under clause (b) of the definition of “I” in paragraph 1 of subsection 48 (4), and

ii. the amount otherwise determined of the transferor’s total Ontario balance at its transition time.

5. The relevant time is included in a taxation year of the transferee that ends before January 1, 2009 during which the transferee has a permanent establishment in Ontario.

6. The cost amount under the Federal Act of the property to the transferee immediately after the disposition does not equal its cost amount under the Corporations Tax Act. 2007, c. 11, Sched. A, s. 52 (5).

Subdivision e — Corporate Minimum Tax Credit

Corporate minimum tax credit

53.  (1)  A corporation may, in computing the amount of its tax payable under this Division for a taxation year, deduct a corporate minimum tax credit equal to the least of the following amounts:

1. The amount of the corporation’s corporate minimum tax account for the year.

2. The amount, if any, by which “A” exceeds “B” where,

“A” is the amount that would be the corporation’s tax payable under this Division for the year if this Act were read without reference to this section, and

“B” is the total amount that would be deemed by subsection 84 (1) to be paid on account of the corporation’s tax payable under this Act for the year if that subsection were read without reference to paragraph 1.

3. The amount, if any, by which “A” exceeds “C” where,

“A” has the same meaning as in paragraph 2, and

“C” is the amount equal to,

(a) in the case of a corporation that is not a life insurance corporation, the amount, if any, by which the corporation’s corporate minimum tax for the year determined under Division C, before any deduction permitted under subsection 56 (2), exceeds the amount, if any, of the corporation’s foreign tax credit for the year for the purposes of that Division as determined under section 59, or

(b) in the case of a life insurance corporation, the greater of,

(i) the corporation’s corporate minimum tax for the year determined under Division C, before any deduction permitted under subsection 56 (2), and

(ii) the amount determined to be “A” in subsection 63 (1). 2007, c. 11, Sched. A, s. 53 (1).

Corporate minimum tax account

(2)  The amount of a corporation’s corporate minimum tax account for a taxation year is determined as follows:

1. If the corporation is not a life insurance corporation, the amount of the corporation’s corporate minimum tax account for the year is the sum of all amounts each of which is,

i. the amount of corporate minimum tax payable by the corporation under Part II.1 of the Corporations Tax Act for a previous taxation year that ends before March 23, 2007 and is not earlier than the designated taxation year determined under subsection (3), to the extent that the tax has not been deducted under section 43.1 of the Corporations Tax Act or this section in determining the amount of tax payable by the corporation for a previous taxation year under Part II of the Corporations Tax Act or this Division, or

ii. the amount of corporate minimum tax payable by the corporation under Part II.1 of the Corporations Tax Act or Division C of this Part for a previous taxation year that ends after March 22, 2007 and is not earlier than the 20th taxation year before the taxation year, to the extent that the tax has not been deducted under section 43.1 of the Corporations Tax Act or this section in determining the amount of tax payable by the corporation for a previous taxation year under Part II of the Corporations Tax Act or this Division.

2. If the corporation is a life insurance corporation, the amount of the corporation’s corporate minimum tax account for the year is the sum of all amounts each of which is,

i. the amount determined under subsection (4) in respect of a previous taxation year that ends before March 23, 2007 and is not earlier than the designated taxation year determined under subsection (3), to the extent that the amount has not been deducted under section 43.1 of the Corporations Tax Act or this section in determining the amount of tax payable by the corporation for a previous taxation year under Part II of the Corporations Tax Act or this Division, or

ii. the amount determined under subsection (4) in respect of a previous taxation year that ends after March 22, 2007 and is not earlier than the 20th taxation year before the taxation year, to the extent that the amount has not been deducted under section 43.1 of the Corporations Tax Act or this section in determining the amount of tax payable by the corporation for a previous taxation year under Part II of the Corporations Tax Act or this Division. 2007, c. 11, Sched. A, s. 53 (2).

Designated taxation year

(3)  For the purposes of subparagraphs 1 i and 2 i of subsection (2), the designated taxation year of a corporation in respect of a particular taxation year of the corporation is the previous taxation year of the corporation that is the later of,

(a) the 20th taxation year of the corporation before the particular taxation year; and

(b) the 10th taxation year of the corporation before its first taxation year ending after December 31, 2008. 2007, c. 11, Sched. A, s. 53 (3).

Life insurance corporations

(4)  For the purposes of subparagraphs 2 i and ii of subsection (2), the amount determined in respect of a previous taxation year is the amount, if any, by which “A.1” exceeds “B.1” where,

“A.1” is,

(a) if the previous year ended after December 31, 2008, the greater of,

(i) the corporation’s corporate minimum tax for the previous year, as determined under Division C of this Part, before any deduction permitted under subsection 56 (2), and

(ii) the amount determined as “A” in subsection 63 (1) in respect of the corporation for the previous year, or

(b) if the previous year ended before January 1, 2009, the corporation’s corporate minimum tax for the previous year, as determined under Part II.1 of the Corporations Tax Act, before any deduction permitted under subsection 57.3 (2) of that Act, and

“B.1” is,

(a) if the previous year ended after December 31, 2008, the amount of tax payable for that year under this Division after all deductions from tax to which the corporation is entitled for that year other than a deduction under this section, or

(b) if the previous year ended before January 1, 2009, the greater of,

(i) the amount that would be determined in respect of the corporation for that year under clause 74.1 (1) (a) of the Corporations Tax Act, and

(ii) the amount of tax payable for that year under Part II of the Corporations Tax Act after all deductions from tax to which the corporation is entitled for that year other than a deduction permitted under any of sections 43.1 to 43.13 of the Corporations Tax Act. 2007, c. 11, Sched. A, s. 53 (4).

Same

(5)  The following rules apply in determining the amount of a corporation’s corporate minimum tax account for a taxation year:

1. Tax payable under Part II.1 of the Corporations Tax Act or under Divisions C and D of this Part for a particular taxation year that is otherwise included in the account is deductible before any tax payable under that Part or those Divisions for later years.

2. If there has been an amalgamation of corporations to which section 87 of the Federal Act applies, the amalgamated corporation is deemed to be the same corporation as and a continuation of each predecessor corporation for the purposes of determining an amount of tax under Part II.1 of the Corporations Tax Act or Division C or D of this Part that was,

i. deducted under section 43.1 of the Corporations Tax Act or this section, or

ii. payable by the amalgamated corporation for a previous taxation year.

3. If the rules in subsection 88 (1) of the Federal Act apply to the winding-up of a subsidiary corporation, its parent corporation is deemed to be the same corporation as and a continuation of the subsidiary corporation for the purposes of determining an amount of tax under Part II.1 of the Corporations Tax Act or Division C or D of this Part that was,

i. deducted under section 43.1 of the Corporations Tax Act or this section, or

ii. payable by the parent corporation for a previous taxation year.

4. Subject to paragraphs 5 and 6, if the conditions described in paragraphs 142.7 (12) (a) and (b) of the Federal Act apply in respect of the winding-up of a Canadian affiliate of an entrant bank (within the meaning of subsection 142.7 (1) of that Act) or in respect of the dissolution of a Canadian affiliate of an entrant bank under a dissolution order (within the meaning of subsection 142.7 (12) of that Act), the entrant bank is deemed to be the same corporation as, and a continuation of, the Canadian affiliate for the purposes of determining an amount of tax under Part II.1 of the Corporations Tax Act or Division C or D of this Part that was,

i. deducted under section 43.1 of the Corporations Tax Act or this section, or

ii. payable by the entrant bank for a previous taxation year.

5. Paragraph 4 does not apply unless,

i. before the later of the date determined under paragraph 142.7 (11) (b) of the Federal Act and June 14, 2005,

A. the entrant bank and the Canadian affiliate jointly elected that paragraph 4 of this subsection or paragraph 4 of subsection 43.1 (4) of the Corporations Tax Act applies, if the Canadian affiliate had not been wound up or dissolved before the election was made, or

B. the entrant bank elected that paragraph 4 of this subsection or paragraph 4 of subsection 43.1 (4) of the Corporations Tax Act applies, if the Canadian affiliate had been wound up or dissolved and had ceased to exist before the election was made, or

ii. the entrant bank and the Canadian affiliate jointly elected under paragraph 142.7 (12) (c) of the Federal Act to have section 142.7 of that Act apply.

6. Paragraph 4 applies only to,

i. taxation years for which an election by the affiliate and bank under paragraph 142.7 (12) (c) of the Federal Act applies or to which section 142.7 of that Act would have applied if an election had been made under paragraph 142.7 (12) (c) of that Act, and

ii. previous taxation years in which a corporate minimum tax credit was earned under section 43.1 of the Corporations Tax Act or under this section. 2007, c. 11, Sched. A, s. 53 (5).

Acquisition of control

(6)  Except as permitted under subsection (7), no amount is deductible under this section by a corporation for a taxation year ending after control of the corporation is acquired by a person or group of persons to the extent the amount is in respect of the corporation’s tax payable under Part II.1 of the Corporations Tax Act or Division C or D of this Part for a taxation year ending before the acquisition of control. 2007, c. 11, Sched. A, s. 53 (6).

Exception

(7)  If a corporation carried on a business in a taxation year ending before control of the corporation was acquired by a person or group of persons, an amount in respect of its tax payable under Part II.1 of the Corporations Tax Act or Division C or D of this Part for that year is deductible by the corporation for a taxation year ending after the acquisition of control, but only if the same business was carried on by the corporation for profit or with a reasonable expectation of profit throughout that year and only to the extent of the amount calculated using the formula,

in which,

“D” is the amount determined under paragraph 3 of subsection (1) in respect of the corporation for that year,

“E” is the total of the corporation’s income for that year from that business and, if properties were sold, leased, rented or developed or services were rendered in the course of carrying on that business before that time, its income for that year from any other business substantially all of the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services,

“F” is the total of all amounts each of which is an amount deducted under paragraph 111 (1) (a) or (d) of the Federal Act in computing its taxable income or taxable income earned in Canada, as the case may be, for that year in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of that business or the other business, and

“G” is the greater of,

(a) the amount, if any, by which “E” exceeds “F”, and

(b) the corporation’s taxable income or taxable income earned in Canada, as the case may be, for that year.

2007, c. 11, Sched. A, s. 53 (7).

Subdivision f — Political Contributions Tax Credit

Definitions

53.1  (1)  In this subdivision,

“Chief Electoral Officer” means the Chief Electoral Officer appointed under the Election Act; (“directeur général des élections”)

“contribution” means a contribution for the purposes of the Election Finances Act to a registered candidate, registered constituency association or registered party; (“contribution”)

“registered candidate” means a candidate within the meaning of the Election Finances Act who is registered under that Act; (“candidat inscrit”)

“registered constituency association” means a constituency association within the meaning of the Election Finances Act that is registered under that Act; (“association de circonscription inscrite”)

“registered party” means a political party registered under the Election Finances Act. (“parti inscrit”) 2009, c. 18, Sched. 28, s. 8.

Eligible contribution

(2)  A contribution made by a corporation during a taxation year to a registered candidate, registered constituency association or registered party is an eligible contribution for the purposes of this subdivision if the receipt required by the Chief Electoral Officer under the Election Finances Act to be issued to the corporation for the contribution is filed with the Ontario Minister with the return required to be filed under this Act for the taxation year. 2009, c. 18, Sched. 28, s. 8.

Eligible contribution balance

(3)  The eligible contribution balance of a corporation for a taxation year for the purposes of this subdivision is the amount, if any, calculated using the formula,

A – (B + C)

in which,

“A” is the sum of all eligible contributions each of which was made by the corporation in the taxation year or in any of the previous 20 taxation years of the corporation,

“B” is the sum of all eligible contributions each of which,

(a) is included in “A”, and

(b) was deducted in computing the corporation’s taxable income for the purposes of Part II of the Corporations Tax Act for a previous taxation year, and

“C” is the amount determined in respect of the corporation for the year under subsection (4).

2009, c. 18, Sched. 28, s. 8.

Same

(4)  For the purposes of subsection (3), the amount of “C” in respect of a corporation for a taxation year is the sum of all amounts each of which is the amount, if any, determined using the formula,

D/E

in which,

“D” is the amount of any tax credit deducted under section 53.2 for one of the corporation’s previous 20 taxation years in respect of an eligible contribution included in determining the amount of “A” in subsection (3) for the year, and

“E” is the corporation’s basic rate of tax for the previous taxation year.

2009, c. 18, Sched. 28, s. 8; 2009, c. 34, Sched. U, s. 11.

Tax credit calculation

53.2  There may be deducted from the tax otherwise payable by a corporation under this Division for a taxation year the least of,

(a) the product determined by multiplying the corporation’s basic rate of tax for the year by the corporation’s eligible contribution balance for the year;

(b) the amount determined by,

(i) multiplying $15,000 by the indexation factor determined under section 40.1 of the Election Finances Act in respect of the calendar year in which the taxation year ends, and rounding the result to the nearest dollar, and

(ii) multiplying the amount determined under subclause (i) by the corporation’s basic rate of tax for the year; and

(c) the corporation’s tax payable under this Division for the year, determined without reference to this section and sections 39 and 53. 2009, c. 18, Sched. 28, s. 8.

Division C — Corporate Minimum Tax

Interpretation

Definitions

54.  (1)  In this Division,

“associated corporation”, of another corporation for a taxation year, means a corporation that is associated at any time in the year with the other corporation, whether or not either of them is subject to tax under this Act; (“société associée”)

“excluded mark-to-market property” means, in respect of a corporation, property, other than specified mark-to-market property, held by the corporation, and in respect of which,

(a) any mark-to-market changes recognized under generally accepted accounting principles from the beginning to the end of a taxation year of the corporation would be reflected in the calculation of the corporation’s income for the taxation year for the purposes of Division B of Part III if the property were held by the corporation throughout the taxation year, or

(b) if the property is denominated in a foreign currency, any change under generally accepted accounting principles in the value of that currency relative to Canadian currency from the beginning to the end of a taxation year of the corporation would be reflected in the calculation of the corporation’s income for the taxation year for the purposes of Division B of Part III if the property were held by the corporation throughout the taxation year; (“bien évalué à la valeur du marché qui est exclu”)

“fair value” means, in respect of property of a corporation, the amount determined in accordance with generally accepted accounting principles that is the fair value of the property to the corporation, expressed in Canadian currency; (“juste valeur”)

“mark-to-market changes” means, with respect to a specified mark-to-market property or excluded mark-to-market property held by a corporation, changes in the fair value of the property that occur after the corporation acquires the property and before the corporation disposes of the property; (“variation de l’évaluation à la valeur du marché”)

“relevant authority” means, with respect to a life insurance corporation,

(a) the Superintendent of Financial Institutions, if the life insurance corporation is required by law to report to the Superintendent of Financial Institutions, or

(b) the authority in the province under the laws of which the life insurance corporation is incorporated that performs a similar function to the Superintendent of Financial Institutions, in any other case; (“autorité compétente”)

“specified mark-to-market property” means, in respect of a corporation, property, other than excluded mark-to-market property, held by the corporation and in respect of which,

(a) any mark-to-market changes recognized under generally accepted accounting principles from the beginning to the end of a taxation year of the corporation would be reflected in the calculation of the corporation’s net income for the taxation year for the purposes of this Division if the property were held by the corporation throughout the taxation year, or

(b) if the property is denominated in a foreign currency, any change under generally accepted accounting principles in the value of that currency relative to Canadian currency from the beginning to the end of a taxation year of the corporation would be reflected in the calculation of the corporation’s net income for the taxation year for the purposes of this Division if the property were held by the corporation throughout the taxation year; (“bien évalué à la valeur du marché qui est déterminé”)

“total assets” means, subject to subsection (1.1), the amount that would be shown on a corporation’s balance sheet at the end of a taxation year as the corporation’s total assets if the balance sheet were prepared in accordance with generally accepted accounting principles, except that the consolidation and equity methods of accounting are not to be used; (“actif total”)

“total revenue” means, with respect to a corporation for a taxation year, the amount that would be the corporation’s gross revenue for the year as determined in accordance with generally accepted accounting principles, except that the consolidation and equity methods of accounting are not used. (“recettes totales”) 2007, c. 11, Sched. A, s. 54 (1); 2008, c. 7, Sched. S, s. 14 (1, 2).

Adjustment to total assets re: specified mark-to-market property

(1.1)  The amount in respect of a specified mark-to-market property to be included in the total assets of a corporation for a taxation year for the purposes of this Division is determined without reference to mark-to-market changes with respect to the specified mark-to-market property. 2008, c. 7, Sched. S, s. 14 (3).

Net income or net loss

(2)  For the purposes of this Division, the net income or net loss of a corporation for a taxation year is,

(a) in the case of a corporation resident in Canada, other than a life insurance corporation or a bank, the amount that would be its net income or net loss, before any income taxes, for the fiscal period coinciding with the taxation year, as determined in accordance with generally accepted accounting principles, except that the consolidation and equity methods of accounting are not used;

(b) in the case of a corporation not resident in Canada, other than a life insurance corporation or a bank, the amount that would be its net income or net loss before any income taxes for the fiscal period coinciding with the taxation year, as determined in accordance with generally accepted accounting principles, except that the consolidation and equity methods of accounting are not used, from,

(i) carrying on a business in Canada, and

(ii) property situated in Canada or used in carrying on a business in Canada, including any gains or losses from a disposition of the property or an interest in it;

(c) in the case of a life insurance corporation resident in Canada during the year that carries on business both in and outside Canada during the year, the amount calculated using the formula,

in which,

“A” is the amount of the life insurance corporation’s Canadian reserve liabilities as at the end of the year,

“B” is the amount of the life insurance corporation’s total reserve liabilities as at the end of the year, and

“C” is the amount of the life insurance corporation’s net income or net loss for the fiscal period coinciding with the taxation year, before the deduction of any income taxes and any tax payable under section 63, as reported in its annual report accepted by the relevant authority or, if the fiscal period does not coincide with the taxation year, a report prepared for the taxation year in accordance with the principles required by the relevant authority, adjusted if necessary so that the consolidation and equity methods of accounting are not used;

(d) in the case of a life insurance corporation other than a corporation referred to in clause (c), the amount of the life insurance corporation’s net income or net loss for the fiscal period coinciding with the taxation year, before the deduction of any income taxes and any tax payable under section 63 as reported in its annual report accepted by the relevant authority or, if the fiscal period does not coincide with the taxation year, a report prepared for the taxation year in accordance with the principles required by the relevant authority, adjusted if necessary so that the consolidation and equity methods of accounting are not used; or

(e) in the case of a bank, the amount of its net income or net loss for the fiscal period coinciding with the taxation year, before any income taxes, as reported in its annual report accepted by the Superintendent of Financial Institutions under the Bank Act (Canada), or if the fiscal period does not coincide with the taxation year, a report prepared for the taxation year in accordance with the principles required by the Superintendent of Financial Institutions, adjusted if necessary so that the consolidation and equity methods of accounting are not used.

2007, c. 11, Sched. A, s. 54 (2).

Total revenue of corporate partner

(3)  If a corporation is a partner in a partnership at the end of a fiscal period of the partnership that ends in a taxation year of the corporation, the corporation’s total revenue for the taxation year for the purposes of this Division includes the product of,

(a) the corporation’s percentage share in the partnership at the end of that fiscal period; and

(b) the total revenue of the partnership for that fiscal period. 2007, c. 11, Sched. A, s. 54 (3).

Total assets of corporate partner

(4)  If a corporation is a partner in a partnership at the end of the last fiscal period of the partnership that ends in a taxation year of the corporation, the amount of the corporation’s total assets for the taxation year for the purposes of this Division includes the product of,

(a) the corporation’s percentage share in the partnership at the end of that fiscal period; and

(b) the total assets of the partnership at the end of that fiscal period. 2007, c. 11, Sched. A, s. 54 (4).

Partnership

(5)  Subject to subsection (6), for the purposes of this Division,

(a) a partnership’s net income or net loss and its total assets and total revenue shall be determined in accordance with generally accepted accounting principles, except that the consolidation and equity methods of accounting shall not be used;

(b) a corporation’s percentage share in a partnership at the end of a fiscal period is the corporation’s direct or indirect percentage interest in the income or loss of the partnership for the fiscal period which shall, if the partnership has no income or loss for the fiscal period, be the percentage that would reasonably be considered to represent the corporation’s direct or indirect percentage interest in the income of the partnership for the fiscal period if the partnership’s income for the fiscal period were $1 million; and

(c) if a corporation has an indirect interest in the partnership at the end of a fiscal period through one or more other partnerships, the fiscal period is deemed to end in a taxation year of the corporation to which it is reasonable to expect that the partnership’s income or loss for the fiscal period would be indirectly allocated under the Federal Act. 2007, c. 11, Sched. A, s. 54 (5); 2008, c. 7, Sched. S, s. 14 (4).

Exception for total assets

(6)  The amount in respect of a specified mark-to-market property to be included in the total assets of a partnership for a fiscal period for the purposes of applying subsection (4) to a corporation for a taxation year is determined without reference to any mark-to-market change with respect to the specified mark-to-market property. 2008, c. 7, Sched. S, s. 14 (5).

Same

(7)  For the purposes of subsection (6), any mark-to-market changes with respect to property of a partnership are determined as if the partnership were a corporation and its fiscal period were a taxation year. 2008, c. 7, Sched. S, s. 14 (5).

Corporate minimum tax liability, taxation years ending before July 1, 2010

55.  (1)  For a taxation year that ends before July 1, 2010, and except as otherwise provided under subsection (2), every corporation subject to tax under Division B of this Part is liable to pay to the Crown in right of Ontario a corporate minimum tax for the year as determined under this Division if,

(a) the amount of the corporation’s total assets at the end of the year exceeds $5 million or the amount of the corporation’s total revenue for the year exceeds $10 million; or

(b) the corporation is associated with one or more corporations during the year and,

(i) the sum of the total assets of the corporation as of the end of the taxation year and of each associated corporation as of the end of the associated corporation’s last taxation year ending in the corporation’s taxation year exceeds $5 million, or

(ii) the sum of the total revenue of the corporation for the taxation year and of each associated corporation for the last taxation year of the associated corporation ending in the corporation’s taxation year exceeds $10 million. 2009, c. 34, Sched. U, s. 12.

Same, taxation years ending after June 30, 2010

(1.1)  For a taxation year that ends after June 30, 2010, and except as otherwise provided under subsection (2), every corporation subject to tax under Division B of this Part is liable to pay to the Crown in right of Ontario a corporate minimum tax for the year as determined under this Division if,

(a) the amount of the corporation’s total assets at the end of the year equals or exceeds $50 million and the amount of the corporation’s total revenue for the year equals or exceeds $100 million; or

(b) the corporation is associated with one or more corporations during the year and,

(i) the sum of the total assets of the corporation as of the end of the taxation year and of each associated corporation as of the end of the associated corporation’s last taxation year ending in the corporation’s taxation year equals or exceeds $50 million, and

(ii) the sum of the total revenue of the corporation for the taxation year and of each associated corporation for the last taxation year of the associated corporation ending in the corporation’s taxation year equals or exceeds $100 million. 2009, c. 34, Sched. U, s. 12.

Rules for determining if subject to CMT

(2)  The following rules apply in determining whether a corporation is subject to tax under this Division for a taxation year:

1. If the taxation year of the corporation is less than 51 weeks, the total revenue of the corporation for the year, before any inclusion in respect of the total revenue of any partnership of which it is a member, is deemed to be the amount otherwise determined, multiplied by the ratio of 365 to the number of days in the taxation year.

2. If the taxation year of an associated corporation referred to in subsection (1) is less than 51 weeks and is the only taxation year of the associated corporation ending in the corporation’s taxation year, the total revenue of the associated corporation for that taxation year, before any inclusion in respect of the total revenue of any partnership of which it is a member, is deemed to be the amount of its total revenue as otherwise determined, multiplied by the ratio of 365 to the number of days in the taxation year.

3. If a fiscal period of a partnership of which a corporation is a member is less than 51 weeks and is the only fiscal period of the partnership ending in the corporation’s taxation year, the total revenue of the partnership for that fiscal period is deemed to be the amount of its total revenue as otherwise determined, multiplied by the ratio of 365 to the number of days in the fiscal period.

4. If an associated corporation referred to in subsection (1) has two or more taxation years ending in the corporation’s taxation year, the total revenue of the associated corporation for the last taxation year ending in the corporation’s taxation year is deemed to be the sum of all amounts each of which is the total revenue of the associated corporation for a taxation year that ended in the corporation’s taxation year and during which the associated corporation was associated with the corporation, multiplied by the ratio of 365 to the total number of days in all of those taxation years.

5. If a partnership of which the corporation is a member during the taxation year has two or more fiscal periods ending in the corporation’s taxation year, the total revenue of the partnership for the corporation’s taxation year is deemed to be the sum of all amounts each of which is the total revenue of the partnership for a fiscal period that ended in the corporation’s taxation year and during which the corporation was a partner in the partnership, multiplied by the ratio of 365 to the total number of days in all of those fiscal periods.

6. If the corporation is associated with the same associated corporation during the taxation year and during the preceding taxation year, but no taxation year of the associated corporation ends in the corporation’s taxation year, references in this section to the associated corporation’s last taxation year ending in the taxation year of the corporation are deemed to be references to the last taxation year of the associated corporation ending before the commencement of the corporation’s taxation year. 2007, c. 11, Sched. A, s. 55 (2).

Tax exemption

(3)  No tax is payable under this Division by a corporation for a taxation year if the corporation is throughout the year,

(a) an investment corporation;

(b) a mortgage investment corporation;

(c) a mutual fund corporation;

(d) a congregation or business agency to which section 143 of the Federal Act applies; or

(e) a deposit insurance corporation, as defined in section 137.1 of the Federal Act. 2007, c. 11, Sched. A, s. 55 (3).

Calculation of corporate minimum tax

56.  (1)  The corporate minimum tax payable by a corporation for a taxation year under this Division is the amount calculated using the formula,

(I – L) × A × R

in which,

“I” is the amount of the corporation’s adjusted net income, if any, for the year,

“L” is the amount of the corporation’s eligible losses, if any, for the year,

“A” is the corporation’s Ontario allocation factor for the year, and

“R” is the sum of,

(a) 0.04 multiplied by the ratio of the number of days in the year that are before July 1, 2010 to the total number of days in the year, and

(b) 0.027 multiplied by the ratio of the number of days in the year that are after June 30, 2010 to the total number of days in the year.

2009, c. 34, Sched. U, s. 13.

Deductions from tax

(2)  A corporation may deduct from the corporate minimum tax otherwise payable by it under this Division for a taxation year,

(a) the amount of the corporation’s foreign tax credit for the year, as determined under section 59, if the corporation is not a life insurance corporation; and

(b) the amount of tax payable by the corporation under Division B for the year, determined without reference to any deduction under section 53. 2007, c. 11, Sched. A, s. 56 (2).

Adjusted net income

57.  (1)  In this Division, a corporation’s adjusted net income for a taxation year is the amount, if any, by which “B” exceeds “C” where,

“B” is the sum of,

(a) the amount of the corporation’s net income, if any, for the year,

(b) if the corporation would have been entitled to exclude a gain from its taxable income earned in Canada under subparagraph 110 (1) (f) (i) of the Federal Act in respect of the disposition of taxable Canadian property, the amount of any loss in respect of the disposition to the extent the loss has been taken into consideration in the calculation of the corporation’s net income or net loss, as the case may be, for the year,

(c) all amounts included in the computation of the corporation’s income by reason of section 135 of the Federal Act, to the extent that the amounts have not been taken into consideration in the calculation of,

(i) the corporation’s net income or net loss, as the case may be, for the taxation year or a previous taxation year ending after December 31, 2008, or

(ii) the corporation’s net income or net loss, as the case may be, as determined under Part II.1 of the Corporations Tax Act, for a previous taxation year ending before January 1, 2009, and

(d) Repealed: 2008, c. 7, Sched. S, s. 15 (1).

(e) such other amounts as may be determined in accordance with the regulations, and

“C” is the sum of,

(a) the amount of the corporation’s net loss, if any, for the year,

(b) the total amount of the payments made pursuant to allocations in proportion to patronage to the extent that the amount is deductible under section 135 of the Federal Act in computing the corporation’s income for the year and has not been deducted in computing the corporation’s net income or net loss, as the case may be, for the year,

(c) each of the following amounts to the extent it has been included in the computation of the corporation’s net income or net loss, as the case may be, for the year:

(i) an amount received or receivable by the corporation during the taxation year that is deductible as an amount in respect of a dividend under section 112 or 113 or subsection 138 (6) of the Federal Act in determining the corporation’s taxable income for the taxation year in which the amount is received by the corporation,

(ii) an amount in respect of a dividend received or receivable by the corporation during the year that is excluded under subsection 83 (2) of the Federal Act in the computation of the income of the corporation,

(iii) if the corporation is entitled to exclude an amount from its taxable income earned in Canada under subparagraph 110 (1) (f) (i) of the Federal Act in respect of the disposition of taxable Canadian property, the amount of any gain in respect of the disposition,

(iv) the amount, if any, of the corporation’s income for the year described in paragraph 81 (1) (c) of the Federal Act,

(v) the amount of any gain in respect of the disposition of property by the corporation, if the disposition is described in subparagraph 38 (a.1) (i) or (a.2) (i) of the Federal Act, and

(vi) the amount of any gain in respect of a disposition of property by the corporation that is described in subparagraph 38 (a.1) (iii) or paragraph 38 (a.3) of the Federal Act if the gift to a qualified donee for the purposes of that provision occurs on or after February 26, 2008,

(d) Repealed: 2008, c. 7, Sched. S, s. 15 (2).

(e) an amount equal to three times the amount of tax payable by the corporation for the year under subsection 191.1 (1) of the Federal Act, and

(f) such other amounts as may be determined in accordance with the regulations. 2007, c. 11, Sched. A, s. 57 (1); 2008, c. 7, Sched. S, s. 15; 2008, c. 19, Sched. U, s. 2.

Dividends

(2)  Despite subsection 54 (2), no dividend paid or payable by a corporation in a taxation year, other than an amount referred to in subsection 137 (4.1) of the Federal Act, shall be deducted in determining whether the corporation has,

(a) a net income of nil or more for the year for the purposes of clause (a) of the definition of “B” in subsection (1); or

(b) a net loss for the year for the purposes of clause (a) of the definition of “C” in subsection (1). 2007, c. 11, Sched. A, s. 57 (2).

Adjusted net loss

(3)  In this Division, a corporation’s adjusted net loss for a taxation year is the amount, if any, by which the amount of “C” as determined for the year under subsection (1) exceeds the amount determined as “B” for the year under that subsection. 2007, c. 11, Sched. A, s. 57 (3).

Interest

(4)  In computing its adjusted net income or adjusted net loss for a taxation year under subsection (1) or (3), a corporation may deduct the amount of any interest paid or payable by the corporation that is included in an amount deducted or deductible by the corporation in the year under paragraph 20 (1) (c) or (d) of the Federal Act to the extent that the amount of interest has not been deducted in computing the corporation’s net income or net loss under subsection 54 (2). 2007, c. 11, Sched. A, s. 57 (4).

Corporate partner

(5)  If a corporation is a partner in a partnership during a fiscal period of the partnership that ends in a taxation year of the corporation,

(a) the corporation’s adjusted net income for the taxation year includes the product of,

(i) the corporation’s percentage share in the partnership for the fiscal period, and

(ii) the partnership’s adjusted net income for the fiscal period; or

(b) the corporation’s adjusted net loss for the year includes the product of,

(i) the corporation’s percentage share in the partnership for the fiscal period, and

(ii) the partnership’s adjusted net loss for the fiscal period. 2007, c. 11, Sched. A, s. 57 (5).

Adjusted net income or loss of partnership

(6)  The adjusted net income or adjusted net loss of a partnership is computed for the purposes of this Division under the provisions of this Division, with such modifications as are necessary, as if the partnership were a corporation and the taxation year of the partnership were its fiscal period. 2007, c. 11, Sched. A, s. 57 (6).

Same

(7)  Despite subsection (6), no amount shall be deducted or included more than once in the calculation of the adjusted net income or adjusted net loss of a corporation that is a member of a partnership. 2007, c. 11, Sched. A, s. 57 (7).

Eligible losses for a taxation year

58.  (1)  Except as provided in subsection (3), the amount of a corporation’s eligible losses for a taxation year that is deducted or deemed to be deducted under this Division for the year is equal to the lesser of “D” and “E” where,

“D” is the amount, if any, by which “F” exceeds “G” where,

“F” is the sum of all amounts, each of which is,

(a) the corporation’s adjusted net loss under Part II.1 of the Corporations Tax Act for a previous taxation year that,

(i) ended on or before March 23, 2007, and

(ii) is not earlier than the 10th taxation year before the taxation year, or

(b) the corporation’s adjusted net loss under Part II.1 of the Corporations Tax Act or under this Division for a previous taxation year that,

(i) ends after March 23, 2007, and

(ii) is not earlier than the 20th taxation year before the taxation year, and

“G” is the sum of all amounts, each of which is an amount included in the amount of “F” that was deducted or is deemed to have been deducted as an eligible loss under Part II.1 of the Corporations Tax Act or this Division for a previous taxation year, and

“E” is the corporation’s adjusted net income for the taxation year. 2007, c. 11, Sched. A, s. 58 (1).

Same

(2)  For the purposes of this Division, the following rules apply in determining the amount of a corporation’s eligible losses for a taxation year:

1. The amount of a corporation’s eligible losses for a previous taxation year is deemed to have been deducted under Part II.1 of the Corporations Tax Act or this Division for the previous taxation year whether or not the corporation was subject to tax imposed under Part II.1 of the Corporations Tax Act or this Division for the previous taxation year.

2. The corporation’s adjusted net loss for the taxation year that is otherwise included in the corporation’s eligible losses for that year shall be deducted or deemed to be deducted under Part II.1 of the Corporations Tax Act or this Division before any amount in respect of the adjusted net loss of the corporation for a subsequent taxation year. 2007, c. 11, Sched. A, s. 58 (2).

Acquisition of control, eligible losses

(3)  If at any time control of a corporation is acquired by a person or group of persons, the amount of the corporation’s eligible losses for a taxation year ending after that time shall include only those amounts otherwise included that may reasonably be regarded as the corporation’s losses from carrying on a business before that time,

(a) if that business was carried on by the corporation for profit or with a reasonable expectation of profit throughout that year; and

(b) to the extent of the portion of the corporation’s adjusted net income for that year that is reasonably attributable to that business and, if properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, to any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services. 2007, c. 11, Sched. A, s. 58 (3).

Amalgamation

(4)  If there has been an amalgamation of corporations to which section 87 of the Federal Act applies, the amalgamated corporation is deemed to be the same corporation as and a continuation of each predecessor corporation for the purposes of determining the amount of,

(a) the amalgamated corporation’s eligible losses for a taxation year ending after the amalgamation; and

(b) the amalgamated corporation’s eligible losses for a taxation year that were deducted or deemed to have been deducted under Part II.1 of the Corporations Tax Act or this Division for a previous taxation year. 2007, c. 11, Sched. A, s. 58 (4).

Exception

(4.1)  If an amalgamation of two or more predecessor corporations occurs after March 21, 2007, subsection (4) does not apply in determining for the purposes of the amalgamated corporation an amount in respect of one of the predecessor corporations if that predecessor corporation was controlled at any time before the amalgamation by any of the other predecessor corporations. 2008, c. 7, Sched. S, s. 16 (1).

Winding-up

(5)  If the rules in subsection 88 (1) of the Federal Act apply to the winding-up of a subsidiary corporation that was completed before March 22, 2007, the parent corporation is deemed to be the same corporation as and a continuation of the subsidiary corporation for the purposes of determining the amount of,

(a) the parent corporation’s eligible losses for a taxation year after the winding-up; and

(b) the parent corporation’s eligible losses for a taxation year that were deducted or deemed to have been deducted under Part II.1 of the Corporations Tax Act or this Division for a previous taxation year. 2007, c. 11, Sched. A, s. 58 (5); 2008, c. 7, Sched. S, s. 16 (2).

Winding-up or dissolution of a Canadian affiliate of an entrant bank

(6)  If the events described in paragraphs 142.7 (12) (a) and (b) of the Federal Act have occurred with respect to the winding-up of a Canadian affiliate of an entrant bank (within the meaning of subsection 142.7 (1) of that Act) or in respect of the dissolution of a Canadian affiliate of an entrant bank under a dissolution order (within the meaning of subsection 142.7 (12) of that Act), the entrant bank is deemed to be the same corporation as, and a continuation of, the Canadian affiliate for the purposes of determining the amount of,

(a) the entrant bank’s eligible losses for a taxation year after the winding-up or dissolution; and

(b) the entrant bank’s eligible losses for a taxation year that were deducted or deemed to have been deducted under Part II.1 of the Corporations Tax Act or this Division for a previous taxation year. 2007, c. 11, Sched. A, s. 58 (6).

Exception

(7)  Subsection (6) does not apply unless,

(a) before the later of June 14, 2005 and the date determined under paragraph 142.7 (11) (b) of the Federal Act,

(i) the entrant bank and the Canadian affiliate jointly elected that subsection 57.5 (10) of the Corporations Tax Act or subsection (6) applied, if the Canadian affiliate had not been wound up or dissolved before the election was made, or

(ii) the entrant bank elected that subsection 57.5 (10) of the Corporations Tax Act or subsection (6) applied, if the Canadian affiliate had been wound up or dissolved and ceased to exist before the election was made; or

(b) the entrant bank and the Canadian affiliate jointly elected under paragraph 142.7 (12) (c) of the Federal Act to have section 142.7 of that Act apply. 2007, c. 11, Sched. A, s. 58 (7).

Application of subs. (6)

(8)  Subsection (6) applies only to,

(a) losses for taxation years for which an election by the Canadian affiliate and entrant bank under paragraph 142.7 (12) (c) of the Federal Act applies or to which section 142.7 of the Federal Act would have applied if an election had been made under paragraph 142.7 (12) (c) of that Act; and

(b) losses for previous taxation years in which a loss for the purposes of this section or section 57.5 of the Corporations Tax Act was incurred. 2007, c. 11, Sched. A, s. 58 (8).

Foreign tax credit

59.  For the purposes of this Division, a corporation’s foreign tax credit for a taxation year is the amount that would be determined for the year under section 34 if the reference in subsection 34 (1) to the tax payable by the corporation under Division B for the year were read as a reference to the amount of the corporation’s corporate minimum tax for the year determined under this Division before any deduction permitted under subsection 56 (2). 2007, c. 11, Sched. A, s. 59.

Election on transfer of property

60.  (1)  If during a taxation year a corporation disposed of property to another corporation or acquired property from another corporation and both corporations jointly elected under section 85 of the Federal Act to have the rules in that section apply, or if section 85.1 of that Act applies to the disposition, both corporations may jointly elect in the form approved by the Ontario Minister to have such rules as may be prescribed apply for the purposes of this Division. 2007, c. 11, Sched. A, s. 60 (1).

Same

(2)  If during a taxation year a corporation disposed of property to a partnership or acquired property from a partnership and the corporation and all of the members of the partnership have jointly elected under section 85 or 97, as the case may be, of the Federal Act to have the rules of that section apply, the corporation and all of the members of the partnership may jointly elect in the form approved by the Ontario Minister to have such rules as may be prescribed apply for the purposes of this Division. 2007, c. 11, Sched. A, s. 60 (2).

Time of election

(3)  An election under subsection (1) or (2) must be made on or before the day that is the earliest of the days on or before which any corporation making the election is required to file a return under this Act for the year in which the disposition or acquisition occurred. 2007, c. 11, Sched. A, s. 60 (3).

Exception

(4)  If no corporation making the election is liable to pay tax under this Division for the taxation year in which the transaction occurred, the election may be made on or before the day that is the earliest of the days on or before which any corporation making the election is required to file a return under this Act for the first taxation year for which the corporation is liable to pay tax under this Division. 2007, c. 11, Sched. A, s. 60 (4).

Transitional

(5)  The following rules apply if a transaction described in subsection (1) or (2) occurred before January 1, 2009:

1. An election made in accordance with section 57.9 of the Corporations Tax Act is deemed to have been made under this section.

2. If no corporation making the election under section 57.9 of the Corporations Tax Act is liable to pay tax under Part II.1 of that Act for the taxation year in which the transaction occurred or for any subsequent taxation year ending before January 1, 2009, the election shall be made on or before the day that is the earliest of the days on or before which any corporation making the election is required to file a return under this Act for the first taxation year for which the corporation is liable to pay tax under this Division. 2007, c. 11, Sched. A, s. 60 (5).

Election on replacement of property

61.  (1)  If at any time in a taxation year an amount has become receivable by a corporation as proceeds of disposition of a capital property or eligible capital property and the corporation has elected under subsection 13 (4) or 14 (6) or section 44 of the Federal Act to have the rules in any of those provisions apply, the corporation may elect to have such rules as may be prescribed apply for the purposes of this Division. 2007, c. 11, Sched. A, s. 61 (1).

Time of election

(2)  An election under subsection (1) must be made in the corporation’s return under this Act for the taxation year in which it acquired a property which is a replacement property for the purposes of subsection 13 (4), subsection 14 (6) or section 44, as applicable, of the Federal Act. 2007, c. 11, Sched. A, s. 61 (2).

Exception

(3)  If the corporation making the election is not liable to pay tax under this Division for the taxation year in which the replacement property was acquired, the election may be made in the corporation’s return under this Act for the first taxation year ending after the replacement property is acquired for which the corporation is liable to pay tax under this Division. 2007, c. 11, Sched. A, s. 61 (3).

Transitional

(4)  The following rules apply if a transaction described in subsection (1) occurred before January 1, 2009:

1. An election made in accordance with section 57.10 of the Corporations Tax Act is deemed to have been made under this section.

2. If the corporation making the election under section 57.10 of the Corporations Tax Act is not liable to pay tax under Part II.1 of that Act for the taxation year in which the replacement property was acquired or for any subsequent taxation year ending before January 1, 2009, the election shall be made on or before the day that is the earliest of the days on or before which the corporation is required to file a return under this Act for the first taxation year for which the corporation is liable to pay tax under this Division. 2007, c. 11, Sched. A, s. 61 (4).

Limitation respecting inclusions and deductions

62.  (1)  Unless a contrary intention is evident, no provision of this Division shall be read or construed to require the inclusion or to permit the deduction, either directly or indirectly, in computing the amount of a corporation’s net income, net loss, adjusted net income or adjusted net loss of any amount to the extent that the amount has already been directly or indirectly included or deducted, as the case may be, in computing such net income, net loss, adjusted net income or adjusted net loss under Part II.1 of the Corporations Tax Act or this Division. 2007, c. 11, Sched. A, s. 62 (1).

Same

(2)  In computing a corporation’s net income, net loss, adjusted net income or adjusted net loss under this Division, no deduction shall be made, either directly or indirectly, in respect of a reserve, outlay or expense except to the extent the reserve, outlay or expense, as the case may be, is reasonable in the circumstances. 2007, c. 11, Sched. A, s. 62 (2).

Division D — Special Additional Tax on Life Insurance Corporations

Special additional tax, life insurance corporation

63.  (1)  Every life insurance corporation that carries on business in Ontario at any time in a taxation year shall pay a tax under this section for the year equal to the amount, if any, by which “A” exceeds “B” where,

“A” is equal to 1.25 per cent of that proportion of its taxable paid-up capital for the year as determined under this section that the number of days in the year is of 365, and

“B” is the amount of tax payable by the corporation under Divisions B and C for the year. 2007, c. 11, Sched. A, s. 63 (1).

Taxable paid-up capital, resident corporation

(2)  For the purposes of this section, the taxable paid-up capital for a taxation year of a life insurance corporation that is resident in Canada at any time in the year is the amount, if any, calculated using the formula,

A × [(B × C/D) + E – F]

in which,

“A” is the corporation’s Ontario domestic factor for the year,

“B” is the sum of,

(a) its capital for the year as determined under subsection (4), and

(b) the amount, if any, determined under subsection (6) for the year in respect of the capital of its foreign insurance subsidiaries, if any,

“C” is the corporation’s Canadian reserve liabilities as at the end of the year,

“D” is the sum of,

(a) its total reserve liabilities as at the end of the year, and

(b) the amount, if any, determined under subsection (7) in respect of the total reserve liabilities of its foreign insurance subsidiaries, if any,

“E” is the amount determined for the year in respect of the corporation under subparagraph 190.11 (b) (ii) of the Federal Act, and

“F” is its capital allowance for the year as determined under this section.

2007, c. 11, Sched. A, s. 63 (2).

Taxable paid-up capital, non-resident corporation

(3)  For the purposes of this section, the taxable paid-up capital for a taxation year of a life insurance corporation that throughout the year is not resident in Canada is the amount, if any, calculated using the formula,

A × (G – F)

in which,

“A” has the meaning ascribed by subsection (2),

“G” is its capital for the year as determined under subsection (5), and

“F” has the meaning ascribed by subsection (2).

2007, c. 11, Sched. A, s. 63 (3).

Capital, resident life insurance corporation

(4)  For the purposes of this section, the capital for a taxation year of a life insurance corporation that is resident in Canada at any time in the year is the amount, if any, determined as of the end of that year by which “H” exceeds “I” where,

“H” is the sum of,

(a) the amount of its long-term debt, and

(b) the amount of its capital stock or, in the case of a corporation incorporated without share capital, the amount of its members’ contributions, plus the amount of its retained earnings, contributed surplus and any other surpluses, and

“I” is the sum of,

(a) the amount of its deferred tax debit balance or future tax assets, and

(b) the amount of any deficit deducted in computing its shareholders’ equity. 2007, c. 11, Sched. A, s. 63 (4).

Capital, non-resident life insurance corporation

(5)  For the purposes of this section, the capital for a taxation year of a life insurance corporation that is not resident in Canada at any time in the year is the amount, if any, calculated as of the end of that year using the formula,

J + K + L + M

in which,

“J” is the greater of,

(a) the amount, if any, by which its surplus funds derived from operations, as of the end of the year, exceeds the sum of all amounts each of which is,

(i) an amount on which it was required or would have been required, but for subsection 219 (5.2) of the Federal Act, to have paid tax under Part XIV of the Federal Act for a previous taxation year, less the portion, if any, of the amount on which tax was payable, or would have been payable, described in subparagraph 219 (4) (a) (i.1) of that Act, or

(ii) an amount on which it was required or would have been required, but for subsection 219 (5.2) of the Federal Act, to have paid tax under subsection 219 (5.1) of that Act for the year because of the transfer of an insurance business to which subsection 138 (11.5) or (11.92) of that Act applied, and

(b) its attributed surplus for the year, as determined under subsection 2400 (1) of the Federal regulations,

“K” is the amount of its other surpluses, if any, relating to its insurance businesses carried on in Canada,

“L” is the amount of its long-term debt that may reasonably be regarded as relating to its insurance businesses carried on in Canada, and

“M” is the amount, if any, by which “N” exceeds “P” where,

“N” is the amount of its reserves for the year, other than its reserves in respect of amounts payable out of segregated funds, that may reasonably be regarded as having been established in respect of its insurance businesses carried on in Canada, and

“P” is the sum of,

(a) all amounts each of which is the amount of a reserve, other than a reserve described in subparagraph 138 (3) (a) (i) of the Federal Act, to the extent that it was included in the amount of “N” for the year and was deducted in computing its income for the year,

(b) all amounts each of which is the amount of a reserve described in subparagraph 138 (3) (a) (i) of the Federal Act, to the extent that it was included in the amount of “N” for the year and was deductible under subparagraph 138 (3) (a) (i) of the Federal Act in computing its income for the year, and

(c) all amounts each of which is the amount outstanding at the end of the year, including any accrued interest, in respect of a policy loan within the meaning assigned by subsection 138 (12) of the Federal Act that was made by the corporation, to the extent that it was deducted in computing the amount determined under clause (b).

2007, c. 11, Sched. A, s. 63 (5).

Capital, foreign insurance subsidiaries

(6)  The amount determined for a taxation year in respect of the capital of the foreign insurance subsidiaries of a particular life insurance corporation is the sum of all amounts each of which is the amount determined in respect of a foreign insurance subsidiary of the particular corporation equal to the amount, if any, by which “Q” exceeds “R” where,

“Q” is the amount that would be the capital of the subsidiary for its last taxation year ending at or before the end of the particular corporation’s taxation year, if the subsidiary were a life insurance corporation resident in Canada at any time in that year, and

“R” is the sum of all amounts each of which is,

(a) an amount included in “Q” for the year in respect of a share of the subsidiary’s capital stock or its long-term debt that was owned by,

(i) the particular corporation,

(ii) a subsidiary of the particular corporation,

(iii) a corporation that is resident in Canada, carried on a life insurance business in Canada at any time in its last taxation year ending at or before the end of the particular corporation’s taxation year and that is,

(A) a corporation of which the particular corporation is a subsidiary, or

(B) a subsidiary of a corporation described in sub-subclause (A), or

(iv) a subsidiary of a corporation described in subclause (iii), or

(b) an amount included in “Q” for the year in respect of any surplus of the subsidiary contributed by a corporation described in any of subclauses (a) (i) to (iv), other than an amount included under clause (a). 2007, c. 11, Sched. A, s. 63 (6).

Total reserve liabilities, foreign insurance subsidiary

(7)  The amount determined for a taxation year for the purposes of subsection (2) in respect of the total reserve liabilities of the foreign insurance subsidiaries of a particular life insurance corporation is the sum of all amounts each of which would be the total reserve liabilities of a foreign insurance subsidiary of the particular corporation as at the end of the subsidiary’s last taxation year ending at or before the end of the particular corporation’s taxation year, if the subsidiary were required by law to report to the Superintendent of Financial Institutions for that year. 2007, c. 11, Sched. A, s. 63 (7).

Capital allowance

(8)  For the purposes of this section, the capital allowance for a taxation year of a life insurance corporation that carries on business in Canada at any time in the year is the sum of,

(a) $10 million;

(b) one-half of the amount, if any, by which the lesser of $50 million and its taxable capital employed in Canada for the year exceeds $10 million;

(c) one-quarter of the amount, if any, by which the lesser of $100 million and its taxable capital employed in Canada for the year exceeds $50 million;

(d) one-half of the amount, if any, by which the lesser of $300 million and its taxable capital employed in Canada for the year exceeds $200 million; and

(e) three-quarters of the amount, if any, by which its taxable capital employed in Canada for the year exceeds $300 million. 2007, c. 11, Sched. A, s. 63 (8).

Exception

(9)  Despite subsection (8) and subject to subsections (10), (11) and (12), if a life insurance corporation is related at the end of a taxation year to another life insurance corporation that carries on business in Canada, its capital allowance for the year is nil. 2007, c. 11, Sched. A, s. 63 (9).

Allocation, related group

(10)  A life insurance corporation that carries on business in Canada at any time in a taxation year and is related at the end of the year to another life insurance corporation that carries on business in Canada may file with the Ontario Minister, on behalf of the related group of life insurance corporations of which the corporation is a member, an agreement under which an amount that does not exceed the sum of the following amounts is allocated for the year among the members of the related group:

1. $10 million.

2. one-half of the amount, if any, by which the lesser of the following amounts exceeds $10 million:

i. $50 million, and

ii. the sum of all amounts each of which is the taxable capital employed in Canada of a life insurance corporation for the year that is a member of the related group.

3. one-quarter of the amount, if any, by which the lesser of the following amounts exceeds $50 million:

i. $100 million, and

ii. the sum of all amounts each of which is the taxable capital employed in Canada of a life insurance corporation for the year that is a member of the related group.

4. one-half of the amount, if any, by which the lesser of the following amounts exceeds $200 million:

i. $300 million, and

ii. the sum of all amounts each of which is the taxable capital employed in Canada of a life insurance corporation for the year that is a member of the related group.

5. three-quarters of the amount, if any, by which the sum of all amounts each of which is the taxable capital employed in Canada of a life insurance corporation for the year that is a member of the related group exceeds $300 million. 2007, c. 11, Sched. A, s. 63 (10).

Allocation by Minister

(11)  The Ontario Minister may request a life insurance corporation that carries on business in Canada at any time in a taxation year and that, at the end of the year, is related to another life insurance corporation that carries on business in Canada to file with the Ontario Minister an agreement referred to in subsection (10) and, if the corporation does not file the agreement within 30 days after receiving the request, the Ontario Minister may allocate among the members of the related group of life insurance corporations of which the corporation is a member for the year an amount not exceeding the sum of the amounts in respect of the related group under paragraphs 1 to 5 of subsection (10). 2007, c. 11, Sched. A, s. 63 (11).

Same

(12)  For the purposes of this section, the least amount allocated for a taxation year to a member of a related group under an agreement described in subsection (10) or by the Ontario Minister under subsection (11) is the capital allowance for the year of that member. 2007, c. 11, Sched. A, s. 63 (12).

Taxable capital employed in Canada

(13)  For the purposes of this section, the taxable capital employed in Canada for a taxation year of a life insurance corporation is determined as follows:

1. If the life insurance corporation is resident in Canada at any time in the year, its taxable capital employed in Canada for the year is the amount calculated using the formula,

(B × C/D) + E

in which “B”, “C”, “D” and “E” are the amounts determined under subsection (2) in respect of the corporation for the year.

2. If the life insurance corporation is not resident in Canada at any time in the year, its taxable capital employed in Canada for the year is the amount of its capital for the year, as determined under subsection (5).

2007, c. 11, Sched. A, s. 63 (13).

Application of Federal Act

(14)  Subsections 181 (3) and (4) and 190.15 (5) and (6) of the Federal Act apply with necessary modifications for the purposes of this section and, in the application of those subsections,

(a) subsection 1 (7) of this Act does not apply;

(b) references to Part I.3 of the Federal Act shall be read as references to this section; and

(c) the references in subsections 190.15 (5) and (6) of the Federal Act to a corporation’s capital deduction shall be read as references to its capital allowance as determined under this section. 2007, c. 11, Sched. A, s. 63 (14).

Definitions

(15)  In this section,

“foreign insurance subsidiary” means, in respect of a particular life insurance corporation at a particular time, a non-resident corporation that,

(a) carried on a life insurance business throughout its last taxation year ending at or before that time,

(b) did not carry on a life insurance business in Canada at any time in its last taxation year ending at or before that time, and

(c) is at that time,

(i) a subsidiary of the particular life insurance corporation, and

(ii) not a subsidiary of any corporation that is resident in Canada that carried on a life insurance business in Canada at any time in its last taxation year ending at or before that time and that is a subsidiary of the particular life insurance corporation; (“filiale d’assurance étrangère”)

“long-term debt” means subordinated indebtedness, within the meaning assigned by the Insurance Companies Act (Canada), evidenced by obligations issued for a term of not less than five years; (“passif à long terme”)

“reserves” means, in respect of a life insurance corporation for a taxation year, the amount at the end of the year of all of the corporation’s reserves, provisions and allowances, other than allowances in respect of depreciation or depletion, and includes any provision in respect of deferred taxes or future tax liabilities; (“réserves”)

“subsidiary” means, in respect of a corporation that in this definition is referred to as the “parent corporation”, a corporation not less than 90 per cent of the issued and outstanding shares of each class of the capital stock of which belong to,

(a) the parent corporation,

(b) a corporation that is a subsidiary of the parent corporation, or

(c) any combination of corporations each of which is a corporation described in clause (a) or (b); (“filiale”)

“Superintendent of Financial Institutions” means the Superintendent of Financial Institutions appointed under the Office of the Superintendent of Financial Institutions Act (Canada); (“surintendant des institutions financières”)

“surplus funds derived from operations” means, in respect of a life insurance corporation as of the end of a taxation year, the amount that would be its surplus funds derived from operations at that time under subsection 138 (12) of the Federal Act, computed as if no tax were payable under Part I.3 or VI of that Act for the year. (“fonds excédentaire résultant de l’activité”) 2007, c. 11, Sched. A, s. 63 (15).

Division E — Capital Tax

Subdivision a —Liability for Capital Tax

Liability for capital tax

64.  (1)  Subject to subsection (2), every corporation to which subsection 27 (1) applies is liable to pay to the Crown in right of Ontario a capital tax for a taxation year commencing before July 1, 2010,

(a) in the amount calculated under subdivision b in the case of a corporation that is a financial institution for the year; or

(b) in the amount calculated under subdivision c in the case of a corporation that is not a financial institution for the year. 2007, c. 11, Sched. A, s. 64 (1); 2008, c. 7, Sched. S, s. 17.

Exception

(2)  The tax imposed by this Division for a taxation year is not payable by,

(a) a corporation that is liable to tax for the year under section 74 of the Corporations Tax Act;

(b) a credit union;

(c) a deposit insurance corporation, as defined in section 137.1 of the Federal Act;

(d) a corporation that is a family farm corporation for the year, other than a corporation in respect of which a determination has been made under subsection 31 (2) of the Federal Act;

(e) a corporation that is a family fishing corporation for the year; or

(f) a corporation to which paragraph 2 of subsection 27 (2) applies. 2007, c. 11, Sched. A, s. 64 (2).

Definitions

(3)  In this section,

“family farm corporation” means, in respect of a taxation year, a corporation,

(a) all the shares of the capital stock of which that confer on the holder the right to vote were, throughout the year, owned by,

(i) an individual resident in Canada,

(ii) an individual resident in Canada and a member or members of that individual’s family who were also resident in Canada,

(iii) another family farm corporation, or

(iv) another corporation, all the shares of the capital stock of which that confer on the holder the right to vote were owned directly or indirectly by a person or persons described in subclause (i), (ii) or (iii),

(b) 75 per cent of the assets of which throughout the year were farming assets, and

(c) that, throughout the year, carried on the business of farming in Ontario,

(i) through the employment of a shareholder or a member of the shareholder’s family who was actually engaged in the operation of the farm, or

(ii) in the case of a corporation described in subclause (a) (iii) or (iv), through the employment of the person or persons referred to in subclause (a) (i) or (ii); (“société agricole familiale”)

“family fishing corporation” means, in respect of a taxation year, a corporation,

(a) all the shares of the capital stock of which that confer on the holder the right to vote were, throughout the year, owned by,

(i) an individual resident in Canada,

(ii) an individual resident in Canada and a member or members of that individual’s family who were also resident in Canada,

(iii) another family fishing corporation, or

(iv) another corporation, all the shares of the capital stock of which that confer on the holder the right to vote were owned directly or indirectly by a person or persons described in subclause (i), (ii) or (iii),

(b) 75 per cent of the assets of which throughout the year were fishing assets, and

(c) that, throughout the year, carried on the business of fishing in Ontario,

(i) through the employment of a shareholder or a member of the shareholder’s family who was actually engaged in the operation of the fishing business, or

(ii) in the case of a corporation described in subclause (a) (iii) or (iv), through the employment of the person or persons referred to in subclause (a) (i) or (ii); (“société de pêche familiale”)

“farming” does not include the maintaining of horses for racing; (“agriculture”)

“farming assets” means, in respect of a corporation,

(a) cash, trade accounts receivable, supplies and inventory of commodities or things produced, raised or grown by the corporation through farming,

(b) land, buildings, equipment, machinery and livestock that are used chiefly in the operation of a farm by the corporation,

(c) any right or licence granted or issued under any Act of the Legislature that permits or regulates the production or sale of any commodity or thing produced, raised or grown by the corporation through farming,

(d) the building in which a shareholder of the corporation or one or more members of his or her family reside who are engaged in the operation of a farm if that building is on land that is used or is contiguous to land used by that shareholder or the member or members of his or her family in the operation of the farm,

(e) shares in another family farm corporation, or

(f) the amount owing to the corporation for the balance of the sale price of farming assets described in clause (b) that have been sold by the corporation if,

(i) the amount is secured by a mortgage held by the corporation, and

(ii) the total value of the corporation’s remaining farming assets described in clauses (a) to (e) exceeds 50 per cent of its total assets; (“actif agricole”)

“fishing assets” means, in respect of a corporation,

(a) cash, trade accounts receivable, supplies and inventory used by the corporation in a fishing business,

(b) land, buildings, boats, ships, equipment, machinery and nets that are used by the corporation chiefly in the operation of a fishing business,

(c) any right or licence granted or issued under any Act of the Legislature that permits or regulates the catching or sale of fish by the corporation, and

(d) shares in another family fishing corporation. (“actif de pêche”) 2007, c. 11, Sched. A, s. 64 (3).

Member of family

(4)  For the purposes of the definitions of “family farm corporation” and “family fishing corporation” in subsection (3), the following are members of an individual’s family:

1. The individual’s spouse or common-law partner.

2. The individual’s children or other lawful descendants.

3. The individual’s father, mother, grandfather and grandmother.

4. The individual’s brothers and sisters and their lawful descendants.

5. The individual’s uncles and aunts by blood relation and their lawful descendants.

6. The father and mother of the individual’s spouse or common-law partner.

7. The brothers and sisters of the individual’s spouse or common-law partner and their lawful descendants.

8. The spouse or common-law partner of each of the individual’s children. 2007, c. 11, Sched. A, s. 64 (4).

Subdivision b —Financial Institutions

Application

65.  This subdivision applies to corporations only in respect of taxation years commencing before July 1, 2010 for which they are financial institutions. 2007, c. 11, Sched. A, s. 65.

Interpretation

Definitions

66.  (1)  In this subdivision,

“associated group”, in respect of a corporation or qualifying small business, has the prescribed meaning; (“groupe”)

“average bank prime rate” has the prescribed meaning; (“taux préférentiel bancaire moyen”)

“community small business investment fund corporation” means a corporation registered as a community small business investment fund corporation under the Community Small Business Investment Funds Act; (“fonds communautaire de placement dans les petites entreprises”)

“disposition” includes an event prescribed to be a disposition for the purposes of this subdivision and excludes an event prescribed not to be a disposition for the purposes of this subdivision; (“disposition”)

“long-term debt” has the meaning assigned by subsection 181 (1) of the Federal Act; (“passif à long terme”)

“qualifying small business” means a business that satisfies the prescribed conditions; (“petite entreprise autorisée”)

“related financial institution” means, in respect of a particular financial institution for a taxation year, another financial institution that is related at the end of the year to the particular financial institution; (“institution financière liée”)

“related insurance corporation” means, in respect of a particular financial institution for a taxation year, an insurance corporation that is related at the end of the year to the particular financial institution; (“compagnie d’assurance liée”)

“reserves” means, in respect of a financial institution for a taxation year, the amount, calculated as of the end of the year, of all of the corporation’s reserves, provisions and allowances, including any provision in respect of deferred taxes or future tax liabilities, but excluding allowances in respect of depreciation or depletion; (“réserves”)

“taxable capital employed in Canada” means, with respect to a financial institution for a taxation year, the financial institution’s taxable capital employed in Canada for the year as determined under section 181.3 of the Federal Act. (“capital imposable utilisé au Canada”) 2007, c. 11, Sched. A, s. 66 (1).

Financial institution

(2)  A corporation is a financial institution for a taxation year for the purposes of this Division if, at any time in the year,

(a) it is a bank;

(b) it is authorized under the laws of Canada or a province to carry on the business of offering its services as a trustee to the public;

(c) it is authorized under the laws of Canada or a province to accept deposits from the public and carries on the business of lending money on the security of real estate or investing in mortgages on real estate;

(d) it is a registered securities dealer;

(e) it is a mortgage investment corporation; or

(f) it is a corporation prescribed for the purposes of this subsection. 2007, c. 11, Sched. A, s. 66 (2).

Deposit-taking institution

(3)  A corporation is a deposit-taking institution for a taxation year for the purposes of this subdivision if,

(a) it is a financial institution for the year by reason of clause (2) (a), (b) or (c);

(b) it is a corporation all or substantially all of the assets of which are shares or indebtedness of corporations described in clause (a) to which the corporation is related; or

(c) it is a corporation all or substantially all of the assets of which are shares or indebtedness of corporations described in clause (b) to which the corporation is related. 2007, c. 11, Sched. A, s. 66 (3).

Qualifying small business corporation

(4)  For the purposes of this subdivision, a corporation is a qualifying small business corporation at a particular time if,

(a) it is a Canadian-controlled private corporation;

(b) it carries on business in Ontario through one or more permanent establishments;

(c) it satisfies the prescribed conditions; and

(d) all or substantially all of the fair market value of the corporation’s assets is attributable to assets used principally in an active business carried on by the corporation primarily in Ontario. 2007, c. 11, Sched. A, s. 66 (4).

Same

(5)  A corporation is also a qualifying small business corporation at a particular time for the purposes of this subdivision if it is associated with a corporation referred to in subsection (4) at that time and satisfies such conditions as may be prescribed. 2007, c. 11, Sched. A, s. 66 (5).

Rule for determining values and amounts

67.  For the purposes of this subdivision, the carrying value of an asset as of the end of a taxation year and all other amounts required to be determined shall be determined in the same manner as would be required for the purposes of Part I.3 of the Federal Act. 2007, c. 11, Sched. A, s. 67.

Financial institution resident in Canada

Paid-up capital

68.  (1)  The paid-up capital for a taxation year of a financial institution that is resident in Canada, is the amount, if any, by which “A” exceeds “B” where,

“A” is the sum of the following amounts, if any, in respect of the financial institution, determined as of the end of the year:

1. Its long-term debt.

2. Its capital stock or, in the case of a financial institution incorporated without share capital, its members’ contributions.

3. Its retained earnings.

4. Its accumulated other comprehensive income.

5. Its contributed surplus and all other surpluses.

6. Its reserves for the year, except to the extent that they were deducted in computing its income under Division B for the year.

“B” is the sum of the following amounts, if any, in respect of the financial institution, determined as of the end of the year:

1. Its deferred tax debit balance or future tax assets.

2. Its deficit, if any, deducted in computing its shareholders’ equity.

3. Any amount deducted under subsection 130.1 (1) or 137 (2) of the Federal Act in computing its income under Division B for the year, to the extent that the amount can reasonably be regarded as being included in the amount of “A” for the year.

4. Any amount, except to the extent that it has been deducted by the financial institution in computing its income under Part II of the Corporations Tax Act or Division B of this Part for the year or any previous taxation year, that is deductible by the financial institution by reason of the application of subsection 37 (1) of the Federal Act in respect of scientific research and experimental development. 2007, c. 11, Sched. A, s. 68 (1).

Same

(2)  The following provisions apply for the purposes of paragraph 4 of the definition of “B” in subsection (1):

1. Paragraph 87 (2) (l) of the Federal Act.

2. Paragraph 88 (1) (e.2) of the Federal Act with respect to the application of paragraph 87 (2) (l) of that Act to a winding-up to which section 88 of that Act applies. 2007, c. 11, Sched. A, s. 68 (2).

Taxable paid-up capital

(3)  The taxable paid-up capital for a taxation year of a financial institution that is resident in Canada is the amount, if any, by which the financial institution’s paid-up capital for the year exceeds its investment allowance for the year in respect of all of its assets, each of which is a share of the capital stock or long-term debt of,

(a) a related financial institution that has a permanent establishment in Ontario and is not exempt from tax under this Division or Part III of the Corporations Tax Act; or

(b) a related insurance corporation that has a permanent establishment in Ontario. 2007, c. 11, Sched. A, s. 68 (3).

Investment allowance

(4)  The investment allowance for a taxation year of a corporation that is a financial institution resident in Canada in respect of a share of the capital stock or long-term debt of a related financial institution or related insurance corporation is the amount calculated using the formula,

A × B/C

in which,

“A” is the carrying value of the asset to the corporation as of the end of the year,

“B” is the Ontario allocation factor of the related financial institution or the related insurance corporation, as the case may be, for its last taxation year ending in the corporation’s year, and

“C” is the corporation’s Ontario allocation factor for the year.

2007, c. 11, Sched. A, s. 68 (4).

Exception, taxable paid-up capital of eligible institution

(5)  Despite subsection (3), the taxable paid-up capital for a taxation year of a financial institution resident in Canada that is an eligible institution for the year is the amount, if any, by which its paid-up capital for the year exceeds its investment allowance for the year in respect of all of its assets, each of which is a share of the capital stock or long-term debt of a corporation that is a qualifying corporation in respect of the eligible institution. 2007, c. 11, Sched. A, s. 68 (5).

Eligible institution

(6)  A financial institution is an eligible institution for a taxation year for the purposes of this section if,

(a) its Ontario allocation factor for the year is one; and

(b) it is not controlled, directly or indirectly, at any time in the year by,

(i) another financial institution, other than a corporation prescribed as a financial institution for the purposes of this Division,

(ii) an insurance corporation, or

(iii) a corporation that would be considered to be a financial institution if it carried on business in Canada and had been incorporated in Canada. 2007, c. 11, Sched. A, s. 68 (6).

Investment allowance, eligible institution

(7)  The investment allowance of an eligible institution for a taxation year in respect of an asset of the eligible institution that is a share of the capital stock or long-term debt of a qualifying corporation is the carrying value of the asset to the eligible institution as of the end of the year. 2007, c. 11, Sched. A, s. 68 (7).

Qualifying corporation

(8)  A corporation is a qualifying corporation in respect of an eligible institution for a taxation year of the eligible institution if the corporation is a financial institution or insurance corporation that,

(a) is related at the end of that year to the eligible institution;

(b) has a permanent establishment in Canada at the end of that year; and

(c) is not exempt from tax under this Division or Part III of the Corporations Tax Act for its last taxation year ending in the year if it is not an insurance corporation. 2007, c. 11, Sched. A, s. 68 (8).

Authorized foreign bank

Paid-up capital

69.  (1)  The paid-up capital for a taxation year of an authorized foreign bank is the amount determined under paragraph 181.3 (3) (e) of the Federal Act in respect of the authorized foreign bank for the year. 2007, c. 11, Sched. A, s. 69 (1).

Taxable paid-up capital

(2)  The taxable paid-up capital for a taxation year of an authorized foreign bank is the amount, if any, by which its paid-up capital for the year exceeds its investment allowance for the year in respect of all amounts each of which is the amount, calculated as of the end of the year before the application of risk weights, that the bank would be required to report under the OSFI risk-weighting guidelines, if those guidelines applied and required a report at that time, of a qualifying investment used or held by the bank in the year in the course of carrying on its Canadian banking business. 2007, c. 11, Sched. A, s. 69 (2).

Investment allowance

(3)  The investment allowance for a taxation year of an authorized foreign bank in respect of a qualifying investment is the amount calculated using the formula,

A × B/C

in which,

“A” is the amount of the qualifying investment, as reported by the authorized foreign bank,

“B” is the Ontario allocation factor of the related financial institution or the related insurance corporation that issued the investment for its last taxation year ending in the authorized foreign bank’s taxation year, and

“C” is