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Corporations Tax Act

R.S.O. 1990, CHAPTER C.40

Consolidation Period: From October 28, 2009 to the e-Laws currency date.

Last amendment: 2009, c. 22, s. 96.

Caution: Many provisions of this Act have special application rules. The reader should consult the Statutes of Ontario, 1992, chapter 3, the Statutes of Ontario, 1994, chapter 14, the Statutes of Ontario, 1996, chapter 1, Schedule B, the Statutes of Ontario, 1996, chapter 29, the Statutes of Ontario, 1997, chapter 43, Schedule A, the Statutes of Ontario, 1998, chapter 5, subsection 12 (2), the Statutes of Ontario, 1998, chapter 34, Part III, the Statutes of Ontario, 1999, chapter 9, Part VI and the Statutes of Ontario, 2004, chapter 31, Schedule 9, subsection 7 (2).

SKIP TABLE OF CONTENTS

CONTENTS

PART I
GENERAL

Interpretation

Interpretation

1.  (1)  In this Act and in the application of the provisions of the Income Tax Act (Canada) that are by this Act made applicable for the purposes of this Act,

(a) each of the provisions contained in Part XVII of the Income Tax Act (Canada) applies for the purposes of this Act unless otherwise provided in this Act;

(b) Repealed: 1996, c. 29, s. 36 (1).

(c) subsection 248 (7) of the Income Tax Act (Canada) does not apply for the purposes of this Act;

(d) the interpretations contained in the said Part XVII of the expressions “farming”, “foreign resource property”, “Minister”, “paid-up capital”, “regulation”, “taxable income”, “taxable income earned in Canada” and “tax payable” do not apply and in lieu thereof the following interpretations are applicable:

“farming” includes tillage of the soil, livestock raising or exhibiting, maintaining of horses for racing, raising of poultry, fur farming, dairy farming, fruit growing, and the keeping of bees, but does not include an office or employment under a person engaged in the business of farming and, for the purposes of subsection 71 (1) only, does not include the maintaining of horses for racing, (“agriculture”)

“foreign resource property” has the meaning given to that expression by section 14, (“avoir minier étranger”)

“Minister” means, unless otherwise provided in this Act, the Minister of Finance, but the reference to “Minister” in subsection 249.1 (7) of the Income Tax Act (Canada) means the Minister of National Revenue for the purposes of this Act, (“ministre”)

“paid-up capital” has the meaning given to that expression by subsection 89 (1) of the Income Tax Act (Canada), but such meaning does not apply for the purposes of Part III of this Act, (“capital versé”)

“regulations” means regulations made under this Act, (“règlements”)

“tax payable”, by a corporation or other person under any Part of this Act by or under which provision is made for the assessment of tax, means the tax payable by the corporation or other person as fixed by assessment or reassessment, subject to variation on objection or appeal, if any, in accordance with sections 84 to 92, (“impôt payable”)

“taxable income” has the meaning given to that expression by section 7, (“revenu imposable”)

“taxable income earned in Canada” has the meaning given to that expression by section 8. (“revenu imposable gagné au Canada”) R.S.O. 1990, c. C.40, s. 1 (1); 1994, c. 14, s. 1 (1); 1996, c. 1, Sched. B, s. 1 (1); 1996, c. 29, s. 36 (1, 2); 1997, c. 43, Sched. A, s. 1 (1, 2); 1999, c. 9, s. 72; 2001, c. 23, s. 20; 2004, c. 16, s. 2 (2); 2008, c. 7, Sched. E, s. 1.

Definitions

(2)  In this Act and in the application of the provisions of the Income Tax Act (Canada) that are by this Act made applicable for the purposes of this Act,

“bank” means a bank to which the Bank Act (Canada) applies; (“banque”)

“family farm corporation” means a corporation that is throughout the taxation year a corporation,

(a) all shares of the capital stock of which that confer on the holder thereof the right to vote were owned by,

(i) an individual ordinarily resident in Canada or by that individual and a member or members of that individual’s family ordinarily resident in Canada or by another family farm corporation, or

(ii) another corporation, all shares of the capital stock of which that confer on the holder thereof the right to vote were owned directly or indirectly by a person or persons referred to in subclause (i),

(b) 75 per cent of the assets of which were farming assets, and

(c) which carried on the business of farming in Ontario through the employment of a shareholder or a member of his or her family actually engaged in the operation of the farm or, where subclause (a) (ii) applies, through the employment of the person or persons referred to in subclause (a) (i); (“société agricole familiale”)

“family fishing corporation” means a corporation that is throughout the taxation year a corporation,

(a) all shares of the capital stock of which that confer on the holder thereof the right to vote were owned by,

(i) an individual ordinarily resident in Canada or by that individual and a member or members of that individual’s family ordinarily resident in Canada or by another family fishing corporation, or

(ii) another corporation, all shares of the capital stock of which that confer on the holder thereof the right to vote were owned directly or indirectly by a person or persons referred to in subclause (i),

(b) 75 per cent of the assets of which were fishing assets, and

(c) which carried on the business of fishing in Ontario through the employment of a shareholder or a member of his or her family actually engaged in the operation of the business or, where subclause (a) (ii) applies, through the employment of the person or persons referred to in subclause (a) (i); (“société de pêche familiale”)

“farming assets” of a family farm corporation means,

(a) cash, trade accounts receivable, supplies and inventory of commodities or things produced, raised or grown through farming,

(b) land, buildings, equipment, machinery, and livestock that are used chiefly in the operation of the 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 through farming,

(d) the building in which a shareholder or member or members of his or her family reside who are engaged in the operation of the farm if that building is on land that is used or is contiguous to land used by that shareholder or member or members of his or her family in the operation of the farm,

(e) shares in another family farm corporation,

(f) a mortgage taken by the family farm corporation as security for the balance of the sale price on its sale of farming assets referred to in clause (b), provided that the amount of the aggregate of its remaining farming assets referred to in clauses (a) to (e) exceeds 50 per cent of its assets; (“actif agricole”)

“federal assessment action” means any of the following actions taken by the Minister of National Revenue under the Income Tax Act (Canada),

(a) an assessment, reassessment or additional assessment of tax, interest or penalties,

(b) a determination or redetermination of a loss or an amount or a written notice of a change in a loss or an amount,

(c) a written notice that no tax is payable, or

(d) a confirmation of an assessment, reassessment or additional assessment of tax, interest or penalties or of a determination or redetermination of a loss or an amount; (“mesure fiscale fédérale”)

“fishing assets” of a family fishing corporation means,

(a) cash, trade accounts receivable, supplies and inventory used in the fishing business,

(b) land, buildings, boats, ships, equipment, machinery and nets that are used chiefly in the operation of the fishing business by the corporation,

(c) any right or licence granted or issued under any Act of the Legislature that permits or regulates the catching or sale of fish, and

(d) shares in another family fishing corporation; (“actif de pêche”)

“jurisdiction” means a province or territory of Canada or a state outside Canada having sovereign power; (“autorité législative”)

“member of his or her family” means, with respect to an individual referred to in the definition of “family farm corporation” or “family fishing corporation” or in subclause 61 (5) (c) (i),

(a) his or her spouse or common-law partner,

(b) his or her child,

(c) his or her father, mother, grandfather or grandmother,

(d) his or her brother or sister or any lawful descendant of his or her brother or sister,

(e) the brother or sister of his or her father or mother or any lawful descendant of that uncle or aunt,

(f) the father or mother of his or her spouse or common-law partner,

(g) a brother or sister of his or her spouse or common-law partner or any lawful descendant of that brother or sister,

(h) the spouse or common-law partner of his or her child, or

(i) a person adopted by him or her under the Child and Family Services Act or a predecessor of that Act or the spouse, common-law partner or any lawful descendant of that person; (“membre de sa famille”)

“permanent establishment” has the meaning given to that expression by section 4; (“établissement stable”)

“province” means a province as defined in subsection 35 (1) of the Interpretation Act (Canada); (“province”)

“return” means a tax return of a corporation or other person for a taxation year that meets the requirements of section 75 respecting the form and medium, the contents, the accompanying documents and the manner of delivery; (“déclaration”)

“taxation year”, of a person, means,

(a) a calendar year, if the person is an administrator of a benefit plan under section 74.2 and is not a corporation,

(b) a taxation year of the person for the purposes of the Income Tax Act (Canada), if the person is an insurance broker within the meaning of section 74.3 and is not a corporation, and

(c) a fiscal period for which the person’s statement of the condition of affairs is prepared for the purposes of reporting to the Superintendent of Insurance, if the person is an insurance exchange within the meaning of section 74.4; (“année d’imposition”)

“timber royalty” includes any consideration for a right under or pursuant to which a right to cut or take timber from a timber limit in Canada is obtained or derived, to the extent that such consideration is dependent upon, and computed by reference to, the amount of timber cut or taken. (“redevance forestière”) R.S.O. 1990, c. C.40, s. 1 (2); 1994, c. 14, s. 1 (2, 3); 1997, c. 43, Sched. A, s. 1 (3-5); 2000, c. 42, s. 10; 2004, c. 16, s. 2 (2); 2005, c. 31, Sched. 5, s. 1.

Interpretation

(3)  In the application of the sections of the Income Tax Act (Canada) that by this Act are made applicable for the purposes of this Act,

(a) “capital cost” means the cost of property as determined for the purposes of this Act;

(b) “undepreciated capital cost” means the undepreciated capital cost of depreciable property as determined for the purposes of this Act;

(c) the references therein to,

(i) returns required to be filed under section 150 of that Act shall be deemed to be references to the returns required to be filed under section 75 of this Act, and

(ii) assessments to be made under section 152 of that Act shall be deemed to be references to assessments to be made under section 80 of this Act;

(d) Repealed: 2005, c. 28, Sched. D, s. 1 (2).

R.S.O. 1990, c. C.40, s. 1 (3); 1996, c. 29, s. 36 (3); 2004, c. 16, s. 2 (2); 2005, c. 28, Sched. D, s. 1 (1, 2).

Application of federal provisions referred to in federal provisions

(3.1)  The following rules apply if a provision of the Income Tax Act (Canada) is made applicable for the purposes of this Act and the provision refers to another provision of the Income Tax Act (Canada) (in this subsection called the “other provision”):

1. Subject to paragraph 3, if the other provision does not otherwise apply for the purposes of this Act, it shall apply for the purposes of the application of the following provisions of the Income Tax Act (Canada) for the purposes of this Act:

i. Section 12.

ii. Section 12.2.

iii. Subsection 13 (7), paragraph 13 (7.1) (e) and the definition of “I” in the definition of “undepreciated capital cost” in subsection 13 (21).

iv. Subsection 14 (3).

v. Section 20.

vi. Paragraphs 37 (1) (d) and (e).

vii. Clauses 53 (1) (e) (i) (B) and 53 (2) (c) (i) (B) and subparagraphs 53 (2) (c) (vi), (vii) and (viii) and 53 (2) (h) (ii), (iii) and (iv).

viii. Section 56.

ix. Section 60.

x. The definition of “L” in the definition of “cumulative Canadian exploration expense” in subsection 66.1 (6).

xi. Section 66.8.

xii. Paragraph 67.1 (2) (d).

xiii. Paragraph 84 (1) (c.3).

xiv. Section 88.

xv. The definition of “relevant tax factor” in subsection 95 (1).

xvi. Subsection 96 (2.1).

xvii. Paragraph 110 (1) (k).

xviii. Paragraph 111 (1) (e).

xix. Paragraph 127.2 (6) (a) and subsection 127.2 (8).

xx. Subsection 127.3 (6).

xxi. Subsection 128.1 (2).

xxii. The definition of “Canadian property” in subsection 133 (8).

xxiii. Subsection 137 (4.3).

xxiv. Section 138.

xxv. Paragraph 138.1 (1) (k).

xxvi. Section 248.

xxvii. Subsection 258 (5).

2. If the other provision is subsection 192 (4.1) or 194 (4.1), it shall apply for the purposes of the application of subparagraph (b) (iii) of the definition of “paid-up capital” in section 89 of the Income Tax Act (Canada) for the purposes of this Act.

3. If the other provision does not apply for the purposes of this Act because a provision of this Act is enacted to apply instead, the reference to the other provision in the provision of the Income Tax Act (Canada) that applies for the purposes of this Act shall be deemed to be a reference to the provision of this Act that applies instead.

4. If the application of the other provision for the purposes of this Act differs from the application of the other provision for the purposes of the Income Tax Act (Canada), the reference to the other provision in the provision of that Act shall be deemed to be a reference to the other provision as it applies for the purposes of this Act.

5. Despite paragraph 3, if the other provision is referred to in clause 53 (1) (e) (i) (B) or 53 (2) (c) (i) (B) of the Income Tax Act (Canada) or in the definition of “gross revenue” in subsection 248 (1) of that Act, the other provision shall apply for the purposes of the application of that clause or definition for the purposes of this Act.

6. Except as otherwise provided in paragraphs 1 to 5, if the other provision does not apply for the purposes of this Act, it shall not apply for the purposes of the application of any provision of the Income Tax Act (Canada) for the purposes of this Act. 2005, c. 28, Sched. D, s. 1 (3).

Application of regulations under Income Tax Act (Canada)

(4)  Despite subsections (1) and (2), any regulation made pursuant to any provision of the Income Tax Act (Canada) that is by this Act made applicable for the purposes of this Act shall apply with necessary modifications for the purposes of this Act unless otherwise provided by this Act or by the regulations. R.S.O. 1990, c. C.40, s. 1 (4); 2004, c. 16, s. 2 (2).

Elections

(5)  Any election or designation by a corporation which has been properly made for the purposes of the Income Tax Act (Canada), pursuant to any provision of that Act that is by this Act made applicable for the purposes of this Act, shall be deemed to have been properly made for the purposes of this Act, provided that,

(a) except as otherwise required by section 29.1 or 31.1 or subsection 34 (10), where an amount elected or designated would be different from the amount determined in accordance with this Act, the amount determined in accordance with this Act applies; and

(b) the provisions in that Act imposing penalties for late filing of such elections are not applicable for the purposes of this Act. R.S.O. 1990, c. C.40, s. 1 (5); 1997, c. 43, Sched. A, s. 1 (6); 2004, c. 16, s. 2 (2).

Late and amended elections

(5.1)  Where, under subsection 220 (3.2) of the Income Tax Act (Canada), the Minister of National Revenue has extended the time for making an election under that Act or has granted permission to amend an election made under that Act, the election or amended election, as the case may be, shall be deemed to have been properly made for the purposes of this Act and shall apply as described in subsection (5) of this section and in paragraph 220 (3.3) (a) of the Income Tax Act (Canada). 1994, c. 14, s. 1 (4); 2004, c. 16, s. 2 (2).

Revoked elections

(5.2)  Where, under subsection 220 (3.2) of the Income Tax Act (Canada), the Minister of National Revenue has granted permission to revoke an election made under that Act, the election shall be deemed never to have been made for the purposes of this Act. 1994, c. 14, s. 1 (4); 2004, c. 16, s. 2 (2).

Registered pension funds

(6)  Any registered pension fund or plan that has been accepted for registration by the Minister of National Revenue for Canada shall be deemed to have been accepted for registration by the Minister of Finance. R.S.O. 1990, c. C.40, s. 1 (6); O.C. 355/93; 1997, c. 19, s. 4 (1); 2004, c. 16, s. 2 (2).

Income Tax Act (Canada) applies as amended from time to time

(7)  The provisions of the Income Tax Act (Canada) by this Act made applicable for the purposes of this Act shall, unless otherwise provided in this Act, be deemed to be applicable as amended or re-enacted from time to time, and such amendments or re-enactments shall apply for the purposes of this Act in the same manner as they apply for the purposes of the Income Tax Act (Canada). R.S.O. 1990, c. C.40, s. 1 (7); 2004, c. 16, s. 2 (2).

Income Tax Regulations (Canada)

(7.1)  The reference in subsection (7) to the provisions of the Income Tax Act (Canada) includes a reference to the provisions of the Income Tax Regulations (Canada) as made, amended and remade from time to time. 1998, c. 34, s. 26; 2004, c. 16, s. 2 (2).

Tax Treaty

(8)  Where,

(a) a corporation is subject to tax under this Act and under the Income Tax Act (Canada); and

(b) the corporation’s liability for tax under the Income Tax Act (Canada) is subject to and modified by the application of the provisions of a Tax Treaty, Agreement or Convention between Canada and another country,

the provisions of this Act may be modified and applied in the manner prescribed by the regulations for the purpose of giving effect to a provision of such a Treaty, Agreement or Convention for the purposes of this Act, and regulations related to this subsection may have retroactive application if they so state. R.S.O. 1990, c. C.40, s. 1 (8); 2004, c. 16, s. 2 (2).

Deemed delivery by registered mail

(9)  Where a receipt is obtained from the addressee on the delivery of anything required or permitted by this Act to be delivered by registered mail, the delivery shall be deemed to have been made by registered mail for the purposes of this Act, and a “registered letter” includes any letter deemed by this subsection to have been delivered by registered mail. R.S.O. 1990, c. C.40, s. 1 (9); 2004, c. 16, s. 2 (2).

Deemed deduction of investment tax credit

(10)  Any amount deemed to have been deducted under subsection 127 (5) of the Income Tax Act (Canada) by operation of subsection 127.1 (3) or 192 (10) of that Act shall be deemed to have been deducted under subsection 127 (5) of that Act for the purposes of this Act. 1992, c. 3, s. 1; 2004, c. 16, s. 2 (2).

Interpretation, corporation

(11)  For the purposes of Parts V and VI, a reference to “corporation” shall be deemed to include a reference to an administrator of a benefit plan within the meaning of section 74.2, an insurance broker within the meaning of section 74.3 and an insurance exchange within the meaning of section 74.4. 1996, c. 1, Sched. B, s. 1 (2); 1997, c. 43, Sched. A, s. 1 (8); 2004, c. 16, s. 2 (2).

(12)  Repealed: 2005, c. 28, Sched. D, s. 1 (4).

Liability for Taxes

Taxes payable

Taxes payable, resident corporation

2.  (1)  Subject to subsection (5), every corporation resident in Canada that has a permanent establishment in Ontario at any time in a taxation year shall pay to Her Majesty in right of Ontario the taxes for the taxation year imposed by this Act at the time and in the manner required by this Act. 2005, c. 28, Sched. D, s. 2 (1); 2007, c. 11, Sched. B, s. 2 (1).

Taxes payable, non-resident corporation

(2)  Subject to subsection (5), every non-resident corporation shall pay to Her Majesty in right of Ontario the taxes for a taxation year imposed by this Act at the time and in the manner required by this Act if, at any time in the taxation year or in a previous taxation year,

(a) the corporation had a permanent establishment in Ontario within the meaning of section 4;

(b) the corporation owned real property, timber resource property or a timber limit in Ontario and the corporation’s income from the property or timber limit,

(i) arose from the sale or rental of the property or timber limit, or

(ii) is a royalty or timber royalty; or

(c) the corporation disposed of property,

(i) that would be taxable Canadian property as defined in subsection 248 (1) of the Income Tax Act (Canada) if the reference in that definition to section 2 of that Act were read as a reference to this section, and

(ii) that is deemed under the regulations to be situated in Ontario. 2005, c. 28, Sched. D, s. 2 (1); 2007, c. 11, Sched. B, s. 2 (2).

Tax in respect of a benefit plan

(2.1)  Every person who is a member or planholder of a benefit plan within the meaning of section 74.2 is liable to a tax in the amount determined under section 74.2, payable at the time and in the manner provided in that section to Her Majesty in right of Ontario. 1996, c. 1, Sched. B, s. 2; 2004, c. 16, s. 2 (2).

Tax in respect of insurance contract with unlicensed insurer

(2.2)  Every insured person within the meaning of section 74.3 who enters into an insurance contract, as defined in that section, with an insurer that is not licensed under the Insurance Act is liable to a tax in the amount determined under that section, payable at the time and in the manner provided in that section to Her Majesty in right of Ontario. 1997, c. 43, Sched. A, s. 2; 2004, c. 16, s. 2 (2).

Tax on insurance exchange

(2.3)  Every insurance exchange within the meaning of section 74.4 is liable to a tax in the amount determined under that section, payable at the time and in the manner provided in that section to Her Majesty in right of Ontario. 1997, c. 43, Sched. A, s. 2; 2004, c. 16, s. 2 (2).

Interpretation

(3)  For the purposes of subsection (2), a corporation “owned real property, timber resource property or a timber limit” if it had a legal, equitable or beneficial interest in the real property, timber resource property or timber limit. R.S.O. 1990, c. C.40, s. 2 (3); 2004, c. 16, s. 2 (2).

Application of subss. (1) and (2)

(4)  Subsections (1) and (2) apply to corporations for taxation years ending after May 11, 2005 and subsections (1) and (2) as they read before that day continue to apply to corporations for taxation years ending on or before that day. 2005, c. 28, Sched. D, s. 2 (2).

Taxation years ending after 2008

(5)  No corporation is liable for taxes under this Act for a taxation year ending after December 31, 2008 other than the taxes imposed by section 74 and subsections (2.1), (2.2) and (2.3). 2007, c. 11, Sched. B, s. 2 (3).

How tax to be determined

3.  (1)  Unless otherwise provided in this Act, any tax imposed by this Act shall be determined on the amount of the paid-up capital or other subject in respect of which the amount of the tax is to be ascertained as such paid-up capital or other subject stood at the close of the taxation year of the corporation for which the tax is imposed. R.S.O. 1990, c. C.40, s. 3 (1); 2004, c. 16, s. 2 (2).

Idem

(2)  Any tax imposed by this Act that is to be calculated in respect of,

(a) the taxable income of a corporation; or

(b) the gross premiums that become payable to insurance corporations,

shall be calculated with reference to the taxable income earned or the gross premiums that become payable, as the case may be, during the taxation year of the corporation for which the respective tax is imposed. R.S.O. 1990, c. C.40, s. 3 (2); 2004, c. 16, s. 2 (2).

Same

(3)  The tax imposed by subsection 2 (2.1) shall be calculated by reference to administration fees paid in respect of the plan and,

(a) to contributions made to the benefit plan if the plan is a funded benefit plan under section 74.2; or

(b) to benefits paid under the plan if the plan is an unfunded benefit plan under that section. 1996, c. 1, Sched. B, s. 3 (1); 2004, c. 16, s. 2 (2).

Same

(4)  The tax imposed by subsection 2 (2.2) shall be calculated by reference to the amount of premiums paid on insurance contracts, as defined in section 74.3, with insurers who do not hold licences under the Insurance Act. 1997, c. 43, Sched. A, s. 3; 2004, c. 16, s. 2 (2).

Same

(5)  The tax imposed by subsection 2 (2.3) shall be calculated by reference to premiums and deposits collected by an insurance exchange, as defined in section 74.4. 1997, c. 43, Sched. A, s. 3; 2004, c. 16, s. 2 (2).

Permanent establishment

4.  (1)  In this Act,

“permanent establishment” includes branches, mines, oil wells, farms, timberlands, factories, workshops, warehouses, offices, agencies and other fixed places of business. R.S.O. 1990, c. C.40, s. 4 (1); 2004, c. 16, s. 2 (2).

Idem

(2)  Where a corporation carries on business through an employee or agent who has general authority to contract for the corporation or who has a stock of merchandise owned by the corporation from which the employee or agent regularly fills orders which the employee or agent receives, such employee or agent shall be deemed to operate a permanent establishment of the corporation. R.S.O. 1990, c. C.40, s. 4 (2); 2004, c. 16, s. 2 (2).

Idem

(3)  The fact that a corporation has business dealings through a commission agent, broker or other independent agent shall not of itself be deemed to mean that the corporation has a permanent establishment. R.S.O. 1990, c. C.40, s. 4 (3); 2004, c. 16, s. 2 (2).

Idem

(4)  The fact that a corporation has a subsidiary controlled corporation in a place or a subsidiary controlled corporation engaged in a trade or business in a place shall not of itself be deemed to mean that the first-mentioned corporation is operating a permanent establishment in that place. R.S.O. 1990, c. C.40, s. 4 (4); 2004, c. 16, s. 2 (2).

Idem

(5)  An insurance corporation is deemed to have a permanent establishment in each jurisdiction in which the corporation is registered or licensed to do business. R.S.O. 1990, c. C.40, s. 4 (5); 2004, c. 16, s. 2 (2).

Idem

(6)  The fact that a corporation maintains an office solely for the purchase of merchandise shall not of itself be deemed to mean that the corporation has a permanent establishment in that office. R.S.O. 1990, c. C.40, s. 4 (6); 2004, c. 16, s. 2 (2).

Idem

(7)  Where a corporation, otherwise having a permanent establishment in Canada, owns land in a province or territory of Canada, such land is a permanent establishment. R.S.O. 1990, c. C.40, s. 4 (7); 2004, c. 16, s. 2 (2).

Idem

(8)  The fact that a non-resident corporation in a taxation year produced, grew, mined, created, manufactured, fabricated, improved, packed, preserved or constructed in whole or in part anything in Canada, whether or not the corporation exported that thing without selling it prior to exportation, shall of itself, for the purposes of this Act, be deemed to mean that the corporation maintained a permanent establishment at any place where the corporation did any of those things in the taxation year. R.S.O. 1990, c. C.40, s. 4 (8); 2004, c. 16, s. 2 (2).

Idem

(9)  The use of substantial machinery or equipment in a particular place at any time in a taxation year of a corporation constitutes a permanent establishment of such corporation in that place for the taxation year. R.S.O. 1990, c. C.40, s. 4 (9); 2004, c. 16, s. 2 (2).

Idem

(10)  Where a corporation has no fixed place of business, it has a permanent establishment in the principal place in which the corporation’s business is conducted. R.S.O. 1990, c. C.40, s. 4 (10); 2004, c. 16, s. 2 (2).

Idem

(11)  Where a corporation does not otherwise have a permanent establishment in Canada, it has a permanent establishment in the place designated in its charter or by-laws as being its head office or registered office. R.S.O. 1990, c. C.40, s. 4 (11); 2004, c. 16, s. 2 (2).

Same, where tax liability affected by a tax treaty, etc.

(12)  If the liability of a corporation for tax under the Income Tax Act (Canada) is determined with reference to a tax treaty, convention or agreement with another country, the corporation does not have a permanent establishment in Ontario for the purposes of this Act if it does not have such an establishment for the purposes of the tax treaty, convention or agreement. 2002, c. 22, s. 37; 2004, c. 16, s. 2 (2).

Same

(13)  Subsection (12) applies with respect to taxation years ending after June 17, 2002. 2002, c. 22, s. 37; 2004, c. 16, s. 2 (2).

Avoidance transactions

Definitions

5.  (1)  In this section and in subsection 80 (3),

“avoidance transaction” means any transaction,

(a) that, but for this section, would result directly or indirectly in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged in good faith primarily for purposes other than to obtain the tax benefit, or

(b) that is part of a series of transactions which would result directly or indirectly in a tax benefit but for this section, unless the transaction may reasonably be considered to have been undertaken or arranged in good faith primarily for purposes other than to obtain the tax benefit; (“opération d’évitement”)

“tax benefit” means a reduction, avoidance or deferral of tax or other amount payable by a corporation under this Act or under the Income Tax Act (Canada) or an increase in a refund of tax or other amount under this Act or under the Income Tax Act (Canada) and includes,

(a) a reduction, avoidance or deferral of tax or other amount that would be payable under the Act or the Income Tax Act (Canada) but for a Tax Treaty, Agreement or Convention between Canada and another country, and

(b) an increase in a refund of tax or other amount under the Act or the Income Tax Act (Canada) as a result of a Tax Treaty, Agreement or Convention between Canada and another country; (“avantage fiscal”)

“tax consequences”, to a corporation, means the amount of,

(a) the corporation’s income, taxable income, taxable income earned in a jurisdiction other than Ontario, taxable income earned in Canada or taxable income earned in Canada in a jurisdiction other than Ontario,

(a.1) the corporation’s net income, net loss, adjusted net income, adjusted net loss, pre-1994 loss or eligible losses for a taxation year, for the purposes of Part II.1,

(b) the corporation’s paid-up capital, taxable paid-up capital, taxable paid-up capital that is deemed to be used by the corporation in a jurisdiction outside Ontario, paid-up capital employed in Canada, taxable paid-up capital employed in Canada or taxable paid-up capital employed in Canada that is deemed to be used by the corporation in a jurisdiction outside Ontario,

(c) any gross premium referred to in Part IV that is payable to the corporation or its agent or agents,

(c.1) any contribution made to a funded benefit plan within the meaning of section 74.2, any benefit paid to or for the benefit of a member of an unfunded benefit plan within the meaning of section 74.2 and any administration fee paid by a person in respect of a benefit plan,

(d) any amount, other than an amount referred to in clause (a), (a.1), (b), (c) or (c.1), payable by or refundable to the corporation under this Act or that is relevant for the purposes of determining any other amount referred to in this subsection; (“attribut fiscal”)

“transaction” includes an arrangement or event. (“opération”) R.S.O. 1990, c. C.40, s. 5 (1); 1994, c. 14, s. 2 (1); 1996, c. 1, Sched. B, s. 4 (1); 2004, c. 16, s. 2 (2); 2005, c. 31, Sched. 5, s. 2 (1).

Application

(1.1)  This section applies to,

(a) transactions entered into after September 12, 1988 in respect of which the tax consequences to a person have been determined through a notice of assessment, reassessment, additional assessment or determination under subsection 152 (1.11) of the Income Tax Act (Canada) that involves the application of section 245 of that Act; and

(b) transactions entered into on or after December 20, 1990. 2005, c. 31, Sched. 5, s. 2 (2).

Determination of tax consequences

(2)  If a transaction is an avoidance transaction, the tax consequences to a corporation shall be determined in a manner that is reasonable in the circumstances in order to deny the tax benefit under this Act that would otherwise result directly or indirectly from the transaction, or from a series of transactions that includes the transaction. R.S.O. 1990, c. C.40, s. 5 (2); 2004, c. 16, s. 2 (2).

Application of subs. (2)

(3)  Subsection (2) applies to a transaction if it is reasonable to consider that,

(a) the transaction would, if this Act were read without reference to this section, result directly or indirectly in a misuse of the provisions of one or more of,

(i) this Act,

(ii) the regulations made under this Act,

(iii) a Tax Treaty, Agreement or Convention between Canada and another country, or

(iv) any Act or regulation of any jurisdiction that is relevant in computing tax or any amount payable by or refundable to a corporation under this Act or in determining any amount relevant for the purposes of that computation; or

(b) the transaction would result directly or indirectly in an abuse having regard to the provisions described in clause (a), other than this section, read as a whole. 2005, c. 31, Sched. 5, s. 2 (3).

Nature of determination

(4)  Without restricting the generality of subsection (2) and despite any other Act or regulation of any jurisdiction, in any determination under subsection (2) of the tax consequences to a corporation of a transaction,

(a) any deduction, exemption or exclusion in computing an amount referred to in clause (a), (a.1), (b), (c), (c.1) or (d) of the definition of “tax consequences” in subsection (1) may be allowed or disallowed in whole or in part;

(b) any deduction, exemption or exclusion referred to in clause (a) and any income, loss or other amount used in the determination of any amount payable or refundable under this Act may be allocated to any person;

(c) the nature of any payment or other amount may be recharacterized; and

(d) the tax effects that would otherwise result from the application of other provisions of this Act may be ignored. R.S.O. 1990, c. C.40, s. 5 (4); 1994, c. 14, s. 2 (2); 1996, c. 1, Sched. B, s. 4 (2); 2004, c. 16, s. 2 (2); 2005, c. 31, Sched. 5, s. 2 (4-6).

Application of subs. (4)

(4.1)  Subsection (4) applies to any benefit provided under a Tax Treaty, Agreement or Convention between Canada and another country that applies for the purposes of this Act despite the following:

1. A provision of the Tax Treaty, Agreement or Convention.

2. A provision of any Act of Canada that gives the force of law to the Tax Treaty, Agreement or Convention and relates to the application of the Tax Treaty, Agreement or Convention. 2005, c. 31, Sched. 5, s. 2 (7).

Consequential adjustments

(5)  If a notice of assessment, reassessment or additional assessment involving the application of subsection (2) with respect to a transaction has been sent to a corporation, or a notice of determination under subsection 80 (3) has been sent to the corporation, any other corporation is entitled, within 180 days after the day of mailing of the notice, to request in writing that the Minister make an assessment, reassessment or additional assessment applying subsection (2), or make a determination under subsection 80 (3), with respect to the transaction. R.S.O. 1990, c. C.40, s. 5 (5); 2004, c. 16, s. 2 (2).

Duty of the Minister

(6)  On receipt of a request by a corporation under subsection (5), the Minister shall consider the request and make an assessment or a determination under subsection 80 (3) with respect to the corporation, despite the expiry of any time limit under subsection 80 (11), except that an assessment or determination may be made under this subsection only to the extent that it may be reasonably regarded as relating to a transaction referred to in subsection (5). R.S.O. 1990, c. C.40, s. 5 (6); 2004, c. 16, s. 2 (2).

Notice of assessment, etc.

(7)  The tax consequences to any corporation after the application of this section shall be determined only through a notice of assessment, reassessment or additional assessment, or through a notice of determination under subsection 80 (3), involving the application of this section. R.S.O. 1990, c. C.40, s. 5 (7); 2004, c. 16, s. 2 (2).

Interpretation, corporation

(8)  In the application of this section,

(a) a reference to “corporation” in this section shall be deemed to include a reference to a person subject to tax under subsection 2 (2.1) and to an administrator of a benefit plan referred to in section 74.2; and

(b) the amount of tax payable under this Act by an administrator of a benefit plan referred to in section 74.2 shall be deemed to include the amount of tax required to be collected and paid over to the Minister by the administrator under section 74.2. 1996, c. 1, Sched. B, s. 4 (3); 2004, c. 16, s. 2 (2).

Inter-provincial tax avoidance

Definitions

5.1  (1)  In this section,

“taxpayer” means a corporation or a partnership whose members include one or more corporations; (“contribuable”)

“transferee” means, in respect of a taxation year,

(a) a corporation that has a permanent establishment in one or more provinces other than Ontario, or

(b) a partnership, one or more of whose members is a corporation described in clause (a); (“bénéficiaire du transfert”)

“transferor” means, in respect of a taxation year,

(a) a corporation that has a permanent establishment in one or more provinces other than Ontario,

(b) an individual who is ordinarily resident in a province other than Ontario on the last day of the taxation year, including a trust that is deemed under subsection 104 (2) of the Income Tax Act (Canada) to be an individual in respect of the trust property, or

(c) a partnership, one or more of whose members is a corporation described in clause (a) or an individual described in clause (b). (“auteur du transfert”) 1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2).

Inter-provincial anti-avoidance, disposition of property

(2)  Despite any other provision of this Act except subsections (4) and (8), if a taxpayer disposes of property to a transferee, and clauses (3) (a) to (d) apply in respect of the disposition, the amount of the taxpayer’s deemed proceeds of disposition of the property for the purposes of this Act is the total of,

(a) the amount that is deemed to be the taxpayer’s proceeds of disposition of the property as determined under this Act without reference to this section; and

(b) the total of all amounts, each of which is in respect of a province in which the transferee has a permanent establishment, determined by multiplying,

(i) the amount by which the cost amount of the property to the transferee under the laws of a province other than Ontario exceeds the amount referred to in clause (a),

by,

(ii) the percentage of the transferee’s taxable income, for the taxation year in which the transferee disposed of the property,

(A) if the transferee is a corporation, that is deemed to be earned in that other province under regulations made under the Income Tax Act (Canada), or that would be deemed to be earned in that other province if the transferee had had taxable income for that year, or

(B) if the transferee is a partnership, that the partnership would be deemed to have earned in that other province under regulations made under the Income Tax Act (Canada) if the partnership were a corporation, its taxation year were its fiscal period, it had had income for the fiscal period and its taxable income for the year were its income for that fiscal period. 1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2).

Application of subs. (2)

(3)  Subsection (2) applies in respect of a disposition of property if,

(a) the transferee does not deal at arm’s length with the taxpayer at or immediately after the time of the disposition;

(b) the amount of the taxpayer’s proceeds of disposition of the property, as determined under this Act without reference to this section, would be deemed to be an amount that is less than the transferee’s cost amount of the property immediately after the disposition, as determined under the laws of a province other than Ontario in which the transferee or, if the transferee is a partnership, one or more of its members, has a permanent establishment;

(c) the property, or other property the fair market value of which is derived primarily from the property or other property acquired by any person other than the taxpayer in substitution for the property, is subsequently disposed of to another person or partnership; and

(d) it is reasonable to believe that a purpose of the disposition of the property to the transferee prior to the subsequent disposition of the property by the transferee to another person was to reduce the total amount of income tax payable to one or more provinces in respect of the two dispositions to an amount that would be less than the amount of provincial income tax that would have been payable if the taxpayer’s proceeds of disposition of the property had equalled the transferee’s proceeds of disposition of the property on the subsequent disposition. 1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2).

Exceptions

(4)  Subsection (2) does not apply in respect of a disposition if,

(a) the cost amount of the property to the transferee is greater than the taxpayer’s proceeds of disposition of the property, as otherwise determined, by reason only of the operation of paragraph 88 (1) (c) or 98 (3) (b) of the Income Tax Act (Canada) or a comparable provision of the laws of another province in which the transferee, or if the transferee is a partnership, one or more of its members, has a permanent establishment;

(b) in the case where the taxpayer is a corporation, the percentage of the taxpayer’s taxable income, for the taxation year in which the taxpayer disposes of the property, that is not deemed, or would not be deemed if the taxpayer had had taxable income for that year, to be earned outside Ontario for the purposes of section 39, is less than or equal to,

(i) if the transferee is a corporation, the percentage of the transferee’s taxable income for the taxation year in which the transferee disposed of the property, that is not deemed, or would not be deemed if the transferee had had taxable income for that year, to be earned outside Ontario for the purposes of section 39, or

(ii) if the transferee is a partnership, the percentage of the transferee’s income, for the fiscal period in which the transferee disposed of the property, that would not be deemed to be earned outside Ontario for the purposes of section 39, if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period; or

(c) in the case where the taxpayer is a partnership, the percentage of the taxpayer’s income, for the fiscal period in which the taxpayer disposed of the property, that would not be deemed to be earned outside Ontario for the purposes of section 39, if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period, is less than or equal to the percentage of the transferee’s taxable income, for the taxation year in which the transferee disposed of the property, that is not deemed, or would not be deemed if the transferee had had taxable income for that year, to be earned outside Ontario for the purposes of section 39. 1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2).

Inter-provincial anti-avoidance, acquisition of property

(5)  Despite any other provision of this Act except subsections (7) and (8), if a taxpayer acquires property from a transferor and clauses (6) (a) to (d) apply, the taxpayer’s cost amount of the property for the purposes of this Act shall be the amount by which,

(a) the taxpayer’s cost amount of the property as otherwise determined under this Act without reference to this section,

exceeds,

(b) the total of all amounts, each of which is in respect of a province in which the transferor has a permanent establishment, determined by multiplying,

(i) the amount by which the amount determined under clause (a) exceeds the proceeds of disposition of the property to the transferor as determined under the laws of a province other than Ontario,

by,

(ii) the percentage of the transferor’s taxable income for the taxation year in which the disposition occurred that is deemed to be earned in that other province under regulations made under the Income Tax Act (Canada), or that would be deemed to be earned in that other province if the transferor had had taxable income for that year. 1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2).

Application of subs. (5)

(6)  Subsection (5) applies in respect of an acquisition of property if,

(a) the transferor does not deal at arm’s length with the taxpayer at or immediately after the time of the acquisition;

(b) the cost amount of the property to the taxpayer, as otherwise determined under this Act, is greater than the amount of the transferor’s deemed proceeds of disposition of the property as determined under the laws of a province other than Ontario in which the transferor or, if the transferor is a partnership, one or more of its members, has a permanent establishment;

(c) the property, or other property the fair market value of which is derived primarily from the property or other property acquired by any person other than the taxpayer in substitution for the property, is subsequently disposed of to another person or partnership; and

(d) it is reasonable to believe that a purpose of the disposition of the property to the taxpayer prior to the disposition of the property by the taxpayer to another person was to reduce the total amount of income tax payable to one or more provinces in respect of the two dispositions to an amount that would be less than the amount of provincial income tax that would have been payable if the taxpayer’s cost amount of the property for the purposes of this Act had equalled the greater of,

(i) the transferor’s cost amount of the property under the Income Tax Act (Canada) immediately before the disposition to the taxpayer, and

(ii) the transferor’s cost amount of the property under the laws of another province immediately before the disposition to the taxpayer. 1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2).

Exceptions

(7)  Subsection (5) does not apply in respect of an acquisition of a property if,

(a) the cost amount of the property to the taxpayer is greater than the transferor’s proceeds of disposition of the property, as otherwise determined, by reason only of the operation of paragraph 88 (1) (c) or 98 (3) (b) of the Income Tax Act (Canada), as applicable for the purposes of this Act;

(b) in the case where the taxpayer is a corporation, the percentage of the taxpayer’s taxable income, for the taxation year in which the taxpayer acquires the property, that is not deemed, or would not be deemed if the taxpayer had had taxable income for that year, to be earned outside Ontario for the purposes of section 39, is less than or equal to,

(i) if the transferor is a corporation, the percentage of the transferor’s taxable income, for the taxation year in which the transferor disposed of the property, that is not deemed, or would not be deemed if the transferor had had income for that year, to be earned outside Ontario for the purposes of section 39, or

(ii) if the transferor is a partnership, the percentage of the transferor’s income, for the fiscal period in which the transferor disposed of the property, that would not be deemed to be earned outside Ontario under the rules prescribed for the purposes of section 39, if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period; or

(c) in the case where the taxpayer is a partnership, the percentage of the taxpayer’s income, for the fiscal period in which the taxpayer acquired the property, that would not be deemed to be earned outside Ontario under the rules prescribed for the purposes of section 39 if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period, is less than or equal to the percentage of the transferor’s taxable income, for the taxation year in which the transferor disposed of the property, that is not deemed, or would not be deemed if the transferor had had taxable income for that year, to be earned outside Ontario for the purposes of section 39 or, if the transferor is an individual, is deemed, or would be deemed if the transferor had had taxable income for that year, to be earned in Ontario under rules prescribed in the regulations made under the Income Tax Act (Canada). 1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2).

Section not applicable

(8)  This section does not apply to a disposition or an acquisition of property if,

(a) the property is,

(i) depreciable property that was included in Class 3 of Schedule II to the regulations made under the Income Tax Act (Canada) and was acquired after November 12, 1981 and before October 25, 1985 by the transferor,

(ii) depreciable property referred to in subclause (i) that was acquired from a related corporation, and the difference between the cost amount of the property for the purposes of this Act and the cost amount of the property for the purposes of the Income Tax Act (Canada) can be primarily attributed to the fact that subsection 1100 (2) of the regulations made under that Act that applied for the purposes of that Act after November 12, 1981 did not apply for the purposes of this Act before October 25, 1985, or

(iii) a foreign resource property;

(b) the rules or conditions prescribed by the regulations have been satisfied; or

(c) an election is made under subsection 29.1 (4) or 31.1 (4) in respect of the disposition, or could have been made if those subsections had been enacted and in force. 1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2).

Anti-avoidance of provincial tax

5.2  (1)  Except as otherwise provided in this section, if a corporation deducts or claims an amount under a provision of this Act, or of the Income Tax Act (Canada) as it applies for the purposes of this Act, that is less than the maximum amount the corporation may deduct or claim in determining its income or taxable income for the taxation year, or fails to deduct or claim any amount under the provision for the taxation year, the corporation shall be deemed to deduct or claim an amount under the provision in determining its income or taxable income, as the case may be, for the taxation year, in addition to the amount, if any, that it has deducted or claimed under the provision, equal to the amount, if any, by which the lesser of “A” and “B” exceeds “C”,

where,

“A” is the greatest amount that may be deducted or claimed by the corporation under the provision in determining its income or taxable income under this Act for the taxation year,

“B” is the greatest of the amounts deducted or claimed by the corporation under the corresponding provisions of the laws of other provinces in computing its income or taxable income for the taxation year under the laws of the other provinces, and

“C” is the amount, if any, that the corporation deducted or claimed under the provision for the taxation year before the application of this subsection. 1998, c. 34, s. 27 (1); 1999, c. 9, s. 73 (1); 2004, c. 16, s. 2 (2).

Exception

(1.1)  Subsection (1) does not apply if the corporation deducted or claimed the amount, or failed to deduct or claim the amount, primarily for purposes other than a reduction in the total amount of income tax payable to one or more provinces over the course of one or more taxation years. 1999, c. 9, s. 73 (2); 2004, c. 16, s. 2 (2).

Same

(2)  Subsection (1) does not apply to a corporation for a taxation year unless the following conditions are satisfied:

1. The corporation’s Ontario allocation factor for a subsequent taxation year, within the meaning of subsection 12 (1), is at least 20 per cent greater than the corporation’s Ontario allocation factor for the taxation year.

2. The amount that would be the corporation’s income or taxable income for the taxation year, determined under this Act before the deduction of any amount deemed by subsection (1) to be deducted or claimed under the provision referred to in that subsection, is greater than the corporation’s income or taxable income, as the case may be, for the taxation year determined under the law of a province other than Ontario because the corporation deducted or claimed a greater amount in determining its income or taxable income under the corresponding provision of the law of the other province.

3. The total amount of all income tax that would be payable by the corporation to one or more provinces for all taxation years commencing with the taxation year and ending with the subsequent taxation year, determined before the deduction of any amount deemed to be claimed or deducted under subsection (1) for the taxation year, is less than the total amount of provincial income tax that would be payable by the corporation for those taxation years, determined after the deduction of the amount deemed to be claimed or deducted under subsection (1) and after all consequential adjustments are made to the corporation’s income and taxable income for those taxation years that would be required by reason of the increase required by subsection (1) in the total amount deducted or claimed under the provision for the taxation year. 1998, c. 34, s. 27 (1); 2004, c. 16, s. 2 (2).

Limitation

(3)  The maximum amount that a corporation is deemed to deduct or claim for a taxation year by virtue of subsection (1) under the provisions of this Act, or of the Income Tax Act (Canada) as they apply for the purposes of this Act, shall not exceed the amount that would be the corporation’s taxable income for the taxation year under this Act before any amount is deemed to be deducted or claimed under this section for the taxation year. 1998, c. 34, s. 27 (1); 2004, c. 16, s. 2 (2).

Partnerships

(4)  If a corporation is a member of a partnership during a taxation year, subsections (1), (2) and (3) apply with necessary modifications in determining the corporation’s share of the income or loss of the partnership for a fiscal period ending in the taxation year. 1998, c. 34, s. 27 (1); 2004, c. 16, s. 2 (2).

Amalgamation and winding-up

(5)  For the purposes of this section,

(a) a corporation that is formed as a result of an amalgamation or merger of two or more corporations shall be deemed to be the same corporation as, and a continuation of, each of the corporations that amalgamated or merged; and

(b) a corporation that is a parent for the purposes of subsection 88 (1) of the Income Tax Act (Canada), or would be a parent if it were a taxable Canadian corporation, shall be deemed to be the same corporation as, and a continuation of, each corporation that, if it were a taxable Canadian corporation, would be described as a subsidiary in that subsection, after the winding-up of the subsidiary. 1999, c. 9, s. 73 (3); 2004, c. 16, s. 2 (2).

Same

(6)  Subsection (5) applies in respect of amalgamations, mergers and windings-up of corporations during a taxation year that begins on or after the day that subsection comes into force. 1999, c. 9, s. 73 (3); 2004, c. 16, s. 2 (2).

Tax avoidance, special reserves

Definition

5.3  (1)  In this section,

“specified reserve” means, in relation to a corporation, an amount claimed as a deduction in determining income under Part II under any of the following provisions of the Income Tax Act (Canada) as they apply for the purposes of Part II, or under the comparable provisions of the laws of a province that impose a tax calculated by reference to the corporation’s income:

1. Paragraphs 20 (1) (l), (l.1), (m), (m.1), (n) and (o).

2. Subsection 26 (2).

3. Subsection 32 (1).

4. Clauses 40 (1) (a) (iii) (C) and (D).

5. Subparagraphs 138 (3) (a) (i), (ii) and (iv).

6. Such other provisions as may be prescribed by regulation. 1999, c. 9, s. 74; 2004, c. 16, s. 2 (2).

Anti-avoidance, provincial tax

(2)  The amount of a specified reserve claimed by a corporation in determining its income under Part II for a taxation year shall be deemed to be the amount determined under subsection (4) if the conditions set out in subsection (3) are satisfied. 1999, c. 9, s. 74; 2004, c. 16, s. 2 (2).

When applicable

(3)  Subsection (2) applies to a corporation for a taxation year if the following conditions are satisfied:

1. The amount of the specified reserve claimed by the corporation is greater than the amount of the specified reserve that it claims for the purposes of determining its income under the laws of another province that impose a similar tax calculated by reference to the corporation’s income or for the purposes of determining the amount of its income under the Income Tax Act (Canada), or the corporation does not claim any amount in respect of the specified reserve in determining its income for the purposes of the income tax laws of another province or under the Income Tax Act (Canada).

2. The corporation’s Ontario allocation factor, as defined in subsection 12 (1), for a subsequent taxation year is at least 20 per cent less than its Ontario allocation factor for the taxation year, or would be at least 20 per cent less if the corporation had tax payable under Part II for the taxation year and subsequent taxation years.

3. It is reasonable to consider that the primary reason that the corporation is claiming different amounts of the specified reserve is to reduce the amount of income taxes payable to one or more provinces over the course of one or more taxation years.

4. The total amount of income tax payable by the corporation under this Act and under the income tax laws of other provinces for the period that includes the taxation year and subsequent taxation years would be less if subsection (2) did not apply. 1999, c. 9, s. 74; 2004, c. 16, s. 2 (2).

Amount deemed to be claimed

(4)  If subsection (2) applies to a corporation for a taxation year in respect of a specified reserve claimed by the corporation, the amount the corporation is deemed to have claimed for the taxation year is the lesser of,

(a) the least of the amounts claimed by the corporation as the specified reserve for the same taxation year in determining the amount of its income for the purposes of the income tax laws of another province or under the Income Tax Act (Canada); or

(b) nil, if no specified reserve is claimed by the corporation for the taxation year in determining the amount of its income for the purposes of the income tax laws of another province or under the Income Tax Act (Canada). 1999, c. 9, s. 74; 2004, c. 16, s. 2 (2).

Partnerships

(5)  If a corporation is a member of a partnership during a taxation year, subsections (1), (2), (3) and (4) apply with necessary modifications in determining the corporation’s share of the income or loss of the partnership for a fiscal period ending in the taxation year. 1999, c. 9, s. 74; 2004, c. 16, s. 2 (2).

Amalgamation and winding-up

(6)  For the purposes of this section,

(a) a corporation that is formed as a result of an amalgamation or merger of two or more corporations shall be deemed to be the same corporation as, and a continuation of, each of the corporations that amalgamated or merged; and

(b) a corporation that is a parent for the purposes of subsection 88 (1) of the Income Tax Act (Canada), or would be a parent if it were a taxable Canadian corporation, shall be deemed to be the same corporation as, and a continuation of, each corporation that, if it were a taxable Canadian corporation, would be described as a subsidiary in that subsection, after the winding-up of the subsidiary. 1999, c. 9, s. 74; 2004, c. 16, s. 2 (2).

Application

(7)  This section applies with respect to a corporation’s taxation years that end on or after the day this section comes into force. 1999, c. 9, s. 74; 2004, c. 16, s. 2 (2).

Transfer pricing

5.4  The provisions of Part XVI.1 of the Income Tax Act (Canada) apply in determining an amount that would be determined for the purposes of this Act, but for this section and section 5, in respect of a corporation for a taxation year commencing after December 31, 1997, with the following exceptions:

1. The reference to a person’s “filing-due date” for a taxation year in the definition of “documentation-due date” in subsection 247 (1) of the Income Tax Act (Canada) shall be read as a reference to the date on which the person is required to deliver a return under section 75 of this Act for the taxation year.

2. The reference to subsection 245 (1) of the Income Tax Act (Canada) in the definition of “tax benefit” in subsection 247 (1) of that Act shall be read as a reference to subsection 5 (1) of this Act.

3. The reference to section 245 of the Income Tax Act (Canada) in subsection 247 (2) of that Act shall be read as a reference to section 5 of this Act.

4. Subsections 76 (1), (2), (6), (8) and (9), sections 80, 81, 82, 84 and 107 and Division F of Part V of this Act apply instead of sections 152, 158, 159, 162 to 167 and Division J of Part I of the Income Tax Act (Canada).

5. Subsection 247 (3) of the Income Tax Act (Canada) does not apply. 2001, c. 23, s. 21; 2004, c. 16, s. 2 (2); 2005, c. 31, Sched. 5, s. 3.

PART II
INCOME TAX

Division A — Liability for Income Tax

Income tax

6.  (1)  Except as otherwise provided in this Part, every corporation liable to the taxes imposed under this Act by virtue of subsection 2 (1) shall, for every taxation year of the corporation, pay an income tax as hereinafter required upon its taxable income. R.S.O. 1990, c. C.40, s. 6 (1); 2004, c. 16, s. 2 (2).

Idem

(2)  Except as otherwise provided in this Part, every corporation liable to the taxes imposed under this Act by virtue of subsection 2 (2) shall, for every taxation year of the corporation, pay an income tax as hereinafter required upon its taxable income earned in Canada. R.S.O. 1990, c. C.40, s. 6 (2); 2004, c. 16, s. 2 (2).

Taxable income

7.  The taxable income of a corporation for a taxation year is its income for the taxation year plus the additions required by Division C and less the deductions permitted by Division C. R.S.O. 1990, c. C.40, s. 7; 2004, c. 16, s. 2 (2).

Taxable income earned in Canada

8.  The taxable income earned in Canada of a corporation for a taxation year is its taxable income earned in Canada determined under Division D. R.S.O. 1990, c. C.40, s. 8; 2004, c. 16, s. 2 (2).

Division B — Computation of Income

basic rules

Basic rules, Income Tax Act (Canada), s. 3, applicable

9.  (1)  Except as hereinafter provided, section 3 of the Income Tax Act (Canada) is applicable for the purposes of this Act in so far as the said section applies to corporations. R.S.O. 1990, c. C.40, s. 9 (1); 2004, c. 16, s. 2 (2).

Interpretation

(2)  In the application of the said section 3 for the purposes of this Act, the reference in paragraph (c) thereof to “subdivision e” shall be deemed to be a reference to Subdivision D of Division B of Part II of this Act, and the reference in the said section to “this Part” shall be deemed to be a reference to Part II of this Act. R.S.O. 1990, c. C.40, s. 9 (2); 2004, c. 16, s. 2 (2).

Losses deemed deducted, deductible or claimed

(3)  Subject to subsection 11 (3), for the purpose of computing the income and taxable income of a corporation for a taxation year, any amount deducted, deductible or claimed by the corporation under a provision of the Income Tax Act (Canada) in computing its income or taxable income, as the case may be, for a previous taxation year in respect of which the corporation was not subject to tax imposed by Part II of this Act shall be deemed, unless otherwise provided in Part II, to have been deducted, deductible or claimed, as the case may be, under the corresponding provision of this Act in computing the income or taxable income of the corporation, as the case may be, for that previous taxation year. 1994, c. 14, s. 3 (1); 2004, c. 16, s. 2 (2).

Same

(4)  Despite subsections 111 (1) and (3) of the Income Tax Act (Canada), as made applicable by section 34 of this Act, in the application of subsection (3), where a corporation has deducted or claimed an amount in respect of a net capital loss, non-capital loss, restricted farm loss or farm loss, determined for a particular taxation year (in this subsection referred to as the “loss year”), in computing its taxable income for another taxation year, the total of such losses determined for the loss year and subsequent taxation years shall be deemed to be amounts deducted or claimed, as the case may be, under the provisions of the Income Tax Act (Canada) in computing the taxable income of the corporation for previous taxation years in respect of which the corporation was not subject to tax under Part II of this Act, to the extent of the total of such losses deducted or claimed in computing taxable income of the corporation for the purposes of the Income Tax Act (Canada) for such previous taxation years; if the total of such losses includes losses determined for more than one loss year, no loss for any year shall be deemed to have been deducted or claimed until all losses determined for previous loss years have been deducted or claimed or deemed to have been deducted or claimed. 1994, c. 14, s. 3 (1); 2004, c. 16, s. 2 (2).

Income or loss from a source or from sources in a place

10.  (1)  Except as hereinafter provided, section 4 of the Income Tax Act (Canada) is applicable for the purposes of this Act in so far as the said section applies to corporations. R.S.O. 1990, c. C.40, s. 10 (1); 2004, c. 16, s. 2 (2).

Interpretation

(2)  In the application of the said section 4 for the purposes of this Act, the references therein to “this Part” shall be deemed to be references to Part II of this Act. R.S.O. 1990, c. C.40, s. 10 (2); 2004, c. 16, s. 2 (2).

Subdivision A — Income or Loss from a Business or Property

Application of Income Tax Act (Canada)

11.  (1)  Except as hereinafter provided, the income or loss of a corporation for a taxation year from a business or property shall for the purposes of this Act be determined in accordance with subdivisions a and b of Division B of Part I of the Income Tax Act (Canada) and the said subdivisions a and b are applicable to this Act in so far as the said subdivisions apply to corporations. R.S.O. 1990, c. C.40, s. 11 (1); 2004, c. 16, s. 2 (2).

Inventory

(2)  In the application of section 10 of the Income Tax Act (Canada) for the purposes of this Act, the amount determined by a corporation for the purposes of that Act as the value of property described in an inventory shall apply for the purposes of this Act, except that if the Minister is of the opinion that the value has been incorrectly determined by the corporation, the Minister may determine the value under section 10 of that Act for the purposes of this Act. R.S.O. 1990, c. C.40, s. 11 (2); 2004, c. 16, s. 2 (2).

Application of Income Tax Act (Canada), s. 10 (2.1)

(2.1)  In the application of subsection 10 (2.1) of the Income Tax Act (Canada) for the purposes of this Act, the references to “the Minister” shall be read as references to the Minister of National Revenue. 1994, c. 14, s. 4 (1); 2004, c. 16, s. 2 (2).

Disposition of depreciable property:

(3)  In the application of section 13 of the Income Tax Act (Canada) for the purposes of this Act, the following rules apply,

Undepreciated capital cost

(a) subsection 13 (10) and element H in the formula in the definition of “undepreciated capital cost” in subsection 13 (21) are not applicable in determining the capital cost or the undepreciated capital cost of depreciable property of a prescribed class for the purposes of this Act and the regulations;

Application of Income Tax Act (Canada), s. 13 (7.1)

(b) the reference in subsection (7.1) of the said section 13 to “section 65” shall be deemed to be a reference to the said section 65 and to section 17 of this Act. R.S.O. 1990, c. C.40, s. 11 (3); 1996, c. 29, s. 37 (1); 2004, c. 16, s. 2 (2).

Loan to non-resident person

(4)  In the application of section 17 of the Income Tax Act (Canada) for the purposes of this Act, subsection (7) thereof does not apply in determining whether an amount shall be included in the income of a corporation in accordance with subsection (1) thereof. R.S.O. 1990, c. C.40, s. 11 (4); 1999, c. 9, s. 75 (1); 2004, c. 16, s. 2 (2).

Add-back of certain amounts paid to non-residents

(5)  Every corporation shall include in its income from a business or property for a taxation year the amount calculated using the formula,

A × B

in which,

“A” is the designated fraction of the corporation for the taxation year, as determined under subsection (8.1), and

“B” is the total of the amounts described in subsection (5.1) deducted by the corporation in computing its income for the taxation year, each of which is paid or payable to,

(a) a non-resident person who, at any time in the corporation’s taxation year, did not deal at arm’s length with the corporation, or

(b) a non-resident owned investment corporation which, at any time in the corporation’s taxation year, did not deal at arm’s length with the corporation.

2000, c. 10, s. 1 (1); 2004, c. 16, s. 2 (2).

Payments

(5.1)  The following amounts are described in this subsection for the purposes of subsection (5):

1. All management or administration fees and charges, including fees and charges calculated by reference to the sale of goods or services, production or profits, but not including,

i. any amount that is not included in the amount determined under subsection 212 (4) of the Income Tax Act (Canada), or

ii. if the management or administration fee or charge is calculated on the basis of cost plus a mark-up, the portion of that fee or charge equal to the total of specific expenses incurred by the non-resident person in the performance of the service for the benefit of the corporation.

2. All rents, royalties and similar payments other than amounts,

i. that would not be included in the amount determined under paragraph 212 (1) (d) of the Income Tax Act (Canada), or

ii. that are for the use, or for the right to use in Canada, of computer software or a patent or information concerning industrial, commercial or scientific experience, or a design or model, plan, secret formula or process.

3. Amounts in consideration for a right in or for the use of,

i. a motion picture film,

ii. a film or video tape for use in connection with television, other than solely in connection with and as part of a news program produced in Canada, or

iii. any other means of reproduction for use in connection with television, other than solely in connection with and as part of a news program produced in Canada. 1998, c. 34, s. 28 (1); 1999, c. 9, s. 75 (3); 2004, c. 16, s. 2 (2).

Exclusions from amount

(5.2)  Despite subsection (5.1), the following amounts shall not be included in the amounts described in that subsection:

1. An amount that would otherwise be included in an amount described in subsection (5.1) that is paid or payable to a person for the benefit of a third person who is a non-resident person entitled to the payment if,

i. the third person deals at arm’s length with the corporation, and

ii. the amount is subsequently paid or payable to the third person.

2. An amount paid or payable to a non-resident person who is subject to tax under this Part or under Part I of the Income Tax Act (Canada), if the amount is included in computing the non-resident person’s taxable income earned in Canada. 1998, c. 34, s. 28 (1); 2004, c. 16, s. 2 (2).

Interpretation

(5.3)  For the purposes of subsection (5.1), a specific expense of a person is an explicit and identifiable expense that is paid or payable and is incurred directly by the person to provide for either the use of property by the corporation making the payment or to obtain goods or services for the benefit of the corporation making the payment. 1998, c. 34, s. 28 (1); 2004, c. 16, s. 2 (2).

Adjustment for unpaid amounts

(5.4)  In computing its income for a taxation year, a corporation may deduct the amount calculated using the formula,

A × B

in which,

“A” is the designated fraction of the corporation for the taxation year, as determined under subsection (8.1), and

“B” is any amount required to be included in the corporation’s income for the taxation year under section 78 of the Income Tax Act (Canada), if the amount is included in the calculation of an amount included in the corporation’s taxable income under subsection (5) or (6) for the taxation year or a prior taxation year.

2000, c. 10, s. 1 (2); 2004, c. 16, s. 2 (2).

Certain payments to non-resident persons

(6)  Subsection (6.1) applies,

(a) if an amount to which subsection (5) would have applied in a taxation year if it had been paid or payable to a non-resident person is paid or payable by a corporation (the “payer”) to a related person (the “payee”) resident in Canada but not in Ontario; and

(b) if the payee is related to another person not resident in Canada that controls the payer. 2000, c. 10, s. 1 (3); 2004, c. 16, s. 2 (2).

Same

(6.1)  In the circumstances described in subsection (6), the corporation that is the payer shall include in computing its income from a business or property for the taxation year the amount calculated using the formula,

A × B

in which,

“A” is the designated fraction of the corporation that is the payer, as determined under subsection (8.1), and

“B” is the amount referred to in subsection (6) for the taxation year.

2000, c. 10, s. 1 (3); 2004, c. 16, s. 2 (2).

Partnerships

(7)  For the purposes of subsections (5), (5.1), (5.2), (5.4) and (6), if an amount is payable to a partnership, or by a partnership to a non-resident person, a non-resident owned investment corporation or another partnership, the following rules apply:

1. If the amount is paid or payable to a partnership, the amount shall be deemed to be paid or payable to each member of the partnership to the extent of that member’s profit entitlement in the partnership.

2. If the amount is paid or payable by a partnership, the amount shall be deemed to be paid or payable by each member of the partnership to the extent of the member’s profit entitlement in the partnership.

3. A person who is a member of a partnership that is a member of a second partnership is deemed to be a member of the second partnership entitled to a pro rata share of the income or loss of the second partnership that is reasonable in the circumstances.

4. The profit entitlement of a person as a member of a partnership is the person’s proportionate share of the income or loss of the partnership to which the person is entitled under the partnership agreement, under paragraph 3 or at law. 1998, c. 34, s. 28 (2); 2004, c. 16, s. 2 (2).

Application of subs. (5)

(8)  Where it is reasonable for the Minister to believe that one of the principal purposes of the provisions of a contract or arrangement between two or more persons is to avoid the application of subsection (5) to an amount paid or payable to which it would otherwise apply, subsection (5) shall, except where subsection (6) applies, apply to that portion of the amount which the Minister considers reasonable in the circumstances. R.S.O. 1990, c. C.40, s. 11 (8); 2004, c. 16, s. 2 (2).

Designated fraction of a corporation

(8.1)  The designated fraction of a corporation for a taxation year is the total of,

(a) 5/15.5 multiplied by the ratio of the number of days in the taxation year before May 2, 2000 to the total number of days in the taxation year;

(b) 5/14.5 multiplied by the ratio of the number of days in the taxation year after May 1, 2000 and before January 1, 2001 to the total number of days in the taxation year;

(c) 5/14 multiplied by the ratio of the number of days in the taxation year that are after December 31, 2000 and before October 1, 2001 to the total number of days in the taxation year;

(d) 5/12.5 multiplied by the ratio of the number of days in the taxation year that are after September 30, 2001 and before January 1, 2004 to the total number of days in the taxation year;

(e) 5/14 multiplied by the ratio of the number of days in the taxation year that are after December 31, 2003 to the total number of days in the taxation year.

(f) Repealed: 2003, c. 7, s. 1.

(g) Repealed: 2003, c. 7, s. 1.

2000, c. 10, s. 1 (4); 2001, c. 8, s. 19 (1); 2001, c. 23, s. 22 (1-3); 2002, c. 22, s. 38; 2003, c. 7, s. 1; 2004, c. 16, s. 2 (2).

Loans or lending assets

(9)  In the application of paragraph 18 (1) (s) of the Income Tax Act (Canada) for the purposes of this Act, the reference therein to “this Part” shall be read as a reference to Part II of this Act. R.S.O. 1990, c. C.40, s. 11 (9); 2004, c. 16, s. 2 (2).

Deductions allowed

(10)  Paragraphs 20 (1) (a) and (v.1) of the Income Tax Act (Canada) are not applicable in computing the income of a corporation for a taxation year from a business or property for the purposes of this Act, and in lieu thereof there may be deducted such of the following amounts as are applicable:

Capital cost of property

(a) such part of the capital cost to the corporation of property, or such amount in respect of the capital cost to the corporation of property, as is allowed by regulation;

Resource allowance

(b) such amount as is allowed to the corporation by the regulations in respect of oil or gas resources in Canada or mineral resources in Canada. R.S.O. 1990, c. C.40, s. 11 (10); 2004, c. 16, s. 2 (2).

Deduction not allowed

(10.1)  If a corporation is entitled to claim a deduction under section 13.1 for a taxation year, no deduction may be claimed under paragraph 20 (1) (b) of the Income Tax Act (Canada), as it applies for the purposes of this Act, in respect of the same property or expenditure. 1997, c. 43, Sched. A, s. 5 (3); 2004, c. 16, s. 2 (2).

Deductions not allowed

(11)  In the application of paragraph 20 (1) (n) of the Income Tax Act (Canada) for the purposes of this Act,

No deduction in respect of property in certain circumstances

(a) despite subsection 20 (8) of the Income Tax Act (Canada), the said paragraph (n) does not apply to allow a deduction in computing the income of a corporation for a taxation year from a business in respect of a property sold in the course of the business if,

(i) the corporation at the end of the taxation year or at any time in the immediately following taxation year,

(A) was exempt from tax under any provision of this Part, or

(B) ceased to have a permanent establishment in Canada, or

(ii) the sale occurred more than thirty-six months before the end of the taxation year; and

No deduction in respect of sale of property if security disposed of

(b) the said paragraph (n) does not apply to allow a deduction in computing the income of a corporation for a taxation year from a business where the corporation has, in the taxation year, sold, pledged, assigned or in any way disposed of any security received by it as payment in whole or in part for the sale of property in respect of which the corporation has, in that or a previous taxation year, been allowed a deduction under that paragraph for the purposes of this Act. R.S.O. 1990, c. C.40, s. 11 (11); 2004, c. 16, s. 2 (2).

Foreign non-business income tax

(12)  For the purposes of this Act, subsection 20 (12) of the Income Tax Act (Canada) does not apply to allow a deduction in computing the income of a corporation for a taxation year except to the extent that the portion of the foreign non-business income tax paid by the corporation to which the subsection applies was not deducted pursuant to subsection 126 (1) of the Income Tax Act (Canada). R.S.O. 1990, c. C.40, s. 11 (12); 2004, c. 16, s. 2 (2).

Foreign non-business income tax

(12.1)  For the purposes of this Act, subsection 20 (12.1) of the Income Tax Act (Canada) does not apply to allow a deduction in computing the income of a corporation for a taxation year ending after December 31, 1997 except to the extent that the portion of the foreign non-business income tax paid by the corporation to which that subsection applies was not included in computing the corporation’s non-business income tax for any taxation year under subsection 126 (4.1) of that Act. 2004, c. 31, Sched. 9, s. 2.

Banks

(13)  In the application of section 26 of the Income Tax Act (Canada) for the purposes of this Act,

(a) despite paragraph 4 of subsection 1 (3.1), the amounts referred to in subparagraphs 26 (1) (c) (i) and 26 (2) (c) (i) of the Income Tax Act (Canada) shall be the amounts that were deductible under subsection 26 (2) of that Act in computing the income of the bank for the taxation years referred to in those subparagraphs for the purposes of that Act, and not the amounts that were deductible under subsection 26 (2) of that Act as that subsection applied for the purposes of this Act in computing the bank’s income for those years for the purposes of this Act;

(b) no amount shall be deducted under paragraph 26 (2) (a), (b), (c) or (e) of that Act, for the purpose of computing the income of a bank for a taxation year for the purposes of this Act, in excess of the amount deducted by the bank under that paragraph for the purposes of computing its income for the taxation year for the purposes of that Act, unless all amounts deductible by the bank under that paragraph have been deducted in computing its income for a previous taxation year or years for the purposes of that Act; and

(c) the reference to subsections 26 (1) and (2) of that Act in subsection 26 (4) of that Act shall be deemed not to be a reference to those subsections as they applied for the purposes of this Act under the predecessor of this subsection. R.S.O. 1990, c. C.40, s. 11 (13); 2004, c. 16, s. 2 (2); 2005, c. 28, Sched. D, s. 3 (1).

(14)  Repealed: 1996, c. 29, s. 37 (2).

Crown corporations

(15)  Section 27 of the Income Tax Act (Canada) is not applicable for the purposes of this Act and in lieu thereof the following provisions shall apply:

Prescription

1. Where a corporation referred to in paragraphs 149 (1) (d) to (d.6) of the Income Tax Act (Canada) is otherwise exempt under section 57 of this Act and subsection 71 (1) of this Act, such exemptions do not apply if the corporation is prescribed by regulation.

Transfers of land for disposition

2. Where land has been transferred to a corporation prescribed in the regulations for the purpose of disposition, the acquisition of the property by the corporation and any disposition thereof shall be deemed not to have been in the course of the business carried on by the corporation.

Application of par. 1 to controlled corporation

3. Where a corporation is prescribed pursuant to paragraph 1, paragraph 1 shall apply to any corporation controlled by such corporation. R.S.O. 1990, c. C.40, s. 11 (15); 1999, c. 9, s. 75 (5); 2004, c. 16, s. 2 (2).

Income Tax Act (Canada), s. 33.1 not applicable

(16)  Section 33.1 of the Income Tax Act (Canada) is not applicable in computing the income of a corporation for a taxation year for the purposes of this Act. R.S.O. 1990, c. C.40, s. 11 (16); 2004, c. 16, s. 2 (2).

Scientific research expenditures

(17)  In the application of paragraph 37 (1) (g) of the Income Tax Act (Canada) for the purposes of this Act,

(a) subsection 1 (3.1) of this Act does not apply; and

(b) the aggregate of the amounts determined under paragraph 37 (1) (g) of the Income Tax Act (Canada) applies for the purposes of the application of that paragraph under this Act. R.S.O. 1990, c. C.40, s. 11 (17); 2004, c. 16, s. 2 (2); 2005, c. 28, Sched. D, s. 3 (2).

Interest repayments

(18)  Paragraph 20 (1) (ll) of the Income Tax Act (Canada) is not applicable for the purposes of this Act and in lieu thereof there may be deducted the amount of interest paid by a corporation to the Receiver General of Canada or to the Treasurer or other government authority of a Province, to the extent that,

(a) the interest was previously received by, or applied to a liability of the corporation, in respect of an overpayment made on account of tax payable, pursuant to the provisions of an Act of the Parliament of Canada or the Legislature of a Province imposing a tax on the income or profits of the corporation;

(b) the interest was included in computing the income of the corporation from a business or property for the purposes of this Act; and

(c) the corporation was required to repay the interest as a result of a subsequent determination that the amount upon which the interest was calculated was not an overpayment of tax. R.S.O. 1990, c. C.40, s. 11 (18); 2004, c. 16, s. 2 (2).

Idem

(19)  Subsections 127.2 (8) and 127.3 (6) of the Income Tax Act (Canada) are applicable for the purposes of this Act in the determination of the cost of property other than capital property, including shares, debt obligations and rights, and in the determination of any amount to be included in the income of the corporation as a result of any adjustments to the cost of the property under this subsection. R.S.O. 1990, c. C.40, s. 11 (19); 2004, c. 16, s. 2 (2).

(20)  Repealed: 1996, c. 29, s. 37 (3).

(21)  Repealed: 1994, c. 14, s. 4 (2).

Interest and property tax transition rule

(22)  In the application of subsection 18 (2) of the Income Tax Act (Canada) for the purposes of this Act, subsection 10 (23) of the Statutes of Canada, 1988, chapter 55, as amended by subsection 132 (1) of the Statutes of Canada, 1994, chapter 21, as it applies for the purposes of the application of subsection 10 (6) of that Act (which repealed and re-enacted subsection 18 (2) of the Income Tax Act (Canada)), applies for the purposes of this Act. R.S.O. 1990, c. C.40, s. 11 (22); 1996, c. 29, s. 37 (4); 2004, c. 16, s. 2 (2).

Idem

(23)  In the application of subsections 18 (2.3) and (2.4) of the Income Tax Act (Canada) for the purposes of this Act, any reference therein to “the Minister” shall be read as a reference to the Minister of National Revenue. R.S.O. 1990, c. C.40, s. 11 (23); 2004, c. 16, s. 2 (2).

Income Tax Act (Canada), par. 18 (1) (t) not applicable

(24)  Paragraph 18 (1) (t) of the Income Tax Act (Canada) is not applicable for the purposes of this Act. 1992, c. 3, s. 2; 2004, c. 16, s. 2 (2).

Interpretation

(25)  In the application of subsection 12 (2.2) of the Income Tax Act (Canada) for the purposes of this Act, a reference in that subsection to an assessment or reassessment of tax, interest or penalties under section 152 of that Act shall be read as a reference to an assessment or reassessment under Part V of this Act. 1996, c. 29, s. 37 (5); 2004, c. 16, s. 2 (2).

Fuel tax rebates

(26)  The amount required to be included in the income of a corporation for a taxation year under paragraph 12 (1) (x.1) of the Income Tax Act (Canada) for the purposes of this Act shall be deemed to be the total of all amounts each of which is a fuel tax rebate received in the taxation year by the corporation under section 68.4 of the Excise Tax Act (Canada). 1997, c. 43, Sched. A, s. 5 (4); 2004, c. 16, s. 2 (2).

Life insurance companies, “SAT” not deductible

(27)  No deduction may be claimed by a corporation in computing its income for a taxation year in respect of any tax payable by the corporation under section 74.1. 1998, c. 34, s. 28 (4); 2004, c. 16, s. 2 (2).

(28)  Repealed: 2001, c. 23, s. 22 (4).

(29)  Repealed: 2001, c. 23, s. 22 (5).

Deductions, resource corporations

11.0.1  (1)  For taxation years ending after December 31, 2002, paragraphs 12 (1) (o), (x.2) and (z.5), 18 (1) (m) and 20 (1) (v) of the Income Tax Act (Canada) do not apply in computing the income of a corporation from a business or property for the purposes of this Act and the provisions of this section apply instead. 2004, c. 31, Sched. 9, s. 3.

Deduction not allowed

(2)  Despite paragraph 18 (1) (a) of the Income Tax Act (Canada), in computing the income of a corporation for taxation years ending after December 31, 2002 from a business or property, no deduction shall be made in respect of any tax on income levied by any province or territory in Canada for the year from mining operations other than a deduction prescribed by the regulations. 2004, c. 31, Sched. 9, s. 3.

Income amounts, royalties, etc.

(3)  There shall be included in computing the income of a corporation for a taxation year ending after December 31, 2002 as income from a business or property any amount, other than an amount prescribed by the regulations and an amount referred to in subsection (5),

(a) that became receivable in the year by,

(i) Her Majesty in right of Canada or of a province,

(ii) an agent of Her Majesty in right of Canada or of a province, or

(iii) a corporation, commission or association that is controlled by Her Majesty in right of Canada or of a province or by an agent of Her Majesty in right of Canada or of a province; and

(b) that can reasonably be considered to be a royalty, tax (other than a tax or portion of a tax that can reasonably be considered to be a municipal or school tax), lease rental or bonus, however described, or to be in respect of the late receipt or non-receipt of any of those amounts, in relation to,

(i) the acquisition, development or ownership of a Canadian resource property of the corporation, or

(ii) the production in Canada,

(A) of petroleum, natural gas or related hydrocarbons from a natural accumulation of petroleum or natural gas (other than a mineral resource) located in Canada, or from an oil or gas well located in Canada, in respect of which the corporation had an interest,

(B) of sulphur from a natural accumulation of petroleum or natural gas located in Canada, from an oil or gas well located in Canada or from a mineral resource located in Canada, in respect of which the corporation had an interest,

(C) to any stage that is not beyond the prime metal stage or its equivalent, of metal, minerals (other than iron or petroleum or related hydrocarbons) or coal from a mineral resource located in Canada in respect of which the corporation had an interest,

(D) to any stage that is not beyond the pellet stage or its equivalent, of iron from a mineral resource located in Canada in respect of which the corporation had an interest, or

(E) to any stage that is not beyond the crude oil stage or its equivalent, of petroleum or related hydrocarbons from a deposit located in Canada of bituminous sands or oil shales in respect of which the corporation had an interest. 2004, c. 31, Sched. 9, s. 3.

Same

(4)  There shall be included in computing the income of a corporation for a taxation year ending after December 31, 2002 as income from a business or property 25 per cent of the corporation’s prescribed resource loss for the year. 2004, c. 31, Sched. 9, s. 3.

Royalties

(5)  In computing the income of a corporation from a business or property for a taxation year ending after December 31, 2002, no deduction shall be made in respect of any amount, other than an amount prescribed by the regulations,

(a) that is paid or payable in the year to,

(i) Her Majesty in right of Canada or of a province,

(ii) an agent of Her Majesty in right of Canada or of a province, or

(iii) a corporation, a commission or an association that is controlled by Her Majesty in right of Canada or of a province or by an agent of Her Majesty in right of Canada or of a province; and

(b) that can reasonably be considered to be a royalty, tax (other than a tax or portion of a tax that can reasonably be considered to be a municipal or school tax), lease rental or bonus, however described, or to be in respect of the late payment or non-payment of any of those amounts, in relation to,

(i) the acquisition, development or ownership of a Canadian resource property, or

(ii) the production in Canada,

(A) of petroleum, natural gas or related hydrocarbons from a natural accumulation of petroleum or natural gas (other than a mineral resource) located in Canada, or from an oil or gas well located in Canada,

(B) of sulphur from a natural accumulation of petroleum or natural gas located in Canada, from an oil or gas well located in Canada or from a mineral resource located in Canada,

(C) to any stage that is not beyond the prime metal stage or its equivalent, of metal, minerals (other than iron or petroleum or related hydrocarbons) or coal from a mineral resource located in Canada,

(D) to any stage that is not beyond the pellet stage or its equivalent, of iron from a mineral resource located in Canada, or

(E) to any stage that is not beyond the crude oil stage or its equivalent, of petroleum or related hydrocarbons from a deposit located in Canada of bituminous sands or oil shales. 2004, c. 31, Sched. 9, s. 3.

Ontario new technology tax incentive gross-up recapture

11.1  (1)  A corporation shall include in its income for a taxation year the total of all amounts, if any, each of which is the amount determined under subsection (2) of the corporation’s Ontario new technology tax incentive gross-up recapture in respect of a depreciable property of a prescribed class if an amount in respect of the depreciable property is required, under section 13 of the Income Tax Act (Canada), as made applicable by section 11, to be included in computing the corporation’s income for the taxation year or the income of a partnership, of which the corporation is a member at the end of the taxation year, for a fiscal period ending in the taxation year. 1997, c. 43, Sched. A, s. 6; 2004, c. 16, s. 2 (2).

Amount of recapture

(2)  The amount of a corporation’s Ontario new technology tax incentive gross-up recapture in respect of a depreciable property of a prescribed class is the amount determined in accordance with the following formula:

A = B/C – B

where,

“A” is the amount of the corporation’s Ontario new technology tax incentive gross-up recapture in respect of the depreciable property;

“B” is the amount,

(a) included under section 13 of the Income Tax Act (Canada), as made applicable by section 11, in computing the corporation’s income for the taxation year in respect of the depreciable property, or

(b) included under section 13 of the Income Tax Act (Canada), as made applicable by section 11, in the income of the partnership for the fiscal period ending in the corporation’s taxation year, multiplied by the percentage of the partnership’s income or loss for the fiscal period to which the corporation is entitled or would be entitled if the partnership had had an income or loss for the fiscal period; and

“C” is the fraction that is the corporation’s allocation factor for the taxation year that would be determined for the purposes of subsection 13.1 (1).

1997, c. 43, Sched. A, s. 6; 2004, c. 16, s. 2 (2).

(3)  Repealed: 1998, c. 5, s. 6.

Rules, Federal investment tax credit for scientific research and experimental development

Definitions

11.2  (1)  In this section,

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

“investment tax credit amount” means, in respect of a corporation for a taxation year, an amount deducted by the corporation for a prior taxation year under subsection 127 (5) or (6) of the Federal Act; (“crédit d’impôt à l’investissement”)

“Ontario allocation factor” has the meaning given to that expression by subsection 12 (1); (“coefficient de répartition de l’Ontario”)

“qualified Ontario SR & ED expenditure” means,

(a) a qualified expenditure within the meaning of subsection 12 (1) that is made or incurred by a corporation in a specified taxation year or in the taxation year immediately preceding the first specified taxation year of the corporation, or

(b) an expenditure made or incurred by a partnership in a fiscal period that ends in a specified taxation year of a corporation if,

(i) the corporation is a member of the partnership at any time in the specified taxation year, and

(ii) the expenditure would be a qualified expenditure within the meaning of subsection 12 (1) if it were made by a corporation; (“dépense admissible de recherche et de développement en Ontario”)

“specified taxation year” means, in respect of a corporation, a taxation year of the corporation that commences after February 29, 2000 and ends before January 1, 2009. (“année d’imposition déterminée”) 2001, c. 23, s. 23; 2004, c. 16, s. 2 (2); 2007, c. 11, Sched. B, s. 2 (4).

Exception, specified taxation year

(2)  Despite the definition of “specified taxation year” in subsection (1), a corporation’s first specified taxation year for the purposes of this section is its first taxation year commencing after December 31, 2000, if its first taxation year that commences after February 29, 2000 ends before January 1, 2001. 2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Rule, deduction under s. 37 (1) of the Federal Act

(3)  If a corporation includes, under paragraph 37 (1) (e) of the Federal Act, an investment tax credit amount in determining the amount otherwise deductible under this Act for a specified taxation year, the corporation may increase the amount of its deduction for the specified taxation year under subsection 37 (1) of the Federal Act, as it applies for the purposes of this Act, by the amount calculated using the formula,

A/B

in which,

“A” is the part of that investment tax credit amount that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the corporation, and

“B” is the Ontario allocation factor of the corporation for the year.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Rule, capital cost

(4)  If a corporation includes an investment tax credit amount in a specified taxation year under paragraph 13 (7.1) (e) of the Federal Act in determining the capital cost to the corporation of depreciable property for the purposes of this Act, the corporation may add, in determining the capital cost of the property, despite subsection 13 (7.1) of the Federal Act as it applies for the purposes of this Act, the amount calculated using the formula,

C/B

in which,

“C” is the part of that investment tax credit amount that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the corporation, and

“B” is the Ontario allocation factor of the corporation for the year.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Rule, undepreciated capital cost

(5)  If a corporation includes an investment tax credit amount in a specified taxation year in determining the amount of the variable “I” in the formula in the definition of “undepreciated capital cost” in subsection 13 (21) of the Federal Act in calculating the amount of the undepreciated capital cost to the corporation of depreciable property, the corporation may add, in determining the amount of the undepreciated capital cost for the purposes of this Act, the amount calculated using the formula,

D/B

in which,

“D” is the part of that investment tax credit amount that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the corporation, and

“B” is the Ontario allocation factor of the corporation for the year.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Rule, adjusted cost base of partnership interest

(6)  If a corporation includes an investment tax credit amount in a specified taxation year under subparagraph 53 (2) (c) (vi) of the Federal Act in computing the adjusted cost base to the corporation of property that is an interest in a partnership, the corporation may add, in determining the adjusted cost base of the property for the purposes of this Act, the amount calculated using the formula,

E/B

in which,

“E” is the part of that investment tax credit amount that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the partnership, and

“B” is the Ontario allocation factor of the corporation for the year.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Same

(7)  If a corporation includes an investment tax credit amount in a specified taxation year under subparagraph 53 (1) (e) (xiii) of the Federal Act in computing the adjusted cost base to the corporation of property that is an interest in a partnership, the corporation shall deduct, in determining the adjusted cost base of the property for the purposes of this Act, the amount calculated using the formula,

F/B

in which,

“F” is the part of that investment tax credit amount that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the partnership, and

“B” is the Ontario allocation factor of the corporation for the year.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Rule, inclusion in income

(8)  If a corporation includes an investment tax credit amount under paragraph 37 (1) (c.2) of the Federal Act in determining the amount of a deduction under subsection 37 (1) of that Act for a specified taxation year and the amount can reasonably be considered to relate to qualified Ontario SR & ED expenditures to acquire a property that were made or incurred by the corporation and were previously subject to the application of subsection (4) because the expenditures are related to an amount included under paragraph 37 (1) (b) of that Act in a deduction under subsection 37 (1) of that Act for a prior taxation year, the corporation shall include, in computing its income for the purposes of this Act for the specified taxation year, an amount calculated using the formula,

G/B

in which,

“G” is the part of that investment tax credit amount that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the corporation, and

“B” is the Ontario allocation factor of the corporation for the year in which the property was last acquired by the corporation.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Exception

(9)  If the corporation is not subject to any of the rules set out in subsections (3) to (7) for a specified taxation year and includes an investment tax credit amount in computing its income for the purposes of this Act for the year, the corporation may deduct, in computing its income for the year, the amount calculated using the formula,

G/B

in which,

“G” is the part of that investment tax credit amount that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the corporation, and

“B” is the Ontario allocation factor of the corporation for the year.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Partnerships

(10)  If a corporation is a member of a partnership in a specified taxation year and adds an amount under subsection 127 (8) of the Federal Act in computing the amount the corporation may deduct under subsection 127 (5) or (6) of the Federal Act for the year, the corporation may deduct, in computing its income for the year, the amount calculated using the formula,

H/B

in which,

“H” is the portion of the amount, if any, included under subsection 127 (8) of the Federal Act in computing the amount of the deduction under subsection 127 (5) or (6) of the Federal Act that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the partnership, and

“B” is the Ontario allocation factor of the corporation for the year.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Same

(11)  If a partnership includes an amount under paragraph 37 (1) (c.3) of the Federal Act in determining the amount of a deduction under subsection 37 (1) of that Act for a fiscal period, and the amount is in respect of qualified Ontario SR & ED expenditures made or incurred by the partnership to acquire a property, a corporation that is a member of the partnership and that previously claimed a deduction under subsection (10) in respect of the expenditures shall include in computing its income for the specified taxation year in which the partnership’s fiscal period ends, an amount calculated using the formula,

J/B

in which,

“J” is the corporation’s proportionate share, based on its share of the income or loss of the partnership, of the amount included under paragraph 37 (1) (c.3) of the Federal Act by the partnership that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the partnership in respect of which the corporation claimed the deduction under subsection (10), and

“B” is the Ontario allocation factor of the corporation for the specified taxation year in which the fiscal period of the partnership ends during which the property was last acquired by the partnership.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Same

(12)  If a partnership includes an amount previously allocated under subsection 127 (8) of the Federal Act in computing its income for the purposes of this Act for a fiscal period and the amount can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the partnership, a corporation that is a member of the partnership shall, if subsection (10) does not apply, deduct an amount in computing its income for the specified taxation year in which the partnership’s fiscal period ends that is calculated using the formula,

K/B

in which,

“K” is the corporation’s proportionate share, based on its share of the income or loss of the partnership, of the amount allocated under subsection 127 (8) of the Federal Act that is included in the partnership’s income for the purposes of this Act that can reasonably be considered to relate to qualified Ontario SR & ED expenditures made or incurred by the partnership, and

“B” is the Ontario allocation factor of the corporation for the specified taxation year.

2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Same

(13)  Subsection 127 (13) of the Federal Act does not apply for the purposes of this section in respect of qualified Ontario SR & ED expenditures made or incurred by a partnership. 2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Effect of transfer

(13.1)  For the purposes of this section, if a qualified Ontario SR & ED expenditure made or incurred by a corporation in a specified taxation year or in the taxation year preceding the first specified taxation year of a corporation is transferred to another corporation pursuant to subsection 127 (13) of the Federal Act, the amount transferred,

(a) is deemed not to be a qualified Ontario SR & ED expenditure made or incurred by the transferor; and

(b) is deemed to be a qualified Ontario SR & ED expenditure made or incurred by the other corporation in the other corporation’s first taxation year that ends after the specified taxation year or that preceding year, as the case may be. 2007, c. 7, Sched. 6, s. 1.

Application of subs. (13.1)

(13.2)  Subsection (13.1) applies in respect of a qualified Ontario SR & ED expenditure made or incurred by a corporation before or after subsection (13.1) comes into force. 2007, c. 7, Sched. 6, s. 1.

Prescribed rules

(14)  The corporation is subject to such rules as may be prescribed by the regulations instead of or in addition to the rules set out in subsections (3) to (12) for the purposes of determining the amount of its income for a specified taxation year or the amount of the capital cost, undepreciated capital cost or adjusted cost basis of its property. 2001, c. 23, s. 23; 2004, c. 16, s. 2 (2).

Research and development super allowance

Definitions

12.  (1)  In this section,

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

“base period”, of a corporation for a particular taxation year, means the three previous taxation years of the corporation or, where the corporation has had fewer than three previous taxation years, the period commencing on the first day of its first taxation year and ending immediately before the particular taxation year, except that,

(a) if the corporation is an amalgamated corporation that, after the amalgamation, has had fewer than three taxation years ending before the particular taxation year, the base period,

(i) shall commence on the earliest day within the thirty-six-month period immediately before the particular taxation year on which a taxation year of a predecessor corporation commenced, and

(ii) shall end immediately before the particular taxation year, or

(b) if the corporation was a parent corporation in a winding-up to which subsection 88 (1) of the Income Tax Act (Canada) applied and has had fewer than three taxation years ending before the particular taxation year, the base period,

(i) shall commence on the earliest day within the thirty-six-month period immediately before the particular taxation year on which a taxation year of the parent corporation or of a subsidiary corporation commenced, and

(ii) shall end immediately before the particular taxation year; (“période de base”)

“contract payment” has the meaning given to that expression by subsection 127 (9) of the Income Tax Act (Canada); (“paiement contractuel”)

“eligible qualified expenditure” means a qualified expenditure made after the 20th day of April, 1988; (“dépense admissible autorisée”)

“eligible research property” means research property acquired after the 20th day of April, 1988; (“bien servant à la recherche admissible”)

“expenditure base”, of a corporation for a particular taxation year, means the ratio of the number of days in the taxation year to the number of days in the corporation’s base period for the particular taxation year, multiplied by the amount if any by which the aggregate of,

(a) the total of,

(i) all qualified expenditures made by the corporation during taxation years commencing before January 1, 1996 that are in the base period, and

(ii) the aggregate of the corporation’s SR & ED qualified expenditure pool at the end of each taxation year commencing after December 31, 1995 that is in the base period, and

(b) all amounts paid by the corporation during the base period that may reasonably be considered to be repayments of amounts referred to in clause (d) received by the corporation before or during the base period,

exceeds the aggregate of,

(c) all amounts each of which was deducted by the corporation under subsection 127 (5) of the Income Tax Act (Canada) in determining the amount of tax payable for a taxation year if,

(i) the amount deducted is reasonably attributable to,

(A) a qualified expenditure made by the corporation during a taxation year commencing before January 1, 1996 that is in or before the base period, or

(B) an amount included in the corporation’s SR & ED qualified expenditure pool at the end of a taxation year commencing after December 31, 1995 that is in or before the base period, and

(ii) the amount deducted was included under paragraph 12 (1) (t) of that Act, as applicable for the purposes of this Act, in computing the corporation’s income for a taxation year ending in the base period or was first required to be included in an amount determined under paragraph 13 (7.1) (e), element I in the formula in the definition of “undepreciated capital cost” in subsection 13 (21) or paragraph 37 (1) (e) of that Act, as applicable for the purposes of this Act, for a taxation year ending in the base period, and

(d) all amounts received or receivable by the corporation in the base period as government assistance, non-government assistance or a contract payment, to the extent that each amount may reasonably be considered to relate to a qualified expenditure made by the corporation; (“base de dépenses”)

“government assistance” and “non-government assistance” have the meanings given to those expressions by subsection 127 (9) of the Income Tax Act (Canada); (“aide gouvernementale”, “aide non gouvernementale”)

“net qualified expenditures”, of a corporation for a taxation year, means the amount, if any, by which,

(a) the total of the corporation’s SR & ED qualified expenditure pool at the end of the taxation year and the amount determined under subsection 43.3 (9) that would be the amount of the corporation’s eligible repayments for the taxation year for the purposes of section 43.3,

exceeds,

(b) the total of,

(i) all amounts deducted by the corporation under subsection 127 (5) of the Income Tax Act (Canada) in computing tax payable under that Act for the previous taxation year, to the extent that the amounts deducted may reasonably be attributable to the corporation’s eligible qualified expenditures for taxation years commencing before January 1, 1996 or to amounts included in the corporation’s SR & ED qualified expenditure pool at the end of a taxation year commencing after December 31, 1995, and

(ii) any amount by which the aggregate determined under this clause in respect of the immediately preceding taxation year exceeds the aggregate determined under clause (a) for the immediately preceding taxation year; (“dépenses admissibles nettes”)

“Ontario allocation factor”, of a corporation for a taxation year, means the fraction equal to “A/B” where,

(a) “A” equals the amount of taxable income of the corporation, or the taxable income of the corporation earned in Canada if the corporation is a corporation to which subsection 2 (2) applies, that would be determined for the taxation year if no amount were deductible under this section or any of sections 13 to 13.5 and that would not be considered for the purposes of section 39 to have been earned in jurisdictions other than Ontario, except that the taxable income or the taxable income earned in Canada shall be deemed to be $1 if there would otherwise be no taxable income or taxable income earned in Canada, and

(b) “B” equals the taxable income of the corporation, or the taxable income of the corporation earned in Canada if the corporation is a corporation to which subsection 2 (2) applies, that would be determined for the taxation year if no amount were deductible under this section or any of sections 13 to 13.5, except that the taxable income or the taxable income earned in Canada shall be deemed to be $1 if there would otherwise be no taxable income or taxable income earned in Canada; (“coefficient de répartition de l’Ontario”)

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

“predecessor corporation” means a corporation that was a predecessor corporation referred to in section 87 of the Income Tax Act (Canada) and includes any corporation in respect of which a predecessor corporation was an amalgamated corporation; (“société remplacée”)

“qualified expenditure” means an expenditure made by a corporation in respect of scientific research and experimental development carried on in Ontario that is a qualified expenditure for the purposes of section 127 of the Income Tax Act (Canada), or that would have been a qualified expenditure for the purposes of that section but for the corporation previously specifying the expenditure for the purposes of clause 194 (2) (a) (ii) (A) of that Act, but does not include an expenditure of the type described in subparagraph 37 (8) (d) (i), (ii) or (iii) of that Act; (“dépense admissible”)

“research property” means property of a corporation referred to in subparagraph 37 (1) (b) (i) of the Income Tax Act (Canada); (“bien servant à la recherche”)

“specified percentage”, in respect of a particular research property, is the percentage represented by the ratio of all amounts deducted under this section in respect of the research property to the capital cost of the research property; (“pourcentage déterminé”)

“SR & ED qualified expenditure pool”, of a corporation at the end of a taxation year, has the meaning given to that expression in subsection 127 (9) of the Income Tax Act (Canada), except that the expression “qualified expenditure” shall have the meaning given to that expression by this section; (“compte de dépenses admissibles de recherche et de développement”)

“subsidiary corporation” means a corporation that is a “subsidiary” under subsection 88 (1) of the Income Tax Act (Canada). (“filiale”) R.S.O. 1990, c. C.40, s. 12 (1); 1996, c. 29, s. 38; 1997, c. 43, Sched. A, s. 7 (1-3); 1998, c. 5, s. 7; 1998, c. 34, s. 29; 1999, c. 9, s. 76; 2000, c. 42, s. 11; 2004, c. 16, s. 2 (2).

Research and development super allowance

(2)  A corporation may deduct a research and development super allowance in computing its income from a business for a taxation year in an amount calculated according to the following formula:

where:

“A” is the research and development super allowance for the corporation for the taxation year;

“B” is 0.35 if the corporation is a Canadian-controlled private corporation throughout the taxation year, or 0.25 otherwise;

“C” is the lesser of the net qualified expenditures of the corporation for the taxation year or the expenditure base of the corporation for the taxation year;

“D” is 0.525 if the corporation is a Canadian-controlled private corporation throughout the taxation year, or 0.375 otherwise;

“E” is the amount, if any, by which the net qualified expenditures of the corporation for the taxation year exceed the expenditure base of the corporation for the taxation year;

“F” is the corporation’s Ontario allocation factor for the taxation year unless the Ontario allocation factor is 0, in which case “F” is 1.

R.S.O. 1990, c. C.40, s. 12 (2); 1997, c. 43, Sched. A, s. 7 (4); 2004, c. 16, s. 2 (2).

Exception, specified taxation year

(2.1)  Despite subsection (2), no amount is deductible under this section by a corporation for a taxation year that is a specified taxation year of the corporation within the meaning of section 11.2. 2001, c. 23, s. 24; 2004, c. 16, s. 2 (2).

Expenditure base after amalgamation

(3)  In determining the amount of the expenditure base of an amalgamated corporation for a particular taxation year, each amount determined under clauses (a) to (d) in the definition of “expenditure base” in subsection (1) includes all amounts described under those clauses in respect of any predecessor corporation in respect of all of its taxation years commencing in the base period of the amalgamated corporation. R.S.O. 1990, c. C.40, s. 12 (3); 2004, c. 16, s. 2 (2).

Expenditure base after winding-up into parent

(4)  If subsection 88 (1) of the Income Tax Act (Canada) applies with respect to a winding-up of a subsidiary corporation, the amount of the expenditure base of the parent corporation for a particular taxation year includes in each amount determined under clauses (a) to (d) in the definition of “expenditure base” in subsection (1), all amounts described under those clauses in respect of the subsidiary corporation in respect of its taxation years commencing in the base period of the parent corporation. R.S.O. 1990, c. C.40, s. 12 (4); 2004, c. 16, s. 2 (2).

Associated corporations

(5)  The expenditure base for a taxation year of a corporation that is associated with one or more other corporations during the taxation year shall be determined according to the following formula:

B = A × C/D

where:

“B” is the expenditure base for the corporation for the particular taxation year;

“A” is the aggregate of,

(a) the expenditure base of the corporation that would be determined, but for this subsection, for the particular taxation year, and

(b) the expenditure base, as determined without reference to this subsection, of each corporation with which the corporation was associated at any time during the particular taxation year, for each taxation year of each associated corporation ending in the same calendar year as the particular taxation year;

“C” is the net qualified expenditures of the corporation for the particular taxation year; and

“D” is the aggregate of “C” and the net qualified expenditures of each corporation with which the corporation was associated at any time during the particular taxation year for each taxation year of each associated corporation ending in the same calendar year as the particular taxation year.

R.S.O. 1990, c. C.40, s. 12 (5); 1997, c. 43, Sched. A, s. 7 (4); 2004, c. 16, s. 2 (2).

Recapture on disposition of eligible research property

(6)  Except as provided in subsections (7) and (8), if a corporation has disposed of an eligible research property at any time in a particular taxation year, there shall be included in computing the income of the corporation for the particular taxation year an amount equal to the lesser of,

(a) the specified percentage of the lesser of the fair market value of the property at the time of the disposition or the capital cost to the corporation of the property immediately before the disposition; or

(b) the amount, if any, by which the aggregate of,

(i) all amounts deducted under this section by the corporation in computing its income for any taxation year commencing before the disposition and by any corporation associated with the corporation in the particular taxation year in computing its income for any taxation year ending in or before the particular taxation year,

exceeds the aggregate of,

(ii) all amounts included by virtue of this subsection in respect of any other eligible research property in computing the income of the corporation for any taxation year commencing before the disposition, or in computing the income of any corporation associated with the corporation in the particular taxation year, for any taxation year ending in or before the particular taxation year. R.S.O. 1990, c. C.40, s. 12 (6); 2004, c. 16, s. 2 (2).

Idem

(7)  If subsection 85 (1) or 88 (1) of the Income Tax Act (Canada) is applicable with respect to the disposition of eligible research property by a corporation to another corporation that is associated with the corporation in the taxation year in which the disposition occurs,

(a) the property shall be deemed to be eligible research property of the other corporation; and

(b) if the capital cost of the eligible research property to the corporation exceeds the proceeds of disposition, the capital cost of the eligible research property to the other corporation shall be deemed to be the amount that was the capital cost thereof to the corporation. R.S.O. 1990, c. C.40, s. 12 (7); 2004, c. 16, s. 2 (2).

Idem

(8)  If section 87 or subsection 88 (1) of the Income Tax Act (Canada) is applicable with respect to an amalgamation of two or more corporations or to a winding-up of a subsidiary corporation, the amalgamated corporation or the parent corporation, as applicable, shall be deemed,

(a) to have deducted, in computing its income for a taxation year commencing before the amalgamation or winding-up, all amounts deducted under this section by any predecessor corporation or subsidiary corporation, as applicable, in computing its income for a taxation year; and

(b) to have included, in computing its income for any taxation year commencing before the amalgamation or winding-up, all amounts included under this section by any predecessor corporation or subsidiary corporation, as applicable, in computing its income for a taxation year. R.S.O. 1990, c. C.40, s. 12 (8); 2004, c. 16, s. 2 (2).

Capital cost after amalgamation

(9)  If section 87 of the Income Tax Act (Canada) is applicable in respect of an amalgamation of two or more corporations, the capital cost to the amalgamated corporation of any property that was eligible research property of a predecessor corporation and that becomes the property of the amalgamated corporation because of the amalgamation shall be deemed to be the capital cost thereof to the predecessor corporation and the property shall be deemed to be eligible research property of the amalgamated corporation. R.S.O. 1990, c. C.40, s. 12 (9); 2004, c. 16, s. 2 (2).

(10)  Repealed: 1997, c. 43, Sched. A, s. 7 (5).

Where previously associated

(11)  If another corporation was not associated with a particular corporation in a taxation year, but was associated with the particular corporation at any time during the particular corporation’s base period for the taxation year, and all or substantially all of the property of the previously associated corporation that was used by it in carrying on any business during the base period was acquired in any manner by the particular corporation, or by one or more corporations associated with the particular corporation in the taxation year, the following rules apply for the purposes of this section:

1. The previously associated corporation shall be deemed to continue to exist, if it has ceased to exist.

2. The previously associated corporation shall be deemed to be associated with the particular corporation in the taxation year.

3. The previously associated corporation shall be deemed to have had taxation years ending on the same day in each year as the last day of its taxation year in which it was last associated with the particular corporation. R.S.O. 1990, c. C.40, s. 12 (11); 2004, c. 16, s. 2 (2).

Exception

(12)  Subsection (11) does not apply if,

(a) the previously associated corporation was a predecessor corporation of the particular corporation, or of a corporation associated with the particular corporation in the taxation year; or

(b) the previously associated corporation was a subsidiary corporation that was wound up before the taxation year and whose parent corporation was either the particular corporation or a corporation associated with the particular corporation in the taxation year. R.S.O. 1990, c. C.40, s. 12 (12); 2004, c. 16, s. 2 (2).

Corporate partners

(13)  If a corporation is a member of a partnership, the following rules apply for the purposes of this section:

1. If the partnership makes, during a fiscal period of the partnership, an expenditure that, if it were made by a corporation, would be a qualified expenditure or an eligible repayment for the purposes of section 43.3, an amount equal to the proportion of the expenditure that the corporation’s share of the income or loss of the partnership for the fiscal period bears to the total income or loss of the partnership for the fiscal period shall be deemed to be a qualified expenditure or eligible repayment made by the corporation for the purposes of section 43.3 in the taxation year of the corporation in which that fiscal period ends.

2. If the partnership disposes of a property that would be an eligible research property of the partnership if the partnership were a corporation, an amount equal to the proportion of the amount that would be included under this section, as a result of the disposition, in the income of the partnership, if the partnership were a corporation, that the corporation’s share of the income or loss of the partnership for the fiscal period in which the property was disposed of bears to the total income or loss of the partnership in the fiscal period shall be included in computing the income of the corporation for the taxation year in which the fiscal period ends.

3. Subsection 127 (13) of the Income Tax Act (Canada) does not apply to a corporation that is a member of a partnership in respect of expenditures incurred by the partnership or by the corporation on behalf of the partnership. R.S.O. 1990, c. C.40, s. 12 (13); 1997, c. 43, Sched. A, s. 7 (6); 2004, c. 16, s. 2 (2).

Maximum deduction by limited partner

(14)  If a corporation is a limited partner in a limited partnership at any time in a taxation year and is deemed by subsection (13) to have made a qualified expenditure or eligible repayment for the purposes of section 43.3, the following rules apply:

1. The maximum amount deductible under subsection (2) by the corporation in the taxation year in respect of the corporation’s share of the qualified expenditure or eligible repayment shall not exceed the aggregate of,

i. the share of the income, if any, of the limited partnership included in the computation of income of the corporation for the taxation year, and

ii. any amount included in the income of the corporation for the taxation year under paragraph 2 of subsection (13). R.S.O. 1990, c. C.40, s. 12 (14); 1992, c. 3, s. 3; 1997, c. 43, Sched. A, s. 7 (7, 8); 2004, c. 16, s. 2 (2).

Anti-avoidance

(15)  A corporation is not entitled to a deduction under this section during a year with respect to any expenditure made by it if, as a result of a transaction or an event, or a series of transactions or events, it is reasonable for the Minister to believe that one of the principal purposes of the carrying out of such a transaction or event or series of transactions or events is to enable the corporation to claim a deduction under this section that would not otherwise be allowed. R.S.O. 1990, c. C.40, s. 12 (15); 2004, c. 16, s. 2 (2).

Current cost allowance deduction

Definitions

13.  (1)  In this section,

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

“eligible asset”, of a corporation, means prescribed manufacturing and processing machinery or equipment acquired by the corporation after the 31st day of December, 1988 and before the 1st day of January, 1992, or prescribed pollution control equipment acquired by the corporation after the 17th day of May, 1989, that,

(a) has not been used by any person for any purpose before being acquired by the corporation,

(b) is first used by the corporation in Ontario,

(c) is used by the corporation for the purpose of earning income from a business, and

(d) has not been deemed to have been acquired by the corporation by paragraph 16.1 (1) (b) of the Income Tax Act (Canada), as made applicable by subsection 11 (1) of this Act; (“élément d’actif admissible”)

“eligible asset pool”, of a corporation for a taxation year, means the amount, if any, by which the aggregate of,

(a) the eligible cost to the corporation at the end of the taxation year of the eligible assets of the corporation for the taxation year or a prior taxation year,

(b) the eligible cost to the corporation immediately before disposition of the eligible assets of the corporation for the taxation year or a prior taxation year that were acquired and disposed of by the corporation at any time before the end of the taxation year, and

(c) all amounts each of which is an amount in respect of an eligible asset included under element C in the formula in the definition of “undepreciated capital cost” in subsection 13 (21) of the Income Tax Act (Canada) in the determination of the undepreciated capital cost to the corporation at the end of the taxation year of depreciable property of a prescribed class,

exceeds,

(d) the aggregate of,

(i) all amounts each of which is an amount in respect of an eligible asset included under element I or J in the formula in the definition of “undepreciated capital cost” in subsection 13 (21) of the Income Tax Act (Canada) in determining the undepreciated capital cost to the corporation at the end of the taxation year of depreciable property of a prescribed class,

(ii) all amounts each of which is an amount included in the income of the corporation, or of a subsidiary corporation or a predecessor corporation, for the taxation year, or for a prior taxation year, under paragraph 12 (1) (t) of the Income Tax Act (Canada), as made applicable for the purposes of this Act, in respect of an eligible asset, and

(iii) all amounts each of which is the amount of the eligible asset pool of the corporation for a prior taxation year in respect of which the corporation was entitled under this section to deduct an amount in computing its income; (“ensemble d’éléments d’actif admissibles”)

“eligible assets of the corporation for the taxation year” means the eligible assets that were acquired by the corporation in the taxation year or a prior taxation year and in respect of which,

(a) the taxation year is the first taxation year in which the corporation may include an amount under element A in the formula in the definition of “undepreciated capital cost” in subsection 13 (21) of the Income Tax Act (Canada) in respect of those assets in the determination of the undepreciated capital cost of depreciable property of a prescribed class, and

(b) no amount has been included under element A in the formula in the definition of “undepreciated capital cost” in subsection 13 (21) of the Income Tax Act (Canada) by a subsidiary corporation or predecessor corporation in the determination of the undepreciated capital cost of depreciable property of a prescribed class of the corporation for a taxation year; (“éléments d’actif admissibles de la société pour l’année d’imposition”)

“eligible cost”, to a corporation at a particular date of eligible assets of the corporation for a taxation year, means,

(a) in respect of eligible assets that are prescribed manufacturing and processing machinery or equipment, the capital cost to the corporation of the assets at that date, and

(b) in respect of eligible assets that are prescribed pollution control equipment acquired in a particular taxation year by the corporation, or by a subsidiary corporation or predecessor corporation, the lesser of,

(i) the capital cost to the corporation of the assets at that date, or

(ii) the amount by which,

(A) $20,000,000 multiplied by the ratio of the number of days in the particular taxation year to 365, or, if the particular taxation year commenced before the 18th day of May, 1989, by the ratio of the number of days in that taxation year after the 17th day of May, 1989, to 365,

exceeds,

(B) the capital cost to the corporation of the eligible assets acquired in the particular year that have been included in the eligible asset pool of the corporation for a prior taxation year; (“coût admissible”)

“Ontario allocation factor”, of a corporation for a taxation year, has the same meaning as in subsection 12 (1); (“coefficient de répartition de l’Ontario”)

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

“predecessor corporation” means a corporation that was a predecessor corporation referred to in section 87 of the Income Tax Act (Canada) and includes a corporation in respect of which a predecessor corporation was an amalgamated corporation; (“société remplacée”)

“specified rate”, of a corporation for a taxation year, means the rate calculated according to the following formula:

A = 0.1 × (B/E) + 0.15 × (C/E) + 0.3 × (D/E)

where:

“A” is the specified rate of the corporation for the taxation year,

“B” is the eligible cost to the corporation of all eligible assets of the corporation for the taxation year acquired by the corporation before the 1st day of January, 1990,

“C” is the eligible cost to the corporation of all eligible assets of the corporation for the taxation year acquired by the corporation after the 31st day of December, 1989 and before the 1st day of January, 1991,

“D” is the eligible cost to the corporation of all eligible assets of the corporation for the taxation year acquired by the corporation after the 31st day of December, 1990,

“E” is the aggregate of “B”, “C” and “D”; (“taux déterminé”)

“subsidiary corporation” means a corporation that is a “subsidiary” under subsection 88 (1) of the Income Tax Act (Canada). (“filiale”) R.S.O. 1990, c. C.40, s. 13 (1); 1992, c. 3, s. 4 (1); 1996, c. 29, s. 39 (1); 2004, c. 16, s. 2 (2).

Current cost adjustment deduction

(2)  A corporation may deduct in computing its income from a business for a taxation year a current cost adjustment deduction calculated according to the following formula:

A = (B/C) × D

where:

“A” is the current cost adjustment deduction for the taxation year;

“B” is the corporation’s eligible asset pool for the taxation year;

“C” is the corporation’s Ontario allocation factor for the taxation year unless the Ontario allocation factor is 0, in which case “C” is 1; and

“D” is the corporation’s specified rate for the taxation year.

R.S.O. 1990, c. C.40, s. 13 (2); 2004, c. 16, s. 2 (2).

Date of acquisition

(3)  If the Minister believes, reasonably, that the corporation has delayed the acquisition of an asset primarily for the purposes of either claiming a deduction under this section or claiming a deduction at a higher specified rate, the Minister may, for the purposes of determining a deduction under this section, deem the acquisition to have occurred on another date. R.S.O. 1990, c. C.40, s. 13 (3); 2004, c. 16, s. 2 (2).

Corporate partners

(4)  If a corporation is a member of a partnership that has acquired property in a particular fiscal period that would be an eligible asset under this section if acquired by a corporation on the date of acquisition by the partnership, the following rules apply for the purposes of this section:

1. The property shall be deemed to have been acquired jointly by the partners, not by the partnership, on the date the property was acquired by the partnership.

2. The capital cost to the corporation of its interest in the property for the purposes of this section is that proportion of the capital cost of the property to the partnership at the end of the fiscal period of the partnership during which the property was acquired that the corporation’s share of the income or loss of the partnership for the fiscal period bears to the total income or loss of the partnership for the fiscal period.

3. The property shall be deemed to be an eligible asset of the corporation for the taxation year in which the fiscal period of the partnership ends in which the partnership may first include an amount under subparagraph 13 (21) (f) (i) of the Income Tax Act (Canada) in respect of the property in the determination of the undepreciated capital cost of depreciable property of a prescribed class.

4. The amount of the corporation’s eligible asset pool for a taxation year is increased by an amount equal to the proportion of any repaid assistance, included under subparagraph 13 (21) (f) (ii.1) of the Income Tax Act (Canada) in determining the undepreciated capital cost to the partnership of depreciable property of a prescribed class at the end of the fiscal period of the partnership ending in the taxation year, that is the corporation’s share of the income or loss of the partnership for the fiscal period and reduced by the same proportion of any amount included by the partnership under subparagraph 13 (21) (f) (viii) of that Act for the fiscal period in determining the undepreciated capital cost of the partnership’s depreciable property of a prescribed class. R.S.O. 1990, c. C.40, s. 13 (4); 2004, c. 16, s. 2 (2).

Amalgamations and winding-up

(5)  If a corporation claiming a deduction under this section is an amalgamated corporation or a parent corporation, the following rules apply for the purposes of this section:

1. Each eligible asset acquired on a particular date by a subsidiary corporation or a predecessor corporation shall be deemed to have been acquired by the corporation on the same date.

2. The capital cost of the asset to the corporation shall be deemed to be the capital cost thereof to the predecessor corporation or the subsidiary corporation.

3. An eligible asset pool of a subsidiary corporation or a predecessor corporation for a prior taxation year shall be deemed to be an eligible asset pool of the corporation for a prior taxation year. R.S.O. 1990, c. C.40, s. 13 (5); 2004, c. 16, s. 2 (2).

Anti-avoidance

(6)  A corporation is not entitled to a deduction under this section with respect to an asset if the acquisition or use of the asset was part of or related to a series of transactions or events and it is reasonable for the Minister to believe that one of the principal purposes for the acquisition of the asset was for use by another person or for use outside Ontario. R.S.O. 1990, c. C.40, s. 13 (6); 2004, c. 16, s. 2 (2).

Limitation

(7)  In the application of element A in the formula in the definition of “undepreciated capital cost” in subsection 13 (21) of the Income Tax Act (Canada) for the purposes of this section, no amount shall be included in calculating the undepreciated capital cost to the corporation of depreciable property of a prescribed class before the date the property is considered to have become available for use by the corporation. 1992, c. 3, s. 4 (2); 1996, c. 29, s. 39 (2); 2004, c. 16, s. 2 (2).

Ontario new technology tax incentive gross-up

13.1  (1)  A corporation may deduct in computing its income from a business for a taxation year the amount determined in respect of the corporation for the year according to the following formula:

A = B/C – B

where,

“A” is the corporation’s Ontario new technology tax incentive gross-up for the taxation year;

“B” is the total of all amounts for the taxation year, each of which is,

(a) an amount deducted by the corporation under clause 11 (10) (a), in computing its income from a business for the taxation year, as an Ontario new technology tax incentive in respect of a prescribed depreciable property, or

(b) an amount equal to the product of,

(i) the amount deducted under clause 11 (10) (a), as an Ontario new technology tax incentive in respect of a prescribed depreciable property, by a partnership of which the corporation is a member, in computing the partnership’s income from a business for a fiscal period ending in the corporation’s taxation year, and

(ii) the percentage of the partnership’s income or loss for the fiscal period to which the corporation is entitled; and

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

1997, c. 43, Sched. A, s. 8; 2004, c. 16, s. 2 (2).

Ontario allocation factor

(2)  For the purposes of subsection (1), a corporation’s Ontario allocation factor for a taxation year is the fraction that would be determined under the definition of that term in subsection 12 (1). 1997, c. 43, Sched. A, s. 8; 2004, c. 16, s. 2 (2).

Workplace child care tax incentive

13.2  (1)  A corporation, other than a child care operator that controls or manages a child care facility with an expectation of profit, may deduct in computing its income from a business for a taxation year a workplace child care tax incentive for the taxation year equal to the amount determined using the formula,

(A/B) × 30%

in which,

“A” is the amount of the corporation’s qualifying expenditures for the taxation year, and

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

1998, c. 34, s. 30; 1999, c. 9, s. 77; 2004, c. 16, s. 2 (2).

Qualifying expenditures

(2)  Subject to subsection (4), the amount of a corporation’s qualifying expenditures for a taxation year is the total of,

(a) all capital costs in respect of expenditures incurred by the corporation after May 5, 1998 and before January 1, 2005,

(i) in the construction or renovation of a licensed child care facility in Ontario that are included by the corporation for that year for the purposes of the Income Tax Act (Canada) in Class 1, 3, 6 or 13 of Schedule II to the regulations made under that Act, and

(ii) on the acquisition of playground equipment for the child care facility that are included by the corporation for that year for the purposes of the Income Tax Act (Canada) in Class 8 of Schedule II to the regulations made under that Act;

(b) all payments of money and the value of qualified contributions that are made by the corporation after May 5, 1998 and before January 1, 2005 to a child care operator who deals at arm’s length with the corporation, to the extent the child care operator has used the money and contributions for the purposes described in clause (a) in the corporation’s taxation year, so long as the operator has provided to the corporation,

(i) confirmation in writing of the amount of money and qualified contributions used for those purposes, and

(ii) the operator’s license number under the Day Nurseries Act; and

(c) repayments of government assistance made by the corporation during the taxation year that do not exceed the amount of the assistance that,

(i) has not been repaid in a prior taxation year, and

(ii) can reasonably be considered to have reduced the amount of a deduction that would otherwise have been allowed to the corporation under this section. 1998, c. 34, s. 30; 2004, c. 16, s. 2 (2); 2004, c. 31, Sched. 9, s. 4.

Qualified contribution

(3)  The following contributions are qualified contributions from a corporation for the purposes of clause (2) (b):

1. The fair market value of property the ownership of which is transferred by the corporation to the child care operator, if the property is used by the child care operator in the activities and for the purposes described in clause (2) (a).

2. The fair market value of services provided by the corporation to the child care operator, if the services are used by the child care operator in the activities and for the purposes described in clause (2) (a).

3. The reasonable monetary value of the benefit from a loan or a loan guarantee given by the corporation to the child care operator, to the extent the proceeds of the loan are used by the child care operator in the activities and for the purposes described in clause (2) (a). 1998, c. 34, s. 30; 2004, c. 16, s. 2 (2).

Limitation on qualifying expenditures

(4)  The amount of a corporation’s qualifying expenditures for a taxation year shall be determined after the deduction of,

(a) all government assistance, if any, in respect of the qualifying expenditures that, at the time the corporation’s return is required to be delivered under section 75 for the taxation year for which the deduction is claimed under this section, the corporation has received, is entitled to receive or may reasonably be expected to be entitled to receive; and

(b) the amount, if any, of the expenditures that would not be considered to be reasonable in the circumstances if they had been incurred by persons dealing with each other at arm’s length. 1998, c. 34, s. 30; 2004, c. 16, s. 2 (2).

Corporate partner

(5)  If a corporation is a member of an eligible partnership at the end of a taxation year and the partnership incurs, in a fiscal period of the partnership that ends in the taxation year, an expenditure in respect of a licensed child care facility that would be a qualifying expenditure for the purposes of this section if the expenditure had been made by the corporation, the portion of the expenditure that may reasonably be considered to be the corporation’s share may be included in the corporation’s qualifying expenditures for the taxation year for the purposes of this section. 1998, c. 34, s. 30; 2004, c. 16, s. 2 (2).

Limited partner

(6)  Despite subsection (5), a limited partner’s share of an expenditure that is considered under subsection (5) to be a qualifying expenditure for the purposes of this section shall be deemed to be nil. 1998, c. 34, s. 30; 2004, c. 16, s. 2 (2).

Definitions

(7)  In this section,

“child care facility” means a day nursery as defined in the Day Nurseries Act; (“garderie”)

“child care operator” means a person who has control or management of a child care facility; (“exploitant de garderie”)

“eligible partnership” means a partnership that does not carry on the business of a child care operator; (“société de personnes admissible”)

“licensed child care facility” means a child care facility operated under the authority of a licence issued by the Ministry of Community and Social Services under the Day Nurseries Act; (“garderie agréée”)

“Ontario allocation factor” of a corporation for a taxation year has the meaning assigned by subsection 12 (1); (“coefficient de répartition de l’Ontario”)

“playground equipment” means a structure erected in the playground area of a licensed child care facility for recreational purposes. (“matériel de terrains de jeux”) 1998, c. 34, s. 30; 2004, c. 16, s. 2 (2).

Workplace accessibility tax incentive

13.3  (1)  Subject to subsection (10), a corporation may deduct a workplace accessibility tax incentive in computing its income from a business for a taxation year. 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2).

Amount of tax incentive

(2)  The amount of a corporation’s workplace accessibility tax incentive for a taxation year is an amount equal to the total of the amounts determined under the following paragraphs:

1. The amount determined by dividing the amount of expenditures, if any, incurred by the corporation in the taxation year, but after July 1, 1998 and before January 1, 2005 to provide during a job interview in Ontario the support services of a sign language interpreter, an intervenor, a note-taker, a reader or an attendant, by the corporation’s Ontario allocation factor for the taxation year.

2. The total of all amounts, each of which is determined in respect of a qualifying employee and is equal to the lesser of,

i. the total amount of qualifying expenditures, other than qualifying expenditures included in the amount determined under paragraph 1, that are incurred by the corporation in the taxation year in respect of the qualifying employee, divided by the corporation’s Ontario allocation factor for the taxation year, and

ii. the amount calculated using the formula,

($50,000 – A)/B

in which,

“A” is the total of all amounts, each of which is a qualifying expenditure in respect of the qualifying employee that was included in determining a workplace accessibility tax incentive deducted by the corporation in computing its income for a prior taxation year, and

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

3. The amount determined by dividing by the corporation’s Ontario allocation factor for the taxation year the amount of repayments of government assistance made by the corporation during the taxation year, if any, that does not exceed the amount of the assistance that,

i. has not been repaid in a prior taxation year, and

ii. can reasonably be considered to have reduced the amount of a deduction that would otherwise have been allowed to the corporation under this section. 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2); 2004, c. 31, Sched. 9, s. 5 (1).

Corporate partner’s workplace accessibility tax incentive

(3)  If a corporation is a member of a partnership at the end of a taxation year and the partnership incurs, in a fiscal period of the partnership that ends in the taxation year, an expenditure in respect of which the partnership would be entitled to claim a deduction under this section if the expenditure had been made by a corporation, the corporation may, subject to subsection (10), deduct in computing its income from a business for the taxation year the amount determined for the taxation year under subsection (4). 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2).

Amount of corporate partner’s deduction

(4)  Subject to subsections (5) and (6), the amount a corporation may deduct under subsection (3) for a taxation year in respect of expenditures incurred by a partnership of which it is a member is the amount determined by multiplying the percentage of the share of the income or loss of the partnership to which the corporation is entitled for the fiscal period ending in the taxation year by the amount that would be determined to be the amount of the partnership’s deduction under this section for that fiscal period using the corporation’s Ontario allocation factor for the taxation year. 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2).

Limited partner

(5)  Despite subsections (3) and (4), no amount may be deducted by a corporation in respect of an expenditure incurred by a partnership in which the corporation is a limited partner. 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2).

Qualifying expenditure

(6)  Each of the following expenditures incurred after July 1, 1998 and before January 1, 2005 by a corporation or partnership in respect of a qualifying employee is a qualifying expenditure of the corporation or partnership:

1. An expenditure that is incurred not more than three months before and not more than 12 months after the date of commencement of the qualifying employee’s employment with the corporation or partnership and,

i. that is in respect of a building, a device or equipment in Ontario and that is deductible by the corporation or partnership in computing its income under paragraph 20 (1) (qq) or (rr) of the Income Tax Act (Canada),

ii. that is for the installation at a location in Ontario of a passenger elevator, vertical platform lift, inclined platform lift or stairway lift to accommodate the qualifying employee in performing his or her job functions, or

iii. that is for the acquisition of any of the following devices or equipment, if the device or equipment is required by the qualifying employee at a location in Ontario to perform his or her job functions:

A. an environmental control unit to operate a telephone and lights, a door opener or other office equipment modified to accommodate an individual with mobility impairment,

B. an ergonomic work station and seating, a customized filing system or other office furniture adapted to accommodate an individual with mobility impairment,

C. a telephone headset for use by an individual with a mobility impairment,

D. specialized lighting for an individual with a visual impairment or epilepsy,

E. a real time captioning or alphanumeric pager for an individual with hearing impairment,

F. a tool, machinery or information communication system adapted for use by an individual with a physical or mental impairment,

G. computer hardware or a hardware attachment that is required to use disability-specific computer software.

2. An expenditure incurred not more than six months after the date of commencement of the qualifying employee’s employment with the corporation or partnership to provide the support services at a location in Ontario of a job coach, note-taker, sign language interpreter, intervenor, reader or attendant for the employee, if the services are required by the employee by reason of a physical or mental impairment.

3. An expenditure incurred not more than 12 months after the date of commencement of the qualifying employee’s employment with the corporation or partnership to train the employee or his or her coworkers to use equipment described in subparagraph iii of paragraph 1.

4. An expenditure prescribed by the regulations. 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2); 2004, c. 31, Sched. 9, s. 5 (2).

Limitation on qualifying expenditures

(7)  The amount of a corporation’s qualifying expenditures for a taxation year shall be determined after the deduction of,

(a) all government assistance, if any, in respect of the qualifying expenditures that, at the time the corporation’s return is required to be delivered under section 75 for the taxation year for which the deduction is claimed under this section, the corporation, or the partnership of which the corporation is a member, has received, is entitled to receive or may reasonably be expected to be entitled to receive;

(b) the amount, if any, of the expenditures that would not be considered to be reasonable in the circumstances if they had been incurred by persons dealing with each other at arm’s length; and

(c) the amount, if any, of the expenditures that were included in determining the amount of a deduction for a taxation year under this section in respect of another qualifying employee. 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2).

Qualifying employee

(8)  A qualifying employee of a corporation, or of a partnership of which the corporation is a member, is an individual who,

(a) deals at arm’s-length with the corporation;

(b) is employed by the corporation or partnership for at least 60 hours per month;

(c) is employed by the corporation or partnership for a period of three months or more;

(d) within 12 months prior to the date of commencing employment with the corporation or partnership, was not employed by the corporation, a partnership of which the corporation is a member or a corporation associated with the corporation; and

(e) is an individual described in subsection (9) or who has obtained a Workplace Accessibility Tax Incentive Certificate in a form approved by the Minister from a qualified medical practitioner certifying,

(i) that the individual has a physical or mental impairment that is continuous or recurrent and expected to last at least one year, and

(ii) that, in the opinion of the practitioner, the impairment constitutes a substantial barrier to competitive employment without accommodations. 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2).

Same

(9)  For the purposes of clause (8) (e), an individual is described in this subsection if,

(a) the individual is an individual in respect of whom a tax credit under section 118.3 of the Income Tax Act (Canada) may be claimed;

(b) the individual is eligible for income support or employment supports under the Ontario Disability Support Program Act, 1997, immediately prior to commencing employment with the corporation or partnership;

(c) the individual is in receipt of a Disability Benefits Canada Pension under the Canada Pension Plan Act immediately prior to commencing employment with the corporation or partnership;

(d) the individual is registered with the Canadian National Institute for the Blind;

(e) the individual is eligible to receive assistance from the Assistive Device Program administered by the Ministry of Health and Long-Term Care; or

(f) the individual satisfies the conditions prescribed by the regulations. 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2); 2006, c. 19, Sched. L, s. 11 (3).

Exception

(10)  No deduction may be made by a corporation under this section in respect of an expenditure incurred in respect of a qualifying employee of the corporation or of a partnership of which it is a member, unless the corporation retains, as part of its records that are required to be kept under section 94, a copy of the certificate referred to in subsection (8) or a copy of the documentation upon which the corporation relies in claiming that the employee is an individual described in subsection (9). 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2).

Definitions

(11)  In this section,

“attendant” means an individual who provides personal support services to a person with a physical disability under the direction of the person on a pre-scheduled visitation basis; (“préposé”)

“intervenor” means an individual who acts as a communication link by providing information, facts and support to a person who is deaf and blind; (“intermédiaire”)

“job coach” means an individual who assists a newly-hired qualifying employee to attain productivity in the workplace that matches other employees by working on-site with the qualifying employee to help him or her to,

(a) become oriented in the workplace,

(b) learn the specific work tasks required by the position,

(c) develop communication skills for interacting with supervisors and co-workers, or

(d) adjust to the work environment; (“agent d’intégration”)

“mental impairment” means a developmental or learning impairment, a psychiatric impairment or an impairment resulting from a head injury; (“déficience mentale”)

“Ontario allocation factor” of a corporation for a taxation year has the meaning assigned by subsection 12 (1); (“coefficient de répartition de l’Ontario”)

“personal support services” include assistance with personal grooming and hygiene, dressing, breathing by operating respiratory equipment, toileting, eating, essential communication by way of bliss boards and augmentive communication, positioning and transferring; (“services de soutien personnels”)

“qualified medical practitioner” means an individual described in section 3 of Ontario Regulation 223/98 made under the Ontario Disability Support Program Act, 1997; (“professionnel de la santé qualifié”)

“sign language interpreter” means an individual who acts as a communication link by using sign language to provide information, facts and support to a deaf person. (“interprète gestuel”) 1998, c. 34, s. 31; 2004, c. 16, s. 2 (2).

Ontario school bus safety tax incentive

13.4  (1)  In computing its income from a business for a taxation year, a corporation may deduct an Ontario school bus safety tax incentive for the taxation year equal to the total of all amounts determined using the formula,

(A/B) × 0.3

in which,

“A” is the capital cost of an eligible school bus acquired by the corporation in the taxation year, and

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

1999, c. 9, s. 78; 2004, c. 16, s. 2 (2).

Eligible school bus

(2)  A vehicle acquired by a corporation is an eligible school bus if,

(a) it is a school bus as defined under subsection 175 (1) of the Highway Traffic Act that meets the requirements of sections 1 and 3 of Regulation 612 of the Revised Regulations of Ontario, 1990 (School Buses) made under the Highway Traffic Act and that conforms to the Canadian Standards Association Standard D250-1998;

(b) it is acquired by the corporation after May 4, 1999 and before January 1, 2006;

(c) it is used in Ontario to transport children or to transport adults with a developmental disability and has not previously been used; and

(d) the capital cost of the vehicle is included by the corporation for the purposes of the Income Tax Act (Canada) in class 10 of Schedule II to the regulations made under that Act. 1999, c. 9, s. 78; 2001, c. 13, s. 11 (1); 2002, c. 22, s. 39; 2004, c. 16, s. 2 (2).

Corporate partner

(3)  If a corporation is a member of a partnership at the end of a taxation year and the partnership incurs, in a fiscal period of the partnership that ends in the taxation year, a capital cost in respect of the acquisition of an eligible school bus that would qualify for the Ontario school bus safety tax incentive if the expenditure had been made by a corporation, the portion of the capital cost that may reasonably be considered to be the corporation’s share of the capital cost may be included by the corporation in determining the amount of its Ontario school bus safety tax incentive for the taxation year. 1999, c. 9, s. 78; 2004, c. 16, s. 2 (2).

Limited partner

(4)  Despite subsection (3), no amount may be included by a corporation in the amount of its Ontario school bus safety tax incentive for a taxation year in respect of an expenditure incurred by a partnership in which the corporation is a limited partner. 1999, c. 9, s. 78; 2004, c. 16, s. 2 (2).

Recapture

(5)  Subsection (6) applies if, within 36 months after the day a corporation or a partnership in which the corporation is a member acquires a school bus that is an eligible school bus in a taxation year, the corporation or partnership disposes of the bus or begins to primarily use the bus for a purpose other than transporting children in Ontario or transporting adults with a developmental disability in Ontario. 1999, c. 9, s. 78; 2001, c. 13, s. 11 (2); 2004, c. 16, s. 2 (2).

Same, calculation

(6)  When calculating its income for the taxation year, the corporation shall include the amount determined using the formula,

[(A/B) × 0.3] × [(1096 – C)/1096]

in which,

“A” is the capital cost of the eligible school bus, to the extent that the cost was included by the corporation in determining the amount of an Ontario school bus safety tax incentive for a taxation year of the corporation,

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

“C” is the number of days that the corporation or a partnership in which the corporation is a member owned the eligible school bus before disposing of it or beginning to use it for a purpose other than transporting children in Ontario or transporting adults with a developmental disability in Ontario.

1999, c. 9, s. 78; 2001, c. 13, s. 11 (3); 2004, c. 16, s. 2 (2).

Exception

(7)  Subsection (6) does not apply in respect of a disposition of an eligible school bus by a corporation or by a partnership in which the corporation is a partner,

(a) if the corporation or partnership disposes of the bus in connection with a disposition by the corporation or partnership of all or substantially all of the business in which the bus was used, and the person acquiring the business continues after the disposition to carry on the business in Ontario;

(b) if the corporation is in bankruptcy or receivership or is insolvent, and the bus is disposed of in the course of a disposition of the assets of the corporation’s business; or

(c) if the corporation disposes of the bus to another corporation (referred to in this clause as the “recipient corporation”) as a result of a winding-up of the corporation into the recipient corporation to which subsection 88 (1) of the Income Tax Act (Canada) applies or as a result of an amalgamation or merger of the corporation with another corporation to form the recipient corporation to which subsection 87 (1) of that Act applies. 1999, c. 9, s. 78; 2004, c. 16, s. 2 (2).

Interpretation

(8)  For the purposes of subsections (5), (6) and (7),

(a) a corporation that is formed as a result of an amalgamation or merger of two or more corporations shall be deemed to be the same corporation as, and a continuation of, each of the corporations that amalgamated or merged; and

(b) a corporation that is a parent for the purposes of subsection 88 (1) of the Income Tax Act (Canada), or would be a parent if it were a taxable Canadian corporation, shall be deemed to be the same corporation as, and a continuation of, each corporation that, if it were a taxable Canadian corporation, would be described as a subsidiary in that subsection, after the winding up of the subsidiary. 1999, c. 9, s. 78; 2004, c. 16, s. 2 (2).

Definition

(9)  In this section,

“Ontario allocation factor”, of a corporation for a taxation year, means Ontario allocation factor as defined in subsection 12 (1). 1999, c. 9, s. 78; 2004, c. 16, s. 2 (2).

Educational technology tax incentive

13.5  (1)  In this section,

“eligible course” means a course of study offered by an eligible educational institution that provides credit towards a post-secondary degree, diploma, certificate or an apprentice training program approved by the Director of Apprenticeships under the Apprenticeship and Certification Act, 1998 or the Trades Qualification and Apprenticeship Act; (“cours admissible”)

Note: On a day to be named by proclamation of the Lieutenant Governor, the definition of “eligible course” is repealed and the following substituted:

“eligible course” means a course of study offered by an eligible educational institution that provides credit towards a post-secondary degree, diploma, certificate or an apprentice training program approved under the Ontario College of Trades and Apprenticeship Act, 2009 or a predecessor of that Act; (“cours admissible”)

See: 2009, c. 22, ss. 96 (1), 104 (1).

“eligible educational institution” means,

(a) a university or college of applied arts and technology in Ontario, whose enrolment is counted for the purposes of calculating its entitlement to annual operating grants from the Government of Ontario,

(b) the Michener Institute of Applied Health Sciences, or

(c) the Ontario College of Art & Design; (“établissement d’enseignement autorisé”)

“eligible equipment” means the equipment described in subsection (14) and excludes the things described in subsection (15); (“matériel admissible”)

“eligible learning technology” means,

(a) custom or pre-packaged computer programs for use primarily in delivering an eligible course to students or instructors,

(b) custom computer programs for use primarily in providing digital library services to students or instructors, or

(c) instructional aids consisting of collections of images, sounds or animated pictures that are archived and shared through the Internet and can be accessed and used in eligible courses; (“technologie d’apprentissage admissible”)

“notional price” means, in respect of eligible equipment that is donated or sold or eligible learning technology that is donated, sold or licensed in a taxation year to an eligible educational institution,

(a) the lowest amount that the corporation would normally have charged in the year on a sale or licensing of the equipment or technology to a person dealing at arm’s length with the corporation, if the corporation carries on a business of selling eligible equipment or selling or licensing eligible learning technology in the taxation year, or

(b) the cost to the corporation of the equipment or technology, in any other case; (“prix théorique”)

“Ontario allocation factor” of a corporation for a taxation year has the meaning assigned by subsection 12 (1); (“coefficient de répartition de l’Ontario”)

“systems software” means a combination of computer programs and associated procedures, related technical documentation and data that,

(a) performs compilation, assembly, mapping, management or processing of other programs,

(b) facilitates the functioning of a computer system by other programs,

(c) provides service or utility functions such as media conversion, sorting, merging, system accounting, performance measurement, system diagnostics or programming aids,

(d) provides general support functions such as data management, report generation or security control, or

(e) provides general capability to meet widespread categories of problem solving or processing requirements where the specific attributes of the work to be performed are introduced mainly in the form of parameters. (“logiciel de systèmes”) 2000, c. 42, s. 12; 2002, c. 8, Sched. P, s. 2; 2004, c. 16, s. 2 (2).

Incentive

(2)  In computing its income from a business for a taxation year, a corporation may deduct an educational technology tax incentive in respect of eligible equipment that is donated or sold or eligible learning technology that is donated, sold or licensed to an eligible educational institution during the taxation year but after May 2, 2000 and before January 1, 2005. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2); 2004, c. 31, Sched. 9, s. 6 (1).

Amount of incentive

(3)  The amount of a corporation’s educational technology tax incentive for a taxation year is the total of all amounts each of which is calculated, in respect of eligible equipment that is donated or sold or eligible learning technology that is donated, sold or licensed to an eligible educational institution in the taxation year, using the formula,

[(A – B) ÷ C] × 0.15

in which,

“A” is the corporation’s notional price for the equipment or technology,

“B” is the fair market value of the consideration, if any, paid or payable by the institution for the equipment or technology, and

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

2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Transitional rule for licences, 2004

(3.1)  In determining, for the purposes of subsection (3), a corporation’s notional price for technology that is licensed to an institution pursuant to a licence granted before January 1, 2005, the following rules apply:

1. If clause (a) of the definition of “notional price” in subsection (1) applies in respect of the corporation and the amount that the corporation normally would have charged for the grant of the licence would require more than one payment by a customer, the corporation’s notional price for the technology for the purposes of this section shall not include any amount that would have been paid or payable by a customer after December 31, 2004.

2. If clause (a) of the definition of “notional price” in subsection (1) applies in respect of the corporation and the amount that the corporation normally would have charged for the grant of the licence would require that a single payment be made by a customer, the corporation’s notional price for the technology for the purposes of this section shall be nil unless the single amount would have been paid or payable by a customer on or before December 31, 2004.

3. If clause (b) of the definition of “notional price” in subsection (1) applies in respect of the corporation, the corporation’s notional price for the technology for the purposes of this section shall not include any amount that would be paid or payable by the corporation after December 31, 2004. 2004, c. 31, Sched. 9, s. 6 (2).

Corporate partner

(4)  A corporation that is a member of a partnership at the end of the corporation’s taxation year may deduct the amount described in paragraph 3 in computing its income from a business for the taxation year in the circumstances described in paragraphs 1 and 2:

1. In a fiscal period of the partnership that ends in the taxation year of the corporation, the partnership donates or sells eligible equipment or donates, sells or licenses eligible learning technology to an eligible educational institution.

2. If the donation or sale had been made or the licence had been given by a corporation, the corporation would be entitled to claim a deduction under this section.

3. The amount deductible by the corporation is the amount that may reasonably be considered to be the corporation’s share of the amount that the partnership would be entitled to deduct in respect of the donation, sale or licence, if the partnership were a corporation and if the partnership used the corporation’s Ontario allocation factor for the taxation year. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Limited partner

(5)  Despite subsection (4), no amount may be deducted under this section by a corporation with respect to a sale or donation of eligible equipment or a sale, donation or licence of eligible learning technology by a partnership in which the corporation is a limited partner. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Certificate

(6)  An eligible educational institution shall issue a certificate to a corporation or partnership that donates or sells eligible equipment or that donates, sells or licenses eligible learning technology to it, stating that the equipment or technology is eligible equipment or eligible learning technology for the purposes of this section. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Same

(7)  The certificate must be issued in a form and be given to the corporation or partnership in a manner approved by the Minister. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Status of certificate

(8)  Unless otherwise directed by the Minister, the certificate forms part of the records and books of account required to be kept under section 94 by the corporation or partnership making the donation or sale or giving the licence. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Same

(9)  A corporation is not entitled to claim a deduction under this section in respect of a donation, sale or licence unless the corporation retains a copy of the certificate in its records. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Minister’s direction and order

(10)  If an eligible educational institution issues one or more incorrect certificates,

(a) the Minister may direct the institution to cease issuing certificates under this section; and

(b) the Minister may order that all or some of the equipment that is donated or sold to the institution or all or some of the technology that is donated, sold or licensed to the institution is not eligible equipment or eligible learning technology for the purposes of this section. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Revocation

(11)  The Minister may revoke a direction or order, or both, made under subsection (10) if the Minister is satisfied that the eligible educational institution will comply with the Minister’s directions with respect to the accuracy, form and content of certificates given under this section. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Conditions

(12)  The Minister may impose such conditions on the revocation of the direction and order under subsection (11) as he or she considers reasonable. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Effect of revocation

(13)  Upon the revocation of a direction and order, the equipment or technology that would have otherwise been eligible equipment or eligible learning technology is, to the extent approved by the Minister, eligible equipment or eligible learning technology for the purposes of this section and may be certified as such by the educational institution. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Eligible equipment

(14)  The following types of equipment are eligible equipment for the purposes of the educational technology tax incentive:

1. Computer, electronic and telecommunications equipment that has never been used before, including any systems software essential to the operation of the equipment, and that is to be used primarily to enhance and expand delivery of an eligible course by enabling better communication between instructors and students or between students, either inside or outside the classroom.

2. Instructional equipment or tools that have never been used before, including any specialized supplies and systems software essential to the operation of the equipment or tools, and that are to be used primarily for the delivery of an eligible course. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

Exclusions from eligible equipment

(15)  The following things are not eligible equipment for the purposes of the educational technology tax incentive:

1. Office or classroom furniture.

2. Fixtures, wiring or components that are part of a building or structure.

3. Fibre optic cable.

4. A personal or laptop computer that a student will own after completing the eligible course.

5. Maintenance equipment.

6. Books. 2000, c. 42, s. 12; 2004, c. 16, s. 2 (2).

13.6  Repealed: 2004, c. 31, Sched. 9, s. 7 (1).

Subdivision B — Taxable Capital Gains and Allowable Capital Losses

Application of Income Tax Act (Canada)

14.  (1)  Except as hereinafter provided, the taxable capital gains and allowable capital losses of a corporation for a taxation year from the disposition of any property shall for the purposes of this Act be determined in accordance with subdivision c of Division B of Part I of the Income Tax Act (Canada) and the said subdivision c is applicable to this Act in so far as the said subdivision applies to corporations. R.S.O. 1990, c. C.40, s. 14 (1); 2004, c. 16, s. 2 (2).

Idem

(2)  In the application of paragraph 39 (1) (a) of the Income Tax Act (Canada) for the purposes of this Act, subparagraph 39 (1) (a) (ii.1) is not applicable. R.S.O. 1990, c. C.40, s. 14 (2); 2004, c. 16, s. 2 (2).

Idem

(3)  Subsections 39 (7) and (8) of the Income Tax Act (Canada) do not apply for the purposes of this Act. R.S.O. 1990, c. C.40, s. 14 (3); 1996, c. 29, s. 40 (1); 2004, c. 16, s. 2 (2).

Limit on capital gains reserve

(3.1)  Despite subparagraph 40 (1) (a) (iii) of the Income Tax Act (Canada), the amount a corporation may claim as a deduction under that subparagraph for the purposes of this Act in determining its gain for a taxation year from the disposition of a property shall not exceed the amount claimed for the taxation year for the purposes of the Income Tax Act (Canada) under that subparagraph in respect of the disposition. 1997, c. 43, Sched. A, s. 9 (1); 2004, c. 16, s. 2 (2).

Exception

(3.2)  Subsection (3.1) does not apply in determining the amount of a corporation’s gain for a taxation year from the disposition of a property if section 5.2 or 5.3 applies in determining the amount deducted by the corporation under subparagraph 40 (1) (a) (iii) of the Income Tax Act (Canada), as it applies for the purposes of this Act, in determining the amount of the gain. 1998, c. 34, s. 32 (1); 1999, c. 9, s. 79 (1); 2004, c. 16, s. 2 (2).

Same

(3.3)  Subsection (3.2) applies to taxation years ending after the day on which that subsection comes into force. 1998, c. 34, s. 32 (1); 2004, c. 16, s. 2 (2).

Idem

(4)  In the application of subparagraph 40 (2) (a) (i) and paragraph 44 (7) (a) of the Income Tax Act (Canada) for the purposes of this Act, the said provisions shall be read as though the words “was not resident” were deleted and the words “ceased to have a permanent establishment” were inserted in lieu thereof. R.S.O. 1990, c. C.40, s. 14 (4); 2004, c. 16, s. 2 (2).

Adjustments to cost base

(5)  The following rules apply for the purposes of this Act in computing the adjusted cost base to a corporation of property as required under subsection (1):

1. If the property is a foreign resource property, the adjusted cost base of the property to the corporation,

i. shall be increased by the amount, if any, of the foreign exploration and development expenses incurred by the corporation after 1971 with respect to the property that has not been allowed as a deduction from income for the purposes of this Act, and

ii. shall be reduced by,

A. any amount that has become receivable by the corporation at a particular time in a taxation year as the result of a transaction that occurred after May 6, 1974 in which the consideration given by the corporation for the amount was property or services the original cost of which may reasonably be regarded as having been foreign exploration and development expenses, and

B. any amount required by subsection 80 (9) of the Income Tax Act (Canada) to be applied to reduce the adjusted cost base of the property at or before the end of the taxation year.

2. Clause 53 (2) (c) (ii) (B) of the Income Tax Act (Canada) applies, except that the clause shall be read without the words “and foreign resource pool expenses”.

3. Subparagraph 53 (2) (k) (i) of the Income Tax Act (Canada) applies, except that the reference in clause 53 (2) (k) (i) (B) of that Act to section 65 shall be read as a reference to both section 65 of that Act and section 17 of this Act.

4. If the property is an interest in a partnership,

i. there shall be deducted in respect of each fiscal period of the partnership ending before that time all amounts deducted by the corporation for a taxation year commencing before that time,

A. under section 12 in respect of the corporation’s share of the qualified expenditures made by the partnership in the fiscal period,

B. under section 13 in respect of the portion of the property of the partnership deemed to be eligible assets acquired by the corporation,

C. under section 13.1 in respect of an amount deducted under clause 11 (10) (a) by the partnership as an Ontario new technology tax incentive,

D. under sections 13.2 and 13.3 in respect of the corporation’s share of the qualifying expenditures under each of those sections made by the partnership in the fiscal period,

E. under section 13.4 in respect of the corporation’s share of the capital costs incurred by the partnership in the fiscal period, and

F. under section 13.5 in respect of the corporation’s share of the amount described in subsection 13.5 (4), as determined under that subsection, and

ii. there shall be added in respect of each fiscal period of the partnership ending before that time all amounts included in the income of the corporation for a taxation year commencing before that time under subsection 12 (13) or section 11.1. 2005, c. 28, Sched. D, s. 4 (1).

Exception

(5.1)  Despite paragraph 4 of subsection (5), if the corporation’s partnership interest is in a limited partnership that had a non-capital loss for a fiscal period ending in a taxation year of the corporation, the following rules apply:

1. An amount described in subparagraph 4 i of subsection (5) shall be deducted from the adjusted cost base of the corporation’s interest in the limited partnership only to the extent that the amount may reasonably be considered not to have been included in the calculation of the amount of the corporation’s limited partnership loss for the taxation year.

2. An amount described in subparagraph 4 ii of subsection (5) shall be added to the adjusted cost base of the corporation’s interest in the limited partnership only to the extent that the amount may reasonably be considered not to have been included in the calculation of the amount of the corporation’s limited partnership loss for the taxation year. 2005, c. 28, Sched. D, s. 4 (1).

Definitions

(6)  In this section,

“foreign exploration and development expenses” incurred by a corporation means,

(a) any drilling or exploration expense, including any general geological or geophysical expense, incurred by it on or in respect of exploring or drilling for petroleum or natural gas outside Canada,

(b) any prospecting, exploration or development expense incurred by it in searching for minerals outside Canada,

(c) any annual payment made by the corporation for the preservation of a foreign resource property, and

(d) its share of the foreign exploration and development expenses incurred by any association, partnership or syndicate in a fiscal period thereof, if at the end of that fiscal period it was a member or partner thereof; (“frais d’exploration et d’aménagement à l’étranger”)

“foreign resource property” of a corporation means any property that would be a Canadian resource property of the corporation within the meaning of subsection 66 (15) of the Income Tax Act (Canada) if the definition of “Canadian resource property” were read as if the references therein to “in Canada” were references to “outside Canada”. (“avoir minier étranger”) R.S.O. 1990, c. C.40, s. 14 (6); 1996, c. 29, s. 40 (3); 2004, c. 16, s. 2 (2).

Interpretation

(7)  Subsections 127.2 (8) and 127.3 (6) of the Income Tax Act (Canada) apply in the determination of the cost of and capital gain from the disposition of capital property which includes shares, debt obligations and rights. R.S.O. 1990, c. C.40, s. 14 (7); 2004, c. 16, s. 2 (2).

Deemed government assistance

(8)  Despite subsection 1 (3.1), in the application of paragraph 53 (2) (k) of the Income Tax Act (Canada) for the purposes of this Act, all amounts deducted under subsection 127 (5) or (6) of that Act, or deemed to have been deducted under subsection 127 (5) by operation of subsection 127.1 (3) or 192 (10) of that Act in the application of paragraph 53 (2) (k) for the purposes of that Act, shall be deemed to be assistance received by the corporation before that time from a government. R.S.O. 1990, c. C.40, s. 14 (8); 2004, c. 16, s. 2 (2); 2005, c. 28, Sched. D, s. 4 (2).

Subdivision C — Other Sources of Income

Income Tax Act (Canada), Part I (B) (d) applicable

15.  (1)  Except as hereinafter provided, subdivision d of Division B of Part I of the Income Tax Act (Canada) is applicable for the purposes of this Act in so far as the said subdivision applies to corporations. R.S.O. 1990, c. C.40, s. 15 (1); 2004, c. 16, s. 2 (2).

Disposition of resource property

(2)  In the application of section 59 of the Income Tax Act (Canada) for the purposes of this Act,

(a) subsection (1) and paragraphs (3.2) (a) and (3.3) (f) of the said section are not applicable; and

(b) the references in subsection (2) of the said section to amounts deducted as a reserve in computing income for the immediately preceding taxation year shall include any amount deducted under section 16 of the Corporations Tax Act, being chapter 97 of the Revised Statutes of Ontario, 1980, in computing income for the immediately preceding taxation year. R.S.O. 1990, c. C.40, s. 15 (2); 2004, c. 16, s. 2 (2).

Application of Income Tax Act (Canada), s. 59.1

(3)  In the application of section 59.1 of the Income Tax Act (Canada) for the purposes of this Act, the reference to “this Part” shall be read as a reference to Part V of this Act. 1994, c. 14, s. 5 (1); 2004, c. 16, s. 2 (2).

Subdivision D — Deductions in Computing Income

Application of s. 60 of Income Tax Act (Canada)

16.  (1)  Except as hereinafter provided, section 60 of the Income Tax Act (Canada) is applicable for the purposes of this Act in so far as the said section applies to corporations. R.S.O. 1990, c. C.40, s. 16 (1); 2004, c. 16, s. 2 (2).

Corporation taxes deductible

(2)  In addition to the deductions permitted by virtue of subsection (1), there may be deducted in computing the income of a corporation for a taxation year all corporation taxes payable in the taxation year by the corporation. R.S.O. 1990, c. C.40, s. 16 (2); 2004, c. 16, s. 2 (2).

Definitions

(3)  In this section,

“corporation income tax” means a tax imposed by the Parliament of Canada or by the Legislature of a province or by a municipality in the province that is declared by the regulations to be a tax of general application on the profits of corporations; (“impôt sur le revenu des sociétés”)

“corporation tax” means a tax imposed by the Legislature of a province or by a municipality in the province that is declared by the regulations to be a tax on corporations, but does not include,

(a) a corporation income tax, or

(b) any other tax declared by the regulations not to be a corporation tax. (“impôt sur les sociétés”) R.S.O. 1990, c. C.40, s. 16 (3); 2004, c. 16, s. 2 (2).

Application of Income Tax Act (Canada), ss. 61.3, 61.4

16.1  Sections 61.3 and 61.4 of the Income Tax Act (Canada) apply for the purposes of this Act in so far as those sections apply to corporations. 1996, c. 29, s. 41 (1); 2004, c. 16, s. 2 (2).

Allowance for oil or gas well, mine or timber limit

17.  (1)  There may be deducted in computing a corporation’s income for a taxation year such amount as an allowance, if any, in respect of,

(a) a natural accumulation of petroleum or natural gas, oil or gas well, mineral resource or timber limit; or

(b) the processing, to the prime metal stage or its equivalent, of ore from a mineral resource,

as is allowed by regulation. R.S.O. 1990, c. C.40, s. 17 (1); 2004, c. 16, s. 2 (2).

Regulations

(2)  For greater certainty it is hereby declared that, in the case of a regulation made under subsection (1),

(a) there may be prescribed by such regulation an amount in respect of any or all,

(i) natural accumulations of petroleum or natural gas, oil or gas wells or mineral resources in which the corporation has an interest, or

(ii) processing operations described in clause (1) (b) that are carried on by the corporation; and

(b) despite any other provision contained in this Act, the Lieutenant Governor in Council may prescribe the formula by which the amount that may be allowed to the corporation by such regulation shall be determined. R.S.O. 1990, c. C.40, s. 17 (2); 2004, c. 16, s. 2 (2).

Lessee’s share of allowance

(3)  Where a deduction is allowed under subsection (1) in respect of a coal mine operated by a lessee, the lessor and lessee may agree as to what portion of the allowance each may deduct and, in the event that they cannot agree, the Minister may fix the portions. R.S.O. 1990, c. C.40, s. 17 (3); 2004, c. 16, s. 2 (2).

Idem

(4)  For the purpose of subsection (3), where an agreement has been made pursuant to subsection 65 (3) of the Income Tax Act (Canada), the ratio of the apportionment of the allowance that has been determined thereunder shall be deemed to apply for the purposes of this Act. R.S.O. 1990, c. C.40, s. 17 (4); 2004, c. 16, s. 2 (2).

Application

(5)  For the purpose of subsection 1 (3.1), this section applies in lieu of section 65 of the Income Tax Act (Canada). R.S.O. 1990, c. C.40, s. 17 (5); 2004, c. 16, s. 2 (2); 2005, c. 28, Sched. D, s. 5.

Exploration and development expenses

18.  (1)  A principal-business corporation may deduct, in computing its income for a taxation year, the lesser of,

(a) the aggregate of such of its Canadian exploration and development expenses as were incurred by it before the end of the taxation year, to the extent that they were not deductible in computing income for a previous taxation year; and

(b) of that aggregate, an amount equal to its income for the taxation year if no deduction were allowed under this subsection or section 17, minus the deductions allowed for the taxation year by sections 112 and 113 of the Income Tax Act (Canada) as made applicable by section 34 of this Act. R.S.O. 1990, c. C.40, s. 18 (1); 2004, c. 16, s. 2 (2).

Expenses of other corporations

(2)  A corporation other than a principal-business corporation may deduct, in computing its income for a taxation year, the lesser of,

(a) the aggregate of such of its Canadian exploration and development expenses as were incurred by it before the end of the taxation year to the extent they were not deductible in computing its income for a previous taxation year; and

(b) of that aggregate, the greater of,

(i) such amount as the corporation may claim, not exceeding 20 per cent of the aggregate determined under clause (a), and

(ii) the aggregate of,

(A) such part of its income for the taxation year as may reasonably be regarded as attributable to the production of petroleum or natural gas from wells in Canada or to the production of minerals from mines in Canada,

(B) its income for the taxation year from royalties in respect of an oil or gas well in Canada or a mine in Canada, and

(C) the aggregate of amounts, each of which is an amount in respect of a Canadian resource property that has been disposed of by it, equal to the amount included in computing its income for the taxation year by virtue of subsection 15 (2) in respect of the disposition of the property,

if no deduction were allowed for the taxation year under this subsection, subsection (3) or section 17. R.S.O. 1990, c. C.40, s. 18 (2); 2004, c. 16, s. 2 (2).

Ontario exploration and development expenses: corporation other than a principal-business corporation

(3)  A corporation other than a principal-business corporation may deduct, in computing its income for a taxation year, the lesser of,

(a) the aggregate of such of its Ontario exploration and development expenses as were incurred by it before the end of the taxation year to the extent that they were not deducted in computing its income for a previous year, minus that portion of the deduction allowed, if any, in computing its income for the taxation year under subsection (2) which is reasonably attributable to Ontario exploration and development expenses; and

(b) that portion of the amount determined under clause (a) equal to the amount of its income for the taxation year if no deductions were allowed under this section, minus,

(i) that portion of the deduction allowed for the taxation year under subsection (2) which is reasonably attributable to Ontario exploration and development expenses, and

(ii) the deduction allowed for the taxation year under sections 112 and 113 of the Income Tax Act (Canada) as made applicable by section 34 of this Act. R.S.O. 1990, c. C.40, s. 18 (3); 2004, c. 16, s. 2 (2).

Dealers

(4)  Section 16 of the Corporations Tax Act, being chapter 97 of the Revised Statutes of Ontario, 1980, and subsection 15 (2), subsections (2) and (3) of this section and sections 19 and 21 do not apply in computing the income for a taxation year under this Part of a corporation, other than a principal-business corporation, whose business includes trading or dealing in rights, licences or privileges to explore for, drill for or take minerals, petroleum, natural gas or other related hydrocarbons. 1994, c. 14, s. 6 (1); 2004, c. 16, s. 2 (2).

Joint exploration corporation: renunciation of its exploration and development expenses in favour of shareholder corporation

(5)  The portion, if any, of its Canadian exploration and development expenses that a joint exploration corporation may renounce in favour of a shareholder corporation shall be determined in accordance with the rules provided in subsection 66 (10) of the Income Tax Act (Canada) and paragraphs (a) and (b) of the said subsection are applicable, except that for the purposes of this subsection,

(a) the references in the said subsection to subsections (1) and (3) of that section shall be deemed to be references to subsections (1) and (2) of this section; and

(b) the references in paragraph (b) of the said subsection to paragraph (1) (a) of that section shall be deemed to be a reference to clause (1) (a) of this section. R.S.O. 1990, c. C.40, s. 18 (5); 2004, c. 16, s. 2 (2).

Idem

(6)  Subsections 66 (10.1), (10.2), (10.3) and (10.4) of the Income Tax Act (Canada) are applicable for the purposes of this Act. R.S.O. 1990, c. C.40, s. 18 (6); 2004, c. 16, s. 2 (2).

Change in control

(7)  Subsections 66 (11) and (11.3) of the Income Tax Act (Canada), except paragraph 66 (11) (e), are applicable for the purposes of this Act. R.S.O. 1990, c. C.40, s. 18 (7); 2004, c. 16, s. 2 (2).

Idem

(8)  Subsections 66 (11.4) and (11.5) of the Income Tax Act (Canada) are applicable for the purposes of this Act with respect to acquisitions of Canadian resource properties. R.S.O. 1990, c. C.40, s. 18 (8); 2004, c. 16, s. 2 (2).

Computation of exploration and development expenses

(9)  In computing the Canadian exploration and development expenses and Ontario exploration and development expenses of a corporation,

(a) there shall be deducted the aggregate of all amounts paid to it after 1971 and before the 25th day of May, 1976,

(i) under the Northern Mineral Exploration Assistance Regulations (Canada) made under an Appropriation Act (Canada) that provides for payments in respect of the Northern Mineral Grants Program,

(ii) pursuant to any agreement entered into between the corporation and Her Majesty in right of Canada under the Northern Mineral Grants Program or the Development Program of the Department of Indian Affairs and Northern Development, or

(iii) under the Mineral Exploration Assistance Program (Ontario),

to the extent that the amounts have been expended by the corporation as or on account of Canadian exploration and development expenses or Ontario exploration and development expenses, as the case may be; and

(b) there shall be included any amount, except an amount in respect of interest, paid by the corporation, after 1971 in respect of amounts paid to it before the 25th day of May, 1976, under the Regulations referred to in subclause (a) (i) to Her Majesty in right of Canada and under the Mineral Exploration Assistance Program (Ontario) to Her Majesty in right of Ontario. R.S.O. 1990, c. C.40, s. 18 (9); 2004, c. 16, s. 2 (2).

Limitations

(10)  Except as otherwise provided in this section or section 19, where a corporation has incurred an outlay or expense in respect of which a deduction from income is authorized under more than one provision of this section or section 19, the corporation is not entitled to make the deduction under more than one provision but is entitled to select the provision under which to make the deduction. R.S.O. 1990, c. C.40, s. 18 (10); 2004, c. 16, s. 2 (2).

Idem

(11)  Despite subsection (10), a corporation that is entitled to a deduction under both subsections (2) and (3) may, in addition to the deduction under subsection (2), deduct such additional amount as it may claim in respect of Ontario exploration and development expenses under subsection (3). R.S.O. 1990, c. C.40, s. 18 (11); 2004, c. 16, s. 2 (2).

Limitations of Canadian exploration and development expenses

(12)  Subsection 66 (12.1) of the Income Tax Act (Canada) is applicable for the purposes of this Act in so far as the said subsection applies to corporations, except that, in its application for the purposes of this Act, the reference in paragraph (a) thereof to “before May 7, 1974” shall be deemed to be a reference to “before the 20th day of May, 1981”. R.S.O. 1990, c. C.40, s. 18 (12); 2004, c. 16, s. 2 (2).

Unitized oil or gas field in Canada

(13)  Subsections 66 (12.2), (12.3) and (12.5) of the Income Tax Act (Canada) are, in so far as the said subsections apply to corporations, applicable for the purposes of this Act except that, in the application of the said subsection (12.2) for the purposes of this Act, the reference therein to “before May 7, 1974” shall be deemed to be a reference to “before the 20th day of May, 1981”. R.S.O. 1990, c. C.40, s. 18 (13); 2004, c. 16, s. 2 (2).

Amount deemed deductible under this Subdivision

(14)  For the purposes of section 9, any amount deductible under The Corporations Tax Application Rules, 1972 in respect of this section shall be deemed to be deductible under this Subdivision. R.S.O. 1990, c. C.40, s. 18 (14); 2004, c. 16, s. 2 (2).

Definitions

(15)  In this section and in sections 19, 20 and 21 and in the provisions of the Income Tax Act (Canada) made applicable for the purposes of this Act,

“agreed portion” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“partie convenue”)

“assistance” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“montant à titre d’aide”)

“Canadian exploration and development expenses” incurred by a corporation means any expense incurred before the 20th day of May, 1981 that is,

(a) any drilling or exploration expense, including any general geological or geophysical expense, incurred by the corporation after 1971 on or in respect of exploring or drilling for petroleum or natural gas in Canada,

(b) any prospecting, exploration or development expense incurred by it after 1971 in searching for minerals in Canada,

(c) despite paragraph 18 (1) (m) of the Income Tax Act (Canada), as that paragraph applies to this Act for a taxation year ending before January 1, 2003 by virtue of subsection 11 (1) of this Act, the cost to the corporation of a Canadian resource property, but for greater certainty not including any payment made to any of the persons referred to in any of the subparagraphs (i) to (iii) of the said paragraph (m) for the preservation of a person’s rights in respect of a Canadian resource property or a property that would have been a Canadian resource property if it had been acquired by the corporation after 1971, and not including a payment to which the said paragraph (m) applied by virtue of subparagraph (v) thereof,

(c.1) despite subsection 11.0.1 (5) of this Act, for taxation years ending after December 31, 2002, the cost to the corporation of a Canadian resource property, but for greater certainty not including any payment made to any of the persons referred to in clause 11.0.1 (5) (a) for the preservation of a person’s rights in respect of a Canadian resource property or a property that would have been a Canadian resource property if it had been acquired by the corporation after 1971, and not including a payment to which subsection 11.0.1 (5) applies by virtue of subclause 11.0.1 (5) (b) (ii),

(d) the corporation’s share of any of the expenses referred to in clauses (a), (b) and (c) incurred after 1971 by any association, partnership or syndicate in a fiscal period thereof, if at the end of that fiscal period the corporation was a member or partner thereof, and

(e) any expenses referred to in clauses (a), (b) and (c) incurred after 1971 pursuant to an agreement with another corporation under which the corporation incurred the expense solely in consideration for shares of the capital stock of the other corporation issued to it by the other corporation or any interest in such shares or right thereto,

but for greater certainty, does not include,

(f) any consideration given by the corporation for any share or any interest therein or right thereto, except as provided by clause (e), or

(g) any expense described in clause (e) incurred by another person to the extent that the expense was, by virtue of clause (e), a Canadian exploration and development expense of that other person,

but no amount of assistance or benefit that a corporation has received or is entitled to receive after the 25th day of May, 1976 in respect of or related to its Canadian exploration and development expenses made or incurred before the 1st day of January, 1981, from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, shall reduce the amount of any of the expenses described in any of clauses (a) to (e); (“frais d’exploration et d’aménagement au Canada”)

“drilling or exploration expense” incurred on or in respect of exploring or drilling for petroleum or natural gas has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“frais d’exploration ou de forage”)

“flow-through share” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada) and includes a share issued pursuant to an agreement entered into by a corporation after the 28th day of February, 1986 and before the 1st day of January, 1987 which qualifies as a “flow-through share” for the purposes of that Act; (“action accréditive”)

“joint exploration corporation” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“société d’exploration en commun”)

“oil or gas well” has the meaning given to that expression by subsection 248 (1) of the Income Tax Act (Canada); (“puits de pétrole ou de gaz”)

“Ontario exploration and development expenses” incurred by a corporation means any expenses that would be Canadian exploration and development expenses incurred by the corporation if the definition of “Canadian exploration and development expenses” were read as if the references therein to,

(a) “in Canada” were references to “in Ontario”,

(b) “after 1971” were references to “after the 9th day of April, 1974 and before the 20th day of May, 1981”, and

(c) “Canadian” were references to “Ontario”; (“frais d’exploration et d’aménagement en Ontario”)

“Ontario resource property” of a corporation means any property acquired after the 9th day of April, 1974 and before the 20th day of May, 1981 that would be a Canadian resource property of the corporation within the meaning of paragraph 66 (15) (c) of the Income Tax Act (Canada) if that paragraph were read as if the references therein to “in Canada” were references to “in Ontario”; (“avoir minier ontarien”)

“original owner”, of a Canadian resource property, means the person who would be the “original owner” of that property under subsection 66 (15) of the Income Tax Act (Canada) if the definition of “original owner” in that subsection were read without the references therein to “foreign resource property”, “foreign exploration and development expenses” and to subsections 66 (2), (3) and (4) and 66.7 (2) and (13) of that Act; (“propriétaire obligé”)

“outlay” or “expense” have the meaning given to those expressions by subsection 66 (15) of the Income Tax Act (Canada); (“dépenses”)

“predecessor owner”, of a Canadian resource property, means the person who would be the “predecessor owner” of that property under subsection 66 (15) of the Income Tax Act (Canada) if the definition of “predecessor owner” in that subsection were read without the references therein to “foreign resource property” and to subsections 66.7 (2) and (15) of that Act; (“propriétaire antérieur”)

“principal-business corporation” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“société exploitant une entreprise principale”)

“production”, from a Canadian resource property, has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada), except that with respect to iron ore, the production from a Canadian resource property means the iron ore produced from the property processed to any stage that is not beyond the prime metal stage or its equivalent; (“production”)

“reserve amount” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“provision”)

“selling instrument” has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada); (“avis d’émission”)

“shareholder corporation” of a joint exploration corporation has the meaning given to that expression by subsection 66 (15) of the Income Tax Act (Canada). (“société actionnaire”) R.S.O. 1990, c. C.40, s. 18 (15); 1996, c. 29, s. 42; 2004, c. 16, s. 2 (2); 2004, c. 31, Sched. 9, s. 9.

Application

(16)  For the purposes of subsection 1 (3.1), this section applies in lieu of section 66 of the Income Tax Act (Canada). R.S.O. 1990, c. C.40, s. 18 (16); 2004, c. 16, s. 2 (2); 2005, c. 28, Sched. D, s. 6.

Canadian exploration expense, Canadian development expense and Canadian oil and gas property expense

19.  (1)  Sections 66.1, 66.2 and 66.4 of the Income Tax Act (Canada) are applicable for the purposes of this Act in so far as the said sections apply to corporations except that, in the application of the said sections for the purposes of this Act,

(a) the references therein to “Canadian exploration expense”, “Canadian development expense”, “Canadian oil and gas property expense”, “cumulative Canadian exploration expense”, “cumulative Canadian development expense” and “cumulative Canadian oil and gas property expense” shall be deemed to be references to such of those outlays or expenses as are made or incurred after the 19th day of May, 1981;

(b) subject to section 22, in addition to the deduction provided under this section by virtue of subsection 66.2 (2) of the Income Tax Act (Canada), a corporation may claim in respect of its Canadian development expenses made or incurred in Ontario in the taxation year or in a previous taxation year a deduction of an amount equal to 70 per cent of the amount, if any, by which,

(i) the aggregate of the amounts described in subparagraphs 66.2 (5) (b) (i) to (iii) of the Income Tax Act (Canada) that are in respect of expenses made or incurred in Ontario,

exceeds the aggregate of all amounts each of which is,

(ii) any amount previously deducted in computing its income for a taxation year by virtue of this clause, or

(iii) the aggregate of the amounts described in subparagraphs 66.2 (5) (b) (iv) to (xi) and (xiii) of the Income Tax Act (Canada) that are in respect of expenses incurred in Ontario;

(c) for the purpose of computing a corporation’s cumulative Canadian development expense at any time, any amount deducted by virtue of clause (b) in computing income for a taxation year ending before that time shall be deemed to be an amount deducted in computing its income for a taxation year ending before that time, but such amount shall not be included in computing the amount under subclause (b) (iii); and

(d) the reference to the Minister in clause 66.1 (6) (a) (ii.1) (D) of the Income Tax Act (Canada) shall be read as a reference to the Minister of National Revenue. R.S.O. 1990, c. C.40, s. 19; 2004, c. 16, s. 2 (2).

Taxation years after 2002

(2)  Despite subsection (1), paragraph (e) of the definition of “Canadian development expense” in subsection 66.2 (5) of the Income Tax Act (Canada) shall be deemed to refer to section 11.0.1 of this Act and shall be read as follows for the purposes of the application of that definition for taxation years ending after December 31, 2002:

(e) despite subsection 11.0.1 (5), for taxation years ending after December 31, 2002, the cost to the corporation of, including any payment for the preservation of a corporation’s rights in respect of, any property described in paragraph (b), (e) or (f) of the definition of “Canadian resource property” in subsection 66 (15) of the Income Tax Act (Canada) or any right to or interest in such property (other than such a right or an interest that the corporation has by reason of being a beneficiary under a trust or a member of a partnership) but not including any payment made to any of the persons referred to in clause 11.0.1 (5) (a) for the preservation of a corporation’s rights in respect of a Canadian resource property nor a payment to which subsection 11.0.1 (5) applied because of subclause 11.0.1 (5) (b) (ii). 2004, c. 31, Sched. 9, s. 10.

Same

(3)  Despite subsection (1), paragraph (a) of the definition of “Canadian oil and gas property expense” in subsection 66.4 (5) of the Income Tax Act (Canada) shall be deemed to refer to section 11.0.1 of the Act and shall be read as follows for the purposes of the application of that definition for taxation years ending after December 31, 2002:

(a) despite subsection 11.0.1 (5), for taxation years ending after December 31, 2002, the cost to the corporation of, including any payment for the preservation of a corporation’s rights in respect of, any property described in paragraph (a), (c) or (d) of the definition of “Canadian resource property” in subsection 66 (15) of the Income Tax Act (Canada) or any right to or interest in such property (other than such a right or an interest that the corporation has by reason of being a beneficiary under a trust or a member of a partnership) or an amount paid or payable to Her Majesty in right of the Province of Saskatchewan as a net royalty payment pursuant to a net royalty petroleum and natural gas lease that was in effect on March 31, 1977 to the extent that it can reasonably be regarded as a cost of acquiring the lease, but not including any payment made to any of the persons referred to in clause 11.0.1 (5) (a) for the preservation of a corporation’s rights in respect of a Canadian resource property nor a payment (other than a net royalty payment referred to in this paragraph) to which subsection 11.0.1 (5) applied because of subclause 11.0.1 (5) (b) (ii). 2004, c. 31, Sched. 9, s. 10.

Application of Income Tax Act (Canada), s. 66, part

20.  Subsections 66 (12.6) to (12.741), (16), (17), (18) and (19) of the Income Tax Act (Canada) are applicable for the purposes of this Act in so far as they apply to corporations, except that in the application of these subsections,

(a) references to the “Minister” in subsections 66 (12.68), (12.69), (12.691), (12.7), (12.701), (12.73), (12.74) and (12.741) of that Act shall be read as references to the Minister of National Revenue;

(b) the reference to “this Part” in subsection 66 (12.71) of that Act shall be read as a reference to Part II of this Act;

(c) a prescribed form referred to in subsection 66 (12.68), (12.69) or (12.7) of that Act that was required to be filed, and that was filed, on or before the 19th day of March, 1987, shall be deemed to have been filed at the time required under that subsection; and

(d) expenditures described in subparagraph 66.1 (6) (a) (i) or (ii.1) of that Act renounced before the 14th day of October, 1988 shall be deemed to have been renounced within ninety days after the 31st day of December, 1987. R.S.O. 1990, c. C.40, s. 20; 1994, c. 14, s. 7 (1, 2); 1996, c. 29, s. 43 (1); 2004, c. 16, s. 2 (2).

Successor rules

21.  Section 66.7 of the Income Tax Act (Canada), other than subsections (2), (8), (13) and (15) and paragraph (10) (h), is applicable for the purposes of this Act, except that in the application thereof,

(a) references to “Canadian exploration and development expenses” shall be read as references to only Canadian exploration and development expenses incurred before the 20th day of May, 1981;

(b) the section shall be read without the references to “foreign exploration and development expenses”, “foreign resource property” and “foreign resource properties”; and

(c) references to “the Minister” in subsection (12.1) shall be read as references to the Minister of National Revenue. R.S.O. 1990, c. C.40, s. 21; 1994, c. 14, s. 8 (1); 2004, c. 16, s. 2 (2).

Proration of “CDE” and “COGPE” for short taxation years

22.  Subsection 66 (13.1) of the Income Tax Act (Canada) is applicable for the purposes of this Act and in the application thereof the reference to paragraph 66.2 (2) (c) of that Act shall be deemed to include a reference to clause 19 (1) (b). R.S.O. 1990, c. C.40, s. 22; 2004, c. 16, s. 2 (2); 2004, c. 31, Sched. 9, s. 11.

Limited partnership resource expenditures

23.  Section 66.8 of the Income Tax Act (Canada) is applicable for the purposes of this Act and in the application thereof the foreign exploration and development expenses referred to in clause (1) (a) (i) (D) of that section shall be limited to only those foreign exploration and development expenses that are deductible. R.S.O. 1990, c. C.40, s. 23; 2004, c. 16, s. 2 (2).

Shares taxed as inventory

24.  Section 66.3 of the Income Tax Act (Canada) is applicable for the purposes of this Act in so far as that section applies to corporations. R.S.O. 1990, c. C.40, s. 24; 2004, c. 16, s. 2 (2).

Application of Income Tax Act (Canada), s. 66.6

25.  Section 66.6 of the Income Tax Act (Canada) is applicable for the purposes of this Act with the references therein to “this Part” read as references to Part II of this Act. R.S.O. 1990, c. C.40, s. 25; 2004, c. 16, s. 2 (2).

Subdivision E — Rules Relating to Computation of Income

Income Tax Act (Canada), Part I (B) (f), applicable

26.  (1)  The rules provided in subdivision f of Division B of Part I of the Income Tax Act (Canada), relating to the computation of income are, in so far as the said rules apply to corporations, applicable in computing income for the purposes of this Act. R.S.O. 1990, c. C.40, s. 26 (1); 2004, c. 16, s. 2 (2).

General limitation re expenses

(2)  In computing income, no deduction shall be made in respect of an outlay or expense in respect of which any amount is otherwise deductible under this Act, except to the extent that the outlay or expense was reasonable in the circumstances. R.S.O. 1990, c. C.40, s. 26 (2); 2004, c. 16, s. 2 (2).

Treatment of foreign resource properties on amalgamation

(3)  In the application of subsection 69 (13) of the Income Tax Act (Canada) for the purposes of this Act, the proceeds of disposition of a foreign resource property shall be deemed to be the cost amount to the corporation of the foreign resource property immediately before the amalgamation or merger. R.S.O. 1990, c. C.40, s. 26 (3); 2004, c. 16, s. 2 (2).

Application of Income Tax Act (Canada)

(4)  References in section 67.3 of the Income Tax Act (Canada) to the prescribed rate shall mean the prescribed rate determined in accordance with the regulations made under the Income Tax Act (Canada). 1992, c. 3, s. 6; 2004, c. 16, s. 2 (2); 2004, c. 16, s. 2 (2).

Disposition of petroleum, etc.

(4.1)  Where a corporation is an operator with respect to a natural accumulation of petroleum or natural gas in Canada, an oil or gas well in Canada or a mineral resource in Canada and at any time in a taxation year beginning after December 31, 2006 disposes of or acquires property produced in the operation that is petroleum, natural gas or related hydrocarbons or metal or minerals produced in the operation, the rules prescribed by the regulations apply to determine the amount of the proceeds of disposition deemed to be received by the corporation or the cost to the corporation of the property. 2004, c. 31, Sched. 9, s. 12.

Reduction of resource expenditures

(5)  Subsection 80 (8) of the Income Tax Act (Canada) shall be read as if paragraph (e) of that subsection had not been enacted. 1996, c. 29, s. 44 (1); 2004, c. 16, s. 2 (2).

Resource royalties, reimbursement by corporation

(6)  The rules set out in subsection (7) apply for the purposes of this Act, other than this section, where for taxation years beginning after December 31, 2006,

(a) a corporation, under the terms of a contract, pays to another person an amount (in this subsection referred to as the “specified payment”) that may reasonably be considered to have been received by the other person as a reimbursement, contribution or allowance in respect of an amount (referred to in clause (b) as the “particular amount”) paid or payable by the other person;

(b) the particular amount is included in the income of the other person or is denied as a deduction in computing the income of the other person by reason of subsection 11.0.1 (3) or (5), as the case may be; and

(c) the corporation was resident in Canada or carrying on business in Canada at the time the specified payment was made by the corporation. 2004, c. 31, Sched. 9, s. 12.

Same

(7)  The following are the rules for the purposes of subsection (6):

1. The corporation shall be deemed neither to have made nor to have become obligated to make the specified payment to the other person but to have paid an amount described in subsection 11.0.1 (5) equal to the amount of the specified payment.

2. The other person shall be deemed neither to have received nor to have become entitled to receive the specified payment from the corporation. 2004, c. 31, Sched. 9, s. 12.

Benefit conferred on corporation

27.  (1)  If a person at any time confers a benefit on a corporation either directly or indirectly by any means, the amount of the benefit shall be included in computing the corporation’s income or taxable income earned in Canada for the taxation year in which the benefit is conferred, to the extent that,

(a) the amount of the benefit is not otherwise included in the corporation’s income or taxable income earned in Canada; and

(b) the amount of the benefit would be so included if the amount were a payment made directly by the person to the corporation and the corporation were resident in Canada. R.S.O. 1990, c. C.40, s. 27 (1); 2004, c. 16, s. 2 (2).

Arm’s length

(2)  If it is established that a transaction was entered into by persons dealing at arm’s length, in good faith and not pursuant to or as part of any other transaction, and not to effect payment, in whole or in part, of an existing or future obligation, no party to the transaction shall be regarded for the purpose of this section as having conferred a benefit on a party with whom he, she or it was dealing. R.S.O. 1990, c. C.40, s. 27 (2); 2004, c. 16, s. 2 (2).

Subdivision F — Amounts not Included in Computing Income

Amounts not included in income:

28.  There shall not be included in computing the income of a corporation for a taxation year,

federal grants

(a) an amount paid to a corporation on account of a grant under the Regional Development Incentives Act (Canada) or the Employment Support Act (Canada); and

other amounts

(b) an amount determined in accordance with the rules provided in paragraph 81 (1) (b), (c), (l) or (m) of the Income Tax Act (Canada). R.S.O. 1990, c. C.40, s. 28; 1994, c. 14, s. 10; 2004, c. 16, s. 2 (2).

Subdivision G — Corporations Resident in Canada and Their Shareholders

Income Tax Act (Canada), Part I (B) (h), applicable

29.  (1)  Except as hereinafter provided, the rules provided in subdivision h of Division B of Part I of the Income Tax Act (Canada) are applicable for the purposes of this Act. R.S.O. 1990, c. C.40, s. 29 (1); 2004, c. 16, s. 2 (2).

Amalgamations consideration for resource property disposition

(2)  In lieu of the rule provided in paragraph 87 (2) (p) of the Income Tax Act (Canada) with respect to amalgamations, the following rule is applicable for the purposes of this Act:

For the purpose of computing a deduction from the income of the new corporation for a taxation year under section 16 of the Corporations Tax Act, being chapter 97 of the Revised Statutes of Ontario, 1980, any amount that has been included in computing the income of a predecessor corporation for its last taxation year or a previous taxation year by virtue of clause 14 (3) (a) or (c) of the Corporations Tax Act, being chapter 97 of the Revised Statutes of Ontario, 1980, or subsection 18 (11) or (12) of that Act, or by virtue of subsection 58 (15) or (16) of The Corporations Tax Act as it read in its application to the taxation years prior to 1972, shall be deemed to have been included in computing the income of the new corporation for a previous taxation year by virtue thereof. R.S.O. 1990, c. C.40, s. 29 (2); 2004, c. 16, s. 2 (2).

Provisions of Income Tax Act (Canada), not applicable

(3)  Paragraphs 87 (2) (y.1), (z), (cc) and (pp) and 88 (1) (e.7) of the Income Tax Act (Canada) are not applicable for the purposes of this Act. R.S.O. 1990, c. C.40, s. 29 (3); 2004, c. 16, s. 2 (2).

Application of Income Tax Act (Canada), s. 88 (1) (e.2)

(4)  Paragraph 88 (1) (e.2) of the Income Tax Act (Canada) shall, in its application for the purposes of this Act, be read without reference therein to paragraphs 87 (2) (y.1), (cc) and (pp) of the said Act, and as though the reference therein to paragraph 87 (2) (p) were a reference to subsection (2) of this section. R.S.O. 1990, c. C.40, s. 29 (4); 2004, c. 16, s. 2 (2).

“Minister” deemed to be Minister of National Revenue

(5)  The references to “Minister” in the following provisions of the Income Tax Act (Canada) are deemed to be references to the Minister of National Revenue for Canada for the purposes of this Act:

1. Subsection 85 (7.1).

2. The definition of “public corporation” in subsection 89 (1).

3. Subsection 89 (3). 2001, c. 23, s. 25 (1); 2004, c. 16, s. 2 (2).

Time of election

(6)  In applying subsection 85 (6) of the Income Tax Act (Canada), the reference to “the earliest of the days” shall be read as “the latest of the days” in the situation where subsection 29.1 (4) or (5) applies to the corporations making the election under section 85 of that Act. 1997, c. 43, Sched. A, s. 10; 2001, c. 23, s. 25 (2); 2004, c. 16, s. 2 (2).

Application of Income Tax Act (Canada), s. 86.1 (5)

(7)  In the application of subsection 86.1 (5) of the Income Tax Act (Canada), the reference to “subsections 152 (4) to (5)” is deemed to be a reference to subsection 80 (11) of this Act. 2001, c. 23, s. 25 (3); 2004, c. 16, s. 2 (2).

Ontario corporations and partnerships

29.1  (1)  In this section,

(a) a corporation is an Ontario corporation for a taxation year if not more than 10 per cent of its taxable income for the year is deemed, or would be deemed if it had had income for that year, to have been earned outside Ontario for the purposes of section 39; and

(b) a partnership is an Ontario partnership for a fiscal period of the partnership if not more than 10 per cent of its income for the fiscal period would be deemed to have been earned outside Ontario for the purposes of section 39 if the partnership were a corporation, its fiscal period were its taxation year and it had had income for the fiscal period. 1997, c. 43, Sched. A, s. 11 (1); 1998, c. 34, s. 33 (1); 2004, c. 16, s. 2 (2).

Elections

(2)  The following rules apply in respect of elections under provisions of the Income Tax Act (Canada) that apply for the purposes of this Subdivision:

1. No election may be made by a corporation or the members of a partnership for the purposes of this Act unless the election has been properly made by the corporation or members of the partnership for the purposes of the Income Tax Act (Canada).

2. If the amount elected or deemed to have been elected for the purposes of the Income Tax Act (Canada) is different from the amount that would be elected or deemed to have been elected for the purposes of this Act, without reference to section 5.1, the amount determined for the purposes of the Income Tax Act (Canada) shall apply for the purposes of this Act. 1997, c. 43, Sched. A, s. 11 (1); 2004, c. 16, s. 2 (2).

Exception to subs. (2)

(3)  Paragraph 2 of subsection (2) does not apply if,

(a) the property in respect of which an election is made is property described in subclause 5.1 (8) (a) (iii) or prescribed by the regulations and the conditions described in clauses (7) (a) and (b) would not be met if subsection (7) applied in respect of the property; or

(b) the rules or conditions prescribed by the regulations have been satisfied and the conditions described in clauses (7) (a) and (b) would not be met if subsection (7) applied in respect of the property. 2001, c. 23, s. 26 (1); 2004, c. 16, s. 2 (2).

Elected amounts

(4)  If all of the corporations required to make an election referred to in subsection (2), in respect of a disposition occurring after May 4, 1998, are Ontario corporations for the taxation year to which the election relates, and any partnership whose partners are required to make the election is an Ontario partnership for the fiscal period to which the election relates and all of its partners are corporations at the end of that fiscal period, or the rules or conditions prescribed by the regulations are satisfied, the corporations making an election under the Income Tax Act (Canada) may, upon delivering a joint election in a form approved by the Minister within the time specified in subsection 85 (6) of the Income Tax Act (Canada) as it reads for the purposes of this section, elect an amount in respect of the property equal to,

(a) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada);

(b) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada), less the cost amount of the property for the purposes of that Act, plus the cost amount of the property for the purposes of this Act, calculated immediately before the disposition to which the election relates; or

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b). 1998, c. 34, s. 33 (2); 2004, c. 16, s. 2 (2).

Same

(5)  If the property, in respect of which an election is made under the Income Tax Act (Canada), in respect of a disposition occurring after May 4, 1998, is property referred to in subclause 5.1 (8) (a) (i) or (ii), the corporations making the election, if each of them has a permanent establishment in Ontario, may, upon delivering a joint election in a form approved by the Minister within the time specified in subsection 85 (6) of the Income Tax Act (Canada) as it reads for the purposes of this section, elect an amount in respect of the property equal to,

(a) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada);

(b) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada), less the cost amount of the property for the purposes of that Act, plus the cost amount of the property for the purposes of this Act, calculated immediately before the disposition to which the election relates; or

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b). 1998, c. 34, s. 33 (2); 2004, c. 16, s. 2 (2).

Anti-avoidance

(6)  Subsection (4) does not apply in respect of the disposition of a property occurring after May 4, 1998 if,

(a) the corporation that holds the property immediately after the disposition,

(i) ceases to be an Ontario corporation within 36 months after the end of its taxation year to which the election relates and still holds the property immediately after it ceases to be an Ontario corporation, or

(ii) disposes of the property within 36 months after the end of its taxation year to which the election relates; or

(b) it is reasonable to believe that one of the reasons the corporation or any other person conducted its business and affairs in a manner that resulted in the corporation being an Ontario corporation for the taxation year to which the election relates is to increase or reduce an amount elected for the purposes of this Act. 1998, c. 34, s. 33 (2); 2004, c. 16, s. 2 (2).

Same

(7)  Subsection (5) does not apply in respect of the disposition of a property occurring after May 4, 1998 referred to in that subsection if,

(a) within 36 months after the end of its taxation year to which the election relates,

(i) the corporation that holds the property immediately after the disposition, disposes of the property, or

(ii) that corporation’s Ontario allocation factor is at least 10 percentage points less than its Ontario allocation factor for the taxation year to which the election relates; or

(b) it is reasonable to believe that one of the reasons for the manner in which the corporation or any other person has conducted their business and affairs is to increase or reduce an amount elected for the purposes of this Act. 1998, c. 34, s. 33 (2); 2001, c. 23, s. 26 (2); 2004, c. 16, s. 2 (2).

Deemed fair market value of the consideration

(8)  The amount agreed upon by two corporations in an election in respect of the disposition of property to which subsection (3), (4) or (5) applies is deemed to be the fair market value of the consideration received by the transferor on the disposition, if the amount agreed upon in the election is more than the fair market value, as determined at the time of the disposition, of the consideration or the portion of the consideration received by the transferor that is not in the form of shares or a right to receive shares in the capital stock of the transferee. 2001, c. 23, s. 26 (3); 2004, c. 16, s. 2 (2).

Subdivision H — Shareholders of Corporations not Resident in Canada

Income Tax Act (Canada), Part I (B) (i), applicable

30.  (1)  The provisions of subdivision i of Division B of Part I of the Income Tax Act (Canada) are applicable in computing the income of a corporation for a taxation year for the purposes of this Act. R.S.O. 1990, c. C.40, s. 30 (1); 2004, c. 16, s. 2 (2).

Definition

(2)  In the application of the said subdivision i for the purposes of this Act,

(a) the references therein to “Minister” shall be deemed to be references to the Minister of National Revenue for Canada;

(b) the reference in subsection 94.1 (1) to “this Part” shall be deemed to be a reference to Part II of this Act; and

(c) the aggregate referred to in paragraph 94.1 (1) (f) computed for the purposes of that Act shall apply for the purposes of this Act. R.S.O. 1990, c. C.40, s. 30 (2); 2004, c. 16, s. 2 (2).

Subdivision I — Partnerships and Their Members

Income Tax Act (Canada), Part I (B) (j), applicable

31.  (1)  Except as hereinafter provided, the rules provided in subdivision j of Division B of Part I of the Income Tax Act (Canada) with respect to partnerships and their members are applicable for the purposes of this Act in so far as the said rules apply to corporations. R.S.O. 1990, c. C.40, s. 31 (1); 2004, c. 16, s. 2 (2).

No deduction of reserve

(1.1)  Paragraph 20 (1) (n) of the Income Tax Act (Canada) does not apply in determining for the purposes of this Act a partnership’s income for a fiscal period from a business in respect of a property sold in the course of the business if any property taken as security on the sale of the property has been sold, pledged, assigned or otherwise disposed of. 1998, c. 34, s. 34 (1); 2004, c. 16, s. 2 (2).

Application of s. 11.0.1

(1.2)  If a corporation holds a direct interest in and is a majority interest partner of a partnership at the end of a fiscal period of the partnership ending after December 31, 2002, the corporation’s share of the income or loss of the partnership for the fiscal period in respect of that interest shall be the amount that would be determined if,

(a) section 11.0.1 applied to the partnership for the fiscal period on the basis that the partnership was a corporation and the fiscal period was its taxation year; and

(b) section 11.0.1 applied to any other partnership in which the corporation had an indirect interest through the partnership and of which the corporation is a majority interest partner at any time in the fiscal period on the basis that the partnership was a corporation and its fiscal period was its taxation year. 2005, c. 28, Sched. D, s. 7 (1).

Exception

(2)  Subsection 96 (1.6) of the Income Tax Act (Canada) is not applicable for the purposes of this Act. R.S.O. 1990, c. C.40, s. 31 (2); 2004, c. 16, s. 2 (2).

(3)  Repealed: 2005, c. 28, Sched. D, s. 7 (2).

(3.1)  Repealed: 2005, c. 28, Sched. D, s. 7 (2).

Members of partnerships deemed to have permanent establishment in Ontario

(4)  Where any activity in Ontario of a partnership in a taxation year is such that, if it were a corporation, it would be subject to subsection 2 (2), each corporation that is deemed to be a member of the partnership shall be deemed to be subject to subsection 2 (2) for that taxation year. R.S.O. 1990, c. C.40, s. 31 (4); 2004, c. 16, s. 2 (2).

Definition

(5)  In the application of the said subdivision j for the purposes of this Act, the reference in subsection 96 (5.1) to “Minister” shall be deemed to be a reference to the Minister of National Revenue for Canada. R.S.O. 1990, c. C.40, s. 31 (5); 2004, c. 16, s. 2 (2).

Application of Income Tax Act (Canada), cl. 96 (2.1) (b) (iv) (A)

(6)  For the purposes of this Act, the amount referred to in clause 96 (2.1) (b) (iv) (A) of the Income Tax Act (Canada) shall equal the corporation’s share of the foreign exploration and development expenses incurred by the partnership in the fiscal period that are deductible in computing income for the purposes of this Act. R.S.O. 1990, c. C.40, s. 31 (6); 2004, c. 16, s. 2 (2).

Limited partnership losses

(7)  In the application of subsection 96 (2.1) of the Income Tax Act (Canada) for the purposes of this Act, in determining the amount otherwise determined under paragraph 96 (2.1) (a) of that Act,

(a) there shall be added all amounts deducted by the corporation for the taxation year,

(i) under section 12 in respect of the corporation’s share of the qualified expenditures made by the partnership in the fiscal period, and

(ii) under section 13 in respect of the portion of the property of the partnership deemed to be eligible assets acquired by the corporation; and

(b) there shall be deducted all amounts included in the income of the corporation for the taxation year under subsection 12 (13) in respect of dispositions made by the partnership. R.S.O. 1990, c. C.40, s. 31 (7); 1992, c. 3, s. 7; 2004, c. 16, s. 2 (2).

Time of election

(8)  In applying subsection 96 (4) of the Income Tax Act (Canada), the reference to “the earliest of the days” shall be read as “the latest of the days” in the situation where subsection 31.1 (4) or (5) applies to the corporations and members of the partnership making the election under section 97 of that Act. 1997, c. 43, Sched. A, s. 12; 2001, c. 23, s. 27; 2004, c. 16, s. 2 (2).

Tax elections

Definitions

31.1  (1)  In this section,

“Ontario corporation” has the same meaning as in subsection 29.1 (1); (“société ontarienne”)

“Ontario partnership” has the same meaning as in subsection 29.1 (1). (“société de personnes ontarienne”) 1997, c. 42, Sched. A, s. 13 (1); 2004, c. 16, s. 2 (2).

Elections

(2)  The following rules apply in respect of elections under provisions of the Income Tax Act (Canada) that apply for the purposes of this Subdivision:

1. No election may be made by a corporation and the members of a partnership for the purposes of this Act unless the election has been properly made by the corporation and the members of the partnership for the purposes of the Income Tax Act (Canada).

2. If the amount elected or deemed to have been elected for the purposes of the Income Tax Act (Canada) is different from the amount that would be elected or deemed to have been elected for the purposes of this Act, without reference to section 5.1, the amount determined for the purposes of the Income Tax Act (Canada) shall apply for the purposes of this Act. 1997, c. 42, Sched. A, s. 13 (1); 2004, c. 16, s. 2 (2).

Exception to subs. (2)

(3)  Paragraph 2 of subsection (2) does not apply if,

(a) the property in respect of which an election is made is property described in subclause 5.1 (8) (a) (iii) or prescribed in the regulations and the conditions described in clauses (7) (a) and (b) would not be met if subsection (7) applied on the disposition of the property; or

(b) the rules or conditions prescribed by the regulations have been satisfied and the conditions described in clauses (7) (a) and (b) would not be met if subsection (7) applied on the disposition of the property. 2001, c. 23, s. 28 (1); 2004, c. 16, s. 2 (2).

Elected amounts

(4)  If every corporation required to make an election referred to in subsection (2), in respect of a disposition occurring after May 4, 1998, is an Ontario corporation for the taxation year to which the election relates, and the partnership whose partners are required to make the election is an Ontario partnership for the fiscal period to which the election relates, or the conditions or rules prescribed by the regulations are satisfied, the corporation and members of the partnership making an election under the Income Tax Act (Canada) may, upon delivering a joint election in a form approved by the Minister within the time specified in subsection 96 (4) of the Income Tax Act (Canada) as it reads for the purposes of this section, elect an amount in respect of the disposition equal to,

(a) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada);

(b) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada), less the cost amount of the property for the purposes of that Act, plus the cost amount of the property for the purposes of this Act, calculated immediately before the disposition to which the election relates; or

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b). 1998, c. 34, s. 35; 2004, c. 16, s. 2 (2).

Same

(5)  If the property in respect of which an election is made under the Income Tax Act (Canada), in respect of a disposition occurring after May 4, 1998, is property referred to in subclause 5.1 (8) (a) (i) or (ii), the corporations and members of the partnership making the election, if each of them has a permanent establishment in Ontario, may, upon delivering a joint election in a form approved by the Minister within the time specified in subsection 96 (4) of the Income Tax Act (Canada) as it reads for the purposes of this section, elect an amount in respect of the property equal to,

(a) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada);

(b) the amount elected or deemed to have been elected in respect of the property under the Income Tax Act (Canada), less the cost amount of the property for the purposes of that Act, plus the cost amount of the property for the purposes of this Act, calculated immediately before the disposition to which the election relates; or

(c) an amount that is greater than the lesser of the amounts described in clauses (a) and (b), but less than the greater of the amounts described in clauses (a) and (b). 1998, c. 34, s. 35; 2004, c. 16, s. 2 (2).

Anti-avoidance

(6)  Subsection (4) does not apply in respect of the disposition of a property occurring after May 4, 1998 if,

(a) the partnership that holds the property immediately after the disposition,

(i) ceases to be an Ontario partnership within 36 months after the end of its fiscal period to which the election relates and still holds the property immediately after it ceases to be an Ontario corporation, or

(ii) disposes of the property within 36 months after the end of its fiscal period to which the election relates; or

(b) it is reasonable to believe that one of the reasons the partnership, a member of the partnership or any other person conducted their business and affairs in a manner that resulted in the partnership being an Ontario partnership for the fiscal period to which the election relates is to increase or reduce an amount elected for the purposes of this Act. 1998, c. 34, s. 35; 2004, c. 16, s. 2 (2).

Same

(7)  Subsection (5) does not apply in respect of the disposition of a property occurring after May 4, 1998 referred to in that subsection if,

(a) within 36 months after the end of its fiscal period to which the election relates,

(i) the partnership that holds the property immediately after the disposition, disposes of the property, or

(ii) the percentage of the partnership’s income for the fiscal period that would be deemed to have been earned outside Ontario for the purposes of section 39, if the partnership were a corporation, its fiscal period were its taxation year and it had income for the fiscal period, is at least 10 percentage points less than the percentage of its income that would be deemed to be earned outside Ontario for the fiscal period to which the election relates; or

(b) it is reasonable to believe that one of the reasons for the manner in which the partnership, a member of the partnership or any other person has conducted their business and affairs is to increase or reduce an amount elected for the purposes of this Act. 1998, c. 34, s. 35; 2001, c. 23, s. 28 (2); 2004, c. 16, s. 2 (2).

Deemed fair market value of the consideration

(8)  The amount agreed upon by a corporation and the members of a partnership in an election in respect of the disposition of property to which subsection (3), (4) or (5) applies is deemed to be the fair market value of the consideration received by the transferor on the disposition of the property if the amount agreed upon in the election is more than the fair market value, as determined at the time of the disposition, of the consideration or the portion of the consideration received by the transferor that is not in the form of shares or a right to receive shares in the capital stock of a corporation. 2001, c. 23, s. 28 (3); 2004, c. 16, s. 2 (2).

Subdivision J — Beneficiaries of Trusts

Income Tax Act (Canada), Part I (B) (k), applicable

32.  (1)  In determining for the purposes of this Act the income of a corporation that is a beneficiary of a trust, subdivision k of Division B of Part I of the Income Tax Act (Canada) is applicable in so far as the said subdivision applies to corporations that are beneficiaries of trusts, and any amount included in or deducted from the income of a corporation for a taxation year by virtue of that subdivision shall be included or deducted, as the case may be, in computing its income for the taxation year for the purposes of this Act. R.S.O. 1990, c. C.40, s. 32 (1); 2004, c. 16, s. 2 (2).

Idem

(2)  In the application of the said subdivision for the purposes of this Act,

(a) subsection 1 (3.1) of this Act does not apply; and

(b) the references therein to “Minister” shall be deemed to be references to the Minister of National Revenue for Canada. R.S.O. 1990, c. C.40, s. 32 (2); 2004, c. 16, s. 2 (2); 2005, c. 28, Sched. D, s. 8.

Anti-avoidance of provincial tax

(3)  If a trust, other than a mutual fund trust, is resident in a province other than Ontario and designates or elects an amount under the Income Tax Act (Canada) in respect of a beneficiary under the trust that is a corporation that has a permanent establishment in Ontario, the trust shall be deemed not to have designated or elected an amount under that Act for the purposes of this Act unless the designated or elected amount in each province in which the trust is resident is the same as the amount designated or elected for the purposes of the Income Tax Act (Canada). 1997, c. 43, Sched. A, s. 14 (1); 2004, c. 16, s. 2 (2).

Division C — Computation of Taxable Income

Application of Income Tax Act (Canada), s. 132.1

33.  (1)  A corporation that is required under paragraph 132.1 (1) (d) of the Income Tax Act (Canada) to include an amount in its income for a taxation year for the purposes of that Act shall include the amount in its income for the taxation year for the purposes of this Act. R.S.O. 1990, c. C.40, s. 33 (1); 2004, c. 16, s. 2 (2).

Mutual fund trust unit

(2)  In computing the adjusted cost base to the corporation of a unit in a mutual fund trust, there shall be included any amount added to the adjusted cost base of the unit under subsection 132.1 (2) of that Act for the purposes of that Act. R.S.O. 1990, c. C.40, s. 33 (2); 2004, c. 16, s. 2 (2).

Income Tax Act (Canada), Part I (C), applicable

34.  (1)  Except as hereinafter in this Division provided, in computing the taxable income of a corporation for a taxation year ending before January 1, 2009, Division C of Part I of the Income Tax Act (Canada) is applicable for the purposes of this Act in so far as the said Division applies to additions and deductions permitted to corporations. R.S.O. 1990, c. C.40, s. 34 (1); 2004, c. 16, s. 2 (2); 2007, c. 11, Sched. B, s. 2 (5).

Restriction on carry back of losses incurred after 2008

(1.0.1)  The amount deducted under section 111 of the Income Tax Act (Canada), as it applies for the purposes of this Act, in computing the taxable income of a corporation for a taxation year ending before January 1, 2009 in respect of a non-capital loss, net capital loss, farm loss, restricted farm loss or limited partnership loss for a taxation year ending after December 31, 2008 shall not exceed the amount deducted under that section for the purposes of the Income Tax Act (Canada) by the corporation in respect of the loss for that taxation year ending before January 1, 2009. 2007, c. 11, Sched. B, s. 2 (6).

Gifts to Her Majesty in right of Ontario

(1.1)  The amount of a deduction for a taxation year under subsection 110.1 (1) of the Income Tax Act (Canada) in respect of gifts made to Her Majesty in right of Ontario, to a Crown agency within the meaning of the Crown Agency Act or to a foundation established under the Crown Foundations Act, 1996 is the lesser of “A” and “B”,

where,

“A” is the amount by which the income of the corporation for the taxation year exceeds the total of all other amounts, if any, deducted by the corporation under this Act for the taxation year,

(a) under paragraph 110.1 (1) (b) of the Income Tax Act (Canada), as it applies for the purposes of this Act in respect of gifts to Her Majesty in right of Canada or to a province other than Ontario, or

(b) under paragraph 110.1 (1) (a) of the Income Tax Act (Canada) as it applies for the purposes of this Act in respect of other gifts, and

“B” is the lesser of the amount of the corporation’s income for the taxation year and the total of,

(a) the amount of gifts made before March 23, 2004 to Her Majesty in right of Ontario, a Crown agency within the meaning of the Crown Agency Act or a foundation established under the Crown Foundations Act, 1996 to the extent that,

(i) the gifts were made in the taxation year or in the five preceding taxation years, and

(ii) the amount of the gifts is not otherwise deducted in computing the corporation’s income or taxable income for the year and was not deducted for a previous taxation year, and

(b) the total of all amounts each of which is the fair market value of a gift made after March 22, 2004 to Her Majesty in right of Ontario, a Crown agency within the meaning of the Crown Agency Act or a foundation established under the Crown Foundations Act, 1996 if,

(i) the gift was made in the taxation year or in the five preceding taxation years,

(ii) the gift is not a gift to which subsection 110.1 (1.2) of the Income Tax Act (Canada) would apply for the taxation year if that subsection applied to amounts deductible under this subsection, and

(iii) the fair market value of the gift is not otherwise deducted in computing the corporation’s income or taxable income under the Act for the taxation year and was not deducted for a previous taxation year. 1998, c. 34, s. 36 (1); 2004, c. 16, s. 2 (2); 2005, c. 31, Sched. 5, s. 4.

Receipts for gifts to charities, etc.

(2)  In the application of subsections 110.1 (2) and (3) of the Income Tax Act (Canada) for the purposes of this Act, a “receipt” includes a photostatic reproduction of the receipt. R.S.O. 1990, c. C.40, s. 34 (2); 2004, c. 16, s. 2 (2).

Interpretation

(3)  In the application of the definition of “registered Canadian amateur athletic association” and “registered charity” in subsection 248 (1) of the Income Tax Act (Canada) for the purposes of this Act, the references therein to “Minister” shall be read as references to the Minister of National Revenue. R.S.O. 1990, c. C.40, s. 34 (3); 2004, c. 16, s. 2 (2).

Losses: application of Income Tax Act (Canada), subs. 111 (3)

(4)  In the application, for the purposes of this Act, of subsection 111 (3) of the Income Tax Act (Canada), paragraph (a) thereof shall be read as if subparagraph (ii) thereof were deleted. R.S.O. 1990, c. C.40, s. 34 (4); 2004, c. 16, s. 2 (2).

Losses: deemed deduction and claim

(5)  Despite subsection 111 (3) of the Income Tax Act (Canada), as made applicable by this section, where a corporation claims a deduction under subsection 42 (1) of this Act, or under clause 33 (1) (b) of the Corporations Tax Act, being chapter 97 of the Revised Statutes of Ontario, 1980, from tax otherwise payable in a taxation year, the corporation shall be deemed to have,

(a) deducted, in the computation of its taxable income for that year, the amount of all losses deductible under subsection 111 (1) of the Income Tax Act (Canada), as made applicable by subsection (1), which were neither deducted nor deemed by this subsection to have been deducted in the computation of taxable income for any previous taxation year; and

(b) claimed, in the computation of its taxable income for that year, the amount in respect of a net capital loss that is available to be claimed for that taxation year under subsection 111 (1) of the Income Tax Act (Canada), as made applicable by subsection (1), which was neither claimed nor deemed by this subsection to have been claimed in the computation of taxable income for any previous taxation year. 1994, c. 14, s. 11 (1); 2004, c. 16, s. 2 (2).

Idem

(6)  Where, under subsection (5),

(a) a corporation;

(b) a predecessor corporation of the corporation, within the meaning of section 87 of the Income Tax Act (Canada); or

(c) a subsidiary of the corporation, prior to a winding-up of the subsidiary to which the rules in subsection 88 (1) of the Income Tax Act (Canada) apply,

has been deemed to have deducted or claimed a loss in the computation of its taxable income for a taxation year, the amount of such loss shall be neither deducted nor claimed by the corporation in the computation of its taxable income for any other taxation year. R.S.O. 1990, c. C.40, s. 34 (6); 1994, c. 14, s. 11 (2); 2004, c. 16, s. 2 (2).

Same

(7)  In the application of section 110.5 or subparagraph 115 (1) (a) (vii) of the Income Tax Act (Canada) and in the application of the definition of “non-capital loss” in subsection 111 (8) of that Act for the purposes of this Act, the amount determined under section 110.5 or subparagraph 115 (1) (a) (vii) that is added for the purposes of that Act to the taxable income of the corporation for the taxation year and to the non-capital loss of the corporation for the taxation year under element B of the formula in the definition of “non-capital loss” in subsection 111 (8) shall be the amount added to the taxable income and included in the non-capital loss of the corporation for the taxation year for the purposes of this Act. 1996, c. 29, s. 45; 2001, c. 23, s. 29 (1); 2004, c. 16, s. 2 (2).

Idem, Income Tax Act (Canada), subpar. 110 (1) (f) (i)

(8)  Subparagraph 110 (1) (f) (i) of the Income Tax Act (Canada) is not applicable for the purposes of this Act. R.S.O. 1990, c. C.40, s. 34 (8); 2004, c. 16, s. 2 (2).

Idem, Income Tax Act (Canada), subcl. 111 (1) (e) (ii) (C) (I)

(9)  For the purposes of this Act, the amount referred to in subclause 111 (1) (e) (ii) (C) (I) of the Income Tax Act (Canada) shall equal the corporation’s share of the foreign exploration and development expenses incurred by the partnership in that fiscal period that are deductible in computing income for the purposes of this Act. R.S.O. 1990, c. C.40, s. 34 (9); 2004, c. 16, s. 2 (2).

Application of par. 111 (4) (e) of Income Tax Act (Canada)

(10)  The following rules apply in the application of paragraph 111 (4) (e) of the Income Tax Act (Canada) for the purposes of this Act:

1. The reference to the Minister shall be read as a reference to the Minister of National Revenue.

2. The paragraph shall be read without reference to the words “under this Part”.

3. If the corporation designates an amount under that paragraph for the purposes of determining the amount of the proceeds of disposition of a capital property for the purposes of the Income Tax Act (Canada), the corporation shall be deemed to have designated under that paragraph for the purposes of this Act the amount designated in respect of the property for the purposes of the Income Tax Act (Canada).

4. No amount may be designated by the corporation under that paragraph for the purposes of determining the amount of the proceeds of disposition of a capital property for the purposes of this Act unless the corporation designates an amount under that paragraph for the purposes of the Income Tax Act (Canada). 1997, c. 43, Sched. A, s. 15 (1); 2004, c. 16, s. 2 (2).

Exception

(10.1)  Paragraph 3 of subsection (10) does not apply if,

(a) the property in respect of which a designation is made is property described in clause 5.1 (8) (a) or prescribed by the regulations; or

(b) the rules or conditions prescribed by the regulations have been satisfied. 1997, c. 43, Sched. A, s. 15 (1); 2004, c. 16, s. 2 (2).

Designated amounts

(10.2)  Despite paragraph 3 of subsection (10), if the corporation making a designation under paragraph 111 (4) (e) of the Income Tax Act (Canada) for a taxation year ending after May 4, 1998 is an Ontario corporation for the taxation year to which the designation relates, or the rules or conditions prescribed in the regulations have been met, the corporation may, upon filing a designation in a form approved by the Minister with the return required under section 75 for the taxation year, designate an amount in respect of a property equal to the total of,

(a) an amount equal to,

(i) the amount designated in respect of the property under the Income Tax Act (Canada),

(ii) the amount designated in respect of the property under the Income Tax Act (Canada), less the cost amount of the property for the purposes of that Act, plus the cost amount of the property for the purposes of this Act, calculated immediately before making the designation, or

(iii) an amount that is greater than the lesser of the amounts described in subclauses (i) and (ii), but less than the greater of the amounts described in subclauses (i) and (ii); and

(b) the sum of,

(i) the amount of the excess, if any, by which the corporation’s non-capital loss balance at the end of the preceding taxation year, as determined under this Act, exceeds its non-capital loss balance at the end of that year, as determined for the purposes of the Income Tax Act (Canada), to the extent the excess has not been included in an amount designated under this subsection in respect of another property, and

(ii) the amount of the excess, if any, by which 4/3 of the corporation’s net capital loss balance at the end of the preceding taxation year, as determined under this Act, exceeds 4/3 of its net capital loss balance at the end of that year, as determined for the purposes of the Income Tax Act (Canada), to the extent the excess has not been included in an amount designated under this subsection in respect of another property. 1998, c. 34, s. 36 (2); 2004, c. 16, s. 2 (2).

Anti-avoidance

(10.3)  Subsection (10.2) does not apply in respect of a designation if,

(a) the corporation that made the designation,

(i) ceases to be an Ontario corporation within 36 months after the taxation year to which the designation relates and still holds the property immediately after it ceases to be an Ontario corporation, or

(ii) disposes of the property within 36 months after the taxation year to which the designation relates; or

(b) it is reasonable to believe that one of the reasons the corporation or any other person conducted their business and affairs in a manner that resulted in the corporation being an Ontario corporation for the taxation year to which the designation relates is to increase or reduce an amount designated for the purposes of this Act under paragraph 111 (4) (e) of the Income Tax Act (Canada). 1997, c. 43, Sched. A, s. 15 (1); 1998, c. 34, s. 36 (3); 2001, c. 23, s. 29 (2); 2004, c. 16, s. 2 (2).

Definition

(10.4)  In this section,

“Ontario corporation” has the same meaning as in subsection 29.1 (1). 1997, c. 43, Sched. A, s. 15 (1); 2004, c. 16, s. 2 (2).

Idem

(11)  In the application of subsections 111 (5.1), (5.2) and (5.3) of the Income Tax Act (Canada) for the purposes of this Act, the references therein to “this Part” shall be read as references to Part II of this Act. R.S.O. 1990, c. C.40, s. 34 (11); 2004, c. 16, s. 2 (2).

Limited partnership losses

(12)  In the application of paragraph 111 (1) (e) of the Income Tax Act (Canada) for the purposes of this Act, in determining the amount otherwise determined under clause 111 (1) (e) (ii) (B) of that Act,

(a) there shall be included all amounts deducted by the corporation for the taxation year under,

(i) section 12 in respect of the corporation’s share of the qualified expenditures made by the partnership in that fiscal period, and

(ii) section 13 in respect of the portion of the property of the partnership deemed to be eligible assets acquired by the corporation; and

(b) there shall be deducted all amounts included in the income of the corporation for the taxation year under subsection 12 (13) with respect to dispositions made by the partnership. R.S.O. 1990, c. C.40, s. 34 (12); 1992, c. 3, s. 8; 2004, c. 16, s. 2 (2).

Application of Income Tax Act (Canada), subss. 111 (10), (11)

(13)  Subsections 111 (10) and (11) of the Income Tax Act (Canada) do not apply for the purposes of this Act. 1997, c. 43, Sched. A, s. 15 (3); 2004, c. 16, s. 2 (2).

Reduction of non-capital loss deductible

35.  (1)  The Minister may direct that the maximum amount that may be deducted by a corporation in a taxation year under paragraph 111 (1) (a) of the Income Tax Act (Canada), as applicable for the purposes of this Act, in respect of a non-capital loss incurred in a particular taxation year, shall not exceed the amount determined under subsection (2) if,

(a) the corporation deducted an amount under any of sections 12, 13, 13.1, 13.2, 13.3, 13.4 and 13.5 in determining the amount of its non-capital loss for the particular taxation year and the Ontario allocation factor of the corporation for the taxation year in which an amount in respect of the loss is to be deducted is greater than 120 per cent of the Ontario allocation factor for the particular taxation year in which the loss was incurred; or

(b) the Minister has directed the maximum amount deductible in respect of the loss for a prior taxation year. R.S.O. 1990, c. C.40, s. 35 (1); 1997, c. 43, Sched. A, s. 16; 1998, c. 34, s. 37 (1, 2); 1999, c. 9, s. 80 (1); 2000, c. 42, s. 14 (1); 2004, c. 16, s. 2 (2).

Maximum amount

(2)  If the Minister makes a direction under subsection (1) in respect of a loss to be deducted in a taxation year of a corporation, the maximum amount that may be deducted by the corporation in respect of a non-capital loss incurred in a particular taxation year shall be determined according to the following formula:

D = (A + B) – C

where:

“D” is the maximum amount deductible by the corporation in the taxation year in respect of the non-capital loss incurred in the particular taxation year;

“A” is the amount by which the non-capital loss for the particular taxation year exceeds the total of any amounts deducted under any of sections 12, 13, 13.1, 13.2, 13.3, 13.4 and 13.5 for the particular taxation year;

“B” is the allocation adjustment as determined under clause (3) (c); and

“C” is the aggregate of all amounts, each of which is the amount by which the non-capital loss deducted under paragraph 111 (1) (a) of the Income Tax Act (Canada), as applicable for the purposes of this Act, in computing the taxable income of the corporation for a prior taxation year, exceeds the allocation adjustment in respect of the loss for the prior taxation year.

R.S.O. 1990, c. C.40, s. 35 (2); 1998, c. 5, s. 9 (1); 1998, c. 34, s. 37 (3, 4); 1999, c. 9, s. 80 (2); 2000, c. 42, s. 14 (2); 2004, c. 16, s. 2 (2).

Idem

(3)  For the purposes of this section,

(a) “Ontario allocation factor” has the same meaning as in subsection 12 (1);

(b) the allocation factor for the taxation year in which the loss arose is the allocation factor of the corporation that incurred the loss in that year;

(c) the allocation adjustment is the product obtained where the amount of a non-capital loss incurred in a particular taxation year attributable to amounts deducted under any of sections 12, 13, 13.1, 13.2, 13.3, 13.4 and 13.5 is multiplied by the ratio of the Ontario allocation factor for the particular taxation year to the Ontario allocation factor for the year for which the allocation adjustment is being determined; and

(d) the amount of a non-capital loss incurred in a particular taxation year which is attributable to amounts deducted under any of sections 12, 13, 13.1, 13.2, 13.3, 13.4 and 13.5 is the amount by which the lesser of,

(i) the non-capital loss for the particular taxation year, or

(ii) the total of all amounts, each of which is an amount deducted under any of sections 12, 13, 13.1, 13.2, 13.3, 13.4 and 13.5,

exceeds,

(iii) the aggregate of all amounts, each of which is the amount deducted under paragraph 111 (1) (a) of the Income Tax Act (Canada), as applicable for the purposes of this Act, in computing its taxable income for a taxation year prior to the taxation year for which the allocation adjustment is being determined, in respect of the non-capital loss incurred in the particular taxation year, multiplied by the ratio of the Ontario allocation factor for the taxation year in which the amount in respect of the loss was deducted to the Ontario allocation factor for the particular taxation year in which the loss was incurred. R.S.O. 1990, c. C.40, s. 35 (3); 1998, c. 5, s. 9 (2); 1998, c. 34, s. 37 (5, 6); 1999, c. 9, s. 80 (3); 2000, c. 42, s. 14 (3); 2004, c. 16, s. 2 (2).

Political donations

36.  (1)  In computing a corporation’s taxable income for a taxation year, there may be deducted the aggregate of amounts (the aggregate of which amounts is hereafter in this subsection referred to as “the amount contributed”) that are contributions for the purposes of the Election Finances Act and that are contributed in the taxation year, and in any previous taxation year ending after the 12th day of February, 1975 to the extent that such contributions have not already been deducted, by the corporation to registered candidates, to registered constituency associations or to registered parties, provided that,

(a) subject to subsection (3), such deduction shall not exceed the least of,

(i) the amount contributed,

(ii) its taxable income computed without reference to this section, and

(iii) $15,000, multiplied by the indexation factor determined under section 40.1 of the Election Finances Act and rounded to the nearest dollar;

(b) payment of each amount that is included in the amount contributed is proven by filing with the Minister receipts that are signed by a recorded agent of the registered candidate, registered constituency association or registered party, as the case may be, and that contain the information prescribed to be shown on such receipts. R.S.O. 1990, c. C.40, s. 36 (1); 1998, c. 9, s. 80 (1); 2004, c. 16, s. 2 (2).

Application

(1.1)  Subclause (1) (a) (iii), as re-enacted by the Statutes of Ontario, 1998, chapter 9, section 80, applies to contributions made after December 31, 1998, and each change to the amount determined under that subclause applies to contributions made on or after the date the change takes effect. 1998, c. 34, s. 38; 2004, c. 16, s. 2 (2).

Definitions

(2)  In this section,

“recorded agent” means a person on record with the Chief Electoral Officer as being authorized to accept contributions on behalf of a political party, constituency association or candidate registered under the Election Finances Act; (“agent désigné”)

“registered candidate”, with respect to an election of a member or members to serve in the Assembly, means a person who has been registered as a candidate for such election by the Chief Electoral Officer and whose name has not been deleted from the register of candidates maintained by the Chief Electoral Officer with respect to such election; (“candidat inscrit”)

“registered constituency association” means a registered constituency association within the meaning given to that expression by the Election Finances Act; (“association de circonscription inscrite”)

“registered party” means a registered party within the meaning given to that expression by the Election Finances Act. (“parti inscrit”) R.S.O. 1990, c. C.40, s. 36 (2); 1998, c. 9, s. 80 (2); 2004, c. 16, s. 2 (2); 2007, c. 15, s. 40 (1).

Corporations to which s. 39 is applicable

(3)  In respect of a corporation to which section 39 is applicable, the amount deductible under clause (1) (a) is the aggregate of,

(a) the amount which would otherwise be deducted under clause (1) (a);

(b) that proportion of the amount determined under clause (a) that,

(i) the taxable income of the corporation that is earned in jurisdictions other than Ontario (as computed for the purposes of section 39 and without reference to this section),

is to,

(ii) the amount by which the taxable income of the corporation exceeds the amount referred to in subclause (i). R.S.O. 1990, c. C.40, s. 36 (3); 2004, c. 16, s. 2 (2).

Division D — Taxable Income Earned in Canada by Non-Residents

Non-residents’ taxable income earned in Canada

37.  (1)  The taxable income earned in Canada for a taxation year of a corporation to which subsection 2 (2) applies shall be computed in accordance with the rules provided in section 115 of the Income Tax Act (Canada) in so far as the said rules apply to corporations, except that for the purposes of this Act,

(a) there shall be included,

(i) income from property that is real property situated in Canada, or any interest therein, including,

(A) amounts that arose from the sale or rental of such property or interest therein, or both, and

(B) royalties and similar payments in respect of such property or interest therein, and

(ii) timber royalties in respect of a timber resource property or a timber limit situated in Canada;

(b) the amount of the income included in accordance with the said rules and clause (a) shall be determined in accordance with this Act; and

(c) in the application of paragraph 115 (1) (d) of the Income Tax Act (Canada), no deduction is permitted with respect to an amount referred to in subparagraph 110 (1) (f) (i) of that Act. R.S.O. 1990, c. C.40, s. 37 (1); 2004, c. 16, s. 2 (2).

Idem

(2)  For the purpose of subsection (1), the taxable income earned in Canada of a corporation to which clause 2 (2) (b) applies shall not include any amount referred to in paragraph 115 (1) (b) of the Income Tax Act (Canada) in respect of the disposition of taxable Canadian property where a Tax Treaty or Convention between Canada and another country has determined that no tax is payable by the corporation in respect of the disposition. R.S.O. 1990, c. C.40, s. 37 (2); 2004, c. 16, s. 2 (2).

Idem

(3)  Where a transitional rule in a prescribed Tax Treaty or Convention between Canada and another country has applied to exclude an amount otherwise included in taxable income earned in Canada for the purposes of the Income Tax Act (Canada) in respect of a disposition of a taxable Canadian property, that rule shall be applied for the purposes of this Act to determine the amount, if any, to be excluded from taxable income earned in Canada in respect of that disposition. R.S.O. 1990, c. C.40, s. 37 (3); 2004, c. 16, s. 2 (2).

Competent authority agreements

(4)  Section 115.1 of the Income Tax Act (Canada) applies for the purposes of this Act in respect of an agreement made under the provisions of a tax treaty, convention or agreement if a regulation has been made under subsection 1 (8) to modify the provisions of this Act for the purpose of giving effect to a provision of the treaty, convention or agreement. 1996, c. 29, s. 46; 2004, c. 16, s. 2 (2).

Same

(5)  If a regulation has not been made under subsection 1 (8) in respect of a particular treaty, convention or agreement, section 115.1 of the Income Tax Act (Canada) is applicable for the purposes of this Act in respect of an agreement referred to in section 115.1 of that Act that was made under that treaty, convention or agreement only to the extent that,

(a) the agreement deals with a provision of that Act,

(i) that applies for the purposes of this Act,

(ii) that has not been replaced for the purposes of this Act by a provision of this Act, and

(iii) in respect of which this Act does not contain provisions that are to apply in addition to the provision; and

(b) the agreement does not deal with a disposition of taxable Canadian property to a non-resident individual or a non-resident partnership. 1996, c. 29, s. 46; 2004, c. 16, s. 2 (2); 2005, c. 31, Sched. 5, s. 5.

Designated investment services to qualified non-resident

(6)  For the purposes of this Division and subsection 2 (2), a qualified non-resident is not considered to have a permanent establishment in Ontario at any particular time in a taxation year ending after December 31, 1998 solely because a Canadian service provider provides designated investment services to the qualified non-resident through a permanent establishment of the Canadian service provider in Ontario, if the conditions described in paragraph 115.2 (2) (b) of the Income Tax Act (Canada) are met. 2001, c. 23, s. 30; 2004, c. 16, s. 2 (2).

Interpretation

(7)  For the purposes of subsection (6), “Canadian service provider”, “designated investment services” and “qualified non-resident” have the meanings assigned by subsection 115.2 (1) of the Income Tax Act (Canada). 2001, c. 23, s. 30; 2004, c. 16, s. 2 (2).

Division D.1 — Tax Incentive for Investing in Ontario Jobs and Opportunity Bonds

Tax incentive, Ontario Jobs and Opportunity Bonds

37.1  (1)  In this section,

“Authority” means the Ontario Strategic Infrastructure Financing Authority continued under subsection 2 (1) of the Ontario Strategic Infrastructure Financing Authority Act, 2002; (“Office”)

“Ontario Jobs and Opportunity Bond” means a bond, debenture or other security,

(a) that is issued by the Authority and is designated by it as an Ontario Jobs and Opportunity Bond,

(b) that is issued by a subsidiary, trust, partnership or other entity established or acquired by the Authority and is designated by the Authority as an Ontario Jobs and Opportunity Bond, or

(c) that is designated by the Minister as an Ontario Jobs and Opportunity Bond. (“obligation ontarienne de financement d’emplois et de projets”) 2002, c. 22, s. 40; 2004, c. 16, s. 2 (2); 2004, c. 31, Sched. 9, s. 14.

Tax incentive

(2)  A corporation that owns an Ontario Jobs and Opportunity Bond at any time in a taxation year is entitled to receive a tax incentive under this section in respect of the interest received or receivable on the Bond in the taxation year. 2002, c. 22, s. 40; 2004, c. 16, s. 2 (2).

Eligible corporation

(3)  A corporation is eligible to receive a tax incentive under this section if it satisfies the prescribed conditions. 2002, c. 22, s. 40; 2004, c. 16, s. 2 (2).

Certificate

(4)  A certificate of the chair, a vice-chair, the chief executive officer or any officer of the Authority designated by its board of directors which states that an entity is a subsidiary, trust, partnership or other entity established or acquired by the Authority or that a bond, debenture or other security is an Ontario Jobs and Opportunity Bond is conclusive evidence of the facts stated. 2002, c. 22, s. 40; 2004, c. 16, s. 2 (2).

Regulations

(5)  The Minister may make regulations,

(a) prescribing the nature of the tax incentive and the manner in which it is calculated;

(b) prescribing the conditions that must be satisfied for a corporation to be eligible to receive a tax incentive under this section;

(c) prescribing circumstances in which a tax incentive must be repaid by a corporation and prescribing the rules applicable to the repayment;

(d) prescribing any other matter that the Minister considers necessary or advisable for the purposes of this section. 2002, c. 22, s. 40; 2004, c. 16, s. 2 (2).

Division E — Computation of Income Tax Payable

Amount of tax payable

38.  (1)  The tax payable by a corporation for a taxation year under this Part on its taxable income or on its taxable income earned in Canada, as the case may be, is the amount determined by multiplying such amount by the specified basic rate of the corporation for the taxation year. 2000, c. 10, s. 2; 2004, c. 16, s. 2 (2).

Specified basic rate

(2)  The specified basic rate of a corporation for a taxation year is the total of,

(a) 15.5 per cent multiplied by the ratio of the number of days in the taxation year that are before May 2, 2000 to the number of days in the taxation year;

(b) 14.5 per cent multiplied by the ratio of the number of days in the taxation year that are after May 1, 2000 and before January 1, 2001 to the total number of days in the taxation year;

(c) 14 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2000 and before October 1, 2001 to the total number of days in the taxation year;

(d) 12.5 per cent multiplied by the ratio of the number of days in the taxation year that are after September 30, 2001 and before January 1, 2004 to the total number of days in the taxation year;

(e) 14 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2003 to the total number of days in the taxation year.

(f) Repealed: 2003, c. 7, s. 2.

(g) Repealed: 2003, c. 7, s. 2.

2000, c. 10, s. 2; 2001, c. 8, s. 20 (1); 2001, c. 23, s. 31 (1-3); 2002, c. 22, s. 41; 2003, c. 7, s. 2; 2004, c. 16, s. 2 (2).

(3)  Repealed: 2001, c. 23, s. 31 (4).

(4)  Repealed: 2001, c. 23, s. 31 (5).

Temporary surtax on banks

38.1  In addition to the tax, if any, otherwise payable under this Part by a bank for a taxation year ending after April 30, 1992 and commencing before November 1, 1993, the bank shall pay a surtax for each such taxation year calculated according to the following formula:

S = 0.1 × T × A/B

where:

“S” is the amount of the surtax for the taxation year;

“T” is the amount of tax, if any, otherwise payable under this Part by the bank for the taxation year, determined without reference to this section and section 40;

“A” is the number of days in the taxation year after April 30, 1992 and before November 1, 1993; and

“B” is the total number of days in the taxation year.

1994, c. 14, s. 12 (1); 2004, c. 16, s. 2 (2).

Deduction from income tax, inter-provincial allocation

39.  (1)  There may be deducted from the tax otherwise payable under this Part for a taxation year by a corporation an amount calculated using the formula,

A × B

in which,

“A” is the specified basic rate of the corporation for the taxation year, as determined under subsection 38 (2), and

“B” is that portion of the taxable income or the taxable income earned in Canada, as the case may be, of the corporation which is earned in the taxation year in each jurisdiction other than Ontario, determined under rules prescribed by the regulations.

2000, c. 10, s. 2; 2004, c. 16, s. 2 (2).

Application provision, 2000 Budget

(2)  This section, as it is re-enacted by the Taxpayer Dividend Act, 2000, applies with respect to taxation years ending after May 1, 2000. 2000, c. 10, s. 2; 2004, c. 16, s. 2 (2).

Foreign tax deduction

40.  (1)  Where a corporation has a permanent establishment in Ontario, and,

(a) the corporation has included in computing its income for the taxation year,

(i) income that was derived from sources within a jurisdiction outside Canada in the form of dividends, interest, rents or royalties received in the year, or

(ii) the amount by which,

(A) the aggregate of that part of the corporation’s taxable capital gains for the taxation year from the disposition of property as may reasonably be considered to be income from a source within a jurisdiction outside Canada,

exceeds,

(B) the aggregate of such of the corporation’s allowable capital losses for the year from the disposition of property as may reasonably be considered to be a loss from a source within that jurisdiction outside Canada,

hereinafter in this section referred to as “foreign investment income”; or

(b) the corporation, having included in its income for the taxation year foreign investment income from sources within a jurisdiction outside Canada, also included income from a business carried on by it in that jurisdiction, hereinafter in this section referred to as “foreign business income”,

and where,

(c) for the purposes of subsection 126 (2) of the Income Tax Act (Canada),

(i) such foreign investment income has not been included as part of such foreign business income,

(ii) such foreign investment income has been excluded from the calculation of gross revenue or any part thereof for the purpose of allocating taxable income to a jurisdiction outside Ontario in accordance with the regulations made under section 39, and

(iii) where the corporation is a bank which has allocated any of its taxable income for the taxation year to a jurisdiction outside Canada under the regulations made under section 39, such foreign investment income has not been derived from loans and deposits of the bank’s permanent establishments in jurisdictions outside Canada used in the determination of such allocation; and

(d) the corporation is entitled to a deduction under section 126 of the Income Tax Act (Canada), hereinafter in this section referred to as a “foreign tax credit”, with respect to any income or profits tax paid to such jurisdiction on such foreign investment income or on such foreign investment income and foreign business income,

the corporation may deduct from the tax otherwise payable under this Part for the taxation year an amount equal to the lesser of,

(e) the amount calculated using the formula,

A × B × C

in which,

“A” is the amount of the foreign investment income,

“B” is the specified basic rate of the corporation for the taxation year, as determined under subsection 38 (2), and

“C” is the corporation’s Ontario allocation factor for the taxation year;

(f) the amount determined by applying the Ontario allocation factor for the taxation year to the deficiency, if any, between,

(i) that portion of the income or profits tax paid for the taxation year by the corporation to the jurisdiction outside Canada in respect of such foreign investment income, that was not deducted, by virtue of subsection 20 (12) of the Income Tax Act (Canada) for the purposes of that Act or for the purposes of this Act by virtue of that subsection as made applicable by section 11 of this Act, in computing the corporation’s income for the year, and

(ii) the foreign tax credit allowed for the taxation year in respect of such foreign investment income under subsection 126 (1) of the Income Tax Act (Canada). R.S.O. 1990, c. C.40, s. 40 (1); 2000, c. 10, s. 3 (1); 2004, c. 16, s. 2 (2).

Idem

(2)  For greater certainty, where the income of a corporation for a taxation year is in whole or in part from sources in more than one jurisdiction outside Canada, subsection (1) shall be read as providing for a separate deduction in respect of each jurisdiction outside Canada. R.S.O. 1990, c. C.40, s. 40 (2); 2004, c. 16, s. 2 (2).

Ontario allocation factor

(3)  For the purposes of this section, the Ontario allocation factor for the taxation year is the ratio that,

(a) that portion of the corporation’s taxable income not deemed to have been earned in jurisdictions outside of Ontario for the purposes of section 39,

is to,

(b) the corporation’s taxable income. R.S.O. 1990, c. C.40, s. 40 (3); 2004, c. 16, s. 2 (2).

Idem

(4)  In this section,

“foreign investment income”, of a corporation for a taxation year, does not include interest income attributable to a loan for any period in the year during which the loan was an “eligible loan” as defined in subsection 33.1 (1) of the Income Tax Act (Canada). R.S.O. 1990, c. C.40, s. 40 (4); 2004, c. 16, s. 2 (2).

Calculation for banks

(5)  In calculating the amount of a deduction permitted to a bank under subsection (1) for a taxation year ending after April 30, 1992 and commencing before November 1, 1993, the amount determined under clause (1) (e) shall be deemed to be the amount otherwise determined under that clause for the taxation year plus an additional amount calculated according to the following formula:

Q = 0.1 × T × A/B

where:

“Q” is the additional amount for the taxation year;

“T” is the amount otherwise determined under clause (1) (e) for the taxation year without reference to this subsection;

“A” is the number of days in the taxation year after April 30, 1992 and before November 1, 1993; and

“B” is the total number of days in the taxation year.

1994, c. 14, s. 13; 2004, c. 16, s. 2 (2).

Application provision, 2000 Budget

(6)  Clause (1) (e), as it is re-enacted by the Taxpayer Dividend Act, 2000, applies with respect to taxation years ending after May 1, 2000. 2000, c. 10, s. 3 (2); 2004, c. 16, s. 2 (2).

Small business incentive

41.  (1)  There may be deducted from the tax otherwise payable under this Part by a corporation for a taxation year an amount equal to the percentage described in subsection (1.1) of the amount determined under subsection (2), if the corporation has made a deduction under section 125 of the Income Tax Act (Canada) for the taxation year, or could have made a deduction under that section if its business limit for the taxation year under paragraph 125 (1) (c) of that Act had been determined without reference to subsection 125 (5.1) of that Act. 1996, c. 1, Sched. B, s. 5 (1); 1998, c. 5, s. 10 (1); 2004, c. 16, s. 2 (2).

Same

(1.1)  Subject to subsections (1.2) to (1.4), the percentage referred to in subsection (1) is,

(a) 6 per cent, in respect of a taxation year that ends after June 30, 1994 and before May 5, 1998;

(b) 6.5 per cent, in respect of a taxation year that ends after May 4, 1998 and before January 1, 1999;

(c) 7 per cent, in respect of a taxation year that ends after December 31, 1998 and before January 1, 2000;

(d) 7.5 per cent, in respect of a taxation year that ends after December 31, 1999 and before October 1, 2001;

(e) 6.5 per cent, in respect of a taxation year that ends after September 30, 2001 and before January 1, 2003;

(f) 7 per cent, in respect of a taxation year that ends after December 31, 2002 and before January 1, 2004;

(g) 8.5 per cent, in respect of a taxation year that ends after December 31, 2003.

(h) Repealed: 2003, c. 7, s. 3 (1).

(i) Repealed: 2003, c. 7, s. 3 (2).

(j) Repealed: 2000, c. 10, s. 4 (1).

1998, c. 5, s. 10 (2); 2000, c. 10, s. 4 (1); 2001, c. 8, s. 21 (1); 2001, c. 23, s. 32 (1-3); 2002, c. 22, s. 42 (1, 2); 2003, c. 7, s. 3 (1, 2); 2004, c. 16, s. 2 (2).

Same, 1998

(1.2)  Despite clause (1.1) (b), if the taxation year begins before May 5, 1998, the increase from 6 per cent to 6.5 per cent shall be prorated according to the number of days in the taxation year that are after May 4, 1998. 1998, c. 5, s. 10 (2); 2004, c. 16, s. 2 (2).

Same, 1999

(1.3)  Despite clause (1.1) (c),