I-3 - Taxation Act

Section 1091.3 Disposition versions

2015-10-26

1091.3. For the purposes of Part I and this Part, a person not resident in Canada is not considered to be carrying on a business in Canada at any particular time solely because of the provision to the person, or to a partnership of which the person is a member, at the particular time of designated investment services by a Canadian service provider if

(a)  in the event that the person not resident in Canada is an individual other than a trust, the person is not affiliated at the particular time with the Canadian service provider;

(b)  in the event that the person not resident in Canada is a corporation or trust,

i.  the person has not, before the particular time, directly or through a mandatary, sold a share of its capital stock or an interest in itself, such a share and such an interest in this section referred to as an “investment”, that is outstanding at the particular time to a person who was a Canadian investor at the time of the sale and who is a Canadian investor at the particular time, nor directed any promotion of investments in itself principally at Canadian investors,

ii.  the person has not, before the particular time, directly or through a mandatary, filed any document with a public authority in Canada in accordance with the securities legislation of Canada or of any province in order to permit the distribution of investments in the person to persons resident in Canada, and

iii.  where the particular time is more than one year after the time at which the person was created, the total of the fair market value, at the particular time, of investments in the person that are beneficially owned by a person or partnership that is affiliated with the Canadian service provider and is not a designated entity in respect of the Canadian service provider, does not exceed 25% of the fair market value, at the particular time, of all investments in the person; and

(c)  in the event that the person not resident in Canada is a member of a partnership,

i.  the particular time is within one year after the time the partnership was formed,

ii.  where the person not resident in Canada is, or is affiliated with, a person or partnership described in subparagraph 1 or 2, the fair market value, at the particular time, of all interests in the partnership is not less than four times the total of the fair market value of each interest in the partnership that is beneficially owned at the particular time by

(1)  a particular person or a particular partnership (other than a designated entity in respect of the Canadian service provider), where persons or partnerships (other than designated entities in respect of the Canadian service provider) that are affiliated with the Canadian service provider are beneficial owners of more than 25% of the fair market value, at the particular time, of all shares of the particular person or all interests in the particular partnership, as the case may be, or

(2)  a person or a partnership (other than a designated entity in respect of the Canadian service provider) that is affiliated with the Canadian service provider, or

iii.  at the particular time, the person not resident in Canada is affiliated neither with the Canadian service provider nor with any person or partnership (other than the partnership to which the services are provided) described in subparagraph 1 or 2 of subparagraph ii.

For the purposes of this paragraph and subparagraph iii of subparagraph b and subparagraph ii of subparagraph c of the first paragraph,

(a)  the fair market value of an investment in a corporation or trust or an interest in a partnership shall be determined without regard to any voting rights attaching to that investment; and

(b)  a person or partnership is, at a particular time, a designated entity in respect of a Canadian service provider if the total of the fair market value, at the particular time, of investments in the designated entity or interests in the partnership, as the case may be, that are beneficially owned by a person or partnership that is affiliated with the Canadian service provider and is not another designated entity in respect of the Canadian service provider, does not exceed 25% of the fair market value, at the particular time, of all investments in the entity or of such interests, as the case may be.

2001, c. 53, s. 246; 2004, c. 8, s. 190; 2015, c. 24, s. 154.

2006-03-01

1091.3. For the purposes of Part I and this Part, a person not resident in Canada is not considered to be carrying on a business in Canada at any particular time solely because of the provision to the person, or to a partnership of which the person is a member, at the particular time of designated investment services by a Canadian service provider if

(a)  in the event that the person not resident in Canada is an individual other than a trust, the person is not affiliated at the particular time with the Canadian service provider;

(b)  in the event that the person not resident in Canada is a corporation or trust,

i.  the person has not, before the particular time, directly or through a mandatary, sold a share of its capital stock or an interest in itself, such a share and such an interest in this section referred to as an “investment”, that is outstanding at the particular time to a person who was a Canadian investor at the time of the sale and who is a Canadian investor at the particular time, nor directed any promotion of investments in itself principally at Canadian investors,

ii.  the person has not, before the particular time, directly or through a mandatary, filed any document with a public authority in Canada in accordance with the securities legislation of Canada or of any province in order to permit the distribution of investments in the person to persons resident in Canada, and

iii.  where the particular time is more than one year after the time at which the person was created, the total of the fair market value, at the particular time, of investments in the person that are beneficially owned by a person or partnership that is affiliated with the Canadian service provider and is not a designated entity in respect of the Canadian service provider, does not exceed 25% of the fair market value, at the particular time, of all investments in the person; and

(c)  in the event that the person not resident in Canada is a member of a partnership and where the particular time is more than one year after the time at which the partnership was formed, the total of the fair market value, at the particular time, of interests in the partnership that are beneficially owned by a person or partnership that is affiliated with the Canadian service provider and is not a designated entity in respect of the Canadian service provider, does not exceed 25% of the fair market value, at the particular time, of all interests in the partnership.

For the purposes of this paragraph, subparagraph iii of subparagraph b of the first paragraph and subparagraph c of that first paragraph,

(a)  the fair market value of an investment in a corporation or trust or an interest in a partnership shall be determined without regard to any voting rights attaching to that investment; and

(b)  a person or partnership is, at a particular time, a designated entity in respect of a Canadian service provider if the total of the fair market value, at the particular time, of investments in the designated entity or interests in the partnership, as the case may be, that are beneficially owned by a person or partnership that is affiliated with the Canadian service provider and is not another designated entity in respect of the Canadian service provider, does not exceed 25% of the fair market value, at the particular time, of all investments in the entity or of such interests, as the case may be.

2001, c. 53, s. 246; 2004, c. 8, s. 190.