I-3 - Taxation Act

Section 119.2 Disposition versions

2006-03-01

119.2. In this division,

“development bond” at any time means an obligation that is at that time a qualifying debt obligation issued

(a)  after 31 December 1981 and before 1 January 1988 by a Canadian-controlled private corporation and in respect of which a joint election was made within 90 days after the later of its issue date and 30 March 1983;

(b)  after 25 February 1992 by a Canadian-controlled private corporation and in respect of which a joint election was made within 90 days after its issue date; or

(c)  by a Canadian-controlled private corporation if

i.  it is reasonable to consider that the corporation and the holder of the obligation intended that this division apply to the obligation, having regard to such factors as may be relevant, including the rate of interest stipulated under the terms of the obligation and the manner in which the corporation and the holder have treated the obligation for the purposes of this Part, and

ii.  the holder files with the Minister a joint election in respect of the obligation within 90 days from the date of notification by the Minister that a joint election in respect of the obligation has not been filed;

“joint election” in respect of any obligation means an election that is made in prescribed form, containing prescribed information, jointly by the issuer corporation of the obligation and the person who is the holder of the obligation at the time of the election, that is filed with the Minister by the holder and in which the holder and the issuer corporation elect that this division apply to the obligation;

“qualified corporation” has the meaning assigned by the regulations;

“qualifying debt obligation” of a corporation at a particular time means an obligation that is a bond, debenture, bill, note, hypothecary claim, mortgage or similar obligation issued between 25 February 1992 and 1 January 1995 and not more than five years before the particular time, the principal amount of which is not less than $10,000 nor more than $500,000, that is issued for a term of not more than five years and, except in the event of a failure or default under the terms or conditions of the obligation, not less than one year, if the obligation is issued by the corporation

(a)  as part of a proposal to, or an arrangement with, its creditors that has been approved by a competent court under the Bankruptcy and Insolvency Act (Revised Statutes of Canada, 1985, chapter B-3);

(b)  at a time when all or substantially all of its assets are under the control of a receiver, receiver-manager, sequestrator or trustee in bankruptcy; or

(c)  in whole or in part, directly or indirectly in exchange or substitution for a debt held by a person with whom the corporation was dealing at arm’s length at a time when, by reason of financial difficulties, the corporation

i.  is in default on that debt, or

ii.  could reasonably be expected to default on that debt.

1982, c. 5, s. 36; 1984, c. 15, s. 26; 1985, c. 25, s. 28; 1987, c. 67, s. 28; 1989, c. 5, s. 36; 1994, c. 22, s. 83; 1995, c. 49, s. 42; 1995, c. 63, s. 27; 1996, c. 39, s. 39; 1997, c. 3, s. 19; 2000, c. 5, s. 41; 2005, c. 1, s. 51.