I-3 - Taxation Act

Section 517.5.7 Disposition versions

2017-12-07

517.5.7. A series of transactions that includes the disposition by an individual of eligible shares of a corporation (in this section referred to as the “particular corporation”) may not be considered to be an eligible business transfer of the individual where, after the disposition of the shares, the individual or the individual’s spouse is actively engaged in a qualified business carried on by the purchaser corporation, by the particular corporation or by a corporation in which the particular corporation has a substantial interest, unless

(a)  the active engagement of the individual or the individual’s spouse in that business for a particular period (in the second paragraph referred to as the “transition period”) aims to encourage the transfer of the knowledge possessed by the individual or the individual’s spouse in relation to that business for the benefit of other persons actively engaged in that business;

(b)  substantially all the income from the business in which the individual or the individual’s spouse is actively engaged is not derived from the sale, leasing, rental or development, as the case may be, of properties, or the rendering of services, similar to those of a business that, before the disposition of the shares, was carried on by the purchaser corporation, by the particular corporation or by a corporation in which the purchaser corporation or the particular corporation held a direct or indirect interest; or

(c)  the active engagement of the individual or the individual’s spouse in that business stems from the sole fact that the person referred to in section 517.5.11 is unable to actively engage in that business due to an illness, a disability or the person’s death if the illness, disability or death begins or occurs after the disposition of the shares of the particular corporation.

For the purposes of subparagraph a of the first paragraph, for any calendar year included in whole or in part in the transition period, the remuneration received by an individual as consideration for services rendered in the calendar year or part of calendar year because the individual is actively engaged in a business carried on by the purchaser corporation, by the particular corporation or by a corporation in which the particular corporation has a substantial interest must not exceed the amount obtained by multiplying the Maximum Pensionable Earnings determined for the year under section 40 of the Act respecting the Québec Pension Plan (chapter R-9) by the proportion that the number of days in the calendar year that are included in whole or in part in the transition period is of 365.

2017, c. 1, s. 137; 2017, c. 29, s. 78.

2017-02-08

517.5.7. A series of transactions that includes the disposition by an individual of eligible primary and manufacturing sectors shares of a corporation (in this section referred to as the “particular corporation”) may not be considered to be an eligible business transfer of the individual where, after the disposition of the shares, the individual or the individual’s spouse is actively engaged in a qualified business carried on by the purchaser corporation, by the particular corporation or by a corporation in which the particular corporation has a substantial interest, unless

(a)  the active engagement of the individual or the individual’s spouse in that business for a particular period (in the second paragraph referred to as the “transition period”) aims to encourage the transfer of the knowledge possessed by the individual or the individual’s spouse in relation to that business for the benefit of other persons actively engaged in that business;

(b)  substantially all the income from the business in which the individual or the individual’s spouse is actively engaged is not derived from the sale, leasing, rental or development, as the case may be, of properties, or the rendering of services, similar to those of a business that, before the disposition of the shares, was carried on by the purchaser corporation, by the particular corporation or by a corporation in which the purchaser corporation or the particular corporation held a direct or indirect interest; or

(c)  the active engagement of the individual or the individual’s spouse in that business stems from the sole fact that the person referred to in section 517.5.11 is unable to actively engage in that business due to an illness, a disability or the person’s death if the illness, disability or death begins or occurs after the disposition of the shares of the particular corporation.

For the purposes of subparagraph a of the first paragraph, for any calendar year included in whole or in part in the transition period, the remuneration received by an individual as consideration for services rendered in the calendar year or part of calendar year because the individual is actively engaged in a business carried on by the purchaser corporation, by the particular corporation or by a corporation in which the particular corporation has a substantial interest must not exceed the amount obtained by multiplying the Maximum Pensionable Earnings determined for the year under section 40 of the Act respecting the Québec Pension Plan (chapter R-9) by the proportion that the number of days in the calendar year that are included in whole or in part in the transition period is of 365.

2017, c. 1, s. 137.