I-3 - Taxation Act

Section 522.3 Disposition versions

2009-05-15

522.3. (Repealed).

2002, c. 40, s. 41; 2009, c. 5, s. 178.

2006-03-01

522.3. For the purposes of section 522.1, where a particular person or partnership is a third party replaced by the taxpayer or by the corporation, as the case may be, in this section referred to as the “replacing party”, the following rules apply:

(a)  the replacing party is deemed, if the particular person or partnership carried on a business at a particular time, to have carried on the business at that time;

(b)  each taxation year or fiscal period, as the case may be, of the particular person or partnership that ended in the 24 months preceding the taxation year of the replacing party in which the disposition is made, is deemed to be a separate taxation year of the replacing party that covers the same period as that covered by the taxation year or fiscal period, as the case may be, of the particular person or partnership;

(c)  notwithstanding section 522.2, the proportion of the business carried on in Québec by the replacing party for a particular taxation year of the replacing party that covers, in whole or in part, the period covered by a taxation year or a fiscal period of a third party it replaces, or for a separate taxation year referred to in subparagraph b of the replacing party, is deemed to be equal to

i.  in the case of such a particular taxation year of the replacing party that is its taxation year in which the disposition is made, the proportion that the business carried on in Québec is of the aggregate of the business carried on in Québec or in Québec and elsewhere by the replacing party that would be determined for that particular taxation year if,

(1)  the proportion were determined in accordance with the rules set out in Chapters II to IV of Title XX of the Regulation respecting the Taxation Act (R.R.Q., 1981, chapter I-3, r.1) with any necessary modifications,

(2)  each of the amounts or other elements that were, or should have been, taken into account in computing, in accordance with the rules referred to in subparagraph 1, the proportion that the business carried on in Québec is of the aggregate of the business carried on in Québec or in Québec and elsewhere by any third party replaced by the replacing party, for any taxation year or any fiscal period of the third party whose period covered is also covered in whole or in part by the taxation year of the replacing party in which the disposition is made, were also taken into account in computing the proportion, even though the amount or element is not attributable to a period covered by that particular taxation year, and

(3)  in respect of each of the amounts or other elements referred to in subparagraph 2 that are attributable to a particular third party replaced by the replacing party, for a particular taxation year or a particular fiscal period of the third party, the replacing party were the same entity as the third party,

ii.  in the case of such a particular taxation year of the replacing party that is prior to the taxation year referred to in subparagraph i and that ended in a particular calendar year, the proportion that the business carried on in Québec is of the aggregate of the business carried on in Québec or in Québec and elsewhere by the replacing party that would be determined for the particular taxation year if,

(1)  the proportion were determined in accordance with the rules set out in Chapters II to IV of Title XX of the Regulation respecting the Taxation Act, with any necessary modifications,

(2)  each of the amounts or other elements that were, or should have been, taken into account in computing, in accordance with the rules referred to in subparagraph 1, the proportion that the business carried on in Québec is of the aggregate of the business carried on in Québec or in Québec and elsewhere by any third party replaced by the replacing party, for any taxation year or any fiscal period of the third party that ended in the particular calendar year, were also taken into account in computing the proportion, even though the amount or element is not attributable to a period covered by that particular taxation year, and

(3)  in respect of each of the amounts or other elements referred to in subparagraph 2 that are attributable to a particular third party replaced by the replacing party, for a particular taxation year or a particular fiscal period of the third party, the replacing party were the same entity as the third party,

iii.  in the case of such a separate taxation year of the replacing party that ended in a particular calendar year, the proportion that the business carried on in Québec is of the aggregate of the business carried on in Québec or in Québec and elsewhere by the replacing party that would be determined for the separate taxation year if,

(1)  the proportion were determined in accordance with the rules set out in Chapters II to IV of Title XX of the Regulation respecting the Taxation Act, with any necessary modifications,

(2)  each of the amounts or other elements that were, or should have been, taken into account in computing, in accordance with the rules referred to in subparagraph 1, the proportion that the business carried on in Québec is of the aggregate of the business carried on in Québec or in Québec and elsewhere by the replacing party, for any such particular taxation year of the replacing party, other than the particular taxation year referred to in subparagraph i, that ended in the particular calendar year, or by any third party replaced by the replacing party, for any taxation year or any fiscal period of the third party that ended in the particular calendar year, were taken into account in computing the proportion, even though the amount or element is not attributable to a period covered by the separate taxation year, and

(3)  in respect of each of the amounts or other elements referred to in subparagraph 2 that are attributable to a particular third party replaced by the replacing party, for a particular taxation year or a particular fiscal period of the third party, the replacing party were the same entity as the third party, or

iv.  where the Minister is of the opinion that the method provided for in subparagraph i, ii or iii, as the case may be, in respect of the particular taxation year or the separate taxation year of the replacing party is not appropriate in the circumstances, the proportion of the business carried on in Québec by the replacing party for the particular taxation year or the separate taxation year determined according to such other method as the Minister considers appropriate in the circumstances.

For the purposes of section 522.1, where a particular person or partnership is a third party replacing the taxpayer or corporation, as the case may be, in this section referred to as the “replaced party”, the following rules apply:

(a)  the replaced party is deemed, if the particular person or partnership carries on a business at a particular time, to carry on the business at that time; and

(b)  each taxation year or fiscal period, as the case may be, of the particular person or partnership that began in the 18 months following the taxation year of the replaced party in which the disposition is made, is deemed to be a separate taxation year of the replaced party that covers the same period as that covered by the taxation year or fiscal period, as the case may be, of the particular person or partnership;

(c)  for each separate taxation year referred to in subparagraph b of the replaced party, the replaced party is deemed to have a proportion of business carried on in Québec equal to the proportion, determined under section 522.2, of the business carried on in Québec by the particular person or partnership for the person’s taxation year or the partnership’s fiscal period, as the case may be, corresponding to that separate taxation year.

For the purposes of subparagraph c of the first paragraph, the replacing party shall apply to the Minister to determine any proportion of the business carried on in Québec by it, and shall transmit to the Minister, where the Minister so requires, any document the Minister considers relevant.

Where any requirement set out in the third paragraph is not complied with, section 522.1 does not apply in respect of the disposition.

2002, c. 40, s. 41.