I-3 - Taxation Act

Section 776.1.41 Disposition versions

2021-06-04

776.1.41. For the purpose of computing the amount that a corporation may deduct under section 776.1.39 for a particular taxation year described in the second paragraph and a subsequent taxation year, in respect of the unused portion of the tax credit of the corporation for a taxation year preceding the particular taxation year, the unused portion of the tax credit of the corporation, otherwise determined, is to be reduced by the amount determined under the third paragraph where, in relation to an eligible investment that the corporation made in another corporation in the particular preceding year,

(a)  the corporation and the other corporation are associated with each other in the particular year; or

(b)  in the particular year, the corporation disposed of or exchanged a share of the capital stock of the other corporation acquired in connection with the eligible investment, otherwise than by reason of the corporation’s or the other corporation’s bankruptcy or insolvency, the unilateral redemption of the share by the other corporation, or the redemption of the share by the other corporation at the corporation’s request where the law confers on it the right to demand that all its shares be redeemed.

The particular taxation year to which the first paragraph refers is

(a)  in the case provided for in subparagraph a of the first paragraph, a taxation year that begins in the 48-month period following the end of the taxation year in which a share was acquired in connection with the eligible investment; or

(b)  in the case provided for in subparagraph b of the first paragraph, the taxation year that includes the day on which the corporation disposed of or exchanged the share, provided that day occurs in the 60-month period that begins on the day on which the share is issued.

The amount to which the first paragraph refers is the amount by which the maximum amount that the corporation could have deducted under section 776.1.38 for the particular preceding taxation year if it had had sufficient tax payable under this Part for that taxation year exceeds

(a)  in the case provided for in subparagraph a of the first paragraph, the aggregate of

i.  the maximum amount that the corporation could have deducted under section 776.1.38 for the particular preceding taxation year if it had had sufficient tax payable under this Part for that taxation year and if no reference were made to any particular eligible investment of the corporation in a corporation with which it becomes associated, under circumstances described in the first paragraph, at any time in the particular year, and

ii.  any portion—that may reasonably be considered as relating to a particular eligible investment—of the aggregate of all amounts each of which is a tax that the corporation would be required to pay for the particular taxation year, or would have been required to pay for a preceding taxation year, if the amount determined under subparagraph b of the second paragraph of sections 1129.27.28 and 1129.27.29 were nil; or

(b)  in the case provided for in subparagraph b of the first paragraph, the aggregate of

i.  the maximum amount that the corporation could have deducted under section 776.1.38 for the particular preceding taxation year if it had had sufficient tax payable under this Part for that taxation year and if, for the purposes of the definition of “eligible investment” in the first paragraph of section 776.1.36 for the preceding taxation year, no reference were made to any amount paid for the acquisition of a share referred to in that subparagraph b of the capital stock of another corporation, unless section 1129.27.29 applies to the corporation for the particular taxation year or applied to the corporation for a taxation year preceding the particular year, and

ii.  any portion—that may reasonably be considered as relating to an eligible investment for the particular preceding taxation year—of the aggregate of all amounts each of which is a tax that the corporation would be required to pay for the particular taxation year, or would have been required to pay for a preceding taxation year, if the amount determined under subparagraph b of the second paragraph of section 1129.27.28 were nil.

For the purpose of computing the amount that the corporation may deduct under section 776.1.39 for the particular taxation year in respect of the unused portion of the tax credit of the corporation for a taxation year other than the particular preceding taxation year, the corporation is deemed to have deducted under that section for the taxation years preceding the particular taxation year in respect of the unused portions of the tax credit of the corporation for the taxation years other than the particular preceding taxation year that are deductible for the particular taxation year, in addition to any other amount deducted or deemed to be deducted, an amount equal to the amount by which the amount determined under subparagraph a or b of the third paragraph, as the case may be, exceeds the amount by which the unused portion of the tax credit of the corporation for the particular preceding taxation year, determined before the application of this section, exceeds the aggregate of the amounts deducted by the corporation under section 776.1.39 for the taxation years preceding the particular taxation year in respect of the unused portion of the tax credit.

2021, c. 18, s. 67.