I-3, r. 1 - Regulation respecting the Taxation Act

Updated to 1 May 2024

This document has official status.

chapter I-3, r. 1

Regulation respecting the Taxation Act

Taxation Act

(chapter I-3, s. 1086).

TITLE I INTERPRETATION AND RULES OF GENERAL APPLICATION

title I; O.C. 1981-80, title 1; R.R.Q., 1981, c. I-3, r. 1, title 1; O.C. 134-2009, s. 1.

0R1. In this Regulation, “Act” means the Taxation Act (chapter I-3).

s. 0R1; O.C. 1981-80, s. 0R1; R.R.Q., 1981, c. I-3, r. 1, s. 0R1; O.C. 134-2009, s. 1.

0R2. For the purpose of facilitating the finding of the provisions of the Act giving rise to a regulatory provision, the figures that precede the letter R in the numbering of this Regulation refer, for the purpose of guidance only, to the section of the Act providing for such regulatory provision.

s. 0R2; O.C. 1981-80, s. 0R2; R.R.Q., 1981, c. I-3, r. 1, s. 0R2; O.C. 134-2009, s. 1.

1R1. For the purposes of the definition of “share” in section 1 of the Act, a prescribed cooperative means a cooperative described in section 119.2R2.

s. 1R1.1; O.C. 67-96, s. 1; O.C. 134-2009, s. 1.

1R2. (Revoked).

s. 1R6; O.C. 1149-2006, s. 1; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 1.

1R3. (Revoked).

s. 1R7; O.C. 1149-2006, s. 1; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 1.

1R4. For the purposes of the definition of “foreign retirement arrangement” in section 1 of the Act, a prescribed plan or arrangement is a plan or arrangement to which any of subsections 408a, b and h of the United States’ Internal Revenue Code of 1986, as amended from time to time, applies.

s. 1R4; O.C. 1660-94, s. 1; O.C. 134-2009, s. 1.

1R4.1. For the purposes of the definition of “specified pension plan” in section 1 of the Act, a prescribed arrangement is the Saskatchewan Pension Plan established under the Saskatchewan Pension Plan Act (S.S. 1986, c. S-32.2) as amended from time to time.

O.C. 229-2014, s. 1.

1R5. For the purposes of the definition of “bituminous sands” in section 1 of the Act, viscosity or density of hydrocarbons is determined using a number of individual samples tested

(a)  at atmospheric pressure;

(b)  at a temperature of 15.6 °C; and

(c)  free of solution gas.

For the purposes of the first paragraph, the samples collected must constitute a representative sampling of that deposit from which the taxpayer is committed to produce by means of one mine.

s. 1R5; O.C. 1454-99, s. 1; O.C. 134-2009, s. 1.

1R6. For the purposes of the definition of “small business corporation” in section 1 of the Act, a corporation is connected with another corporation at a particular time where, at that time,

(a)  it is controlled, within the meaning of subparagraph b of the first paragraph of section 739 of the Act, but otherwise than by reason of a right referred to in paragraph b of section 20 of the Act, by the other corporation; or

(b)  it is a corporation, shares of the capital stock of which, representing more than 10% of the issued shares of its capital stock having full voting rights and more than 10% of the fair market value of the aggregate of the issued shares of its capital stock, are the property of the other corporation.

s. 1R2; O.C. 1549-88, s. 1; O.C. 1707-97, s. 98; O.C. 134-2009, s. 1; O.C. 701-2013, s. 1.

1R7. For the purposes of the definition of “lending assets” in section 1 of the Act,

(a)  a share owned by a bank is a prescribed share for a taxation year where it is a preferred share of the capital stock of a corporation that is dealing at arm’s length with the bank that may reasonably be considered to be, and is reported as, a substitute or alternative for a loan to the corporation, or another corporation with whom the corporation does not deal at arm’s length, in the bank’s annual report for the year to the Superintendent of Financial Institutions of Canada or, where the bank was throughout the year subject to the supervision of the Superintendent of Financial Institutions of Canada but was not required to file an annual report for the year with the Superintendent of Financial Institutions of Canada, in its financial statements for the year; and

(b)  a property is a prescribed property for a taxation year where

i.  the security is a mark-to-market property, within the meaning of section 851.22.1 of the Act, for the year of a financial institution within the meaning of that section,

ii.  the security is at any time in the year a property described in an inventory of a taxpayer, or

iii.  the property is a direct financing lease, or any other financing agreement, of a taxpayer that is reported as a loan in the taxpayer’s financial statements for the year, prepared in accordance with generally accepted accounting principles, provided that an amount is deductible in computing the taxpayer’s income for the year, in respect of the property that is the subject of the lease or agreement, under paragraph a of section 130 or the second paragraph of section 130.1 of the Act.

s. 1R3; O.C. 366-94, s. 1; O.C. 1707-97, s. 98; O.C. 1463-2001, s. 1; O.C. 1470-2002, s. 1; O.C. 134-2009, s. 1; O.C. 390-2012, s. 1.

1R8. For the purposes of the definition of “zero-emission vehicle” in section 1 of the Act,

(a)  it is a prescribed condition that the motor vehicle have a battery capacity of at least seven kilowatt-hours;

(b)  the election provided for in section 130R134.1 is a prescribed election; and

(c)  the federal incentive for the purchase of a zero-emission vehicle announced in the federal budget plan of 19 March 2019 is a prescribed program.

S.Q. 2021, c. 18, s. 233.

7R1. For the purposes of subparagraph b of the second paragraph of section 7 of the Act, Gaz Métro Limited Partnership is a prescribed partnership.

s. 7R1; O.C. 1155-2004, s. 1; O.C. 134-2009, s. 1.

8R1. Every international development assistance program set forth in Part XXXIV of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) is a prescribed program for the purposes of paragraph d of section 8 of the Act.

s. 8R1; O.C. 1981-80, s. 8R1; R.R.Q., 1981, c. I-3, r. 1, s. 8R1; O.C. 35-96, s. 86; O.C. 134-2009, s. 1.

11R1. For the purposes of section 11 of the Act, a foreign business corporation means a foreign business corporation referred to in subsection 4 of section 250 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

s. 11R1; O.C. 1981-80, s. 11R1; R.R.Q., 1981, c. I-3, r. 1, s. 11R1; O.C. 35-96, s. 1; O.C. 1707-97, s. 98; O.C. 134-2009, s. 1.

21.6R1. For the purposes of paragraph e of section 21.6 of the Act,

(a)  a share last acquired before 29 June 1982 and of a class of the capital stock of a corporation that is listed on a designated stock exchange in Canada is a prescribed share where less than 10% of the issued and outstanding shares of that class are owned by the owner of that share or by the owner of that share and persons related to that owner;

(b)  a share acquired after 28 June 1982 and of a class of the capital stock of a corporation that is listed on a designated stock exchange in Canada is a prescribed share at any particular time in respect of another corporation that receives a dividend at the particular time in respect of the share unless

i.  where the other corporation is a restricted financial institution,

(1)  the share is not a taxable preferred share,

(2)  dividends, other than dividends received on shares prescribed under section 21.6R3, are received at the particular time by the other corporation or by the other corporation and restricted financial institutions with which the other corporation does not deal at arm’s length, in respect of more than 5% of the issued and outstanding shares of that class, and

(3)  a dividend is received at the particular time by the other corporation or a restricted financial institution with which the other corporation does not deal at arm’s length, in respect of a share, other than a share prescribed under section 21.6R3, of that class acquired after 15 December 1987 and before the particular time,

ii.  where the other corporation is a restricted financial institution, the share

(1)  is not a taxable preferred share,

(2)  was acquired after 15 December 1987 and before the particular time, and

(3)  was, by reason of section 21.9 of the Act or paragraph a or b of section 21.9.1 of the Act, deemed to have been issued after 15 December 1987 and before the particular time, or

iii.  in any case, dividends, other than dividends received on shares prescribed under section 21.6R3, are received at the particular time by the other corporation or by the other corporation and persons with whom the other corporation does not deal at arm’s length, in respect of more than 10% of the issued and outstanding shares of that class;

(c)  a share of any of the following series of preferred shares of the capital stock of Massey-Ferguson Limited issued after 15 July 1981 and before 23 March 1982 is a prescribed share:

i.  $25 Cumulative Redeemable Retractable Convertible Preferred Shares, Series C,

ii.  $25 Cumulative Redeemable Retractable Preferred Shares, Series D, or

iii.  $25 Cumulative Redeemable Retractable Convertible Preferred Shares, Series E.

s. 21.6R2; O.C. 2456-80, s. 1; R.R.Q., 1981, c. I-3, r. 1, s. 21.6R2; O.C. 1472-87, s. 1; O.C. 1076-88, s. 1; O.C. 1114-92, s. 1; O.C. 1114-93, s. 2; O.C. 1707-97, s. 98; O.C. 1451-2000, s. 66; O.C. 1463-2001, s. 3; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 2.

21.6R2. For the purposes of paragraph b of section 21.6R1, of section 21.6R3 and of this section, the following rules apply:

(a)  where a taxpayer is a beneficiary of a trust and an amount has been designated to the beneficiary by the trust in a taxation year in accordance with section 666 of the Act, the taxpayer is deemed to have received the amount so designated at the time it was received by the trust;

(b)  where a taxpayer is a member of a partnership and a dividend has been received by the partnership, the taxpayer’s share of the dividend is deemed to have been received by the taxpayer at the time the dividend was received by the partnership.

s. 21.6R3; O.C. 1472-87, s. 1; O.C. 1076-88, s. 2; O.C. 1114-92, s. 2; O.C. 1707-97, s. 98; O.C. 134-2009, s. 1.

21.6R3. For the purposes of paragraph e of section 21.6 of the Act, a share of a class of the capital stock of a corporation listed on a designated stock exchange in Canada is a prescribed share at any particular time in respect of another corporation that is registered or licensed under the laws of a province to trade in securities and that holds the share for the purpose of sale in the course of the business ordinarily carried on by it, unless

(a)  it may reasonably be considered that the share was acquired as part of a series of transactions or events one of the main purposes of which was to avoid or limit the application of section 740.1 of the Act; or

(b)  the share was not acquired by the other corporation in the course of an underwriting of shares of that class to be distributed to the public and

i.  dividends are received at the particular time by the other corporation or by the other corporation and corporations controlled by the other corporation in respect of more than 10% of the issued and outstanding shares of that class,

ii.  the other corporation is a restricted financial institution and

(1)  the share is not a taxable preferred share,

(2)  dividends are received at the particular time by the other corporation or by the other corporation and corporations controlled by the other corporation in respect of more than 5% of the issued and outstanding shares of that class, and

(3)  a dividend is received at the particular time by the other corporation or a corporation controlled by the other corporation in respect of a share of that class acquired after 15 December 1987 and before that particular time, or

iii.  the other corporation is a restricted financial institution and the share:

(1)  is not a taxable preferred share,

(2)  was acquired after 15 December 1987 and before the particular time, and

(3)  was deemed to have been issued after 15 December 1987 and before the particular time by reason of section 21.9 of the Act or paragraph a or b of section 21.9.1 of the Act.

s. 21.6R4; O.C. 1114-92, s. 3; O.C. 1114-93, s. 3; O.C. 1707-97, s. 2; O.C. 1451-2000, s. 66; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 3.

21.6R4. For the purposes of paragraph e of section 21.6 of the Act,

(a)  a share of the capital stock of a corporation that is a member institution of a deposit insurance corporation within the meaning of section 804 of the Act is a prescribed share with respect to the deposit insurance corporation and any subsidiary wholly-owned corporation of the deposit insurance corporation that is deemed to be a deposit insurance corporation under section 806.1 of the Act; and

(b)  the Exchangeable Preference Shares of Canada Cement Lafarge Ltd., referred to as “subject shares” in this paragraph, the Exchangeable Preference Shares of Lafarge Canada Inc. and the shares of any corporation formed as a result of an amalgamation or merger of Lafarge Canada Inc. with one or more other corporations are prescribed shares at any particular time where the terms and conditions of such shares at the particular time are the same as, or substantially the same as, the terms and conditions of the subject shares as of 18 June 1987, and, for the purposes of this paragraph, the amalgamation or merger of one or more corporations with another corporation formed as a result of the amalgamation or merger of Lafarge Canada Inc. with one or more other corporations is deemed to be an amalgamation of Lafarge Canada Inc. with another corporation.

s. 21.6R5; O.C. 1114-92, s. 3; O.C. 1707-97, s. 98; O.C. 134-2009, s. 1.

21.6R5. For the purpose of determining, under paragraph b of section 21.6R1 and of section 21.6R3, the time at which a share of a class of the capital stock of a corporation was acquired by any taxpayer, shares of that class acquired by the taxpayer at any particular time before a disposition by the taxpayer of shares of that class are deemed to have been disposed of before shares of that class acquired by the taxpayer before that particular time.

s. 21.6R6; O.C. 1114-92, s. 3; O.C. 1707-97, s. 98; O.C. 134-2009, s. 1.

21.6R6. For the purposes of paragraph b of section 21.6R1 and of section 21.6R3, the following rules apply:

(a)  a share of the capital stock of a corporation acquired by a person after 15 December 1987 pursuant to an agreement in writing entered into before 16 December 1987 is deemed to have been acquired by that person before 16 December 1987;

(b)  a share of the capital stock of a corporation acquired by a person after 15 December 1987 and before 1 July 1988 as part of a distribution to the public made in accordance with the terms of a prospectus, preliminary prospectus, registration statement, offering memorandum or notice filed before 16 December 1987 with a public authority in accordance with the securities legislation of the jurisdiction in which the shares were distributed, is deemed to have been acquired by that person before 16 December 1987;

(c)  where a share that was owned by a particular restricted financial institution on 15 December 1987 has, by one or more transactions between related restricted financial institutions, been transferred to another restricted financial institution, the share is deemed to have been acquired by the other restricted financial institution before that date and after 28 June 1982, unless at any particular time after 15 December 1987 and before the share was transferred to the other restricted financial institution, the share was owned by a shareholder who, at that particular time, was a person other than a restricted financial institution related to the other restricted financial institution; and

(d)  where, at any particular time there has been an amalgamation, within the meaning of section 544 of the Act, and each of the predecessor corporations, within the meaning of that section, was a restricted financial institution throughout the period beginning 16 December 1987 and ending at the particular time and the predecessor corporations were related to each other throughout that period, or each of the predecessor corporations and the new corporation, within the meaning of that section, is a corporation described in any of paragraphs a to d of the definition “restricted financial institution” in section 1 of the Act, a share acquired by the new corporation from a predecessor corporation is deemed to have been acquired by the new corporation at the time it was acquired by the predecessor corporation.

s. 21.6R7; O.C. 1114-92, s. 3; O.C. 1707-97, s. 98; O.C. 134-2009, s. 1.

21.11.12R1. For the purposes of paragraph h of section 21.11.12 of the Act, a prescribed share is a share referred to in paragraph b of section 21.6R4.

s. 21.11.12R1; O.C. 1114-92, s. 5; O.C. 134-2009, s. 1.

21.11.15R1. For the purposes of section 21.11.15 of the Act, the following shares are prescribed shares at any particular time:

(a)  the 8.5% Cumulative Redeemable Convertible Class A Preferred Shares of St. Marys Paper Inc. issued on 7 July 1987, where such shares are not deemed, by reason of paragraph c of section 21.11.16 of the Act, to have been issued after that date and before the particular time;

(b)  the Cumulative Redeemable Preferred Shares of CanUtilities Holdings Ltd. issued before 1 July 1991, unless the amount of the consideration for which all such shares were issued exceeds $300,000,000 or the particular time is after 1 July 2001; and

(c)  the shares referred to in paragraph b of section 21.6R4.

s. 21.11.15R1; O.C. 1114-92, s. 5; O.C. 134-2009, s. 1.

21.11.16R1. For the purposes of paragraphs a, b and e of section 21.11.16 of the Act, a prescribed share is a share referred to in section 21.11.15R1.

s. 21.11.16R1; O.C. 1114-92, s. 5; O.C. 134-2009, s. 1.

21.19R1. For the purposes of section 21.19 of the Act, a prescribed corporation is a corporation that is registered under the provisions of

(a)  The Small Business Development Corporations Act 1979, of Ontario (S.O. 1979, c. 22);

(b)  Manitoba Regulation 194/84, made under The Loans Act, 1983 (2) of Manitoba (S.M. 1982-83-84, c. 36);

(c)  The Venture Capital Tax Credit Act of Saskatchewan (S.S. 1983-84, c. V-4.1);

(d)  the Small Business Equity Corporations Act of Alberta (S.A. 1984, c. S-13.5);

(e)  the Small Business Venture Capital Act of British Columbia (S.B.C. 1985, c. 56);

(f)  The Venture Capital Act of Newfoundland and Labrador (R.S.N.L. 1990, c. V-3);

(g)  The Labour-sponsored Venture Capital Corporations Act of Saskatchewan (S.S. 1986, c. L-0.2);

(h)  Part 2 of the Employee Investment Act of British Columbia (R.S.B.C. 1996, c. 112);

(i)  Part III of The Community Small Business Investment Funds Act (S.O. 1992, c. 18);

(j)  The Labour-Sponsored Venture Capital Corporations Act (Continuing Consolidation of the Statutes of Manitoba, c. L12);

(k)  Part II of the Risk Capital Investment Tax Credits Act of the Northwest Territories, (S.N.W.T. 1998, c. 22); or

(l)  section 11 or Part II of the Equity Tax Credit Act of Nova Scotia (S.N.S. 1993, c. 3).

The following are also prescribed corporations for the purposes of section 21.19 of the Act:

(a)  the corporation governed by The Act to establish the Fonds de solidarité des travailleurs du Québec (F.T.Q.) (chapter F-3.2.1);

(b)  a corporation that is registered with the Department of Economic Development and Tourism of the Government of the Northwest Territories pursuant to the Venture Capital Policy and Directive issued by the Government of the Northwest Territories on 27 June 1985;

(c)  a registered labour-sponsored venture capital corporation within the meaning of subsection 1 of section 248 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.));

(d)  the corporation governed by The Manitoba Employee Ownership Fund Corporation Act (Continuing Consolidation of the Statutes of Manitoba, c. E95);

(e)  the corporation governed by the Act to establish Fondaction, le Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l’emploi (chapter F-3.1.2); and

(f)  the corporation governed by the Act constituting Capital régional et coopératif Desjardins (chapter C-6.1).

s. 21.19R1; Erratum, 1988 G.O. 2, 4642; O.C. 615-88, s. 2; O.C. 1114-92, s. 6; O.C. 1660-94, s. 3; O.C. 35-96, s. 2; O.C. 67-96, s. 3; O.C. 1633-96, s. 1; O.C. 1707-97, s. 98; O.C. 1454-99, s. 2; O.C. 1463-2001, s. 6; O.C. 1470-2002, s. 2; O.C. 1282-2003, s. 1; O.C. 134-2009, s. 1; I.N. 2016-10-01.

21.20.1R1. For the purposes of paragraph d of section 21.20.1 of the Act, the prescribed rate of interest in effect during a particular period is equal

(a)  where the shares referred to in that paragraph d were issued before 1 January 1984, to the rate determined in respect of that period for the purposes of subsection 1 of section 161 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)); and

(b)  where the shares referred to in that paragraph d were issued after 31 December 1983, to the rate determined in respect of that period in accordance with subparagraph i of paragraph a of section 4301 of the Income Tax Regulations made under the Income Tax Act.

s. 21.20.1R1; O.C. 67-96, s. 4; O.C. 1707-97, s. 98; O.C. 1463-2001, s. 7; O.C. 134-2009, s. 1.

TITLE II INCOME EARNED IN QUÉBEC AND INCOME EARNED IN QUÉBEC AND ELSEWHERE BY AN INDIVIDUAL RESIDENT IN QUÉBEC

title II; O.C. 1981-80, title II; R.R.Q., 1981, c. I-3, r. 1, title II; O.C. 134-2009, s. 1.

CHAPTER I GENERAL RULES

c. I; O.C. 1981-80, title II, c. I; R.R.Q., 1981, c. I-3, r. 1, title II, c. I; O.C. 134-2009, s. 1.

22R1. For the purposes of this Title and the second paragraph of section 22 of the Act, the income earned in Québec by an individual for a taxation year is the individual’s income as determined under section 28 of the Act, without reference to section 1029.8.50 of the Act, less that part of the individual’s income from carrying on a business that is attributable to an establishment situated outside Québec in Canada, and the individual’s income earned in Québec and elsewhere is the individual’s income as determined under section 28 of the Act, without reference to section 1029.8.50.

s. 22R1; O.C. 1981-80, s. 22R1; R.R.Q., 1981, c. I-3, r. 1, s. 22R1; O.C. 1544-82, s. 1; O.C. 523-96, s. 1; O.C. 1707-97, s. 3; O.C. 1466-98, s. 2; O.C. 1463-2001, s. 9; O.C. 134-2009, s. 1.

22R2. For the purposes of section 22R1, where the individual is an individual referred to in any of sections 726.42, 726.43 to 726.43.2, 737.16 and 737.18.10 of the Act, the individual’s income earned in Québec, computed for a taxation year under that section 22R1, must be increased by the amount that is included in computing the individual’s taxable income for the year under any of sections 726.43 to 726.43.2 of the Act and reduced by the part, not otherwise deducted in computing the individual’s income earned in Québec, of the amount that is deducted in computing the individual’s taxable income for the year under any of sections 726.42, 737.16 and 737.18.10 of the Act, and the individual’s income earned in Québec and elsewhere, determined for the year under that section 22R1, must be increased by the amount that is included in computing the individual’s taxable income for the year and reduced by the amount that is deducted in computing the individual’s taxable income for the year.

s. 22R1.1; O.C. 1811-86, s. 1; O.C. 1451-2000, s. 1; O.C. 1463-2001, s. 10; O.C. 1155-2004, s. 2; O.C. 1116-2007, s. 1; O.C. 134-2009, s. 1; O.C. 390-2012, s. 2; O.C. 117-2019, s. 1; O.C. 1448-2021, s. 1; O.C. 90-2023, s. 1.

22R3. For the purposes of section 22R1, where the individual is a person described in the second paragraph, the individual’s income earned in Québec and the individual’s income earned in Québec and elsewhere, computed for a taxation year under that section 22R1, is reduced by the amount deducted by the individual in computing taxable income for the year under any of sections 737.21, 737.22.0.0.3, 737.22.0.0.7, 737.22.0.3, 737.22.0.4.7, 737.22.0.7, 737.25 and 737.28 of the Act.

The person referred to in the first paragraph is a foreign researcher within the meaning assigned by paragraph a of section 737.19 of the Act, a foreign researcher on a post-doctoral internship within the meaning assigned by section 737.22.0.0.1 of the Act, a foreign expert within the meaning assigned by section 737.22.0.0.5 of the Act, a foreign specialist within the meaning assigned by section 737.22.0.1 or 737.22.0.4.1 of the Act, a foreign professor, within the meaning assigned by section 737.22.0.5 of the Act, or an individual referred to in any of sections 737.25 and 737.28 of the Act.

s. 22R1.2; O.C. 1666-90, s. 1; O.C. 523-96, s. 1; O.C. 1707-97, s. 4; O.C. 1466-98, s. 3; O.C. 1451-2000, s. 2; O.C. 1463-2001, s. 11; O.C. 1282-2003, s. 2; O.C. 134-2009, s. 1; O.C. 1105-2014, s. 1; O.C. 90-2023, s. 2.

22R4. For the purposes of section 22R1, an individual’s income earned in Québec and an individual’s income earned in Québec and elsewhere, computed for a taxation year under that section 22R1, must be reduced by the amount deducted by the individual in computing the individual’s taxable income for the year under section 726.20.2 of the Act.

s. 22R1.3; O.C. 1707-97, s. 5; O.C. 1463-2001, s. 12; O.C. 134-2009, s. 1.

22R5. The income derived from carrying on a business by an individual referred to in the second paragraph of section 22 of the Act is deemed to have been wholly earned in Québec for a taxation year if the individual has no establishment outside Québec in Canada during the year.

s. 22R2; O.C. 1981-80, s. 22R2; R.R.Q., 1981, c. I-3, r. 1, s. 22R2; O.C. 134-2009, s. 1.

22R6. The income derived from carrying on a business by an individual referred to in the second paragraph of section 22 of the Act is deemed to have been wholly earned outside Québec for a taxation year if the individual has no establishment in Québec or outside Canada during the year.

s. 22R3; O.C. 1981-80, s. 22R3; R.R.Q., 1981, c. I-3, r. 1, s. 22R3; O.C. 2583-85, s. 1; O.C. 134-2009, s. 1.

22R7. An individual resident in Québec on the last day of a taxation year and carrying on a business outside Québec in Canada who is resident in more than one province on that day is deemed, for the purposes of this Title, to have resided only in the province that may reasonably be considered to be the individual’s principal place of residence.

However, the first paragraph does not apply in respect of an individual referred to in section 8 of the Act.

s. 22R4; O.C. 1981-80, s. 22R4; R.R.Q., 1981, c. I-3, r. 1, s. 22R4; O.C. 1544-82, s. 2; O.C. 1463-2001, s. 13; O.C. 134-2009, s. 1.

CHAPTER II ESTABLISHMENTS IN SEVERAL JURISDICTIONS

c. II; O.C. 1981-80, title II, c. II; R.R.Q., 1981, c. I-3, r. 1, title II, c. II; O.C. 134-2009, s. 1.

DIVISION I GENERALITIES

div. I; O.C. 1981-80, title II, c. II, div. I; R.R.Q., 1981, c. I-3, r. 1, title II, c. II, div. I; O.C. 134-2009, s. 1.

22R8. Subject to the special provisions of Chapter III, where, in a taxation year, an individual referred to in the second paragraph of section 22 of the Act carries on a business and owns an establishment outside Québec in Canada and an establishment in Québec or outside Canada, the part of the individual’s income from the business that is attributable to the individual’s establishment outside Québec in Canada is one-half the aggregate of

(a)  that proportion of the individual’s income from the business that the gross revenue of the business for the fiscal period ending in the year reasonably attributable to an establishment outside Québec in Canada is of the total gross revenue of the business for that period; and

(b)  that proportion of the individual’s income from the business that the aggregate of the salaries and wages paid by the individual in the fiscal period of the business ending in the year to employees of the establishments outside Québec in Canada is of the aggregate of all salaries and wages paid by the individual in that period in the course of the individual’s business.

s. 22R5; O.C. 1981-80, s. 22R5; R.R.Q., 1981, c. I-3, r. 1, s. 22R5; O.C. 1463-2001, s. 14; O.C. 134-2009, s. 1.

22R9. For the purposes of section 22R8, “gross revenue” does not include interest on a bond, debenture or obligation secured by hypothecary claim, mortgage, or dividends, rentals or royalties from property that is not used in connection with the business of the individual.

s. 22R6; O.C. 1981-80, s. 22R6; R.R.Q., 1981, c. I-3, r. 1, s. 22R6; O.C. 1466-98, s. 4; O.C. 134-2009, s. 1.

22R10. Except where a commission is paid to a person who is not an employee of the individual, where an amount is paid under an agreement by the individual to a person in respect of services that would normally be rendered by employees of the individual, the amount so paid is, for the purposes of paragraph b of section 22R8, deemed to be salary or wages paid to an employee of the individual’s establishment to which the services are reasonably attributable and to the extent that they are so attributable.

s. 22R7; O.C. 1981-80, s. 22R7; R.R.Q., 1981, c. I-3, r. 1, s. 22R7; O.C. 1463-2001, s. 15; O.C. 134-2009, s. 1.

DIVISION II COMPUTATION OF GROSS REVENUE

div. II; O.C. 1981-80, title II, c. II, div. II; R.R.Q., 1981, c. I-3, r. 1, title II, c. II, div. II; O.C. 134-2009, s. 1.

22R11. The rules in this division apply to the computation of the gross revenue reasonably attributable to an establishment of an individual referred to in the second paragraph of section 22 of the Act for a taxation year.

s. 22R8; O.C. 1981-80, s. 22R8; R.R.Q., 1981, c. I-3, r. 1, s. 22R8; O.C. 134-2009, s. 1.

22R12. Where the merchandise sold is shipped to a jurisdiction in which the individual has an establishment, the gross revenue derived from the sale is attributable to that establishment and, if there is no such establishment, it is attributable to the establishment to which the person who has negotiated the sale is attached.

Where the buyer instructs that the merchandise be shipped to some other person, the gross revenue derived from the sale is attributable to the establishment situated in the jurisdiction of the buyer’s establishment, if the individual has an establishment in that jurisdiction, otherwise, it is attributable to the establishment to which the person who has negotiated the sale is attached.

s. 22R9; O.C. 1981-80, s. 22R9; R.R.Q., 1981, c. I-3, r. 1, s. 22R9; O.C. 134-2009, s. 1.

22R13. Despite section 22R12, where the merchandise sold is shipped to another country where the individual has no establishment and if the merchandise was entirely produced or manufactured by the individual in one jurisdiction in Canada, the gross revenue derived from the sale is attributable to the establishment situated in that jurisdiction.

However, if the merchandise sold was produced or manufactured by the individual partly outside Québec in Canada and partly in Québec or outside Canada, the gross revenue derived from the sale attributable to the establishment situated outside Québec in Canada is that proportion of the gross revenue that the salaries and wages paid in the year to employees of that establishment is of the aggregate of the salaries and wages paid in the year to employees of all the establishments where the merchandise sold was produced or manufactured.

The same rules apply where the establishment of the buyer is situated in a jurisdiction outside Canada in which the individual has no establishment and the buyer instructs that the merchandise be shipped to another person.

s. 22R10; O.C. 1981-80, s. 22R10; R.R.Q., 1981, c. I-3, r. 1, s. 22R10; O.C. 134-2009, s. 1.

22R14. The gross revenue derived from services rendered in a jurisdiction is attributable to the establishment situated in that jurisdiction and, if there is no such establishment, it is attributable to the establishment to which the person who has negotiated the contract is attached.

s. 22R11; O.C. 1981-80, s. 22R11; R.R.Q., 1981, c. I-3, r. 1, s. 22R11; O.C. 134-2009, s. 1.

22R15. Where standing timber or a cutting right thereto is sold, the gross revenue from such sale is attributable to the establishment of the individual in the jurisdiction in which the timber limit containing the standing timber or to which the cutting right refers is located.

s. 22R12; O.C. 1981-80, s. 22R12; R.R.Q., 1981, c. I-3, r. 1, s. 22R12; O.C. 134-2009, s. 1.

22R16. Where land is an establishment, the gross revenue derived therefrom is attributable to that establishment.

s. 22R13; O.C. 1981-80, s. 22R13; R.R.Q., 1981, c. I-3, r. 1, s. 22R13; O.C. 134-2009, s. 1.

CHAPTER III BUS AND TRUCK TRANSPORTATION BUSINESSES

c. III; O.C. 1981-80, title II, c. III; R.R.Q., 1981, c. I-3, r. 1, title II, c. III; O.C. 134-2009, s. 1.

22R17. The part of an individual’s income for a taxation year from carrying on a bus and truck transportation business that is attributable to the individual’s establishment outside Québec in Canada is one-half the aggregate of

(a)  that proportion of the individual’s income therefrom that the number of kilometres travelled by the individual’s vehicles outside Québec in Canada in the fiscal period ending in the year is of the total number of kilometres travelled by the individual’s vehicles in that period; and

(b)  that proportion of the individual’s income therefrom that the aggregate of salaries and wages paid by the individual in the fiscal period ending in the year to employees of the individual’s establishment outside Québec in Canada is of the aggregate of all salaries and wages paid by the individual in that period.

s. 22R14; O.C. 1981-80, s. 22R14; R.R.Q., 1981, c. I-3, r. 1, s. 22R14; O.C. 1463-2001, s. 16; O.C. 134-2009, s. 1.

CHAPTER IV SPECIAL CASES

c. IV; O.C. 1981-80, title II, c. IV; R.R.Q., 1981, c. I-3, r. 1, title II, c. IV; O.C. 134-2009, s. 1.

22R18. If the aggregate of the amounts determined as the income for a taxation year from a business carried on in Québec and elsewhere by an individual referred to in the second paragraph of section 22 of the Act is greater than the individual’s income for the year, the part of the individual’s income from a business that is attributable to an establishment outside Québec in Canada is deemed to be equal to that proportion of the individual’s income for the year that the part of the individual’s income from carrying on that business outside Québec in Canada, as otherwise determined, is of that aggregate.

For the purposes of the first paragraph, the income for a taxation year of an individual is the amount by which the aggregate of the individual’s income for the year, as determined under section 28 of the Act without reference to section 1029.8.50 of the Act, and the amount that is included in computing the individual’s taxable income for the year under any of sections 726.43 to 726.43.2 of the Act, exceeds the aggregate of,

(a)  where the individual is referred to in any of sections 726.42, 737.16 and 737.18.10 of the Act, the amount that is deducted in computing the individual’s taxable income for the year under any of sections 726.42, 737.16 and 737.18.10 of the Act;

(b)  where the individual is a foreign researcher within the meaning assigned by section 737.19 of the Act, a foreign researcher on a post-doctoral internship within the meaning assigned by section 737.22.0.0.1 of the Act, a foreign expert within the meaning assigned by section 737.22.0.0.5 of the Act, a foreign specialist within the meaning assigned by section 737.22.0.1 or 737.22.0.4.1 of the Act, a foreign professor within the meaning assigned by section 737.22.0.5 of the Act or an individual referred to in any of sections 737.25 and 737.28 of the Act, the amount deducted by the individual in computing taxable income for the year under any of sections 737.21, 737.22.0.0.3, 737.22.0.0.7, 737.22.0.3, 737.22.0.4.7, 737.22.0.7, 737.25 and 737.28 of the Act; and

(c)  the amount deducted by the individual in computing taxable income for the year under section 726.20.2 of the Act.

s. 22R15; O.C. 1981-80, s. 22R15; R.R.Q., 1981, c. I-3, r. 1, s. 22R15; O.C. 1633-96, s. 2; O.C. 1707-97, s. 6; O.C. 1466-98, s. 5; O.C. 1451-2000, s. 4; O.C. 1463-2001, s. 17; O.C. 1282-2003, s. 3; O.C. 1155-2004, s. 3; O.C. 1116-2007, s. 2; O.C. 134-2009, s. 1; O.C. 390-2012, s. 3; O.C. 117-2019, s. 2; O.C. 164-2021, s. 1; O.C. 1448-2021, s. 2; O.C. 90-2023, s. 3.

22R19. Where an individual carries on more than one business in a taxation year, this Title applies in respect of each business, and the part of the business income that is attributable for the year to the individual’s establishments outside Québec in Canada is the aggregate of the amounts so determined in respect of each business.

s. 22R16; O.C. 1981-80, s. 22R16; R.R.Q., 1981, c. I-3, r. 1, s. 22R16; O.C. 1463-2001, s. 18; O.C. 134-2009, s. 1.

22R20. Where an individual referred to in the second paragraph of section 22 of the Act became or ceased to be resident in Canada in the taxation year, the part of the individual’s income for the year from carrying on a business that is attributable to an establishment outside Québec in Canada is computed by reference solely to a business the income from which is included in computing the individual’s taxable income under sections 23 and 24 of the Act.

s. 22R17; O.C. 1981-80, s. 22R17; R.R.Q., 1981, c. I-3, r. 1, s. 22R17; O.C. 1463-2001, s. 19; O.C. 134-2009, s. 1.

CHAPTER V LOSSES ATTRIBUTABLE TO AN ESTABLISHMENT OUTSIDE QUÉBEC IN CANADA

c. V; O.C. 1981-80, title II, c. V; R.R.Q., 1981, c. I-3, r. 1, title II, c. V; O.C. 134-2009, s. 1.

22R21. Sections 22R1 to 22R20 apply with the necessary modifications in determining the part of the losses of an individual referred to in the second paragraph of section 22 of the Act that is attributable to an establishment outside Québec in Canada.

s. 22R18; O.C. 1981-80, s. 22R18; R.R.Q., 1981, c. I-3, r. 1, s. 22R18; O.C. 1633-96, s. 44; O.C. 134-2009, s. 1.

TITLE III PLAN FOR THE INSURANCE OF PERSONS

title III.0.1; O.C. 473-95, s. 1; O.C. 1633-96, s. 44; O.C. 134-2009, s. 1.

37.0.1.2R1. For the purposes of the second paragraph of section 37.0.1.2 of the Act, the amount prescribed for a particular period in respect of an individual in relation to a particular coverage is the product obtained by multiplying the number of days, after 20 May 1993, included in the particular period by $2.74 where the particular coverage is coverage solely for the individual, or by $10.96 in any other case.

s. 37.0.1.2R1; O.C. 473-95, s. 1; O.C. 1463-2001, s. 20; O.C. 134-2009, s. 1.

37.0.1.5R1. For the purposes of subparagraph a of the second paragraph of section 37.0.1.4 of the Act, enacted by paragraph c of section 37.0.1.5 of the Act, the amount prescribed in respect of particular coverage and benefits enjoyed by an individual during a taxation year under a plan for the insurance of persons is the total of all amounts each of which corresponds to the product obtained by multiplying, in respect of a particular person described in the second paragraph in relation to the particular coverage and benefits, the number of days, after 20 May 1993, included in the particular period referred to in subparagraph b of the second paragraph in respect of the particular person by $2.74 where the particular coverage is coverage solely for the particular person, or by $10.96 in any other case.

A particular person referred to in the first paragraph in respect of particular coverage and benefits enjoyed by an individual during a taxation year under a plan for the insurance of persons means a person who

(a)  is an employee of the individual’s employer; and

(b)  has enjoyed the particular coverage and benefits under the plan for a particular period, included in the year, throughout which the person was not entitled to benefit from the provisions of the Health Insurance Act (chapter A-29) and the particular benefits enjoyed by the person in relation to the particular coverage under the plan covered at least all of the services that would have been insured in the person’s respect under that Act for the particular period had the person then been entitled to benefit from the provisions of that Act.

s. 37.0.1.5R1; O.C. 473-95, s. 1; O.C. 1633-96, s. 44; S.Q. 1999, c. 89, s. 53; O.C. 149-2000; O.C. 1463-2001, s. 21; O.C. 134-2009, s. 1.

TITLE IV AMOUNTS NOT INCLUDED IN COMPUTING INCOME

title III.1; O.C. 1981-80, title III.1; R.R.Q., 1981, c. I-3, r. 1, title III.1; O.C. 134-2009, s. 1.

39R1. The amounts that an individual is not required, pursuant to paragraph g of section 39 of the Act, to include in computing the individual’s income are

(a)  the special allowance granted by the Gouvernement du Québec to one of its officers pursuing studies at an educational institution outside Canada;

(b)  an allocation received pursuant to the Canadian Forces Overseas School Regulations, made under subsection 1 of section 12 of the National Defence Act (R.S.C. 1985, c. N-5), by personnel employed outside Canada whose services are acquired by the Minister of National Defence pursuant to those Regulations;

(c)  travel, personal, living or representation expense allowances fixed by Order of the Government or by a Decision of the Conseil du trésor;

(d)  a refund to the individual in respect of travel, personal, living or representation expenses, or a payment of such expenses on the individual’s behalf, made under an Order of the Government or a Decision of the Conseil du trésor or authorized pursuant to such an Order or Decision; and

(e)  travel, personal, living or representation expense allowances fixed by a collective agreement entered into pursuant to the Act respecting labour relations, vocational training and workforce management in the construction industry (chapter R-20).

s. 39R1; O.C. 2456-80, s. 2; O.C. 1535-81, s. 1; R.R.Q., 1981, c. I-3, r. 1, s. 39R1; O.C. 1544-82, s. 3; O.C. 2962-82, s. 2; O.C. 500-83, s. 2; O.C. 544-86, s. 2; O.C. 1471-91, s. 2; O.C. 1454-99, s. 4; O.C. 1463-2001, s. 22; O.C. 1155-2004, s. 4; S.Q. 2007, c. 3, s. 72; O.C. 134-2009, s. 1; O.C. 229-2014, s. 2.

TITLE V BENEFIT RELATED TO THE OPERATION OF AN AUTOMOBILE

title III.1.1; O.C. 1707-97, s. 7; O.C. 134-2009, s. 1.

41.1.1R1. The amount prescribed to which subparagraph ii of subparagraph a of the second paragraph of section 41.1.1 of the Act refers is

(a)  33 cents, except where paragraph b applies; and

(b)  30 cents, if the individual referred to in that section 41.1.1 is engaged principally in selling or leasing automobiles and an automobile is made available in the year to the individual or a person related to the individual by the individual’s employer or a person related to the employer.

s. 41.1.1R1; O.C. 1707-97, s. 7; O.C. 1466-98, s. 126; O.C. 1463-2001, s. 23; O.C. 1470-2002, s. 3; O.C. 1155-2004, s. 5; O.C. 1149-2006, s. 2; O.C. 1116-2007, s. 3; O.C. 134-2009, s. 1; O.C. 1303-2009, s. 1; O.C. 701-2013, s. 2; O.C. 321-2017, s. 1; O.C. 1182-2017, s. 1; O.C. 117-2019, s. 3; O.C. 204-2020, s. 1; O.C. 1448-2021, s. 3; O.C. 90-2023, s. 4; O.C. 1726-2023, s. 1.

TITLE VI EMPLOYEE BENEFIT PLANS

title III.2; O.C. 2962-82, s. 3; O.C. 500-83, s. 3; O.C. 1466-98, s. 6; O.C. 134-2009, s. 1.

47.6R1. For the purposes of the second paragraph of section 47.6 of the Act, each of the following is a prescribed arrangement:

(a)  the “Major League Baseball Players Benefit Plan” of the United States;

(b)  an arrangement under which all contributions are made pursuant to a law of Canada or a province, where one of the main purposes of the law is to enforce minimum standards with respect to wages, vacation entitlement or severance pay; and

(c)  an arrangement under which all contributions are made in connection with a dispute regarding the entitlement of one or more persons to receive benefits.

s. 47.6R1; O.C. 2962-82, s. 3; O.C. 500-83, s. 3; O.C. 1466-98, s. 7; O.C. 134-2009, s. 1.

TITLE VII SALARY DEFERRAL ARRANGEMENTS

title III.3; O.C. 1471-91, s. 4; O.C. 134-2009, s. 1.

47.16R1. A plan or arrangement referred to in paragraph l of section 47.16 of the Act is an arrangement in writing

(a)  between an employer and an employee that is established after 27 July 1986 where

i.  it is reasonable to conclude, having regard to the circumstances, including the terms and conditions of the arrangement and any agreement relating thereto, that the arrangement is not established to provide benefits to the employee on or after retirement but is established for the main purpose of permitting the employee to fund, through salary or wage deferrals, a leave of absence from the employee’s employment of not less than 3 consecutive months if the leave is to be taken by the employee for the purpose of permitting the full-time attendance of the employee at a designated educational institution within the meaning assigned by subsection 1 of section 118.6 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), or of 6 consecutive months in any other case, that is to commence immediately after a period, in this section referred to as the “deferral period”, not exceeding 6 years after the date on which the deferrals for the leave of absence commence,

ii.  the part of the salary or wages deferred by the employee under the arrangement or any other similar arrangement for the services rendered by the employee to the employer in a taxation year does not exceed one-third of the amount of the salary or wages that the employee would, but for the arrangements, have reasonably expected to receive in the year in respect of the services,

iii.  the arrangement provides that throughout the period of the leave of absence referred to in subparagraph i the employee will not receive any salary or wages from the employer, or from any other person or partnership with whom the employer does not deal at arm’s length, other than

(1)  the amount by which the employee’s salary or wages under the arrangement was deferred or is to be reduced, or amounts that are based on a percentage of the salary or wage scale of employees of the employer, which percentage is fixed in respect of the employee for the deferral period and the leave of absence referred to in subparagraph i, or

(2)  the reasonable fringe benefits that the employer usually pays to or on behalf of employees,

iv.  the arrangement provides

(1)  that the amounts deferred in respect of the employee under the arrangement are held by or for the account of a trust governed by a plan or arrangement that is an employee benefit plan and that the amount that may reasonably be considered to be the income of the trust for a taxation year that has been earned by it for the benefit of the employee is to be paid in the year to the employee, or

(2)  that the amounts deferred in respect of the employee under the arrangement are held by or for the account of any person other than a trust referred to in subparagraph 1 and that the amount in respect of interest or other additional amounts that may reasonably be considered to have accrued to or for the benefit of the employee to the end of a taxation year is to be paid in the year to the employee;

v.  the arrangement provides that the employee is to return to the employee’s regular employment with the employer or an employer that participates in the same or a similar arrangement after the leave of absence referred to in subparagraph i for a period that is not less than the period of leave of absence, and

vi.  subject to subparagraph iv, the arrangement provides that all amounts held for the employee’s benefit under the arrangement are to be paid to the employee not later than the end of the first taxation year that begins after the end of the deferral period;

(b)  between an employer and an employee that is established before 28 July 1986 where it is reasonable to conclude, having regard to the circumstances, including the terms and conditions of the arrangement and any agreement relating thereto, that the arrangement is not established to provide benefits to the employee on or after retirement but is established for the main purpose of permitting the employee to fund, through salary or wage deferrals, a leave of absence from the employee’s employment and under which the deferrals for the leave of absence commenced before 1 January 1987;

(c)  that is established for the purpose of deferring the salary or wages of a professional referee or linesman for the referee’s or linesman’s services as such with the National Hockey League if, in the case of a professional referee or linesman resident in Canada, the trust or any other person having custody and control of any funds, investments or other property under the arrangement is resident in Canada; or

(d)  subject to section 47.16R2, between a corporation and an employee of the corporation or a corporation related thereto under which the employee, or, after the employee’s death, a dependant, the legal representative or a relation of the employee, may or is to receive an amount that may reasonably be attributed to duties of an office or employment performed by the employee on behalf of the corporation or a corporation related thereto where

i.  all amounts that may be received under the arrangement will be received after the time of the employee’s death or retirement from, or loss of, the office or employment, but not later than the end of the first calendar year commencing thereafter, and

ii.  the total of all amounts each of which may be received under the arrangement depends on the fair market value of shares of the capital stock of the corporation or a corporation related thereto at a time within the period that commences 1 year before the time of the employee’s death or retirement from, or loss of, the office or employment and that ends at the time the amount is received.

s. 47.16R1; O.C. 1471-91 s. 4; O.C. 35-96, s. 86; O.C. 67-96, s. 5; O.C. 1707-97, s. 98; O.C. 1466-98, s. 126; O.C. 1463-2001, s. 24; O.C. 134-2009, s. 1.

47.16R1.1. For the purposes of paragraph a of section 47.16R1, if an employee’s leave of absence is suspended after 14 March 2020, the period of leave prior to the suspension being referred to in this section as the employee’s “first period”, and the employee resumes the leave of absence on or before 30 April 2022, the period of leave so resumed being referred to in this section as the employee’s “second period”, the following rules apply:

(a)  the employee’s first period and second period are deemed to be one continuous leave of absence; and

(b)  amounts held for the employee’s benefit under the arrangement referred to in that paragraph a are to be paid to the employee out of or under the arrangement not later than the end of the first taxation year that commences after the start of the second period.

If the 6-year period referred to in subparagraph i of paragraph a of section 47.16R1 in respect of an arrangement ends during the period beginning on 15 March 2020 and ending on 30 April 2022, the reference in that subparagraph to “6 years” is to be read as a reference to “8 years”.

O.C. 1448-2021, s. 4.

47.16R2. An arrangement referred to in paragraph d of section 47.16R1 does not include an arrangement between a corporation and an employee of that corporation or a corporation related thereto where, by reason of the arrangement or a series of transactions that includes the arrangement, the employee or a person with whom the employee does not deal at arm’s length is entitled, either immediately or in the future and either absolutely or contingently, to receive or obtain any amount or benefit granted or to be granted for the purpose of reducing the impact, in whole or in part, of any reduction in the fair market value of the shares of the capital stock of the corporation or a corporation related thereto.

s. 47.16R2; O.C. 1471-91 s. 4; O.C. 1707-97, s. 98; O.C. 1463-2001, s. 25; O.C. 134-2009, s. 1.

TITLE VIII CAPITAL COST OF AN EMPLOYEE’S MOTOR VEHICLE OR AIRCRAFT

title IV; O.C. 1981-80, title IV; R.R.Q., 1981, c. I-3, r. 1, title IV; O.C. 2962-82, s. 4; O.C. 500-83, s. 4; O.C. 1697-92, s. 1; O.C. 1282-2003, s. 4; O.C. 134-2009, s. 1.

64R1. In computing the income from an office or employment for a taxation year, an individual referred to in section 64 of the Act may deduct, in respect of an aircraft or a motor vehicle, such part of the capital cost thereof as is determined for the year under section 130R1.

s. 64R1; O.C. 1981-80, s. 64R1; R.R.Q., 1981, c. I-3, r. 1, s. 64R1; O.C. 2962-82, s. 4; O.C. 500-83, s. 4; O.C. 1697-92, s. 2; O.C. 1463-2001, s. 26; O.C. 134-2009, s. 1.

TITLE IX PENSION PLANS

title IV.0.1; O.C. 1282-2003, s. 5; O.C. 134-2009, s. 1.

70.2R1. For the purposes of section 70.2 of the Act, a prescribed plan means

(a)  the pension plan established as a consequence of the establishment, pursuant to section 27 of the Members of Parliament Retiring Allowances Act (R.S.C. 1985, c. M-5), of the Members of Parliament Retirement Compensation Arrangements Account; or

(b)  the pension plan established by the Retirement Compensation Arrangements Regulations, No. 1, made under the Special Retirement Arrangements Act (S.C. 1992, c. 46, Sch. 1).

s. 70.2R1; O.C. 1282-2003, s. 5; O.C. 134-2009, s. 1.

TITLE X CAPITAL COST OF AN EMPLOYEE’S MUSICAL INSTRUMENT

title IV.0.2; O.C. 1282-2003, s. 5; O.C. 134-2009, s. 1.

78.4R1. In computing the income from an office or employment for a taxation year, an individual referred to in section 78.4 of the Act may deduct, under paragraph b of that section, in respect of a musical instrument, such part of the capital cost thereof as is determined for the year under section 130R1.

s. 78.4R1; O.C. 1697-92, s. 3; O.C. 1463-2001, s. 27; O.C. 134-2009, s. 1.

TITLE XI AMOUNTS TO BE INCLUDED

title V; O.C. 1981-80, title V; R.R.Q., 1981, c. I-3, r. 1, title V; O.C. 134-2009, s. 1.

CHAPTER I GENERAL RULES AND SPECIFIC AMOUNTS

c. I; O.C. 1981-80, title V, c. I; R.R.Q., 1981, c. I-3, r. 1, title V, c. I; O.C. 134-2009, s. 1.

83R1. A taxpayer may, in computing the income of the taxpayer from a business for a taxation year, value all the property included in all the inventories of the business at its fair market value.

s. 83R2; O.C. 1981-80, s. 83R2; R.R.Q., 1981, c. I-3, r. 1, s. 83R2; O.C. 1114-92, s. 7; O.C. 1463-2001, s. 28; O.C. 134-2009, s. 1.

83R2. Despite section 83R1, a taxpayer whose business includes the breeding and raising of animals may elect in prescribed form for the taxation year and subsequent taxation years to value each animal of a particular species in the manner described in section 83R5.

However, where the aggregate value of all the animals of a particular species exceeds the fair market value of those animals, the latter may nevertheless be valued at their fair market value.

s. 83R3; O.C. 1981-80, s. 83R3; R.R.Q., 1981, c. I-3, r. 1, s. 83R3; O.C. 1463-2001, s. 29; O.C. 134-2009, s. 1.

83R3. The election provided by section 83R2 may not be made in respect of a registered animal, an animal purchased for feedlot or similar operations, or an animal purchased by a trader for resale.

s. 83R4; O.C. 1981-80, s. 83R4; R.R.Q., 1981, c. I-3, r. 1, s. 83R4; O.C. 134-2009, s. 1.

83R4. An election under section 83R2 may be revoked in writing by the taxpayer and, in such case, a further election may not be made.

s. 83R5; O.C. 1981-80, s. 83R5; R.R.Q., 1981, c. I-3, r. 1, s. 83R5; O.C. 134-2009, s. 1.

83R5. Where animals of a particular species are included in the inventory of a taxpayer at the end of the taxation year immediately preceding the first year in respect of which the taxpayer elects under section 83R2, the unit price of each animal of that species is computed by dividing the total value of all animals of that species in the inventory of the preceding year by the number of animals of that species described in that inventory and, in any other case, the unit price of an animal of a species is determined by the Minister, having regard, among other things, to the unit prices of animals of a comparable species of animals used in valuing the inventories of other taxpayers in the district.

s. 83R6; O.C. 1981-80, s. 83R6; R.R.Q., 1981, c. I-3, r. 1, s. 83R6; O.C. 134-2009, s. 1.

87R1. The amount referred to in paragraph e.1 of section 87 of the Act in respect of an insurer for a taxation year is

(a)  where the amount determined under section 152R5 in respect of the insurer for the year is less than nil, that amount expressed as a positive number; and

(b)  in any other case, nil.

s. 87R0.1; O.C. 1463-2001, s. 30; O.C. 134-2009, s. 1.

87R2. For the purposes of paragraph p of section 87 of the Act, the prescribed amount is the amount deducted by the taxpayer pursuant to subsection 13 or 14 of section 127 of the Income Tax Act (R.S.C. 1952, c. 148) in computing the tax otherwise payable by the taxpayer for the year under Part I of that Income Tax Act.

s. 87R1; O.C. 1981-80, s. 87R1; O.C. 2456-80, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 87R1; O.C. 35-96, s. 86; O.C. 1463-2001, s. 31; O.C. 134-2009, s. 1.

87R3. For the purposes of paragraph s of section 87 of the Act, the Canadian Home Insulation Program and the Canada Oil Substitution Program provided for under Part LV of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) are prescribed programs.

s. 87R2; O.C. 2962-82, s. 5; O.C. 500-83, s. 5; O.C. 35-96, s. 86; O.C. 134-2009, s. 1.

87R4. For the purposes of paragraph u of section 87 of the Act, a prescribed amount is any amount deducted under subsection 5 or 6 of section 127 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), other than the part of that amount that may reasonably be considered to be related to

(a)  an amount that is a qualified expenditure, within the meaning of subsection 9 of that section 127, and that is, for the purposes of the definition of that expression, an expenditure made after 30 April 1987 and before 10 May 1996 or a proxy amount computed by reference to an expenditure incurred as salary or wages before 10 May 1996; or

(b)  an amount that is a flow-through mining expenditure or a flow-through critical mineral mining expenditure, within the meaning assigned to those expressions by subsection 9 of that section 127.

s. 87R3; O.C. 2962-82, s. 5; O.C. 500-83, s. 5; O.C. 140-90, s. 1; O.C. 35-96, s. 86; O.C. 523-96, s. 3; O.C. 1707-97, s. 8; O.C. 1155-2004, s. 6; O.C. 134-2009, s. 1; O.C. 1726-2023, s. 2.

87R5. For the purposes of paragraph w of section 87 of the Act, the following are prescribed amounts:

(a)  an amount described in paragraph g or i of section 488R1;

(b)  an amount of any assistance granted to a taxpayer and that is prescribed assistance under section 241.0.1R2, or would be prescribed assistance under that section if that section applied in respect of, or for the acquisition of, a share of the capital stock of a corporation registered under the Act respecting Québec business investment companies (chapter S-29.1);

(c)  an amount deducted under subsection 5 or 6 of section 127 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) that may reasonably be considered to be related to

i.  an amount that is a qualified expenditure within the meaning of subsection 9 of that section 127, and that is, for the purposes of the definition of that expression, an expenditure made after 30 April 1987 and before 10 May 1996 or a proxy amount computed by reference to an expenditure incurred as salary or wages before 10 May 1996 or

ii.  an amount that is a flow-through mining expenditure or a flow-through critical mineral mining expenditure, within the meaning assigned to those expressions by subsection 9 of that section 127;

(d)  an amount paid by the National Aboriginal Economic Development Board (P.C. 1983-3394, 83-10-31) pursuant to the Native Economic Development Program, or paid under the Aboriginal Capital Corporation Program of the Canadian Aboriginal Economic Development Strategy, to a corporation whose purpose is to provide loans, loan guarantees, bridge financing, venture capital, lease financing, surety bonding or other similar financing services to aboriginal enterprises and where all of the shares of the capital stock of the corporation are

i.  owned by aboriginal individuals,

ii.  held in trust for the exclusive benefit of aboriginal individuals,

iii.  owned by a corporation, all the shares of which are owned by aboriginal individuals or held in trust for the exclusive benefit of aboriginal individuals, or

iv.  owned or held in a combination of ownership or holding structures described in any of subparagraphs i to iii;

(e)  the amount that the taxpayer is required to include, for the purposes of the Income Tax Act, in computing the taxpayer’s income for the year under paragraph x.1 of subsection 1 of section 12 of that Act;

(f)  an amount paid pursuant to subparagraph a of the first paragraph of section 94.0.3.2 of the Tax Administration Act (chapter A-6.002);

(g)  an amount that is the portion of a student loan forgiven under section 11.1 of the Canada Student Loans Act (R.S.C. 1985, c. S-23) or section 9.2 of the Canada Student Financial Assistance Act (S.C. 1994, c. 28);

(h)  an amount that is the portion of a student loan forgiven under a provincial program that would be an amount referred to in paragraph g if section 11.1 of the Canada Student Loans Act or section 9.2 of the Canada Student Financial Assistance Act applied to loans made under the program; and

(i)  an emissions allowance issued to the taxpayer under a law of Québec, of Canada or of another province.

s. 87R4; O.C. 140-90, s. 2; O.C. 1232-91, s. 1; O.C. 1114-92, s. 8; O.C. 1539-93, s. 1; O.C. 91-94, s. 1; O.C. 35-96, s. 86; O.C. 523-96, s. 4; O.C. 1707-97, s. 9; O.C. 1466-98, s. 8; O.C. 1282-2003, s. 6; O.C. 1155-2004, s. 7; O.C. 1116-2007, s. 4; O.C. 134-2009, s. 1; O.C. 701-2013, s. 3; O.C. 117-2019, s. 4; O.C. 204-2020, s. 2; O.C. 1726-2023, s. 3.

87R6. For the purposes of paragraph z.4 of section 87 of the Act, a taxpayer’s resource loss for a taxation year is equal to the amount determined by the formula

A – B.

In the formula referred to in the first paragraph,

(a)  A is the aggregate of all amounts each of which is a Canadian exploration and development overhead expense, within the meaning given to that expression by section 360R2, made or incurred by the taxpayer in the year, other than an amount included therein because of section 181 or 182 of the Act; and

(b)  B is the taxpayer’s adjusted resource profits for the year within the meaning of section 145R2.

s. 87R5; O.C. 1470-2002, s. 4; O.C. 134-2009, s. 1.

91R1. For the purposes of section 91 of the Act, a prescribed amount is

(a)  an amount receivable by Her Majesty in right of Canada for the use and benefit of a band, within the meaning of the Indian Act (R.S.C. 1985, c. I-5), or by Petro-Canada;

(b)  an amount receivable after 11 December 1979, in respect of a period after that date, by a person described in section 90 of the Act,

i.  if that amount may be considered related to the leasing of property described in paragraph b or e of section 370 of the Act and if it becomes receivable before the beginning of production, in reasonable commercial quantities, of minerals obtained from that property, or

ii.  if that amount may be considered related to the leasing of a right, permit or privilege for underground storage in Canada of petroleum, natural gas or related hydrocarbons;

(c)  an amount paid under section 49 of the Canada Oil and Gas Act (R.S.C. 1985, c. O-6); or

(d)  an amount equal to the lesser of the following amounts:

i.  an amount that became receivable by a person referred to in section 90 of the Act as rental for property referred to in paragraph a of section 370 of the Act or for a portion of such property and that became receivable either in a taxation year in which there was no taking of petroleum, natural gas or related hydrocarbons in relation to the property or portion thereof, as the case may be, to which the rental relates, if the amount became receivable after 31 December 1984, or prior to the taking of petroleum, natural gas or related hydrocarbons in relation to the property or portion thereof, as the case may be, to which the rental relates, if the amount became payable after 31 October 1982 and before 1 January 1985, and

ii.  an amount obtained by multiplying $2.50 per year per hectare by the number of hectares to which the amount referred to in subparagraph i relates.

s. 91R1; O.C. 1981-80, s. 91R1; O.C. 1535-81, s. 2; R.R.Q., 1981, c. I-3, r. 1, s. 91R1; O.C. 2509-85, s. 1; O.C. 35-96, s. 86; O.C. 134-2009, s. 1.

CHAPTER II ACCRUED INTEREST ON A PRESCRIBED DEBT OBLIGATION

c. I.1; O.C. 7-87, s. 2; O.C. 134-2009, s. 1.

DIVISION I GENERAL

div. I; O.C. 7-87, s. 2; O.C. 134-2009, s. 1.

92.5R1. For the purposes of this chapter, a bonus or premium payable on a debt obligation is an amount of interest payable under the debt obligation.

s. 92.5R1; O.C. 7-87, s. 2; O.C. 134-2009, s. 1.

92.5R2. For the purposes of this chapter, where a taxpayer has an interest in a debt obligation, in this section referred to as the “first interest”, under which there is a conversion privilege or an option to extend its term upon maturity, and, at the time the obligation was issued or, if later, at the time the conversion privilege or option was added or modified, circumstances could reasonably be foreseen under which the holder of the obligation would, by exercising the conversion privilege or option, acquire an interest in a debt obligation with a principal amount less than its fair market value at the time of acquisition, the subsequent interest in any debt obligation acquired by the taxpayer by exercising the conversion privilege or option is a continuation of the first interest.

s. 92.5R2; O.C. 7-87, s. 2; O.C. 1466-98, s. 9; O.C. 134-2009, s. 1.

DIVISION II PRESCRIBED DEBT OBLIGATION

div. II; O.C. 7-87, s. 2; O.C. 134-2009, s. 1.

92.5R3. For the purposes of section 92.5 of the Act, each of the following debt obligations, other than a debt obligation that is an indexed debt obligation, in respect of which a taxpayer has acquired an interest is a prescribed debt obligation:

(a)  a debt obligation in respect of which no interest is stipulated to be payable in respect of its principal amount;

(b)  a debt obligation in respect of which the proportion of the payments of principal to which the taxpayer is entitled is not equal to the proportion of the payments of interest to which the taxpayer is entitled;

(c)  a debt obligation, other than one described in subparagraph a or b, in respect of which it can be determined, at the time the taxpayer acquired the interest therein, that the maximum amount of interest payable thereon in a year ending after that time is less than the maximum amount of interest payable thereon in a subsequent year; and

(d)  a debt obligation, other than one described in any of subparagraphs a to c, in respect of which the amount of interest to be paid in respect of any taxation year is, under the terms and conditions of the obligation, dependent on a contingency existing after the year.

In the first paragraph, a debt obligation includes all of the issuer’s obligations to pay principal and interest under that obligation.

s. 92.5R3; O.C. 7-87, s. 2; O.C. 1076-88, s. 3; O.C. 1466-98, s. 10; O.C. 1454-99, s. 6; O.C. 134-2009, s. 1.

DIVISION III CALCULATION OF ACCRUED INTEREST

div. III; O.C. 7-87, s. 2; O.C. 134-2009, s. 1.

92.5R4. The amount determined as interest on a debt obligation referred to in section 92.5 of the Act is

(a)  in the case of a debt obligation referred to in subparagraph a of the first paragraph of section 92.5R3, the amount of interest determined under section 92.5R5;

(b)  in the case of a debt obligation referred to in subparagraph b of the first paragraph of section 92.5R3, the amount of interest determined under section 92.5R6;

(c)  in the case of a debt obligation referred to in subparagraph c of the first paragraph of section 92.5R3, other than an obligation in respect of which paragraph d applies, the amount of interest determined under section 92.5R8;

(d)  in the case of a debt obligation referred to in subparagraph c of the first paragraph of section 92.5R3 for which the rate of interest stipulated to be payable in respect of each period throughout which the obligation is outstanding is fixed at the date of issue of the obligation and the stipulated rate of interest applicable at each time is not less than each stipulated rate of interest applicable before that time, the amount of interest determined under section 92.5R9; and

(e)  in the case of a debt obligation referred to in subparagraph d of the first paragraph of section 92.5R3, the amount of interest determined under section 92.5R11.

s. 92.5R4; O.C. 7-87, s. 2; O.C. 1466-98, s. 11; O.C. 1463-2001, s. 32; O.C. 134-2009, s. 1.

92.5R5. The amount referred to in paragraph a of section 92.5R4 for a taxation year is the amount of interest that would be determined in respect of the debt obligation if the interest thereon for that year were computed on a compound interest basis using the maximum of all rates each of which is a rate computed in respect of each possible circumstance under which an interest of the taxpayer in the debt obligation could mature or be surrendered or retracted, and using assumptions concerning the interest rate and compounding period that would result in a present value, at the date of purchase of the interest, of all the maximum payments thereunder, equal to the cost thereof to the taxpayer.

s. 92.5R5; O.C. 7-87, s. 2; O.C. 1466-98, s. 12; O.C. 134-2009, s. 1.

92.5R6. The amount referred to in paragraph b of section 92.5R4 for a taxation year is the aggregate of all amounts each of which is the amount of interest that would be determined in respect of the taxpayer’s interest in a payment under the debt obligation if interest thereon for that year were computed on a compound interest basis using the specified cost of the taxpayer’s interest in the payment and the specified interest rate in respect of the taxpayer’s total interest in the debt obligation.

s. 92.5R6; O.C. 7-87, s. 2; O.C. 1466-98, s. 12; O.C. 134-2009, s. 1.

92.5R7. In this section and section 92.5R6,

“specified cost” of a taxpayer’s interest in a payment under a debt obligation is its present value at the date of purchase computed using the specified interest rate; and

“specified interest rate” is the maximum of all rates each of which is a rate computed in respect of each possible circumstance under which an interest of the taxpayer in the debt obligation could mature or be surrendered or retracted, and using assumptions concerning the interest rate and compounding period that would result in a present value, at the date of purchase of the interest, of all the maximum payments to the taxpayer in respect of the taxpayer’s total interest in the debt obligation, equal to the cost of that interest to the taxpayer.

s. 92.5R7; O.C. 7-87, s. 2; Erratum, 1988 G.O. 2, 2689; O.C. 1466-98, s. 12; O.C. 134-2009, s. 1.

92.5R8. The amount referred to in paragraph c of section 92.5R4 for a taxation year is the greater of

(a)  the maximum amount of interest on the debt obligation in respect of the year; and

(b)  the maximum amount of interest that would be determined in respect of the debt obligation if interest thereon for that year were computed on a compound interest basis using the maximum of all rates each of which is a rate computed in respect of each possible circumstance under which an interest of the taxpayer in the debt obligation could mature or be surrendered or retracted, and using assumptions concerning the interest rate and compounding period that would result in a present value, at the date of issue of the debt obligation, of all the maximum payments thereunder, equal to its principal amount.

s. 92.5R8; O.C. 7-87, s. 2; O.C. 1466-98, s. 12; O.C. 134-2009, s. 1.

92.5R9. The amount referred to in paragraph d of section 92.5R4 for a taxation year is the amount of interest that would be determined in respect of the year if interest on the debt obligation for that year were computed on a compound interest basis using the maximum of all rates each of which is the compound interest rate that, for a particular assumption with respect to when the taxpayer’s interest in the obligation will mature or be surrendered or retracted, results in a present value, at the date the taxpayer acquires the interest in the obligation, of all payments under the obligation after the acquisition by the taxpayer of the taxpayer’s interest in the obligation equal to the principal amount of the obligation at the date of acquisition.

s. 92.5R8.1; O.C. 1466-98, s. 13; O.C. 134-2009, s. 1.

92.5R10. For the purpose of making the computations referred to in sections 92.5R5 to 92.5R9, the compounding period is not to exceed 1 year and any interest rate used must be constant from the time of acquisition or issue, as the case may be, until the time of maturity, surrender or retraction.

s. 92.5R9; O.C. 7-87, s. 2; O.C. 1466-98, s. 14; O.C. 134-2009, s. 1.

92.5R11. The amount referred to in paragraph e of section 92.5R4 for a taxation year is the maximum amount of interest payable under the debt obligation for that year.

s. 92.5R10; O.C. 7-87, s. 2; O.C. 1466-98, s. 15; O.C. 134-2009, s. 1; O.C. 117-2019, s. 5.

CHAPTER III PRESCRIBED CONTRACT

c. I.1.1; O.C. 421-88, s. 1; O.C. 134-2009, s. 1.

92.7R1. For the purposes of subparagraph ix of paragraph a of section 92.7 of the Act, a prescribed contract throughout a calendar year is a registered retirement savings plan or a registered retirement income fund, other than such a plan or fund to which a trust is a party, where the annuitant under the plan or fund is alive at any time in the year or was alive at any time in the preceding calendar year.

s. 92.7R1; O.C. 421-88, s. 1; O.C. 67-96, s. 6; O.C. 1707-97, s. 11; O.C. 1466-98, s. 16; O.C. 1149-2006, s. 3; O.C. 134-2009, s. 1.

92.7R2. In section 92.7R1, “annuitant” means

(a)  in respect of a registered retirement income fund at any time, the annuitant of such a fund within the meaning of paragraph d of section 961.1.5 of the Act; and

(b)  in respect of a registered retirement income plan, the annuitant under such plan within the meaning of paragraph b of section 905.1 of the Act.

s. 92.7R2; O.C. 421-88, s. 1; O.C. 1114-93, s. 6; O.C. 1707-97, s. 12; O.C. 134-2009, s. 1.

CHAPTER IV AMOUNTS TO BE INCLUDED IN RESPECT OF A LIFE INSURANCE POLICY OR AN ANNUITY CONTRACT

c. I.2; O.C. 7-87, s. 2; O.C. 134-2009, s. 1.

DIVISION I INTERPRETATION

div. III.1; O.C. 67-96, s. 8; O.C. 134-2009, s. 1.

92.11R1. For the purposes of this chapter,

“accumulating fund” at a particular time, in respect of an interest in an annuity contract or a life insurance policy means the amount determined at that time in respect of the interest in accordance with sections 92.11R2 to 92.11R13;

“adjusted purchase price” of a taxpayer’s interest in an annuity contract at a particular time means, subject to sections 336R8 to 336R11, the amount that would be determined at that time in respect of the interest as the adjusted cost basis under sections 976 and 976.1 of the Act if that section 976.1 were read without reference to its paragraph c;

“amount payable” has the meaning assigned by subparagraph j of the first paragraph of section 835 of the Act;

“cash surrender value” has the meaning assigned to it by paragraph d of section 966 of the Act;

“coverage” under a life insurance policy means

(a)  for the purposes of Division IV, each life insurance (other than a fund value benefit) under the policy in respect of a life, or 2 or more lives jointly insured; and

(b)  for the purposes of this chapter (except Division IV) and section 976.1R1, each life insurance (other than a fund value benefit) under the policy in respect of a life, or 2 or more lives jointly insured, and in respect of which a particular schedule of premium or cost of insurance rates applies, each such insurance being a separate coverage;

“death benefit” includes the amount of an endowment benefit but does not include

(a)  an additional amount payable following an accidental death; and

(b)  where interest on an amount held on deposit by an insurer is included in computing the income of a policyholder for a taxation year, that interest and the amount held on deposit;

“endowment date” of an exemption test policy means

(a)  where the exemption test policy is issued in respect of a life insurance policy issued before 1 January 2017, the later of the 10th anniversary of the date of issue of the life insurance policy and the first policy anniversary that is after the day preceding the day on which the individual whose life is insured under the policy would, if the individual survived, attain the age of 85 years, within the meaning of the policy; or

(b)  where the exemption test policy is issued in respect of a coverage under a life insurance policy issued after 31 December 2016,

i.  if 2 or more lives are jointly insured under the coverage, the date that would be determined under subparagraph ii using the equivalent single age, determined on the coverage’s date of issue and in accordance with accepted actuarial principles and practices, that reasonably approximates the mortality rates of those lives, and

ii.  in any other case, the later of the first policy anniversary that is after the day preceding the day on which the individual whose life is insured under the coverage would, if the individual survived, attain the age of 90 years, within the meaning of the policy, and

(1)  the 15th anniversary of the date of issue of the exemption test policy, or

(2)  if it is earlier than that 15th anniversary, the first policy anniversary that is after the day preceding the day on which the individual whose life is insured under the coverage would, if the individual survived, attain the age of 105 years, within the meaning of the policy;

“exempt policy” has the meaning assigned to it by Division IV;

“fund value benefit” under a life insurance policy at a particular time means the amount by which the fund value of the policy at that time exceeds the aggregate of all amounts each of which is a fund value of a coverage under the policy at that time;

“fund value of a coverage” under a life insurance policy at a particular time means the aggregate of all amounts each of which is the balance at that time of an investment account in respect of the policy that reduces the net amount at risk as determined for the purpose of calculating the cost of insurance charges for the coverage for the period during which those charges are incurred or would be incurred if they were to apply until the termination of the coverage;

“fund value of a policy” at a particular time means the aggregate of all amounts each of which is the balance at that time of an investment account in respect of the policy and, for that purpose, any amount held on deposit by an insurer and any interest on the deposit are included in that aggregate if the interest is not included in computing the income of a policyholder for a taxation year and are excluded from that aggregate if the interest is included in computing the income of a policyholder for a taxation year;

“future benefits to be provided” in respect of a coverage under a life insurance policy at a particular time means

(a)  if there is a fund value of the coverage at the particular time, each death benefit that would be payable under the coverage at any time after the particular time if the amount of the benefit were equal to the amount by which the death benefit at the particular time exceeds the fund value of the coverage at the particular time; and

(b)  in any other case, each death benefit payable under the coverage at any time after the particular time;

“future net premiums or cost of insurance charges” in respect of a coverage at a particular time means each amount determined by the formula in the first paragraph of section 92.11R1.1;

“future premiums or cost of insurance charges” in respect of a coverage at a particular time means

(a)  if there is a fund value of the coverage at the particular time, each cost of insurance charge in respect of the coverage that would be incurred at a time after the particular time if the net amount at risk under the coverage after the particular time were equal to the amount by which the death benefit under the coverage at the particular time exceeds the fund value of the coverage at the particular time; and

(b)  in any other case, each premium that is fixed and determined on the date of issue of the coverage that will become payable, or each cost of insurance charge in respect of the coverage that will be incurred at a time after the particular time;

“interpolation time” of a coverage means the time that is the earlier of the 8th anniversary of the date of issue of the coverage and the first time at which no premiums are payable or cost of insurance charges are incurred in respect of the coverage;

“life annuity contract” has the meaning assigned to it by sections 966R2 to 966R4;

“maximum tax actuarial reserve” in respect of a particular class of life insurance policies for a taxation year of a life insurer means, except as otherwise provided, the maximum amount the insurer may deduct for the year, under paragraph a of section 840 of the Act, in respect of the policies of that class;

“net premium reserve” of a life insurance policy at a particular time means the amount determined by the formula in the third paragraph of section 92.11R1.1;

“pay period” of an exemption test policy means

(a)  where the exemption test policy is issued in respect of a life insurance policy issued before 1 January 2017,

i.  if, on the date of issue of the exemption test policy, the individual whose life is insured has attained the age of 66 years, within the meaning of the policy, but not the age of 75 years, within the meaning of the policy, the period that starts on that date and that ends after the number of years obtained when the number of years by which the age of the individual exceeds 65 years, within the meaning of the policy, is subtracted from 20,

ii.  if, on the date of issue of the exemption test policy, the individual whose life is insured has attained the age of 75 years, within the meaning of the policy, the 10-year period that starts on that date, and

iii.  in any other case, the 20-year period that starts on the date of issue of the exemption test policy; and

(b)  where the exemption test policy is issued in respect of a life insurance policy issued after 31 December 2016,

i.  subject to subparagraph ii, where the individual whose life is insured under the coverage would, if the individual survived, attain the age of 105 years, within the meaning of the policy, within the 8-year period that starts on the date of issue of the exemption test policy, the period that starts on that date and that ends on the first policy anniversary that is after the day preceding the day on which the individual would, if the individual survived, attain the age of 105 years, within the meaning of the policy,

ii.  where 2 or more lives are jointly insured under the coverage and an individual of an age equal to the equivalent single age on the date of the issue of the coverage would, if the individual survived, attain the age of 105 years, within the meaning of the policy, within the 8-year period that starts on the date of issue of the exemption test policy, the period that starts on that date and that ends on the first policy anniversary that is after the day preceding the day on which the individual would, if the individual survived, attain the age of 105 years, within the meaning of the policy, and

iii.  in any other case, the 8-year period that starts on the date of issue of the exemption test policy;

“policy anniversary” includes, in the case of a life insurance policy that exists for a full calendar year and in respect of which there would not otherwise be a policy anniversary during the year, the end of the calendar year;

“policy loan” has the meaning assigned to it by paragraph a.1.1 of section 966 of the Act; and

“prescribed annuity contract” has the meaning assigned to it by Division III.

The definitions and rules provided for in Division I of Chapter XV of Title XXXII apply to this chapter.

s. 92.11R0.1; O.C. 67-96, s. 8; O.C. 1470-2002, s. 5; O.C. 1155-2004, s. 8; O.C. 134-2009, s. 1; O.C. 390-2012, s. 4; S.Q. 2019, c. 14, s. 619; S.Q. 2023, c. 19, s. 139.

92.11R1.1. The formula to which the definition of “future net premiums or cost of insurance charges” in the first paragraph of section 92.11R1 refers at a particular time is the following:

A × (B/C).

In the formula in the first paragraph,

(a)  A is future premiums or cost of insurance charges in respect of the coverage at that time;

(b)  B is the present value at the date of issue of the coverage of future benefits to be provided in respect of the coverage on that date;

(c)  C is the present value at the date of issue of the coverage of future premiums or cost of insurance charges in respect of the coverage on that date.

The formula to which the definition of “net premium reserve” in the first paragraph of section 92.11R1 refers at a particular time is the following:

D + E + F.

In the formula in the third paragraph,

(a)  D is the aggregate of all amounts each of which is the present value at that time of the fund value of a coverage under the policy at that time;

(b)  E is the amount of the fund value benefit under the policy at that time; and

(c)  F is the aggregate of all amounts each of which is, in respect of a coverage under the policy,

i.  if the particular time is at or after the interpolation time of the coverage, the amount by which the present value at the particular time of future benefits to be provided in respect of the coverage at the particular time exceeds the present value at the particular time of future net premiums or cost of insurance charges in respect of the coverage at the particular time, or

ii.  if the particular time is before the interpolation time of the coverage, the amount determined by the formula

G/H × (I − J).

For the purposes of the formula in subparagraph ii of subparagraph c of the fourth paragraph,

(a)  G is the number of years that the coverage has been in effect as of the particular time;

(b)  H is the number of years that the coverage would have been in effect if the particular time were the interpolation time;

(c)  I is the present value at the interpolation time of future benefits to be provided in respect of the coverage at the interpolation time and, if the coverage has a fund value at the particular time, determined as if the amount of the death benefit under the coverage at the interpolation time were equal to the amount by which the death benefit at the particular time exceeds the fund value of the coverage at the particular time; and

(d)  J is the present value at the interpolation time of future net premiums or cost of insurance charges in respect of the coverage at the interpolation time and, if the coverage has a fund value at the particular time, determined as if the net amount at risk under the coverage after the interpolation time were equal to the amount by which the death benefit at the particular time exceeds the fund value of the coverage at the particular time.

S.Q. 2019, c. 14, s. 620; S.Q. 2021, c. 14, s. 241.

DIVISION II ACCUMULATING FUNDS

div. III.2; O.C. 67-96, s. 8; O.C. 134-2009, s. 1.

92.11R2. For the purposes of section 92.11 of the Act, an accumulating fund at a particular time is,

(a)  in respect of a taxpayer’s interest in an annuity contract that is not a contract issued by a life insurer, the amount determined under sections 92.11R4 and 92.11R5;

(b)  in respect of a taxpayer’s interest in a life insurance policy that is not an exemption test policy or an annuity contract described in paragraph a, the amount determined under sections 92.11R6 and 92.11R7; and

(c)  in respect of an exemption test policy, the amount determined under sections 92.11R8 to 92.11R12.

s. 92.11R1; O.C. 7-87, s. 2; O.C. 1114-93, s. 9; O.C. 67-96, s. 9; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 621.

92.11R3. (Revoked).

s. 92.11R1.0.1; O.C. 67-96, s. 10; O.C. 1470-2002, s. 6; O.C. 1155-2004, s. 9; O.C. 134-2009, s. 1; O.C. 390-2012, s. 5; S.Q. 2019, c. 14, s. 622.

92.11R4. An accumulating fund at a particular time in respect of a taxpayer’s interest in an annuity contract described in paragraph a of section 92.11R2 is an amount equal to the greater of

(a)  the amount by which the cash surrender value of the taxpayer’s interest at that time exceeds the amount payable in respect of a loan unpaid at that time and made under the contract in respect of the interest; and

(b)  the amount by which the actualized value at that time of the future payments to be made under the contract in respect of the taxpayer’s interest exceeds the aggregate of the actualized value at that time of future premiums to be paid under the contract in respect of the taxpayer’s interest and the amount payable in respect of a loan unpaid at that time and made under the contract in respect of the taxpayer’s interest.

s. 92.11R1.0.2; O.C. 67-96, s. 10; O.C. 134-2009, s. 1.

92.11R5. For the purposes of paragraph b of section 92.11R4, the actualized value of future payments and that of future premiums is computed using,

(a)  in the case where the interest rate used by the issuer for a period in order to fix the terms of the contract at the time of issue is lower than the rate used for that purpose for a subsequent period, the simple rate that, if it applied to each period, would yield the same terms; or

(b)  in all other cases, the rates that the issuer used in order to fix the terms of the contract at the time of issue.

s. 92.11R1.0.3; O.C. 67-96, s. 10; O.C. 134-2009, s. 1.

92.11R6. An accumulating fund at a particular time in respect of a taxpayer’s interest in a life insurance policy described in paragraph b of section 92.11R2 is an amount equal to the amount obtained by multiplying the proportional interest of the taxpayer in the policy by,

(a)  in the case where the policy is not a deposit administration fund policy and the particular time immediately follows the death of a person whose life was insured under the policy, the aggregate of the maximum amounts that, immediately before the death and in respect of the policy, could be determined by the life insurer under subparagraph c of the first paragraph of section 92.11R12.2 and, in respect of a benefit in the case of accidental death, under subparagraph e of the first paragraph of that section, if the mortality rates used were adjusted to take into account the assumption that the death would occur at the time at which and in the manner in which it did occur; or

(b)  in all other cases, the maximum amount that, at the particular time and in respect of the policy, would be determined by the life insurer under subparagraph a of the first paragraph of section 92.11R12.2, computed as if there were only one deposit administration fund policy, or under subparagraph c of the first paragraph of section 92.11R12.2, whichever applies.

s. 92.11R1.0.4; O.C. 67-96, s. 10; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 623.

92.11R7. For the purposes of section 92.11R6, in respect of a life insurance policy issued before 1 January 2017 or an annuity contract, where the interest rate that a life insurer used for a period, when computing the amounts referred to in subparagraph a or b of the first paragraph of section 92.11R12.3, is determined in accordance with any of subparagraphs a to c of the second paragraph of that section and that rate is lower than the interest rate so determined for a subsequent period, the rate that is required to be used is the simple rate that, if it applied to each period, could be used in determining the premiums in respect of the policy.

s. 92.11R1.0.5; O.C. 67-96, s. 10; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 624.

92.11R8. An accumulating fund, at a particular time, in respect of an exemption test policy referred to in paragraph c of section 92.11R2 means

(a)  if the particular time is during the exemption test policy’s pay period, the amount determined by the formula

A × B/C;

(b)  if the particular time is after the exemption test policy’s pay period and before its endowment date, the amount that is the present value at the particular time of the future death benefit under the exemption test policy; and

(c)  if the particular time is on or after the exemption test policy’s endowment date and the relevant life insurance policy is issued after 31 December 2016, the amount that is the death benefit under the exemption test policy at the particular time.

In the formula in subparagraph a of the first paragraph,

(a)  A is the amount that would be determined under subparagraph b of the first paragraph in respect of the exemption test policy

i.  if the exemption test policy’s pay period is determined under subparagraph i or ii of paragraph b of the definition of “pay period” in the first paragraph of section 92.11R1, on the first policy anniversary that is after the day preceding the day on which the individual whose life is insured would, if the individual survived, attain the age of 105 years, within the meaning of the policy, and

ii.  in any other case, on the exemption test policy’s policy anniversary represented by the adjectival form of the number of years in its pay period;

(b)  B is the number of years since the exemption test policy was issued; and

(c)  C is the number of years in the exemption test policy’s pay period.

s. 92.11R1.0.6; O.C. 67-96, s. 10; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 624.

92.11R9. For the purpose of applying section 92.11R8 in respect of an exemption test policy issued in respect of a coverage under a life insurance policy issued after 31 December 2016, the following rules apply:

(a)  the rates of interest and mortality used and the age of the individual whose life is insured under the coverage are to be the same as those used in computing the amounts referred to in subparagraph c of the first paragraph of section 92.11R12.2 in respect of the policy; and

(b)  each amount of a death benefit is to be determined net of any portion of the death benefit in respect of the exemption test policy that is related to a segregated fund.

s. 92.11R1.0.7; O.C. 67-96, s. 10; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 624.

92.11R10. For the purpose of applying section 92.11R8 in respect of an exemption test policy in respect of a life insurance policy issued before 1 January 2017, the rates of interest and mortality used and the age of the person whose life is insured must be the same as those used in computing an amount referred to in subparagraph a or b of the first paragraph of section 92.11R12.3 in respect of the life insurance policy in respect of which the exemption test policy is issued, except that

(a)  if the life insurance policy is one in respect of which subparagraph c of the second paragraph of section 92.11R12.3 applies and if the amount determined under subparagraph i of subparagraph c of the first paragraph of section 92.11R12.2 in respect of that policy exceeds the amount determined in its respect under subparagraph ii of that subparagraph c, the rates of interest and mortality used may be those used in computing the cash surrender values of that policy;

(b)  if the interest rate for a period, otherwise determined under this section in respect of that interest, is lower than the interest rate so determined for a subsequent period, the rate that is required to be used is the simple rate that, if it applied to each period, could be used in determining premiums in respect of the life insurance policy;

(c)  each amount of a death benefit is to be determined net of any portion of the death benefit in respect of the exemption test policy that is related to a segregated fund.

s. 92.11R1.0.8; O.C. 67-96, s. 10; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 625.

92.11R11. For the purpose of applying section 92.11R8 in respect of an exemption test policy in respect of a life insurance policy issued before 1 January 2017 and despite section 92.11R10, the following rules apply:

(a)  where the rates referred to in section 92.11R10 do not exist, the rates that are required to be used are the minimum guaranteed interest rates that were used under the life insurance policy in order to determine the cash surrender values, and the mortality rates set forth in the table entitled “Commissioners 1958 Standard Ordinary Mortality Table”, published in Volume X of the “Transactions of the Society of Actuaries”, that apply to the person whose life is insured under the life insurance policy; and

(b)  where, in respect of the life insurance policy, the particular period for which an amount is determined under subparagraph ii of subparagraph c of the second paragraph of section 92.11R12.2 does not extend to the exemption test policy’s endowment date, the rate that is required to be used for the period following the particular period, but preceding that date, is the weighted arithmetic mean of the interest rates used to determine that amount.

s. 92.11R1.0.9; O.C. 67-96, s. 10; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 626.

92.11R12. Despite sections 92.11R10 and 92.11R11, none of the annual interest rates used in computing the accumulating fund in relation to an exemption test policy in respect of a life insurance policy issued before 1 January 2017 may be less than

(a)  4%, where the life insurance policy was issued after 30 April 1985; or

(b)  3%, where the life insurance policy was issued before 1 May 1985.

s. 92.11R1.0.10; O.C. 67-96, s. 10; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 627.

92.11R12.1. For the purpose of applying subparagraph c of the first paragraph of section 92.11R12.2 in respect of a life insurance policy (other than an annuity contract) issued after 31 December 2016, the following rules apply:

(a)  the following rates are used in computing present values:

i.  an annual interest rate of 3.5%, and

ii.  mortality rates;

(b)  in determining the mortality rates that apply in respect of a life insured under a coverage under the policy,

i.  if a single life is insured under the coverage,

(1)  the age that is to be used is the age of the life insured on the date on which the coverage was issued, or that which is attained on the birthday of the life insured nearest to the date on which the coverage was issued, depending on the method used by the insurer that issued the policy in determining the premium or cost of insurance rates in respect of the life insured,

(2)  if the life insured was determined by the insurer that issued the policy to be a standard life on the date on which the coverage was issued, the Proposed CIA Mortality Tables, 1986–1992 included in the May 17, 1995 Canadian Institute of Actuaries Memorandum, extended to include select mortality rates from age 81 to age 90 developed using the methodology used by the Canadian Institute of Actuaries to derive select mortality rates from age 71 to age 80, applicable for an individual who has the same relevant characteristics as the life insured, are to be used, and

(3)  if the life insured was determined by the insurer that issued the policy to be a substandard life on the date on which the coverage was issued, the mortality rates that are to be applied are equal to the value determined in accordance with the second paragraph,

ii.  if 2 or more lives are jointly insured under the coverage, the mortality rates to be used are those determined by applying the methodology used by the insurer that issued the policy to estimate the mortality rates of the lives jointly insured for the purpose of determining the premium or cost of insurance rates in respect of the coverage to the Proposed CIA Mortality Tables, 1986–1992 included in the May 17, 1995 Canadian Institute of Actuaries Memorandum, extended to include select mortality rates from age 81 to age 90 developed using the methodology used by the Canadian Institute of Actuaries to derive select mortality rates from age 71 to age 80; and

(c)  in determining the net premium reserve of the policy, the present value of future net premiums or cost of insurance charges is to be calculated as if a premium or cost of insurance charge payable or incurred on a policy anniversary were payable or incurred, as the case may be, one day after the policy anniversary.

The value to which subparagraph 3 of subparagraph i of subparagraph b of the first paragraph refers is either of the following values, depending on the method used by the insurer for the purpose of determining the premium or cost of insurance rates in respect of the coverage:

(a)  the lesser of 1 and the product obtained by multiplying the rating attributed to the life by the insurer and the mortality rates that would be determined under subparagraph 2 of subparagraph i of subparagraph b of the first paragraph if the life insured were not a substandard life, or

(b)  the mortality rates that would be determined under subparagraph 2 of subparagraph i of subparagraph b of the first paragraph if the life insured were a standard life and the age of the life insured were the age used by the life insurer for the purpose of determining the premium or cost of insurance rates in respect of the coverage.

S.Q. 2019, c. 14, s. 628.

92.11R12.2. For the purpose of applying this division at a particular time, the amounts determined under this section are,

(a)  in respect of a deposit administration fund policy, the total of the insurer’s liabilities under the policy calculated in the manner that

i.  if the insurer is required to file an annual report with the relevant authority for a period that includes the particular time, is required to be used in preparing that report, and

ii.  in any other case, is required to be used in preparing its annual financial statements for the period that includes the particular time;

(b)  in respect of a group term life insurance policy that provides insurance for a period not exceeding 12 months, the unearned portion of the premium paid by the policyholder in respect of the policy at the particular time determined by apportioning the premium paid by the policyholder equally over the period to which that premium pertains;

(c)  in respect of a life insurance policy, other than a policy referred to in subparagraph a or b, the greater of

i.  the amount determined by the formula

A – B, and

ii.  the amount determined by the formula

C − (D + E);

(d)  in respect of a group life insurance policy, the amount (other than an amount the insurer may deduct under section 832 of the Act because of paragraph b of section 841 of the Act in computing the insurer’s income for its taxation year that includes the particular time) in respect of a dividend, refund of premiums or refund of premium deposits provided for by the policy that will be used by the insurer to reduce or eliminate a future adverse claims experience under the policy or that will be paid or unconditionally credited to the policyholder by the insurer or applied in discharge, in whole or in part, of a liability of the policyholder to pay premiums to the insurer, which is the least of

i.  a reasonable amount in respect of such a dividend, refund of premiums or refund of premium deposits,

ii.  25% of the amount of the premium payable under the policy for the 12-month period ending at the particular time, and

iii.  the amount of the reserve or liability in respect of such a dividend, refund of premiums or refund of premium deposits that, if the insurer is required to file an annual report with the Superintendent of Financial Institutions for a period that includes the particular time, is used in preparing that report, and, in any other case, is used in preparing its annual financial statements for the period that includes the particular time; and

(e)  in respect of a policy, other than a policy referred to in subparagraph a, the amount of a benefit, risk or guarantee described in the third paragraph that is equal to the lesser of

i.  a reasonable amount in respect of the benefit, risk or guarantee, and

ii.  the reserve in respect of the benefit, risk or guarantee that, if the insurer is required to file an annual report with the Superintendent of Financial Institutions for a period that includes the particular time, is used in preparing that report, and, in any other case, is used in preparing its annual financial statements for the period that includes the particular time.

In the formulas in the first paragraph,

(a)  A is

i.  if the policy is issued after 31 December 2016 and is not an annuity contract, the cash surrender value of the policy at the particular time determined without reference to surrender charges, and

ii.  in any other case, the cash surrender value of the policy at the particular time;

(b)  B is the aggregate of all amounts each of which is an amount payable at the particular time in respect of a policy loan in respect of the policy;

(c)  C is

i.  if the policy is issued after 31 December 2016 and is not an annuity contract, the net premium reserve in respect of the policy at the particular time, and

ii.  in any other case, the present value at the particular time of the future benefits provided by the policy;

(d)  D is

i.  if the policy is issued after 31 December 2016 and is not an annuity contract, zero, and

ii.  in any other case, the present value at the particular time of any future modified net premiums in respect of the policy; and

(e)  E is the aggregate of all amounts each of which is an amount payable at the particular time in respect of a policy loan in respect of the policy.

The amount of a benefit, risk or guarantee to which subparagraph e of the first paragraph refers is

(a)  an accidental death benefit;

(b)  a disability benefit;

(c)  an additional risk in respect of

i.  a substandard life insurance,

ii.  the conversion of a term insurance policy or the conversion of the benefits under a group insurance policy into another insurance policy after the particular time,

iii.  a settlement option, or

iv.  a guaranteed insurability benefit;

(d)  a guarantee in respect of a segregated fund policy; or

(e)  subject to the prior approval of the Minister on the advice of the Superintendent of Financial Institutions, any other benefit that is ancillary to the policy.

For the purposes of the third paragraph, the amount of a benefit, risk or guarantee to which subparagraph e of the first paragraph refers is not such an amount in respect of which an insurer has deducted an amount in computing its income for its taxation year that includes the particular time.

For the purposes of this section (except subparagraph d of the third paragraph), any amount claimed by an insurer for a taxation year must not include an amount in respect of a liability of a segregated fund.

S.Q. 2019, c. 14, s. 628.

92.11R12.3. Subject to sections 92.11R12.4 to 92.11R12.6, for the purpose of applying subparagraph c of the first paragraph of section 92.11R12.2 in respect of a life insurance policy issued before 1 January 2017 or an annuity contract, a modified net premium and an amount determined in accordance with that subparagraph c are to be computed using the rates described in the second paragraph and taking into account only

(a)  in the case of a lapse-supported policy effected after 31 December 1990, rates of interest, mortality and policy lapse; and

(b)  in any other case, rates of interest and mortality.

The rates to which the first paragraph refers are as follows:

(a)  in the case of a modified net premium and a benefit (other than a benefit described in subparagraph b) of a participating life insurance policy (other than an annuity contract) under the terms of which the policyholder is entitled to receive a specified amount in respect of the policy’s cash surrender value, the rates used by the insurer when the policy was issued in computing the cash surrender values of the policy;

(b)  in the case of a benefit provided in lieu of a cash settlement on the termination or maturity of a policy, or in satisfaction of a dividend on a policy, the rates used by the insurer in computing the amount of such benefit; and

(c)  in the case of the whole or part of any other policy, the rates used by the insurer in computing the amount of the premiums in respect of the policy.

S.Q. 2019, c. 14, s. 628.

92.11R12.4. For the purposes of section 92.11R12.3, where the present value of the premiums in respect of a policy on the date of its issue is less than the aggregate of the present value on that date of the benefits provided for by the policy and outlays and expenses referred to in section 92.11R12.5, an increased rate of interest must be determined by multiplying the rate of interest used by the insurer in computing the amount of such premiums by a constant factor so that, when the increased rate of interest is used, the present value of those premiums on that date is equal to the aggregate of the present value on that date of those benefits, outlays and expenses and, in such case, that increased rate of interest is deemed to have been used by the insurer in computing the amount of such premiums.

S.Q. 2019, c. 14, s. 628.

92.11R12.5. The outlays and expenses referred to in section 92.11R12.4 are those made or incurred by the insurer in respect of the policy or those that it reasonably estimates to make or incur in respect of the policy, except for the maintenance in force of the policy after the payment of all premiums if an express provision in that respect has not been made in calculating the premiums, and such part of any other outlays or expenses incurred by the insurer that is reasonably applicable to the policy.

S.Q. 2019, c. 14, s. 628.

92.11R12.6. For the purposes of section 92.11R12.3, where a rate of mortality or other probability used by an insurer in computing a premium in respect of a policy is not reasonable in the circumstances, the Minister may, on the advice of the Superintendent of Financial Institutions, modify that rate in a manner that is reasonable in the circumstances and the insurer is deemed to have used that modified rate in computing that premium.

Likewise, for the purposes of section 92.11R12.4, a present value referred to in that section must be computed using the rates of mortality and other probabilities used by the insurer in computing its premiums after any modification required under the first paragraph.

S.Q. 2019, c. 14, s. 628.

92.11R12.7. For the purposes of section 92.11R12.3, where no document related to the rate of interest or mortality used by an insurer in computing the amount of the premiums in respect of a policy is available, the insurer may, if the policy was issued before 1978, make a reasonable estimate of that rate and the Minister, on the advice of the Superintendent of Financial Institutions, may do likewise if the policy was issued after 1977 or, where it was issued before 1978, if the insurer has not made such an estimate.

S.Q. 2019, c. 14, s. 628.

92.11R12.8. Despite subparagraph c of the first paragraph of section 92.11R12.2, a life insurer may use a method of approximation in computing its income for a taxation year, in respect of any class of life insurance policies issued before its 1988 taxation year, other than policies referred to in subparagraph a or b of that first paragraph, in order to convert the amount that it reported as a reserve in respect of those policies in its annual report for the year filed with the Superintendent of Financial Institutions into an amount that is a reasonable estimate of the amount that, but for this section, would have been computed under subparagraph c of that first paragraph in respect of those policies, provided that that method of approximation is acceptable to the Minister on the advice of the Superintendent of Financial Institutions.

S.Q. 2019, c. 14, s. 628.

92.11R12.9. For the purposes of section 92.11R12.3 and despite sections 92.11R12.4 to 92.11R12.8 and 92.11R12.10, where an individual annuity contract was issued before 1969 by a life insurer or a benefit was purchased before 1969 under a group annuity contract issued by a life insurer, and the contract is a policy in respect of which section 628.8 of the former Regulation, within the meaning of section 2000R2, applied as that section 628.8 read for the purposes of its application to the insurer’s 1977 taxation year, the insurer must use the same rates of interest and mortality as those used in computing its reserve provided for by such section 628.8 in respect of the policy for its 1977 taxation year.

S.Q. 2019, c. 14, s. 628.

92.11R12.10. For the purposes of section 92.11R12.3 for a taxation year and subject to the fourth paragraph, an insurer may revise the rates of interest, mortality or policy lapse used by the issuer of the policies referred to in subparagraph b to eliminate all or any part of the reserve deficiency determined in subparagraph c, where

(a)  a disposition to which section 832.7 of the Act applies has been made to the insurer during the year by a person with whom it was dealing at arm’s length;

(b)  the insurer assumes, as a result of the disposition referred to in subparagraph a, obligations under life insurance policies in respect of which it may claim an amount as a reserve for the year under subparagraph c of the first paragraph of section 92.11R12.2;

(c)  the reserve deficiency determined by the following formula is a positive amount:

A − B − C; and

(d)  the reserve deficiency determined in subparagraph c may reasonably be attributed to the fact that the rates of interest, mortality and policy lapse used by the issuer of the policies referred to in subparagraph b to determine the cash surrender value of the policies or the premiums in respect of those policies are no longer reasonable in the circumstances.

In the formula in subparagraph c of the first paragraph,

(a)  A is the aggregate of all amounts received or receivable by the insurer from the person referred to in subparagraph a of the first paragraph in respect of the policies referred to in subparagraph b of the first paragraph;

(b)  B is the aggregate of all amounts paid or payable by the insurer to the person referred to in subparagraph a of the first paragraph in respect of commissions in respect of the amounts referred to in subparagraph a; and

(c)  C is the aggregate of the maximum amounts that may be claimed by the insurer for the year as a reserve under subparagraph c of the first paragraph of section 92.11R12.2, determined without reference to this section, in respect of the policies referred to in subparagraph b of the first paragraph.

The rates revised under the first paragraph are deemed to have been used by the issuer of the policies referred to in subparagraph b of the first paragraph for the purpose of determining the cash surrender value of the policies or the premiums in respect of those policies.

If in accordance with this section an insurer has revised the rates of interest, mortality or policy lapse used by the issuer of the policies referred to in subparagraph b of the first paragraph, the Minister may, for the purposes of section 92.11R12.3 and the third paragraph, make further revisions to the revised rates to the extent that the insurer’s revisions to those rates are not reasonable in the circumstances.

S.Q. 2019, c. 14, s. 628.

92.11R13. Section 92.19R3 applies to this division.

s. 92.11R1.0.11; O.C. 67-96, s. 10; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 629.

DIVISION III PRESCRIBED ANNUITY CONTRACT

div. IV; O.C. 7-87, s. 2; O.C. 134-2009, s. 1.

92.11R14. In this division,

“annuitant” under an annuity contract, at any time, means a person who, at that time, is entitled to receive annuity payments under that contract;

“spouse” of a particular individual includes another individual who is a party to a void or voidable marriage with the particular individual.

s. 92.11R1.1; O.C. 1471-91, s. 6; O.C. 1282-2003, s. 8; O.C. 134-2009, s. 1.

92.11R15. For the purposes of this division, an annuitant under an annuity contract is deemed to be the holder of the contract where

(a)  another person holds the contract in trust for the annuitant; or

(b)  the annuitant acquired the contract under a group term life insurance policy under which life insurance on another person was effected by reason of or on the occasion of the office or employment, current or former, of that other person.

s. 92.11R1.2; O.C. 1471-91, s. 6; O.C. 134-2009, s. 1.

92.11R16. For the purposes of subparagraph b of the second paragraph of section 92.11 of the Act, a prescribed annuity contract for a taxation year means

(a)  an annuity contract purchased pursuant to a tax-free savings account, a registered pension plan, a pooled registered pension plan, a registered retirement savings plan, a registered retirement income fund or a deferred profit sharing plan;

(b)  an income-averaging annuity contract;

(c)  an income-averaging annuity respecting income from artistic activities;

(d)  an annuity contract the cost of which may be deducted by the holder under paragraph f of section 339 of the Act in computing the holder’s income;

(d.1)  an annuity contract that is a qualifying trust annuity in relation to a taxpayer the cost of which is deductible under paragraph f of section 339 of the Act in computing the taxpayer’s income;

(d.2)  an annuity contract that the holder acquired in circumstances to which subsection 21 of section 146 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) applied; and

(e)  an annuity contract described in section 92.11R17.

s. 92.11R2; O.C. 7-87, s. 2; O.C. 1471-91, s. 7; O.C. 35-96, s. 86; O.C. 1466-98, s. 17; O.C. 1155-2004, s. 10; O.C. 1149-2006, s. 4; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 4; O.C. 321-2017, s. 2.

92.11R17. An annuity contract referred to in paragraph e of section 92.11R16 is, for a taxation year, a contract

(a)  under which annuity payments commenced in that year or in a preceding taxation year;

(b)  the issuer of which is a corporation described in subparagraph ii of paragraph b of the definition of “retirement savings plan” in subsection 1 of section 146 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), a life insurance corporation, a registered charity, a corporation described in any of paragraphs a to c of the definition of “specified financial institution” in section 1 of the Act, or a corporation that is neither a mutual fund corporation nor a mortgage investment corporation, but whose principal activity consists in making loans;

(c)  a holder of which

i.  where the annuity payments commenced before 1 January 1987, notified the issuer of the contract in writing, before the end of the year, that the contract is to be treated as a prescribed annuity contract,

ii.  where the annuity payments commenced after 31 December 1986, did not notify the issuer of the contract in writing, before the end of the taxation year in which the annuity payments commenced, that the contract is not to be treated as a prescribed annuity contract, or

iii.  where the annuity payments commenced after 31 December 1986, notified the issuer of the contract in writing, before the end of the taxation year in which the annuity payments commenced, that the contract is not to be treated as a prescribed annuity contract, which notification was cancelled by a holder of the contract by means of a notice in writing addressed to the issuer of the contract before the end of the year;

(d)  each holder of which is an annuitant under the contract who, throughout the year, dealt at arm’s length with the issuer of the contract and who is, as the case may be,

i.  an individual other than a trust,

ii.  a trust described in subparagraph a of the first paragraph of section 653 of the Act and in the second paragraph of that section,

iii.  a qualified disability trust, within the meaning of the first paragraph of section 768.2 of the Act, for the taxation year in which the annuity is issued, or

iv.  in the case where the annuity is issued before 1 January 2016, a testamentary trust at the time the annuity is issued;

(e)  the terms of which require that from the time when the contract fulfils the requirements of this section, the conditions mentioned in the first paragraph of section 92.11R18 are satisfied; and

(f)  for which none of the terms provide a remedy against the issuer in case of failure to make a payment prescribed by the contract.

s. 92.11R3; O.C. 7-87, s. 2; O.C. 1471-91, s. 8; O.C. 35-96, s. 3; O.C. 1707-97, s. 13; O.C. 134-2009, s. 1; O.C. 390-2012, s. 6; O.C. 117-2019, s. 6; O.C. 204-2020, s. 3.

92.11R18. For the purposes of paragraph e of section 92.11R17, the conditions that must be satisfied are:

(a)  subject to the holder’s right to change the frequency and the quantum of the payments to be made in a taxation year under the contract without changing the present value, at the beginning of the year, of those payments, all the payments made under the contract must be equal annuity payments made at regular intervals at least once a year;

(b)  the annuity payments under the contract must continue either for a fixed period, or

i.  where the holder is an individual other than a trust, for the life of the first holder or until the day of the later of the death of the first holder and the death of any of the spouse, brothers and sisters, referred to as “the survivor” in subparagraph c, of the first holder, or

ii.  where the holder is

(1)  a trust described in subparagraph a of the first paragraph of section 653 of the Act and in the second paragraph of that section, called “spouse trust” in this section, for the life of an individual to whom that subparagraph a refers if the individual is entitled to receive all of the income of the trust that arose before the individual’s death,

(2)  a joint spousal trust, until the day of the later of the death of the individual and the death of the beneficiary under the trust who is the individual’s spouse,

(3)  a qualified disability trust, for the life of an individual who is an electing beneficiary of the trust for the taxation year in which the annuity is issued,

(4)  a trust, other than a qualified disability trust or a spouse trust, where the annuity is issued before 24 October 2012, for the life of an individual who is entitled to receive income from the trust, or

(5)  a trust, other than a qualified disability trust or a spouse trust, where the annuity is issued after 23 October 2012, for the life of an individual who is entitled when the contract was first held to receive all of the income of the trust that is an amount received by the trust on or before the death of the individual as an annuity payment;

(c)  where the period during which the annuity payments are to be made is of a guaranteed or fixed duration, the period so guaranteed or fixed cannot exceed 91 years minus the age, when the contract was first held, in whole years of the following individual:

i.  where the holder is not a trust, the individual who is,

(1)  in the case of a joint and last survivor annuity, the younger of the first holder and the survivor,

(2)  in the case of a contract that is held jointly, the younger of the first holders, and

(3)  in any other case, the first holder,

ii.  where the holder is a spouse trust, the individual who is,

(1)  in the case of a joint and last survivor annuity held by a joint spousal trust, the younger of the beneficiaries under the trust who are in combination entitled to receive all of the income of the trust that arose before the later of their deaths, and

(2)  in the case of an annuity that is not a joint and last survivor annuity, the individual who is entitled to receive all of the income of the trust that arose before the individual’s death,

iii.  where the holder is a qualified disability trust, an individual who is an electing beneficiary of the trust for the taxation year in which the annuity is issued, and

iv.  where the holder is a trust, other than a qualified disability trust or a spouse trust, and the annuity is issued before 1 January 2016, the individual who was the youngest of the beneficiaries under the trust when the contract was first held;

(d)  no loan exists under the contract and the holder’s rights under the contract may be disposed of only,

i.  where the holder is an individual, on the holder’s death,

ii.  where the holder is a spouse trust, other than a joint spousal trust, on the death of the spouse who is entitled to receive all of the income of the trust that arose before the spouse’s death,

iii.  where the holder is a spouse trust that is a joint spousal trust, on the later of the deaths of the beneficiaries under the trust who are in combination entitled to receive all of the income of the trust that arose before the later of their deaths, and

iv.  where the holder is a testamentary trust other than a spouse trust, and the contract was first held after 31 October 2011, on the earlier of the time at which the trust ceases to be a testamentary trust and the death of the individual referred to in subparagraph ii of subparagraph b or, as the case may be, subparagraph iii or iv of subparagraph c, in respect of the trust; and

(e)  no payment may be made under the contract unless it is permitted by this division.

For the purposes of the first paragraph, “electing beneficiary” and “qualified disability trust” have the meaning assigned by the first paragraph of section 768.2 of the Act.

s. 92.11R4; O.C. 7-87, s. 2; O.C. 1471-91, s. 9; O.C. 134-2009, s. 1; O.C. 1105-2014, s. 2; O.C. 117-2019, s. 7.

92.11R19. Despite sections 92.11R16 to 92.11R18, an annuity contract may qualify as a prescribed annuity contract even if,

(a)  in a case where the contract provides a joint and last survivor annuity or is held jointly, the terms of the contract provide that there will be a reduction in the amount of the annuity payments to be made under the contract from the time of the death of one of the annuitants;

(b)  the terms of the contract provide that if the holder of the contract dies upon reaching the age of 91 or before reaching that age, the contract is terminated and the holder will be paid under the contract an amount not greater than the excess of the total amount of premiums paid under it over the total amount of the annuity payments made under the contract;

(c)  where the period during which the annuity payments are to be made is of a guaranteed or fixed duration, the terms of the contract provide that, following the death of the holder of the contract during that period, the payments which would have been made during that period, were it not for that death, may be replaced by a single payment; or

(d)  the terms of the contract as they read on 1 December 1982 and at any time after that date provide that the holder share in the investment earnings of the issuer and that the amount of such share must be paid in the 60 days following the end of the year in respect of which it is computed.

s. 92.11R5; O.C. 7-87, s. 2; O.C. 1471-91, s. 10; O.C. 134-2009, s. 1.

DIVISION IV EXEMPT POLICY

div. VII; O.C. 7-87, s. 2; O.C. 134-2009, s. 1.

92.19R1. For the purposes of paragraph a of section 92.19 of the Act, an exempt policy at a particular time means a life insurance policy in respect of which the following conditions are met:

(a)  if the particular time corresponds to a policy anniversary of the policy, the accumulating fund of the policy at that time, determined without considering any policy loan, does not exceed the aggregate of the accumulating funds, at that time, of the accumulating funds of the exemption test policies issued in respect of the policy not later than that time;

(b)  assuming that the terms of the policy do not differ from those that were in force on the last policy anniversary of the policy occurring not later than the particular time and, where necessary, making reasonable assumptions about all the other factors, including, in the case of a participating life insurance policy within the meaning of subparagraph f of the first paragraph of section 835 of the Act, the assumption that the amounts of dividends paid will be as shown in the dividend scale, it is reasonable to expect that

i.  if the policy is issued before 1 January 2017, the condition provided for in subparagraph a will be met on each policy anniversary of the policy on which the policy could remain in force after the particular time but before the endowment date of the exemption test policies issued in respect of the policy, and

ii.  if the policy is issued after 31 December 2016, the condition in subparagraph a will be met on the policy’s next policy anniversary, without reference to any automatic adjustments under the policy that may be made after the particular time to ensure that the policy is an exempt policy and, where applicable, making projections using the most recent values that are used to calculate the accumulating fund in respect of the policy or in respect of each exemption test policy issued in respect of a coverage under the policy;

(c)  the condition in paragraph a was met on all policy anniversaries of the policy prior to the particular time; and

(d)  the condition in paragraph b was met at all times from the first policy anniversary of the policy and before the particular time.

In the first paragraph, a life insurance policy does not include an annuity contract, a deposit administration fund policy or a leveraged insured annuity policy.

s. 92.19R1; O.C. 7-87, s. 2; O.C. 67-96, s. 11; O.C. 1470-2002, s. 7; O.C. 134-2009, s. 1; O.C. 390-2012, s. 7; O.C. 1182-2017, s. 2; S.Q. 2019, c. 14, s. 630.

92.19R2. For the purposes of section 92.19R1, a life insurance policy that is an exempt policy at the time of its first policy anniversary is deemed to have been an exempt policy from the time of its issue up to that anniversary.

s. 92.19R3; O.C. 7-87, s. 2; O.C. 67-96, s. 13; O.C. 134-2009, s. 1.

92.19R3. For the purposes of this division, the following rules apply:

(a)   in the case of a life insurance policy issued before 1 January 2017, a separate exemption test policy is deemed, subject to section 92.19R6.1, to have been issued in respect of the life insurance policy

i.  on the date of issue of the life insurance policy, and

ii.  on each policy anniversary of the life insurance policy on which the amount of the death benefit under the life insurance policy exceeds 108% of the amount of the death benefit under the life insurance policy on the later of the life insurance policy’s date of issue and the date of the life insurance policy’s preceding policy anniversary, if any; and

(b)   in the case of a life insurance policy issued after 31 December 2016, a separate exemption test policy is deemed, subject to section 92.19R6.1, to be issued in respect of each coverage under the life insurance policy

i.  on any of the following dates:

ii.  on each policy anniversary of the life insurance policy on which the amount of the death benefit under the coverage on that policy anniversary exceeds 108% of the amount of the death benefit under the coverage, on the later of the coverage’s date of issue and the date of the life insurance policy’s preceding policy anniversary (or, if there is no preceding policy anniversary, the coverage’s date of issue), and

iii.  on each policy anniversary of the life insurance policy—except to the extent that another exemption test policy has been issued on that date under this subparagraph iii in respect of a coverage under the life insurance policy—on which an excess amount is determined by the formula

A − B.

In the formula in the first paragraph,

(a)  A is the amount by which the fund value benefit under the life insurance policy on the policy anniversary referred to in subparagraph iii of subparagraph b of the first paragraph exceeds the fund value benefit under the life insurance policy on the life insurance policy’s preceding policy anniversary (or, if there is no preceding policy anniversary, the date of issue of the policy); and

(b)  B is the amount by which 8% of the amount of the death benefit under the life insurance policy on the policy anniversary preceding the policy anniversary referred to in subparagraph iii of subparagraph b of the first paragraph (or, if there is no preceding policy anniversary, the date of issue of the policy) exceeds the aggregate of all amounts each of which is, in respect of a coverage under the policy, the lesser of

i.  the amount by which the amount of the death benefit under the coverage on the date of the policy anniversary referred to in that subparagraph iii exceeds the amount of the death benefit under the coverage on the later of the coverage’s date of issue and the date of the life insurance policy’s preceding policy anniversary (or, if there is no preceding policy anniversary, the coverage’s date of issue), and

ii.  8% of the amount of the death benefit under the coverage on the later of the coverage’s date of issue and the date of the policy anniversary preceding the policy anniversary referred to in that subparagraph iii (or, if there is no preceding policy anniversary, the coverage’s date of issue).

s. 92.19R4; O.C. 7-87, s. 2; Erratum, 1988 G.O. 2, 2689; O.C. 67-96, s. 14; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 632; S.Q. 2021, c. 14, s. 242.

92.19R4. For the purpose of determining whether the condition in subparagraph a of the first paragraph of section 92.19R1 is met on a policy anniversary of a life insurance policy, each exemption test policy issued in respect of the life insurance policy, or in respect of a coverage under the life insurance policy, is deemed

(a)  to have a death benefit that is uniform throughout the term of the exemption test policy and that, subject to section 92.19R5, is equal to

i.  if the date on which the exemption test policy is issued is determined under subparagraph i of subparagraph a of the first paragraph of section 92.19R3, the amount by which the amount on that policy anniversary of the death benefit under the life insurance policy exceeds the aggregate of all amounts each of which is the amount on that policy anniversary of the death benefit under another exemption test policy issued on or before that policy anniversary in respect of the life insurance policy,

ii.  if the date on which the exemption test policy is issued is determined under subparagraph ii of subparagraph a of the first paragraph of section 92.19R3, the amount of the excess referred to in that subparagraph on that date in respect of the life insurance policy,

iii.  if the date on which the exemption test policy is issued is determined under subparagraph i of subparagraph b of the first paragraph of section 92.19R3, the amount determined by the formula

A + B − C,

iv.  if the date on which the exemption test policy is issued is determined under subparagraph ii of subparagraph b of the first paragraph of section 92.19R3, the amount of the excess referred to in that subparagraph on that date in respect of the coverage, or

v.  if the date on which the exemption test policy is issued is determined under subparagraph iii of subparagraph b of the first paragraph of section 92.19R3, the lesser of

(1)  the amount by which the amount determined under subparagraph a of the second paragraph of section 92.19R3 exceeds the amount determined under subparagraph b of that paragraph in respect of the coverage on that date, and

(2)  the amount determined under subparagraph 1 of subparagraph i of subparagraph b of the second paragraph in respect of the coverage on that date; and

(b)  to pay the amount of its death benefit on the earlier of the exemption test policy’s endowment date and

i.  if the life insurance policy is issued before 1 January 2017, the date of death of the individual whose life is insured under the life insurance policy, or

ii.  if the life insurance policy is issued after 31 December 2016,

(1)  if 2 or more lives are jointly insured under the coverage, the date at which the benefit would be payable as a result of the death of any of the lives, and

(2)  in any other case, the date of death of the individual whose life is insured under the coverage.

In the formula in subparagraph iii of subparagraph a of the first paragraph,

(a)  A is the amount, on the policy anniversary referred to in the first paragraph, of the death benefit under the coverage;

(b)  B is

i.  if the death benefit under the life insurance policy includes a fund value benefit on the policy anniversary referred to in the first paragraph, the portion of the fund value benefit on that policy anniversary that is equal to the lesser of

(1)  the maximum amount of the fund value benefit that could be payable on that policy anniversary if no other coverage were offered under the life insurance policy and the life insurance policy were an exempt policy, and

(2)  the amount by which the fund value benefit on that policy anniversary exceeds the aggregate of all amounts each of which is the portion of the fund value benefit allocated to other coverages under the life insurance policy, and

ii.  in any other case, nil; and

(c)  C is the aggregate of all amounts each of which is the amount, on the policy anniversary referred to in the first paragraph, of the death benefit under another exemption test policy issued on or before that policy anniversary in respect of the coverage.

s. 92.19R5; O.C. 7-87, s. 2; O.C. 67-96, s. 15; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 632; S.Q. 2021, c. 14, s. 243.

92.19R5. The following rules apply for the purpose of determining the amount of a death benefit under an exemption test policy issued in respect of

(a)  a life insurance policy issued before 1 January 2017 if, at a particular time, the amount of a death benefit under the life insurance policy is reduced, a particular amount that is equal to the reduction is to be applied at that time to reduce the amount of the death benefit under each exemption test policy issued before that time in respect of the life insurance policy (other than the exemption test policy the date of issue of which is determined under subparagraph i of subparagraph a of the first paragraph of section 92.19R3) in the order in which the dates of their issuance are proximate to that time, by an amount equal to the lesser of

i.  the portion of the particular amount that did not reduce the death benefit under one or more other such exemption test policies, and

ii.  the amount, immediately before that time, of the death benefit under the relevant exemption test policy; and

(b)  a coverage under a life insurance policy issued after 31 December 2016 if, at a particular time, there is a particular reduction in the amount of a death benefit under the coverage, or the portion of the fund value benefit referred to in subparagraph i of subparagraph b of the second paragraph of section 92.19R4 in respect of the coverage, the amount of the death benefit under each exemption test policy issued before that time in respect of the coverage (other than the exemption test policy the date of issue of which is determined under subparagraph i of subparagraph b of the first paragraph of section 92.19R3) is to be reduced at that time by an amount equal to the least of

i.  the particular reduction,

ii.  the amount, immediately before that time, of the death benefit under the relevant exemption test policy, and

iii.  the portion of the particular reduction that did not reduce the death benefit under one or more other such exemption test policies issued on or after the date of issue of the relevant exemption test policy.

s. 92.19R6; O.C. 7-87, s. 2; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 632; S.Q. 2021, c. 14, s. 244.

92.19R6. Section 92.19R6.1 applies at a particular time in respect of a life insurance policy if

(a)  that time is on its 10th or a later policy anniversary;

(b)  the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy at that time exceeds 250% of

i.  in the case where the particular time at which the policy is issued is determined under section 967.1 of the Act and the policy’s third preceding policy anniversary is before the particular time, the accumulating fund (computed without regard to any amount payable in respect of a policy loan and as though the policy were issued after 31 December 2016) in respect of the policy on that third preceding policy anniversary, or

ii.  in any other case, the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy on its third preceding policy anniversary; and

(c)  where that time is after 31 December 2016,

i.  the accumulating fund (computed without regard to any amount payable in respect of a policy loan) in respect of the policy at that time exceeds the aggregate of all amounts each of which is

(1)  if the policy is issued before 1 January 2017, 3/20 of the accumulating fund, at that time, in respect of an exemption test policy issued in respect of the policy, and

(2)  if the policy is issued after 31 December 2016, 3/8 of the accumulating fund, at that time, in respect of an exemption test policy issued in respect of a coverage under the policy, and

ii.  section 92.19R6.1 did not apply on any of the policy’s six preceding policy anniversaries.

s. 92.19R7; O.C. 7-87, s. 2; O.C. 1470-2002, s. 8; O.C. 1282-2003, s. 9; O.C. 134-2009, s. 1; S.Q. 2019, c. 14, s. 632; S.Q. 2021, c. 14, s. 245.

92.19R6.1. Where the conditions set out in section 92.19R6 are met at a particular time in respect of a life insurance policy, each exemption test policy issued before that time in respect of the life insurance policy is at and after that time deemed to be issued (except for the purposes of this section, subparagraph a of the first paragraph of section 92.19R4 and section 92.19R5) on the later of the following dates and not at any other time:

(a)  the date of the third preceding policy anniversary described in paragraph b of section 92.19R6; and

(b)  the date on which it was deemed under section 92.19R3 or 92.19R6.4 to be issued (determined immediately before the particular time).

S.Q. 2019, c. 14, s. 633; S.Q. 2021, c. 14, s. 246.

92.19R6.2. A life insurance policy that would, in the absence of this section, cease (other than by reason of its conversion into an annuity contract) on a policy anniversary of the policy to be an exempt policy is deemed to be an exempt policy on that policy anniversary if

(a)  had that policy anniversary occurred on the particular day that is 60 days after that policy anniversary, the policy would have been an exempt policy on the particular day; or

(b)  the person whose life is insured under the policy dies on that policy anniversary or within 60 days after that policy anniversary.

S.Q. 2019, c. 14, s. 633.

92.19R6.3. A life insurance policy (other than an annuity contract or deposit administration fund policy) issued before 2 December 1982 is deemed to be an exempt policy at all times from the date of its issue until the first time after 1 December 1982 at which

(a)  a premium referred to in section 92.19R7 is paid by a taxpayer in respect of an interest, last acquired before 2 December 1982, in the policy; or

(b)  an interest in the policy is acquired by a taxpayer from the person who held the interest continuously since 1 December 1982.

S.Q. 2019, c. 14, s. 633.

92.19R6.4. Despite sections 92.19R3 and 92.19R4, where a life insurance policy is issued for any purpose at a particular time determined under section 967.1 of the Act, for the purposes of this division (other than this section and section 92.19R6.3) and Division II in respect of the life insurance policy, the following rules apply at and after the particular time:

(a)  in respect of each coverage issued before the particular time under the life insurance policy, a separate exemption test policy is deemed to be issued in respect of a coverage under the life insurance policy

i.  on the date of issue of the life insurance policy, and

ii.  on each policy anniversary that ends before the particular time and on which the amount of the death benefit under the life insurance policy exceeds 108% of the amount of the death benefit under the life insurance policy on the later of the life insurance policy’s date of issue and the date of the life insurance policy’s preceding policy anniversary, if any;

(b)  in respect of each coverage issued before the particular time under the life insurance policy, section 92.19R3 does not apply to deem an exemption test policy to be issued in respect of the policy, or in respect of a coverage under the policy, at any time before the particular time;

(c)  in respect of each exemption test policy the date of issue of which is determined under subparagraph i of paragraph a, subparagraph iii of subparagraph a of the first paragraph of section 92.19R4 and paragraph b of section 92.19R5 are to be read as if “subparagraph i of subparagraph b of the first paragraph of section 92.19R3” were replaced by “subparagraph i of paragraph a of section 92.19R6.4”;

(d)  in respect of each exemption test policy the date of issue of which is determined under subparagraph ii of paragraph a, subparagraph iv of subparagraph a of the first paragraph of section 92.19R4 is to be read as follows:

“iv. if the date on which the exemption test policy is issued is determined under subparagraph ii of paragraph a of section 92.19R6.4 at a time before a particular time, the portion of the amount that would be determined, at the time immediately before the particular time, under subparagraph ii if the exemption test policy were issued in respect of the policy on the same date as the date determined for it under subparagraph ii of paragraph a of section 92.19R6.4 that can be reasonably allocated to the coverage in the circumstances (an allocation being considered not to be reasonable if the total of the amounts determined under subparagraphs a and b of the second paragraph is less than the amount determined under subparagraph c of that paragraph in respect of the exemption test policy the date of issue of which is determined under subparagraph i of paragraph a of section 92.19R6.4 in respect of the coverage), or”; and

(e)  section 92.19R5 is to be read as if “at a particular time” in the portion of paragraph b before subparagraph i were replaced by “at a time that is at or after the particular time referred to in section 92.19R6.4 in respect of the life insurance policy”.

S.Q. 2019, c. 14, s. 633; S.Q. 2021, c. 14, s. 247.

92.19R7. A premium paid at a particular time under a life insurance policy is a premium to which paragraph a of section 92.19R6.3 refers where the total amount of one or more premiums paid at that time under the policy exceeds the amount of the premium that was to be paid under the policy at that time, as determined not later than 1 December 1982 and as adjusted to take into account those events among the following events occurring after that date in respect of the policy:

(a)  a change in the underwriting class;

(b)  a change in the premium following a change in the frequency of premium payments during a year having no effect on the actualized value at the beginning of the year of the aggregate of the premiums to be paid in that year under the policy;

(c)  the addition or deletion of an accidental death benefit or a guaranteed purchase option or of a disability benefit providing for annuity payments or a waiver of premium payments;

(d)  an adjustment of the premium attributable to interest, death or expenses or a change in the death benefit under the policy following an increase in the Consumer Price Index published by Statistics Canada under the Statistics Act (R.S.C. 1985, c. S-19), the adjustment being made by the life insurer for each class in accordance with the terms of the policy as they read on 1 December 1982 and not resulting from the exercise of a conversion privilege under the policy;

(e)  a change resulting from the provision of an additional death benefit under a participating life insurance policy within the meaning of subparagraph f of the first paragraph of section 835 of the Act, either as policy dividends or other amounts distributed out of the life insurer’s income from the carrying on of the participating life insurance business as determined under sections 92.19R9 to 92.19R13, or as interest earned on policy dividends left on deposit with the life insurer;

(f)  the reinstatement, within the time prescribed in subparagraph iii of paragraph a of section 966 of the Act, of lapsed policies or reinstatement owing to an amount outstanding under a policy loan;

(g)  a change in premium following correction of erroneous information contained in the policy application;

(h)  payment of a premium after the due date or payment of a premium within 30 days preceding the due date, as determined not later that 1 December 1982; or

(i)  payment of the interest referred to in paragraph b.3 of section 966 of the Act.

s. 92.19R8; O.C. 7-87, s. 2; O.C. 1114-93, s. 12; O.C. 35-96, s. 86; O.C. 1470-2002, s. 9; O.C. 1282-2003, s. 10; O.C. 134-2009, s. 1; O.C. 390-2012, s. 8; O.C. 321-2017, s. 3; S.Q. 2019, c. 14, s. 634.

92.19R8. For the purposes of section 92.19R7, a life insurance policy issued following exercise of a renewal privilege provided for in the terms of another policy as they read on 1 December 1982 is the continuation of that other policy.

s. 92.19R9; O.C. 1114-93, s. 13; O.C. 134-2009, s. 1.

92.19R9. For the purposes of paragraph e of section 92.19R7, the income of an insurer derived from the operation of its participating life insurance business carried on in Canada for a taxation year is computed in accordance with the provisions of the Act concerning the computation of the income derived from a source, subject to sections 92.19R10 to 92.19R13.

O.C. 321-2017, s. 4.

92.19R10. In the computation under section 92.19R9, the insurer must include the aggregate of

(a)  the amount determined by the formula

A × B / C;

(b)  the insurer’s maximum tax actuarial reserve for the immediately preceding taxation year in respect of participating life insurance policies in Canada; and

(c)  (subparagraph revoked).

In the formula in subparagraph a of the first paragraph,

(a)  A is the insurer’s gross Canadian life investment income, within the meaning of section 818R53, for the year;

(b)  B is the aggregate of

i.  the insurer’s mean maximum tax actuarial reserve, within the meaning of section 818R53, for the year in respect of participating life insurance policies in Canada, and

ii.  one-half of the aggregate of

(1)  all amounts on deposit with the insurer as at the end of the year in respect of policies described in subparagraph i; and

(2)  all amounts on deposit with the insurer as at the end of the immediately preceding taxation year in respect of policies described in subparagraph i; and

(c)  C is the aggregate of all amounts each of which is

i.  the insurer’s mean maximum tax actuarial reserve for the year in respect of a class of life insurance policies in Canada, or

ii.  one-half of the aggregate of

(1)  all amounts on deposit with the insurer as at the end of the year in respect of a class of policies described in subparagraph i; and

(2)  all amounts on deposit with the insurer as at the end of the immediately preceding taxation year in respect of a class of policies described in subparagraph i.

O.C. 321-2017, s. 4; S.Q. 2023, c. 19, s. 140.

92.19R11. In the computation under section 92.19R9, the insurer must deduct the insurer’s maximum tax actuarial reserve for the year in respect of participating life insurance policies in Canada.

O.C. 321-2017, s. 4; S.Q. 2023, c. 19, s. 141.

92.19R12. In the computation under section 92.19R9, the insurer may not include

(a)  any amount in respect of the insurer’s participating life insurance policies in Canada that was deducted under paragraph a of section 840 of the Act in computing its income for the immediately preceding taxation year; or

(b)  subject to subparagraph a of the first paragraph of section 92.19R10,

i.  any amount as a reserve that was deducted under section 140 of the Act in computing the insurer’s income for the immediately preceding taxation year; or

ii.  any amount that was included in determining the insurer’s gross Canadian life investment income for the year.

O.C. 321-2017, s. 4; S.Q. 2023, c. 19, s. 142.

92.19R13. In the computation under section 92.19R9, the insurer may not deduct,

(a)  subject to subparagraph a of the first paragraph of section 92.19R10, any amount taken into account in determining the insurer’s gross Canadian life investment income for the year;

(b)  subject to subparagraph a of the first paragraph of section 92.19R10, any amount deductible under section 140 of the Act in computing the insurer’s income for the year;

(c)  any amount deductible under paragraph a of section 841 of the Act in computing the insurer's income for the year; or

(d)  subject to section 92.19R11, any amount deductible as a reserve under paragraph a of section 840 of the Act in computing the insurer’s income for the year.

O.C. 321-2017, s. 4; S.Q. 2023, c. 19, s. 143.

CHAPTER V

(Revoked).

c. I.2.2; O.C. 1454-99, s. 8; O.C. 134-2009, s. 1; O.C. 321-2017, s. 5.

92.21R1. (Revoked).

s. 92.21R9; O.C. 1454-99, s. 8; O.C. 134-2009, s. 1; O.C. 321-2017, s. 5.

92.21R2. (Revoked).

s. 92.21R10; O.C. 1454-99, s. 8; O.C. 134-2009, s. 1; O.C. 321-2017, s. 5.

92.21R3. (Revoked).

s. 92.21R11; O.C. 1454-99, s. 8; O.C. 134-2009, s. 1; O.C. 321-2017, s. 5.

92.21R4. (Revoked).

s. 92.21R12; O.C. 1454-99, s. 8; O.C. 134-2009, s. 1; O.C. 321-2017, s. 5.

92.21R5. (Revoked).

s. 92.21R13; O.C. 1454-99, s. 8; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 5; O.C. 321-2017, s. 5.

CHAPTER VI DISPOSITION OF DEPRECIABLE PROPERTY

c. I.3; O.C. 7-87, s. 2; O.C. 134-2009, s. 1.

93R1. For the purposes of subparagraph e of the second paragraph of section 93 of the Act, the prescribed manner and the prescribed delay are those prescribed by section 130R70.

s. 93R1; O.C. 1981-80, s. 93R1; R.R.Q., 1981, c. I-3, r. 1, s. 93R1; O.C. 1282-2003, s. 11; O.C. 134-2009, s. 1.

93R2. For the purposes of subparagraph f of the second paragraph of section 93 of the Act, a prescribed amount is an amount referred to in paragraph c of section 87R5.

s. 93R2; O.C. 1539-93, s. 2; O.C. 1282-2003, s. 12; O.C. 134-2009, s. 1.

93.6R1. Property referred to in subparagraph t of the first paragraph, or the second or fourth paragraph, of Class 12 in Schedule B is prescribed property for the purposes of section 93.6 of the Act.

s. 93.6R1; O.C. 67-96, s. 16; O.C. 1463-2001, s. 33; O.C. 134-2009, s. 1.

93.7R1. An offshore region referred to in section 4609 of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) is a prescribed offshore region for the purposes of subparagraph j of the first paragraph of section 93.7 of the Act.

s. 93.7R2; O.C. 67-96, s. 16; O.C. 134-2009, s. 1.

96.2R1. For the purposes of section 96.2 of the Act, prescribed energy conservation property means property included in Class 43.1 or 43.2 in Schedule B.

s. 96.2R1; O.C. 1454-99, s. 9; O.C. 1116-2007, s. 5; O.C. 134-2009, s. 1.

99R1. For the purposes of paragraph d.3 of section 99 of the Act, the prescribed amount is,

(a)  in respect of a passenger vehicle acquired between 31 August 1989 and 1 January 1991, $24,000; and

(b)  in respect of a passenger vehicle acquired after 31 December 1990, the amount determined by the formula

A + B.

In the formula in subparagraph b of the first paragraph,

(a)  A is

i.  $24,000, if the passenger vehicle was acquired before 1 January 1997,

ii.  $25,000, if the passenger vehicle was acquired after 31 December 1996 and before 1 January 1998,

iii.  $26,000, if the passenger vehicle was acquired after 31 December 1997 and before 1 January 2000,

iv.  $27,000, if the passenger vehicle was acquired after 31 December 1999 and before 1 January 2001, and

v.  $30,000, if the passenger vehicle was acquired after 31 December 2000; and

(b)  B is the sum that would have been payable in respect of federal and provincial sales taxes on the acquisition of the passenger vehicle if it had been acquired, at a cost equal to the amount determined in subparagraph a before the application of the federal and provincial sales taxes, at the time of the acquisition.

s. 99R2; O.C. 1697-92, s. 4; O.C. 1463-2001, s. 35; O.C. 1470-2002, s. 10; O.C. 134-2009, s. 1.

99R1.1. For the purposes of paragraph d.5 of section 99 of the Act, the amount prescribed in respect of a zero-emission passenger vehicle of a taxpayer is equal to the amount determined by the formula

A + B.

In the formula in the first paragraph,

(a)  A is $55,000; and

(b)  B is the sum of the federal and provincial sales taxes that would have been payable on the acquisition of the zero-emission passenger vehicle if it had been acquired by the taxpayer at a cost equal, at the time of the acquisition, to the amount specified in subparagraph a, before the application of those sales taxes.

S.Q. 2021, c. 18, s. 234.

99R2. For the purposes of paragraph e of section 99 of the Act,

(a)  a prescribed property is a property referred to in section 130R152; and

(b)  a prescribed business is a business referred to in section 130R153.

s. 99R1; O.C. 1981-80, s. 99R1; R.R.Q., 1981, c. I-3, r. 1, s. 99R1; O.C. 1282-2003, s. 13; O.C. 134-2009, s. 1.

101R1. For the purposes of section 101 of the Act, an amount referred to in paragraph c of section 87R5 is a prescribed amount.

s. 101R0.1; O.C. 1539-93, s. 3; O.C. 134-2009, s. 1.

101R2. For the purposes of section 101 of the Act, the assistance referred to therein does not include

(a)  a deduction granted under the Act to promote industrial development by means of fiscal advantages (chapter D-9) or under the Act respecting fiscal incentives to industrial development (chapter S-34), as those Acts read before they were repealed;

(b)  an amount deducted under sections 360 and 361 of the Act;

(c)  an amount paid under the Act to promote scientific research and development (R.S.C. 1970, c. I-10), or an amount paid before 20 December 1984 under the Act respecting assistance for regional industrial development (S.Q. 1968, c. 27) or a plan equivalent to that instituted by that Act and considered to be equivalent under it;

(d)  an amount received as a grant under a program referred to in section 313.1R1;

(e)  an amount described in paragraph b of section 225 of the Act; or

(f)  an amount referred to in paragraph g or i of section 488R1.

s. 101R1; O.C. 1981-80, s. 101R1; R.R.Q., 1981, c. I-3, r. 1, s. 101R1; O.C. 544-86, s. 4; O.C. 140-90, s. 3; O.C. 1232-91, s. 2; O.C. 1539-93, s. 4; O.C. 523-96, s. 5; O.C. 1707-97, s. 14; O.C. 1466-98, s. 18; O.C. 134-2009, s. 1.

101.1R1. For the purposes of section 101.1 of the Act, the amount that an insurer is deemed to have deducted in respect of depreciable property of a prescribed class for taxation years prior to its 1977 taxation year is the amount deemed to have been so deducted under subsection 22 of section 13 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

s. 101.1R1; O.C. 1981-80, s. 101.1R1; R.R.Q., 1981, c. I-3, r. 1, s. 101.1R1; O.C. 35-96, s. 86; O.C. 134-2009, s. 1.

101.2R1. For the purposes of section 101.2 of the Act, the amount that a life insurer is deemed to have deducted in computing its income for taxation years prior to its 1978 taxation year in respect of depreciable property of a prescribed class is equal to the aggregate of the total depreciation, determined immediately after the 1977 taxation year of the insurer and without reference to that section, that was granted to the insurer in respect of property of that class, and the amount that the maximum depreciation which the insurer was entitled to claim in respect of that property for its taxation years ending after 1968 and before 1978 exceeds that aggregate depreciation.

s. 101.2R1; O.C. 1981-80, s. 101.2R1; R.R.Q., 1981, c. I-3, r. 1, s. 101.2R1; O.C. 134-2009, s. 1.

101.3R1. For the purposes of section 101.3 of the Act, a prescribed amount is

(a)  an amount determined under subsection 7 or 8 of section 127 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), other than the part of that amount that may reasonably be considered to be related to an amount that is a qualified expenditure, within the meaning of subsection 9 of that section 127, and that constitutes, for the purposes of the definition of that expression, an expenditure made after 30 April 1987 and before 10 May 1996; and

(b)  a tax deduction provided for in subsection 5 or 6 of section 127 of the Income Tax Act.

s. 101.3R1; O.C. 2962-82, s. 7; O.C. 500-83, s. 7; O.C. 35-96, s. 86; O.C. 1707-97, s. 15; O.C. 134-2009, s. 1.

101.8R1. For the purposes of paragraph a of section 101.8 of the Act, a prescribed property in respect of a taxpayer is a property that, if it were acquired by the taxpayer, would be included in Class 10 in Schedule B under subparagraph f of the second paragraph of that class.

s. 101.8R1; O.C. 1470-2002, s. 11; O.C. 134-2009, s. 1.

101.8R2. For the purposes of paragraph b of section 101.8 of the Act, the following properties are prescribed:

(a)  a road, other than a specified temporary access road, sidewalk, runway, parking area, storage area or similar surface construction;

(b)  a bridge; and

(c)  a property ancillary to any property referred to in paragraph a or b.

s. 101.8R2; O.C. 1470-2002, s. 11; O.C. 134-2009, s. 1.

CHAPTER VII DISPOSITION OF VESSELS

c. II; O.C. 1981-80, title IV, c. II; R.R.Q., 1981, c. I-3, r. 1, title IV, c. II; O.C. 134-2009, s. 1.

104R1. In this chapter,

“conversion” has the meaning assigned by subsection 21 of section 13 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.));

“conversion cost” has the meaning assigned by subsection 21 of section 13 of the Income Tax Act;

“vessel” means a vessel as defined in the Canada Shipping Act (S.C. 2001, c. 26).

s. 104R1; O.C. 1981-80, s. 104R1; R.R.Q., 1981, c. I-3, r. 1, s. 104R1; O.C. 35-96, s. 4; O.C. 134-2009, s. 1.

104R2. Where a deduction has been made for a year under the Act, the Provincial Income Tax Act (R.S.Q. 1964, c. 69) or the Corporation Tax Act (R.S.Q. 1964, c. 67) in respect of capital cost allowance of a vessel, section 94 of the Act is applicable to the prescribed class, as well as to any other class prescribed by either of those Acts, to which the vessel may have been transferred.

s. 104R2; O.C. 1981-80, s. 104R2; R.R.Q., 1981, c. I-3, r. 1, s. 104R2; O.C. 134-2009, s. 1.

104R3. Where a vessel owned by a taxpayer on 1 January 1966, or constructed pursuant to a construction contract entered into by the taxpayer prior to that date without the vessel being completed by such date, is disposed of by the taxpayer prior to 1974, section 94 of the Act and Title IV of Book III of Part I of the Act does not apply to the proceeds of disposition

(a)  if an amount at least equal to the proceeds of disposition is used by the taxpayer, before the month of May 1974 and during the taxation year in which the taxpayer disposed of the vessel or within 4 months following the end of that taxation year, under the conditions provided for in subparagraph i of paragraph a of subsection 15 of section 13 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), either for replacement of the vessel or to incur any conversion cost with respect to another vessel owned by the taxpayer; or

(b)  if, under the conditions provided for in subparagraph ii of paragraph a of subsection 15 of section 13 of the Income Tax Act, the taxpayer deposits on or before the day on which the taxpayer’s fiscal return is to be filed for the taxation year of disposal of the vessel, either an amount at least equal to the tax that would, but for this paragraph, be payable by the taxpayer under Part I of the Act in respect of the proceeds of disposition, or satisfactory security therefor to guarantee that the proceeds of disposition will be used before 1975 for replacement of the vessel.

s. 104R3; O.C. 1981-80, s. 104R3; R.R.Q., 1981, c. I-3, r. 1, s. 104R3; O.C. 35-96, s. 5; O.C. 1707-97, s. 16; O.C. 134-2009, s. 1.

104R4. In the case of a disposition referred to in section 104R3, the taxpayer may, within the time prescribed under the Act for the filing of the taxpayer’s fiscal return for the taxation year in which the taxpayer disposed of the vessel, elect to have the vessel considered as a prescribed class or, if any conversion cost in respect of the vessel has been included in a separate prescribed class, have the vessel transferred to that class and, if the taxpayer so elects, the vessel is deemed to have been so transferred immediately before the disposition by the taxpayer.

However, this section does not apply unless the proceeds of disposition of the vessel exceed the amount that would be the undepreciated capital cost of property of the class to which the vessel would be so transferred.

s. 104R4; O.C. 1981-80, s. 104R4; R.R.Q., 1981, c. I-3, r. 1, s. 104R4; O.C. 1282-2003, s. 14; O.C. 134-2009, s. 1.

104R5. If section 104R3 does not apply to the proceeds of disposition of a vessel or if the taxpayer does not make an election under section 104R4 within the time prescribed therein, the taxpayer may, on disposal of a vessel owned by the taxpayer, elect to have the proceeds that would be included in computing the taxpayer’s income for the year under Part I of the Act, treated as proceeds of disposition of property of another prescribed class that includes a vessel owned by the taxpayer.

s. 104R5; O.C. 1981-80, s. 104R5; R.R.Q., 1981, c. I-3, r. 1, s. 104R5; O.C. 134-2009, s. 1.

104R6. Where a separate prescribed class has been constituted under the Act, the Provincial Income Tax Act (R.S.Q. 1964, c. 69) or the Corporation Tax Act (R.S.Q. 1964, c. 67), by virtue of the conversion of a vessel, owned by a taxpayer and the vessel is disposed of by the taxpayer without making an election under section 104R4, such separate prescribed class is deemed to have been transferred to the class in which the vessel was included immediately before the disposition thereof.

s. 104R6; O.C. 1981-80, s. 104R6; R.R.Q., 1981, c. I-3, r. 1, s. 104R6; O.C. 134-2009, s. 1.

104R7. All or any part of a deposit made under paragraph b of section 104R3, under the Provincial Income Tax Act (R.S.Q. 1964, c. 69) or under the Corporation Tax Act (R.S.Q. 1964, c. 67) may be paid out to or on behalf of any person who, before 1975 and under the conditions in paragraph a of section 104R3, replaces the vessel disposed of by another vessel

(a)  that was constructed in Canada;

(b)  that is registered in Canada or in any place to which the British Commonwealth Merchant Shipping Agreement signed at London on 10 December 1931 applies; and

(c)  in respect of the capital cost of which no allowance has been made to any other taxpayer under this Act, the Provincial Income Tax Act, or the Corporation Tax Act.

Similarly, such amount may be paid out to or on behalf of any person who incurs any conversion cost with respect to a vessel the person owns and that is described in subparagraph b of the first paragraph.

However, the ratio of the amount paid out to the amount of the deposit may not exceed the ratio of the capital cost of the vessel or the conversion cost of the vessel, as the case may be, to the proceeds of disposition of the vessel disposed of and any deposit or part of a deposit not so paid out before the month of July 1975 or not paid out pursuant to section 104R8 is assigned to the Consolidated Revenue Fund.

s. 104R7; O.C. 1981-80, s. 104R7; R.R.Q., 1981, c. I-3, r. 1, s. 104R7; O.C. 134-2009, s. 1.

104R8. Despite any other provision of this chapter, where a deposit was made by a taxpayer under paragraph b of section 104R3 and the proceeds of disposition in respect of which the deposit was made are not used by any person before 1975, in accordance with the conditions in paragraph a of that section, to acquire a vessel described in subparagraphs a to c of the first paragraph of section 104R7 or to incur any conversion cost with respect to a vessel owned by that person and described in subparagraph b of the first paragraph of that section, the Minister may refund to the taxpayer the deposit, or the part thereof not paid out to the taxpayer under that section.

Where a refund is so made, the taxpayer is required, in computing the income of the taxpayer for the taxation year in which the vessel was disposed of, to add that proportion of the amount that would have been included in computing the taxpayer’s income for the year under Part I of the Act, had the deposit not been made under paragraph b of section 104R3, that the portion of the proceeds of disposition not so used before 1975 as replacement of a vessel is of the total proceeds of disposition.

s. 104R8; O.C. 1981-80, s. 104R8; R.R.Q., 1981, c. I-3, r. 1, s. 104R8; O.C. 134-2009, s. 1.

104R9. Where a taxpayer has made an election under section 104R4 with respect to a vessel and the proceeds of disposition of that vessel have been used before 1975 for replacement thereof, under conditions mentioned in paragraph a of section 104R3, or where a refund is made under section 104R8, the Minister is to issue such reassessments of tax, interest or penalties as are necessary to give effect to sections 104R3, 104R4 and 104R8.

This section also applies with respect to an election under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

s. 104R9; O.C. 1981-80, s. 104R9; R.R.Q., 1981, c. I-3, r. 1, s. 104R9; O.C. 35-96, s. 86; O.C. 134-2009, s. 1.

104R10. For the purposes of this Title, of sections 130.1, 142 and 149 of the Act, and of the regulatory provisions made under paragraph a of section 130 of the Act, a vessel in respect of which any conversion cost is incurred after 23 March 1967 is, to the extent of the conversion cost, deemed to be included in a separate prescribed class.

s. 104R10; O.C. 1981-80, s. 104R10; R.R.Q., 1981, c. I-3, r. 1, s. 104R10; O.C. 134-2009, s. 1.

CHAPTER VIII DEVELOPMENT BONDS

c. II.1; O.C. 2962-82, s. 8; O.C. 500-83, s. 8; O.C. 134-2009, s. 1.

119.2R1. The expression “qualified corporation” in section 119.2 of the Act means a taxable Canadian corporation that is a cooperative, within the meaning of section 119.2R2, all or substantially all of the assets of which are used in a qualified business carried on by it in Canada, or a small business corporation.

s. 119.2R1; O.C. 2962-82, s. 8; O.C. 500-83, s. 8; O.C. 615-88, s. 4; O.C. 1232-91, s. 3; O.C. 1633-96, s. 3; O.C. 1707-97, s. 98; O.C. 1466-98, s. 19; O.C. 134-2009, s. 1.

119.2R2. For the purposes of section 119.2R1, a cooperative is a cooperative incorporated under a statute of Québec, of another province or of Canada for the purposes of marketing natural products belonging to its members or customers or acquired from those persons, carrying out any processing operation necessary or related to that marketing, purchasing supplies, materials or necessary household articles for its members or customers, or for resale to its members or customers, or for furnishing services to them and for which

(a)  the Act under which it was incorporated, its charter, articles of association, by-laws or contracts with its members or customers, give reason to believe that payments will be made to them in proportion to their purchases;

(b)  none of the members, except other cooperatives, has more than one vote in the conduct of the corporation’s business;

(c)  at least 90% of the members are individuals, other cooperatives, or corporations or partnerships that carry on the business of farming; and

(d)  at least 90% of its shares are held by members described in paragraph c or by trusts governed by TSFAs, registered retirement income funds, registered education savings plans or registered retirement savings plans, the annuitants, holders or subscribers under which are members described in that paragraph.

s. 119.2R3; O.C. 2962-82, s. 8; O.C. 500-83, s. 8; O.C. 67-96, s. 17; O.C. 1707-97, s. 98; O.C. 134-2009, s. 1; O.C. 66-2016, s. 1.

CHAPTER IX INDEXED DEBT OBLIGATIONS

c. III.0.1; O.C. 1454-99, s. 10; O.C. 134-2009, s. 1.

125.0.1R1. In this chapter,

“excluded payment” with respect to a taxpayer for a taxation year means, subject to the second paragraph, an indexed payment under an indexed debt obligation where

(a)  the non-indexed debt obligation associated with the indexed debt obligation provides for the payment, at least annually, of interest at a single fixed rate; and

(b)  the indexed payment corresponds to one of the interest payments referred to in paragraph a;

“indexed payment” means, in relation to an indexed debt obligation, an amount payable under the obligation that is determined by reference to the purchasing power of money;

“inflation adjustment period” of an indexed debt obligation means, in relation to a taxpayer,

(a)  where the taxpayer acquires and disposes of the taxpayer’s interest in the obligation in the same regular adjustment period of the obligation, the period that begins when the taxpayer acquires the interest in the obligation and ends when the taxpayer disposes of the interest; and

(b)  in any other case, each of the following consecutive periods:

i.  the period that begins when the taxpayer acquires the taxpayer’s interest in the obligation and ends at the end of the regular adjustment period of the obligation in which the taxpayer acquires the interest in the obligation,

ii.  each succeeding regular adjustment period of the obligation throughout which the taxpayer holds the interest in the obligation, and

iii.  where the taxpayer does not dispose of the interest in the obligation at the end of a regular adjustment period of the obligation, the period that begins immediately after the last period referred to in subparagraph i or ii and that ends when the taxpayer disposes of the interest in the obligation;

“regular adjustment period” of an indexed debt obligation means

(a)  where the terms or conditions of the obligation provide that, while the obligation is outstanding, indexed payments are to be made at regular intervals not exceeding 12 months in length, each of the following periods:

i.  the period that begins when the obligation is issued and ends when the first indexed payment is required to be made, and

ii.  each succeeding period beginning when an indexed payment is required to be made and ending when the next indexed payment is required to be made;

(b)  where paragraph a does not apply and the obligation is outstanding for less than 12 months, the period that begins when the obligation is issued and ends when the obligation ceases to be outstanding; and

(c)  in any other case, each of the following periods:

i.  the 12-month period that begins when the obligation is issued,

ii.  each succeeding 12-month period throughout which the obligation is outstanding, and

iii.  where the obligation ceases to be outstanding at a time other than the end of a 12-month period referred to in subparagraph i or ii, the period that commences immediately after the last period referred to in those subparagraphs and that ends when the obligation ceases to be outstanding.

For the purposes of the definition of “excluded payment” in the first paragraph, an excluded payment does not include payments under an indexed debt obligation where, at any time in the taxation year, the taxpayer’s proportionate interest in a payment to be made under the obligation after that time differs from the taxpayer’s proportionate interest in any other payment to be made under the obligation after that time.

s. 125.0.1R1; O.C. 1454-99, s. 10; O.C. 134-2009, s. 1.

125.0.1R2. For the purposes of this chapter, the non-indexed debt obligation associated with an indexed debt obligation is the debt obligation that would result if the indexed debt obligation were amended to eliminate all adjustments determined by reference to changes in the purchasing power of money.

s. 125.0.1R2; O.C. 1454-99, s. 10; O.C. 134-2009, s. 1.

125.0.1R3. For the purposes of paragraph a of section 125.0.1 of the Act, where, at any time in a taxation year of a taxpayer, the taxpayer holds an interest in an indexed debt obligation, the amount determined in accordance with the second paragraph is deemed to be interest received or receivable by the taxpayer in the year in respect of the obligation.

The amount to which the first paragraph refers is equal to the aggregate of

(a)  the amount determined by the formula

A – B;

(b)  where the non-indexed debt obligation associated with the indexed debt obligation is an obligation that is described in any of subparagraphs a to d of the first paragraph of section 92.5R3, the amount of interest that would be determined in accordance with section 92.5R4 to accrue to the taxpayer in respect of the non-indexed debt obligation in the particular period described in the fifth paragraph if, for the purposes of that section 92.5R4, the particular period were a taxation year of the taxpayer and the taxpayer’s interest in the indexed debt obligation were an interest in the non-indexed debt obligation.

In the formula in subparagraph a of the second paragraph,

(a)  A is the aggregate of all amounts each of which is the amount by which the amount payable in respect of the taxpayer’s interest in an indexed payment under the indexed debt obligation, other than a payment that is an excluded payment with respect to the taxpayer for the year, has, because of a change in the purchasing power of money, increased over an inflation adjustment period of the indexed debt obligation that ends in the year, exceeds

(b)  B is the aggregate of

i.  the aggregate of all amounts each of which is that portion of the aggregate determined in accordance with subparagraph a that is required, otherwise than because of section 125.0.1 of the Act, to be included in computing the taxpayer’s income for the year or a preceding taxation year;

ii.  the aggregate of all amounts each of which is the amount by which the amount payable in respect of the taxpayer’s interest in an indexed payment under the indexed debt obligation, other than a payment that is an excluded payment with respect to the taxpayer for the year, has, because of a change in the purchasing power of money, decreased over an inflation adjustment period of the obligation that ends in the year.

For the purpose of determining the amount by which an indexed payment under an indexed debt obligation has increased or decreased over a period because of a change in the purchasing power of money, the amount of the indexed payment is determined using the method for computing the amount of the payment at the time it is to be made, adjusted in a reasonable manner to take into account the earlier date of computation.

The particular period to which subparagraph b of the second paragraph refers is the period that begins at the beginning of the first inflation adjustment period of the indexed debt obligation in respect of the taxpayer that ends in the year, and ends at the end of the last inflation adjustment period of the indexed debt obligation in respect of the taxpayer that ends in the year.

s. 125.0.1R3; O.C. 1454-99, s. 10; O.C. 134-2009, s. 1.

125.0.1R4. For the purposes of paragraph b of section 125.0.1 of the Act, where, at any time in a taxation year of a taxpayer, the taxpayer holds an interest in an indexed debt obligation, the amount by which the amount determined in accordance with subparagraph b of the third paragraph of section 125.0.1R3 in respect of the taxpayer’s interest in the obligation exceeds the amount determined in accordance with subparagraph a of that paragraph in respect of the taxpayer’s interest in the obligation, is deemed to be interest paid or payable in respect of the year by the taxpayer in respect of the obligation.

s. 125.0.1R4; O.C. 1454-99, s. 10; O.C. 134-2009, s. 1.

125.0.2R1. For the purposes of subparagraph a of the first paragraph of section 125.0.2 of the Act, where at any time in a taxation year of a taxpayer an indexed debt obligation is an obligation of the taxpayer, the amount that would be determined in accordance with subparagraph a of the second paragraph of section 125.0.1R3 in respect of the taxpayer for the year if, at each time at which the obligation is an obligation of the taxpayer, the taxpayer were the holder of the obligation and not the debtor under the obligation, is deemed to be interest payable in respect of the year by the taxpayer in respect of the obligation.

s. 125.0.2R1; O.C. 1454-99, s. 10; O.C. 134-2009, s. 1.

125.0.2R2. For the purposes of subparagraph b of the first paragraph of section 125.0.2 of the Act, where at any time in a taxation year of a taxpayer an indexed debt obligation is an obligation of the taxpayer, the amount that would be determined in accordance with section 125.0.1R4 in respect of the taxpayer for the year if, at each time at which the obligation is an obligation of the taxpayer, the taxpayer were the holder of the obligation and not the debtor under the obligation, is deemed to be interest received or receivable by the taxpayer in the year in respect of the obligation.

s. 125.0.2R2; O.C. 1454-99, s. 10; O.C. 134-2009, s. 1.

CHAPTER X LEASING PROPERTIES

c. III.1; O.C. 366-94, s. 3; O.C. 134-2009, s. 1.

125.1R1. For the purposes of section 125.1 of the Act, the following properties are prescribed:

(a)  an exempt property, within the meaning assigned to that expression by the first paragraph of section 130R71, other than a property leased before 3 February 1990 that is

i.  a truck or a tractor that is designed to be used on public highways and has a “gross vehicle weight rating” within the meaning of the Motor Vehicle Safety Regulations made under the Motor Vehicle Safety Act (S.C. 1993, c. 16) of at least 11,778 kg,

ii.  a trailer that is designed to be used on public highways and to be hauled, under normal operating conditions, by a truck or tractor described in subparagraph i, or

iii.  a railway car; and

(b)  a property that is the subject of a lease, where the fair market value of the corporeal property that is the subject of that lease, other than exempt property within the meaning assigned to that expression by the first paragraph of section 130R71, did not exceed, at the time the lease was entered into, $25,000.

s. 125.1R1; O.C. 366-94, s. 3; O.C. 35-96, s. 86; O.C. 134-2009, s. 1; O.C. 164-2021, s. 2.

125.1R2. For the purposes of paragraph d of section 125.1 of the Act, the rate of interest that is prescribed at any time is the rate equal to the rate that is determined for the month including that time pursuant to section 4302 of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

s. 125.1R2; O.C. 366-94, s. 3; O.C. 35-96, s. 86; O.C. 134-2009, s. 1.

CHAPTER XI AMOUNT OWING BY A PERSON NOT RESIDENT IN CANADA

c. IV; O.C. 1981-80, title V, c. IV; O.C. 2456-80, s. 4; R.R.Q., 1981, c. I-3, r. 1, title V, c. IV; O.C. 1155-2004, s. 11; O.C. 134-2009, s. 1.

127.6R1. For the purposes of section 127.6 of the Act, the rate of interest prescribed, for any particular period, is the rate that corresponds to the rate determined, for that period, under subparagraph i of paragraph a of section 4301 of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

s. 127.6R1; O.C. 1155-2004, s. 13; O.C. 134-2009, s. 1.

127.12R1. For the purposes of section 127.12 of the Act, the prescribed tax is that referred to in Part XIII of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)).

s. 127.12R1; O.C. 1155-2004, s. 13; O.C. 134-2009, s. 1.

127.17R1. For the purposes of section 127.17 of the Act, the rate of interest prescribed, for any particular period, is the rate that corresponds to the rate that would be determined, for that period, under paragraph a of section 4301 of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) if the reference in subparagraph i of that paragraph to “the next higher whole percentage where the mean is not a whole percentage” were read as “2 decimal points”.

O.C. 117-2019, s. 8.

TITLE XII ALLOWANCES IN RESPECT OF CAPITAL COST

title VI; O.C. 1981-80, title VI; R.R.Q., 1981, c. I-3, r. 1, title VI; O.C. 134-2009, s. 1.

CHAPTER I DEDUCTIONS

c. I; O.C. 1981-80, title VI, c. I; R.R.Q., 1981, c. I-3, r. 1, title VI, c. I; O.C. 134-2009, s. 1; S.Q. 2023, c. 2, s. 94.

130R0.1. The amounts described in sections 130R0.2 and 130R1 are the prescribed amounts of the capital cost of property that a taxpayer may deduct in computing income under paragraph a of section 130 of the Act and under other special provisions of that Act.

S.Q. 2023, c. 2, s. 95.

130R0.2. An eligible person or partnership may deduct, in computing income for a taxation year, as allowances in respect of capital cost of property, in addition to the amount prescribed by section 130R1, an amount equal to the least of

(a)  the eligible person or partnership’s immediate expensing limit for the taxation year;

(b)  the undepreciated capital cost, as of the end of the taxation year, of property that is designated immediate expensing property of the eligible person or partnership for the taxation year, such undepreciated capital cost being determined before making any deduction under this Title for the taxation year; and

(c)  if the eligible person or partnership is not a Canadian-controlled private corporation, the income, if any, computed without reference to paragraph a of section 130 of the Act, earned from a source that is a business or property in which the relevant designated immediate expensing property is used for the eligible person or partnership’s taxation year.

S.Q. 2023, c. 2, s. 95.

130R0.3. Before computing any other deduction permitted under this Title or any of the provisions of Part XI of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) that are referred to in paragraphs a and b of section 130R1, the amount of any deduction made under section 130R0.2 by an eligible person or partnership in respect of a designated immediate expensing property of a prescribed class is to be subtracted from the undepreciated capital cost of the particular class to which the property belongs.

S.Q. 2023, c. 2, s. 95.

130R0.4. For the purposes of paragraph b of section 130R0.2, in respect of property of a class in Schedule B that is immediate expensing property of an eligible person or partnership solely because of subparagraph i of paragraph c of the definition of “immediate expensing property” in section 130R3, and subject to the second paragraph, an amount incurred by a person or partnership in respect of the property is not to be included in determining the undepreciated capital cost to the eligible person or partnership as of the end of the taxation year of property that is designated immediate expensing property for the taxation year, such undepreciated capital cost being determined before making any deduction under this Title for the taxation year, if the amount is incurred

(a)  before 19 April 2021, where the eligible person or partnership is a Canadian-controlled private corporation; or

(b)  before 1 January 2022, where the eligible person or partnership is an individual or a Canadian partnership.

The first paragraph does not apply where

(a)  the property was acquired by an eligible person or partnership from another person or partnership (in this paragraph referred to as the “transferee” and the “transferor”, respectively) and the acquisition occurred

i.  after 18 April 2021, where the transferee is a Canadian-controlled private corporation, or

ii.  after 31 December 2021, where the transferee is an individual or a Canadian partnership;

(b)  the transferee was either

i.  the eligible person or partnership, or

ii.  a person or partnership that does not deal at arm’s length with the eligible person or partnership; and

(c)  the transferor

i.  dealt at arm’s length with the transferee, and

ii.  held the property as property described in the inventory of a business carried on by the transferor.

S.Q. 2023, c. 2, s. 95.

130R1. A taxpayer may deduct, in computing the taxpayer’s income for a taxation year, as allowances in respect of capital cost of property, the amounts prescribed by Chapters II to VII and by the following provisions of Part XI of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)):

(a)  paragraphs d and n to q of subsection 1 of section 1100; and

(b)  subsection 11 of section 1100 and subsections 12 and 13 of section 1102.

s. 130R1; O.C. 1981-80, s. 130R1; R.R.Q., 1981, c. I-3, r. 1, s. 130R1; O.C. 1697-92, s. 5; O.C. 35-96, s. 86; O.C. 134-2009, s. 1; S.Q. 2023, c. 2, s. 96.

CHAPTER II INTERPRETATION

c. II; O.C. 1981-80, title VI, c. II; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, title VI, c. II; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 134-2009, s. 1.

130R2. Where the taxpayer is an individual and the taxpayer’s income for the taxation year includes income from a business, the fiscal period of which does not coincide with the calendar year, in respect of the depreciable properties acquired for the purpose of gaining or producing income from the business, a reference in this Title to “the taxation year” is deemed to be a reference to the fiscal period of the business and a reference to “the end of the taxation year” is deemed to be a reference to the end of the fiscal period of the business.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1.

130R3. In this Title and Schedule B referred to therein, unless the context indicates otherwise,

“accelerated investment incentive property” means property of a taxpayer, other than property included in any of Classes 54 to 56 in Schedule B, that

(a)  is acquired by the taxpayer after 20 November 2018 and is considered to be available for use before 1 January 2028; and

(b)  meets either of the following conditions:

i.  the property is not property in respect of which an amount has been deducted under paragraph a of section 130 or the second paragraph of section 130.1 of the Act by a person or partnership for a taxation year ending before the time the property was acquired by the taxpayer, or

ii.  the property was not

(1)  acquired in circumstances where the taxpayer is deemed to have been allowed to deduct or deducted an amount under paragraph a of section 130 of the Act in respect of the property in computing income for previous taxation years, or where the undepreciated capital cost of depreciable property of a prescribed class of the taxpayer was reduced by an amount determined by reference to the amount by which the capital cost of the property to the taxpayer exceeds its cost amount, or

(2)  previously owned or acquired by the taxpayer or by a person or partnership with which the taxpayer did not deal at arm’s length at any time when the property was owned or acquired by the person or partnership;

“bitumen development phase” of a taxpayer’s oil sands project means a development phase that expands the oil sands project’s capacity to extract and initially process tar sands to produce bitumen or a similar product;

“Canadian field processing” means

(a)  the processing in Canada of raw natural gas at a field separation and dehydration facility;

(b)  the processing in Canada of raw natural gas at a natural gas processing plant, to any stage that is not beyond the stage of natural gas that is acceptable to a common carrier of natural gas;

(c)  the processing in Canada of hydrogen sulphide derived from raw natural gas to any stage that is not beyond the marketable sulphur stage;

(d)  the processing in Canada of natural gas liquids, at a natural gas processing plant where the input is raw natural gas derived from a natural accumulation of natural gas, to any stage that is not beyond the marketable liquefied petroleum stage or its equivalent; or

(e)  the processing in Canada of crude oil, other than heavy crude oil recovered from an oil or gas well or a tar sands deposit, recovered from a natural accumulation of petroleum to any stage that is not beyond the crude oil stage or its equivalent;

“Canadian film or video production” means a film or video production of a corporation, other than a Québec film production, in respect of which the Minister of Canadian Heritage has issued to the corporation, for the purposes of section 125.4 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), a certificate that has not been revoked;

“certified feature film” has the meaning assigned by subsection 2 of section 1104 of the Income Tax Regulations made under the Income Tax Act;

“certified production” has the meaning assigned by subsection 2 of section 1104 of the Income Tax Regulations made under the Income Tax Act, but does not include a motion picture film or a video tape that is a certified Québec film or a Québec film production;

“certified Québec film” for a taxation year means a motion picture film or a video tape recognized as a Québec film by the Institut québécois du cinéma or the Société de développement des entreprises culturelles and in respect of which

(a)  the Institut québécois du cinéma or the Société de développement des entreprises culturelles has issued a certificate that has not been revoked, certifying that it is a Québec film for which the work of scenery, filming or taping and editing began after 31 December 1982 and for which the principal taping or filming work began before the end of the taxation year but not later than 18 December 1990, unless it is a film or a tape described in subparagraph b or c of the fourth paragraph in this section, or was completed not later than 60 days after the end of the taxation year; and

(b)  unless it is a film or a tape that would be described in section 726.4.7.2 of the Act if the references made therein to an individual read as references to a taxpayer, the ministère du Revenu made, not later than at the end of the taxation year during which the film or tape was acquired, an advance ruling confirming the rate of depreciation applicable in respect of the film or tape and, where applicable, the percentage indicated, applicable for an individual referred to in section 726.4.6 or 726.4.7 of the Act, in respect of the film or tape;

“completion” of a specified development phase of a taxpayer’s oil sands project means the first attainment of a level of average output, attributable to the specified development phase and measured over a 60-day period, equal to at least 60% of the planned level of average daily output, as determined in paragraph b of the definition of “specified development phase”, in respect of that phase;

“computer software” includes system software and a right or licence to use computer software;

“data network infrastructure equipment” means network infrastructure equipment that controls, transfers, modulates or directs data, and that operates in support of telecommunications applications such as e-mail, instant messaging, audio- and video-over-Internet Protocol or Web browsing, Web searching and Web hosting, including data switches, multiplexers, routers, remote access servers, hubs, domain name servers and modems, but does not include

(a)  network equipment, other than radio network equipment, that operates in support of telecommunications applications, if the bandwidth made available by that equipment to a single end-user of the network is 64 kbits/s or less in either direction;

(b)  radio network equipment that operates in support of wireless telecommunications applications unless the equipment supports digital transmission on a radio channel;

(c)  network equipment that operates in support of broadcast telecommunications applications and that is unidirectional;

(d)  network equipment that is end-user equipment, including telephone sets, personal digital assistants and facsimile transmission devices;

(e)  equipment that is described in subparagraph i of the first paragraph of Class 10 in Schedule B, subparagraph p of the second paragraph of that class or any of Classes 45, 50 and 52 in that schedule;

(f)  wires or cables, or similar property; and

(g)  structures;

“designated asset” in respect of a development phase of a taxpayer’s oil sands project, means a property that is a building, a structure, machinery or equipment and is, or is an integral and substantial part of,

(a)  in the case of a bitumen development phase,

i.  a crusher,

ii.  a froth treatment plant,

iii.  a primary separation unit,

iv.  a steam generation plant,

v.  a cogeneration plant, or

vi.  a water treatment plant; or

(b)  in the case of an upgrading development phase,

i.  a gasifier unit,

ii.  a vacuum distillation unit,

iii.  a hydrocracker unit,

iv.  a hydrotreater unit,

v.  a hydroprocessor unit, or

vi.  a coker;

“designated costs of underground storage” for a designated taxpayer means the costs incurred by the taxpayer, after 11 December 1979, for development of a well, mine or other similar underground property for the purposes of storing petroleum, natural gas related hydrocarbons in Canada;

“designated immediate expensing property”, for a taxation year, means property of an eligible person or partnership, in respect of which the following conditions are met:

(a)  the property is immediate expensing property of the eligible person or partnership;

(b)  the property became available for use by the eligible person or partnership in the taxation year; and

(c)  the eligible person or partnership designates, in the prescribed form, the property as designated immediate expensing property and the prescribed form is filed with the Minister for the taxation year within the following time limit:

i.  if the eligible person or partnership is a partnership, on or before the day that is 12 months after the day on which any member of the partnership is required to file an information return under section 1086R78 for the fiscal period to which the designation relates, or

ii.  in any other case, on or before the day that is 12 months after the eligible person or partnership’s filing-due date for the taxation year to which the designation relates;

“development phase” of a taxpayer’s oil sands project means the acquisition, construction, fabrication or installation of a group of assets, by or on behalf of the taxpayer, that may reasonably be considered to constitute a discrete expansion in the capacity of the oil sands project when complete, including the initiation of a new oil sands project;

“eligible liquefaction building” of a taxpayer, in respect of an eligible liquefaction facility of the taxpayer, means property, other than property that has been used or acquired for use for any purpose before it was acquired by the taxpayer or a residential building, acquired by the taxpayer after 19 February 2015 and before 1 January 2025 that is included in Class 1 in Schedule B because of paragraph q of that class and that is used as part of the eligible liquefaction facility;

“eligible liquefaction equipment” in respect of an eligible liquefaction facility of a taxpayer, means property of the taxpayer that is used in connection with the liquefaction of natural gas and that

(a)  is acquired by the taxpayer after 19 February 2015 and before 1 January 2025;

(b)  is included in Class 47 in Schedule B because of paragraph b of that class;

(c)  has not been used or acquired for use for any purpose before it was acquired by the taxpayer;

(d)  is not excluded equipment; and

(e)  is used as part of the eligible liquefaction facility;

“eligible liquefaction facility” of a taxpayer means a self-contained system located in Canada, including buildings, structures and equipment, that is used or intended to be used by the taxpayer for the purpose of liquefying natural gas;

“eligible non-residential building” means a taxpayer’s building, other than a building that was used, or acquired for use, by any person or partnership before 19 March 2007, that is located in Canada, is included in Class 1 in Schedule B and is acquired by the taxpayer after 18 March 2007 to be used by the taxpayer, or a lessee of the taxpayer, for a non-residential use;

“eligible person or partnership”, for a taxation year, means

(a)  a corporation that is a Canadian-controlled private corporation throughout the year;

(b)  an individual, other than a trust, who is resident in Canada throughout the year; or

(c)  a Canadian partnership all of the members of which are, throughout the period, persons described in paragraph a or b;

“excluded equipment” means

(a)  pipelines, other than pipelines used to move natural gas, or its components that are extracted, within an eligible liquefaction facility during the liquefaction process or used to move liquefied natural gas;

(b)  equipment used exclusively to regasify liquefied natural gas; and

(c)  electrical generation equipment;

“gas or oil well equipment” includes equipment, structures and pipelines acquired to be used in a gas or oil field in the production therefrom of natural gas or crude oil, other than a well casing, and a pipeline acquired to be used solely for transmitting gas to a natural gas processing plant, but does not include

(a)  equipment or structures acquired for the refining of oil or the processing of natural gas, including the separation therefrom of liquid hydrocarbons, sulphur or other joint products or by-products; or

(b)  a pipeline for removal or for collection for immediate removal of natural gas or crude oil from a gas or oil field, except a pipeline acquired to be used solely for transmitting gas to a natural gas processing plant;

“general-purpose electronic data processing equipment” means electronic equipment that, in its operation, requires an internally stored computer program that

(a)  is executed by the equipment;

(b)  can be altered by the user of the equipment;

(c)  instructs the equipment to read and select, alter or store data from an external medium such as a card, disk or tape; and

(d)  depends upon the characteristics of the data being processed to determine the sequence of its execution;

“immediate expensing property”, for a taxation year, means a particular property of a class in Schedule B of an eligible person or partnership, other than accelerated investment incentive property that is qualified intellectual property and that became available for use before 1 January 2024, accelerated investment incentive property included in Class 50 in Schedule B that is used primarily in Québec in the course of a business and that became available for use before 1 January 2024, or property included in any of Classes 1 to 6, 14.1, 17, 47, 49 and 51 in that schedule, where the particular property

(a)  is acquired by the eligible person or partnership

i.  after 18 April 2021, where the eligible person or partnership is a Canadian-controlled private corporation, or

ii.  after 31 December 2021, where the eligible person or partnership is an individual or a Canadian partnership;

(b)  becomes available for use

i.  before 1 January 2025, where the eligible person or partnership is an individual or a Canadian partnership all the members of which are individuals throughout the taxation year, or

ii.  before 1 January 2024, in any other case; and

(c)  meets any of the following conditions:

i.  the particular property

(1)  has not been used for any purpose before it was acquired by the eligible person or partnership, and

(2)  is not a property in respect of which an amount has been deducted by a person or partnership under paragraph a of section 130 or the second paragraph of section 130.1 of the Act for a taxation year that ends before the time the property was acquired by the eligible person or partnership, or

ii.  the particular property

(1)  was not acquired in circumstances where the eligible person or partnership was deemed to have been allowed to deduct or deducted an amount under paragraph a of section 130 of the Act in respect of the particular property in computing income for previous taxation years, or where the undepreciated capital cost of depreciable property of a class in Schedule B of the eligible person or partnership was reduced by an amount determined by reference to the amount by which the capital cost of the particular property to the eligible person or partnership exceeds its cost amount, and

(2)  was not previously owned or acquired by the eligible person or partnership or by a person or partnership with which the eligible person or partnership did not deal at arm’s length at any time when the property was owned or acquired by the person or partnership;

“oil sands project” of a taxpayer means an undertaking by the taxpayer for the extraction of tar sands from a mineral resource owned by the taxpayer, which undertaking may include the processing of the tar sands to a stage that is not beyond the crude oil stage or its equivalent;

“oil sands property” of a taxpayer means property acquired by the taxpayer for the purpose of earning income from an oil sands project of the taxpayer;

“ore” includes any ore from a mineral resource that has been processed to any stage that is prior to the prime metal stage or its equivalent;

“overburden removal cost” of a taxpayer means any expense incurred by the taxpayer in clearing or removing overburden from a mine in Canada that the taxpayer operates or owns, to the extent that the expense

(a)  is incurred between 16 November 1978 and 1 January 1988 and after the mine has come into production in reasonable commercial quantities;

(b)  has not been deducted by the taxpayer in computing the taxpayer’s income at the end of the taxation year during which it was incurred; and

(c)  is not, in whole or in part, deductible otherwise than pursuant to paragraph a of section 130 of the Act in computing the income of the taxpayer for a taxation year subsequent to that in which it was incurred;

“preliminary work activity” means activity that is preliminary to the acquisition, construction, fabrication or installation, by or on behalf of a taxpayer, of designated assets in respect of the taxpayer’s oil sands project including, without limiting the generality of the foregoing, the following activities:

(a)  obtaining permits or regulatory approvals;

(b)  performing design or engineering work;

(c)  conducting feasibility studies;

(d)  conducting environmental assessments;

(e)  clearing or excavating land;

(f)  building roads; and

(g)  entering into contracts;

“qualified intellectual property” of a taxpayer means incorporeal property, within the meaning that would be assigned to that expression by the first paragraph of section 130R10 if the expression were read with “or a right to use patented information” inserted after “patent”, that is acquired by the taxpayer after 3 December 2018 and that

(a)  is included in any of Classes 14, 14.1 and 44 in Schedule B;

(b)  is acquired by the taxpayer in the course of a technology transfer, within the meaning of the first paragraph of section 130R10, or is developed by or on behalf of the taxpayer with a view to enabling the taxpayer to implement an innovation or invention concerning the taxpayer’s business;

(c)  begins to be used within a reasonable time after being acquired or after its development is completed;

(d)  is used, for the period covering the process of implementing the innovation or invention, referred to in this definition as the “implementation period”, only in Québec and primarily in the course of carrying on a business by the taxpayer or, where applicable, by another person who acquired the property in circumstances described in paragraph a or b of section 130R149; in that respect, the incorporeal property is considered to be used only in Québec during the implementation period when it is used as part of the process of implementing the innovation or invention and the efforts to implement the innovation or invention are made only in Québec;

(e)  is not, for the implementation period, property used for the purposes of earning or producing gross revenue consisting of rent or a royalty; and

(f)  is not property acquired from a person or partnership with which the taxpayer does not deal at arm’s length;

“Québec film production” means a motion picture film or a video tape recognized as a Québec film by the Société de développement des entreprises culturelles and in respect of which the Société has made a favourable advance ruling that is in force or has issued a certificate that has not been revoked, certifying that it is a Québec film for which the principal taping or filming work began after 18 December 1990 and before the end of the taxation year, or was completed not later than 60 days after the end of the taxation year;

“railway system” includes a railroad owned or operated by a common carrier, together with all buildings, rolling stock, equipment and other properties pertaining thereto, but does not include a tramway;

“specified development phase” of a taxpayer’s oil sands project means a bitumen development phase or an upgrading development phase of the oil sands project which can reasonably be expected to result in a planned level of average daily output, where that output is bitumen or a similar product in the case of a bitumen development phase, or synthetic crude oil or a similar product in the case of an upgrading development phase, and in respect of which phase,

(a)  not including any preliminary work activity, one or more designated assets was, before 19 March 2007, acquired by the taxpayer, or in the process of being constructed, fabricated or installed, by or on behalf of the taxpayer; and

(b)  the planned level of average daily output is the lesser of,

i.  the level that was the demonstrated intention of the taxpayer as of 19 March 2007 to produce from the specified development phase, and

ii.  the maximum level of output associated with the design capacity, as of 19 March 2007, of the designated assets referred to in paragraph a;

“specified oil sands property” of a taxpayer means oil sands property, acquired by the taxpayer before 1 January 2012, the taxpayer’s use of which is reasonably required

(a)  for a specified development phase of an oil sands project of the taxpayer to reach completion; or

(b)  as part of a bitumen development phase of an oil sands project of the taxpayer, to the extent that the output from the bitumen development phase is required for an upgrading development phase that is a specified development phase of the oil sands project to reach completion, and it is reasonable to conclude that all or substantially all of the output from the bitumen development phase will be so used, and where it was the demonstrated intention of the taxpayer as of 19 March 2007 to produce, from a mineral resource owned by the taxpayer, the bitumen feedstock required for the upgrading development phase to reach completion;

“specified temporary access road” means

(a)  a temporary access road to an oil or gas well in Canada; or

(b)  a temporary access road in Canada, the cost of which would be a Canadian exploration expense under paragraph c or c.1 of section 395 of the Act if section 396 of the Act were read without reference to its paragraphs c and c.1;

“system software” means a combination of computer programs and associated procedures, related technical documentation and data or a right or licence to use such a combination, where the combination

(a)  performs compilation, assembly, mapping, management or processing of other programs;

(b)  facilitates the functioning of a computer system by other programs;

(c)  provides service or utility functions such as media conversion, sorting, merging, system accounting, performance measurement, system diagnostics or programming aids;

(d)  provides general support functions such as data management, report generation or security control; or

(e)  provides general capability to meet widespread categories of problem solving or processing requirements where the attributes of the work to be performed are introduced mainly in the form of parameters, constants or descriptors rather than in program logic;

“tar sands ore” means ore extracted from a deposit of bituminous sands or oil shales;

“taxpayer” includes an eligible person or partnership;

“telegraph system” includes the buildings, structures, general plant and communication and other equipment pertaining thereto;

“telephone system” includes the buildings, structure, general plant and communication and other equipment pertaining thereto;

“television commercial message” has the meaning assigned by subsection 2 of section 1104 of the Income Tax Regulations made under the Income Tax Act;

“tramway or trolley bus system” includes the buildings, structures, rolling stock and general plan and equipment pertaining thereto and, where omnibuses other than trolley buses are operated in connection therewith, includes the properties pertaining to those operations;

“upgrading development phase” of a taxpayer’s oil sands project means a development phase that expands the oil sands project’s capacity to process bitumen or a similar feedstock, all or substantially all of which is from a mineral resource owned by the taxpayer, to the crude oil stage or its equivalent.

In the definition of “certified Québec film” in the first paragraph, for the taxation year concerned, “certified Québec film” does not include a motion picture film or a video tape for which, unless it is a film or a tape described in subparagraph b or c of the fourth paragraph, the principal taping or filming work began after 18 December 1990, or that is acquired

(a)  after the first day of its use for commercial purposes or the first anniversary of the day on which the principal filming or taping work was completed, whichever is earlier;

(b)  from a person to whom the purchaser did not pay cash before the end of the year in an amount at least equal to 5% of the capital cost to the purchaser of the film or the video tape at that time;

(c)  from a person to whom the purchaser gave in total or partial payment for the film or the video tape a bond, debenture, bill, note, hypothecary claim, mortgage or any other similar security under which an amount was payable after the fourth year following the taxation year during which the film or the video tape was purchased;

(d)  from a person not resident in Canada; or

(e)  unless it is a film or a tape that would be described in section 726.4.7.2 of the Act if the references made therein to an individual read as references made to a taxpayer, by a taxpayer or partnership whose financial commitment in the film or tape represents not more than 30% of the capital cost of the film or tape for the taxpayer or partnership, whichever applies.

In subparagraph e of the second paragraph, the expression “financial commitment” of a taxpayer or partnership in a motion picture film or video tape means the amount that would be determined for the taxpayer or partnership in respect of the film or tape under section 726.4.7.4 of the Act if the references made in that section to a certified Québec film were read as references made to the motion picture film or video tape and if the references made therein to an investor who is an individual likewise included an investor that is a corporation.

In the definition of “Québec film production” in the first paragraph, for the taxation year referred to in that definition, “Québec film production” does not include a motion picture or a video tape

(a)  for which the principal taping or filming work began before 19 December 1990;

(b)  for which the principal taping or filming work began after 18 December 1990 and was completed not later than 31 December 1991 and in respect of which the funds for its production were obtained from an individual or a partnership, as the case may be, not later than 28 February 1991;

(c)  that is referred to in paragraph b of section 726.4.7.2 of the Act; or

(d)  that is acquired

i.  after the first day it is used for commercial purposes or the first anniversary of the day on which the principal taping or filming work is completed, whichever is earlier,

ii.  from a person to whom the purchaser does not pay in cash before the end of the year at least 5% of the capital cost to the purchaser of the film or the video tape at that time,

iii.  from a person to whom the purchaser issues in payment or part payment of the film or the video tape, a bond, debenture, bill, note, hypothecary claim, mortgage or similar security under which an amount is payable after the fourth year following the taxation year during which the film or the video tape is acquired, or

iv.  from a person not resident in Canada.

For the purposes of paragraphs b to d of the definition of “Canadian field processing” in the first paragraph,

(a)  gas is not considered to cease to be raw natural gas solely because of its processing in a field separation and dehydration facility until it is received by a common carrier of natural gas; and

(b)  where all or part of a natural gas processing plant is devoted primarily to the recovery of ethane, the plant, or the part of the plant, as the case may be, is considered not to be a natural gas processing plant.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984 c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994 c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 6; O.C. 390-2012, s. 9; O.C. 321-2017, s. 6; O.C. 164-2021, s. 3; S.Q. 2021, c. 18, s. 235; O.C. 90-2023, s. 5; S.Q. 2023, c. 2, s. 97; O.C. 1726-2023, s. 4.

130R3.1. For the purposes of subparagraph i of paragraph b of the definition of “accelerated investment incentive property” in the first paragraph of section 130R3, if the capital cost to a taxpayer of a depreciable property, referred to in this section as the “single property”, includes amounts incurred at different times, then amounts deducted under paragraph a of section 130 or the second paragraph of section 130.1 of the Act in respect of the single property are deemed to have been deducted in respect of a separate property that is not part of the single property to the extent the deducted amounts can reasonably be considered to be in respect of amounts

(a)  incurred before 21 November 2018; or

(b)  incurred after 20 November 2018, if any portion of the single property is considered to have become available for use before the time the single property is first used for the purpose of earning income.

O.C. 90-2023, s. 6.

130R4. For the purposes of sections 130R109 and 130R110, “revenue guarantee” means a contract or other arrangement entitling a taxpayer to receive a minimum rental revenue from a certified feature film, a certified production, a certified Québec film or a Québec film production, or other fixed revenue in respect of a right to the use of such property.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1.

130R5. In this Title and Schedule B referred to therein, unless the provisions of section 130R6 indicates otherwise,

“industrial mineral mine” includes a peat bog or peat deposit but does not include a mineral resource; and

“mineral” includes peat.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1; O.C. 1303-2009, s. 2.

130R6. In Class 10 in Schedule B, “mine“ includes a well for the extraction of material from a deposit of bituminous sands or oil shales or from a deposit of calcium chloride, sylvite or halite.

For the purposes of Class 10 in Schedule B, income from a mine includes income attributable to the processing of

(a)  ore, other than iron ore or tar sands ore, from a mineral resource not owned by the taxpayer, to any stage that is not beyond the prime metal stage or its equivalent,

(b)  iron ore from a mineral resource not owned by the taxpayer, to any stage that is not beyond the pellet stage or its equivalent,

(c)  tar sands ore from a mineral resource not owned by the taxpayer, to any stage that is not beyond the crude oil stage or its equivalent, or

(d)  material extracted by a well from a mineral resource not owned by the taxpayer that is a deposit of bituminous sands or oil shales to any stage that is not beyond the crude oil stage or its equivalent.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1.

130R7. For the purposes of sections 1R5, 130R66 to 130R69.2, 130R143, 130R144, 130R169 to 130R172.2 and Classes 12, 28, 41 and 41.1 in Schedule B,

(a)  “mine” includes a well for the extraction of material from a deposit of bituminous sands or oil shales or from a deposit of calcium chloride, sylvite or halite, and a pit for the extraction of kaolin or tar sands ore, but does not include

i.  an oil or gas well, or

ii.  a sand pit, gravel pit, clay pit, shale pit, peat bog, deposit of peat or a stone quarry, other than a deposit of bituminous sands or oil shales or a kaolin pit;

(b)  all wells of a taxpayer for the extraction of material from one or more deposits of calcium chloride, sylvite or halite, the material produced from which is sent to the same plant for processing, are deemed to be one mine of the taxpayer;

(c)  all wells of a taxpayer for the extraction of material from a deposit of bituminous sands or oil shales that may reasonably be considered to constitute one project, are deemed to be one mine of the taxpayer.

For the purposes of subparagraph a of the first paragraph, “stone quarry” includes a mine producing dimension stone or crushed rock for use as aggregates or for other construction purposes.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1; O.C. 390-2012, s. 10.

130R8. For the purposes of sections 130R66 to 130R69.2, 130R169 to 130R172.2 and Classes 10, 28, 41 and 41.1 in Schedule B, a taxpayer’s income from a mine includes income that may reasonably be attributed to

(a)  the processing by the taxpayer of

i.  ore, other than iron ore or tar sands ore, all or substantially all of which is from a mineral resource owned by the taxpayer to any stage that is not beyond the prime metal stage or its equivalent,

ii.  iron ore all or substantially all of which is from a mineral resource owned by the taxpayer to any stage that is not beyond the pellet stage or its equivalent,

iii.  tar sands ore all or substantially all of which is from a mineral resource owned by the taxpayer to any stage that is not beyond the crude oil stage or its equivalent, or

iv.  material extracted by a well, all or substantially all of which is from a deposit of bituminous sands or oil shales owned by the taxpayer, to any stage that is not beyond the crude oil stage or its equivalent;

(b)  the production by the taxpayer of material from a deposit of bituminous sands or oil shales; and

(c)  the transportation by the taxpayer of ore that would be referred to in any of subparagraphs i to iii of paragraph a if that subparagraph were read without reference to “all or substantially all of which is” and that has been processed by the taxpayer to any stage that is not beyond the stage mentioned in any of those subparagraphs i to iii, as the case may be, to the extent that such transportation is effected through the use of property of the taxpayer that is included in Class 10 in Schedule B because of subparagraph m of the second paragraph of that class or that would be so included if that subparagraph m were read without reference to “property included in Class 28 or” and if subparagraph i of subparagraph e of the first paragraph of Class 41 in that schedule were read without the reference therein to that subparagraph m.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1; O.C. 390-2012, s. 11.

130R9. For the purposes of Classes 41 and 41.1 in Schedule B, gross revenue from a mine includes

(a)  revenue that may reasonably be attributed to the processing by the taxpayer of

i.  ore, other than iron ore or tar sands ore, from a mineral resource owned by the taxpayer to any stage that is not beyond the prime metal stage or its equivalent,

ii.  iron ore from a mineral resource owned by the taxpayer to any stage that is not beyond the pellet stage or its equivalent,

iii.  tar sands ore from a mineral resource owned by the taxpayer to any stage that is not beyond the crude oil stage or its equivalent, or

iv.  material extracted by a well from a mineral resource owned by the taxpayer that is a deposit of bituminous sands or oil shales to any stage that is not beyond the crude oil stage or its equivalent;

(b)  the amount by which any revenue that may reasonably be attributed to the processing by the taxpayer of the following ore or material exceeds the cost to the taxpayer of the ore or material processed:

i.  ore, other than iron ore or tar sands ore, from a mineral resource not owned by the taxpayer, to any stage that is not beyond the prime metal stage or its equivalent,

ii.  iron ore from a mineral resource not owned by the taxpayer to any stage that is not beyond the pellet stage or its equivalent,

iii.  tar sands ore from a mineral resource not owned by the taxpayer to any stage that is not beyond the crude oil stage or its equivalent, and

iv.  material extracted by a well from a mineral resource not owned by the taxpayer that is a deposit of bituminous sands or oil shales to any stage that is not beyond the crude oil stage or its equivalent; and

(c)  revenue that may reasonably be attributed to the production by the taxpayer of material from a deposit of bituminous sands or oil shales.

For the purposes of the first paragraph, gross revenue from a mine does not include revenue that may reasonably be attributed to the addition of diluent, for the purpose of transportation, to material extracted from a deposit of bituminous sands or oil shales.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1; O.C. 390-2012, s. 12.

130R10. In subparagraph t of the first paragraph of Class 12 in Schedule B,

“incorporeal property” means a patent, a licence, a permit, know-how, a commercial secret or other similar property constituting knowledge, but does not include a trade mark, in industrial design, a copyright or other similar property constituting the expression of knowledge;

“technology transfer” means the transmission to a taxpayer of knowledge in the form of know-how, techniques, processes or formulas, with a view to enabling the taxpayer to implement an innovation or invention concerning the taxpayer’s business.

For the purposes of subparagraph t of the first paragraph of Class 12 in Schedule B, an incorporeal property is deemed to be used only in Québec where it is used as part of the process of implementing an innovation or invention and where the efforts to implement that innovation or invention are made only in Québec.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1.

130R11. For the purposes of section 130R98 and of paragraphs b of section 130R123, b of section 130R149 and a of section 130R160, where, but for this section, a taxpayer would be considered to be dealing not at arm’s length with another person as a result of a transaction or series of transactions the principal purpose of which may reasonably be considered to have been to cause one or more of sections 130R98, 130R124, 130R148 and 130R160 to apply in respect of the acquisition of a property, the taxpayer is deemed to be dealing at arm’s length with the other person in respect of the acquisition of that property.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1.

130R11.0.1. For the purposes of this Title and Schedule B, an eligible person or partnership’s immediate expensing limit for a taxation year is $1,500,000 unless the eligible person or partnership is associated, within the meaning of Chapter IX of Title II of Book I of Part I of the Act and section 130R11.0.5, in the year, with one or more other eligible persons or partnerships, in which case, except as otherwise provided in this chapter, its immediate expensing limit is nil.

S.Q. 2023, c. 2, s. 98.

130R11.0.2. Despite section 130R11.0.1, where an eligible person or partnership is associated, within the meaning of Chapter IX of Title II of Book I of Part I of the Act and section 130R11.0.5, in a taxation year, with one or more other eligible persons or partnerships and all those eligible persons or partnerships filed with the Minister in prescribed form an agreement in which they assign, for the purposes of this Title and Schedule B, a percentage to one or more of them for the year, the immediate expensing limit for the year of each of them is equal to

(a)  where the percentage or aggregate of percentages so assigned, as the case may be, does not exceed 100%, the lesser of

i.  the product obtained by multiplying $1,500,000 by the percentage it was so assigned, and

ii.  the amount it was assigned, if applicable, for the year under subsection 3.3 or 3.4 of section 1104 of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) or, if it was not so assigned an amount, zero; or

(b)  in any other case, zero.

Where an amount is assigned to an eligible person or partnership for the year in accordance with subparagraph ii of subparagraph a of the first paragraph, each person that is such an eligible person or partnership and each member of a partnership that is such an eligible person or partnership must notify the Minister of the assignment and enclose with the notice a copy of any document sent to the Minister of National Revenue in connection with the assignment.

S.Q. 2023, c. 2, s. 98.

130R11.0.3. Where one or more eligible persons or partnerships that are associated with each other in a taxation year, within the meaning of Chapter IX of Title II of Book I of Part I of the Act and section 130R11.0.5, have failed to file with the Minister the agreement described in the first paragraph of section 130R11.0.2 or a copy of the documents sent to the Minister of National Revenue, in accordance with the requirement prescribed by that section 130R11.0.2, within 30 days after notice in writing by the Minister has been forwarded to one or more of them that such an agreement or the sending of a copy of such documents is required for the purposes of any assessment of tax under Part I of the Act, the Minister shall, for the purposes of this Title and Schedule B, allocate an amount to one or more of those eligible persons or partnerships for the taxation year.

S.Q. 2023, c. 2, s. 98.

130R11.0.4. Despite sections 130R11.0.1 to 130R11.0.3, the following rules apply:

(a)  where an eligible person or partnership (in this paragraph referred to as the “first entity”) has more than one taxation year ending in the same calendar year and it is associated, within the meaning of Chapter IX of Title II of Book I of Part I of the Act and section 130R11.0.5, in 2 or more of those taxation years with another eligible person or partnership that has a taxation year ending in that calendar year, the immediate expensing limit of the first entity for each particular taxation year ending both in the calendar year in which it is so associated with the other eligible person or partnership and after the first taxation year ending in that calendar year is, subject to paragraph b, an amount equal to the lesser of

i.  its immediate expensing limit for the first taxation year ending in the calendar year, determined in accordance with section 130R11.0.2 or 130R11.0.3, and

ii.  its immediate expensing limit for the particular taxation year ending in the calendar year, determined in accordance with section 130R11.0.2 or 130R11.0.3; and

(b)  where an eligible person or partnership has a taxation year that is less than 51 weeks, its immediate expensing limit for the year is equal to its immediate expensing limit, determined without reference to this section, multiplied by the proportion that the number of days in the year is of 365.

S.Q. 2023, c. 2, s. 98.

130R11.0.5. For the purposes of this Title and Schedule B and for the purpose of determining whether an eligible person or partnership is associated, within the meaning of Chapter IX of Title II of Book I of Part I of the Act, in a taxation year with another eligible person or partnership, the following rules apply:

(a)  if the eligible person or partnership is a partnership,

i.  the partnership is deemed, for the year, to be a corporation having a capital stock of a single class of voting shares divided into 100 issued and outstanding shares,

ii.  each member of the partnership is deemed to own a number of shares of the capital stock of the deemed corporation described in subparagraph i equal either to the agreed proportion, determined in respect of the member for the last fiscal period of the partnership, of the 100 shares referred to in subparagraph i or, if no such agreed proportion has been determined in its respect, to the proportion of 100 that the fair market value, at that time, of the member’s interest in the partnership is of the fair market value, at that time, of the aggregate of the members’ interests in the partnership, and

iii.  the partnership’s fiscal period is deemed to be the taxation year of the deemed corporation referred to in subparagraph i; and

(b)  if the eligible person or partnership is an individual, other than a trust, who carries on a business or has acquired immediate expensing property, the following rules apply:

i.  the individual, in respect of that business or property, is deemed to be a corporation that is controlled by the individual, and

ii.  the corporation’s taxation year is deemed to be the same as the individual’s taxation year.

S.Q. 2023, c. 2, s. 98.

130R11.1. For the purposes of sections 130R0.4 and 130R120.2 and the definitions of “accelerated investment incentive property” and “immediate expensing property” in the first paragraph of section 130R3, a person or a partnership is deemed not to be dealing at arm’s length with another person or partnership, in respect of the acquisition or ownership of a property, where, in the absence of this section, they would be considered to be dealing at arm’s length with each other and it may reasonably be considered that the principal purpose of a transaction or series of transactions was to

(a)  cause the property to qualify as accelerated investment incentive property or immediate expensing property; or

(b)  cause the person or partnership and the other person or partnership to deal at arm’s length with each other.

O.C. 164-2021, s. 4; O.C. 90-2023, s. 7; S.Q. 2023, c. 2, s. 99.

130R12. For the purposes of sections 130R23.1 and 130R52 and Class 29 in Schedule B, “manufacturing or processing” does not include

(a)  farming or fishing;

(b)  logging;

(c)  construction;

(d)  operating an oil or gas well or extracting petroleum or natural gas from a natural accumulation of petroleum or natural gas;

(e)  extracting minerals from a mineral resource;

(f)  processing of

i.  ore, other than iron ore or tar sands ore, from a mineral resource to any stage that is not beyond the prime metal stage or its equivalent,

ii.  iron ore from a mineral resource to any stage that is not beyond the pellet stage or its equivalent, or

iii.  tar sands ore from a mineral resource to any stage that is not beyond the crude oil stage or its equivalent;

(g)  producing industrial minerals;

(h)  producing or processing electrical energy or steam for sale;

(i)  processing natural gas as part of the business of selling or distributing gas in the course of operating a public utility;

(j)  processing heavy crude oil recovered from a natural reservoir in Canada, to a stage that is not beyond the crude oil stage or its equivalent; or

(k)  Canadian field processing.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 7.

130R13. For the purposes of subparagraph d of the first paragraph of Class 34 in Schedule B and the second paragraph of that class, the Minister may revoke the certificate granted if inaccurate information was provided or if the taxpayer does not comply with the plan described in subparagraph d, and a certificate so revoked is null and void from the date on which it was issued.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1.

130R14. In Class 37 in Schedule B, an “amusement park” means a park open to the public where there are sideshows, rides and permanent audiovisual shows.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1.

130R15. For the purposes of this section, section 130R16 and Classes 43.1 and 43.2 in Schedule B,

“basic oxygen furnace gas” means the gas that is produced intermittently in a basic oxygen furnace of a steel mill by the chemical reaction of carbon in molten steel and pure oxygen;

“biogas” means the gas produced by the anaerobic digestion of specified waste material;

“bio-oil” means liquid fuel that is created from wood waste or plant residues using a thermo-chemical conversion process that takes place in the absence of oxygen;

“blast furnace gas” means the gas produced in a blast furnace of a steel mill, by the chemical reaction of carbon in the form of coke, coal or natural gas, the oxygen in air and iron ore;

“digester gas” means a mixture of gases that are produced from the decomposition of organic waste in a digester and that are extracted from an eligible sewage treatment facility;

“distribution equipment” means equipment, other than transmission equipment, used to distribute electrical energy generated by electrical generating equipment;

“district energy equipment” means property that is part of a district energy system and that consists of pipes or pumps used to collect and distribute an energy transfer medium, meters, control equipment, chillers and heat exchangers that are attached to the main distribution line of a district energy system, but does not include

(a)  property used to distribute water that is for consumption, disposal or treatment; or

(b)  property that is part of the internal heating or cooling system of a building;

“district energy system” means a system that is used primarily to provide heating or cooling by continuously circulating, from a central generation unit to one or more buildings through a system of interconnected pipes, an energy transfer medium that is heated or cooled using thermal energy;

“eligible landfill site” means a landfill site that is situated in Canada, or a former landfill site that is situated in Canada, and, if a permit or licence in respect of the site is or was required under any law of Canada or of a province, for which the permit or licence has been issued;

“eligible sewage treatment facility” means a sewage treatment facility that is situated in Canada and for which a permit or licence is issued under any law of Canada or of a province;

“eligible waste fuel” means biogas, bio-oil, digester gas, landfill gas, municipal waste, plant residue, pulp and paper waste and wood waste;

“eligible waste management facility” means a waste management facility that is situated in Canada and for which a permit or licence is issued under any law of Canada or of a province;

“enhanced combined cycle system” means an electrical generating system in which thermal waste from one or more natural gas compressor systems is recovered and used to contribute at least 20% of the energy input of a combined cycle process in order to enhance the generation of electricity, but does not include the natural gas compressor systems;

“food and animal waste” means organic waste that is disposed of in accordance with the laws of Canada or a province and that is

(a)  generated during the preparation or processing of food or beverage for human or animal consumption;

(b)  food or beverage that is no longer fit for human or animal consumption; or

(c)  animal remains;

“fossil fuel” means a fuel that is petroleum, natural gas or related hydrocarbons, basic oxygen furnace gas, blast furnace gas, coal, coal gas, coke, coke oven gas, lignite or peat;

“landfill gas” means a mixture of gases that are produced from the decomposition of organic waste and that are extracted from an eligible landfill site;

“liquid biofuel” means a fuel produced all or substantially all from specified waste material or carbon dioxide and that is a liquid at a temperature of 15.6 °C and a pressure of 101 kPa;

“municipal waste” means the combustible portion of waste material, other than waste material that is considered to be toxic or hazardous waste pursuant to any law of Canada or of a province, that is generated in Canada and that is accepted at an eligible landfill site or an eligible waste management facility and that, when burned to generate energy, emits only those fluids or other emissions that are in compliance with the laws of Canada or of a province;

“plant residue” means residue of plants, other than wood waste and waste that no longer has the chemical properties of the plants of which it is a residue, that would otherwise be waste material;

“producer gas” means,

(a)  in respect of a property of a taxpayer that becomes available for use by the taxpayer before 1 January 2025, fuel the composition of which, excluding its water content, is all or substantially all non-condensable gases that is generated primarily from eligible waste fuel or specified waste material using a thermo-chemical conversion process and that is not generated from any feedstock other than eligible waste fuel, specified waste material or fossil fuel; and

(b)  in respect of a property of a taxpayer that becomes available for use by the taxpayer after 31 December 2024, fuel

i.  the composition of which, excluding its water content, is all or substantially all non-condensable gases,

ii.  that is generated using a thermo-chemical conversion process,

iii.  that is generated from feedstock of which no more than 25% is fossil fuel when measured in terms of energy content, expressed as a higher heating value of the feedstock, and

iv.  that is not generated from any feedstock other than eligible waste fuel, specified waste material or fossil fuel;

“pulp and paper by-product” means tall oil soaps and crude tall oil that are produced as by-products of the processing of wood into pulp or paper and the by-product of a pulp or paper plant’s effluent treatment or its de-inking processes;

“pulp and paper waste” means

(a)  tall oil soaps, crude tall oil and turpentine that are produced as by-products of the processing of wood into pulp or paper; and

(b)  the by-product of a pulp or paper plant’s effluent treatment, or its de-inking processes, if that by-product has a solid content of at least 40% before combustion;

“separated organics” means organic waste, other than waste that is considered to be toxic or hazardous waste under any law of Canada or a province, that could be disposed of in an eligible waste management facility or eligible landfill site;

“solid biofuel” means a fuel, other than charcoal that is used for cooking or fuels with fossil fuel-derived ignition accelerants, that is produced all or substantially all from specified waste material, that is a solid at a temperature of 15.6 °C and a pressure of 101 kPa, and that has undergone

(a)  a thermo-chemical conversion process to increase its carbon fraction and densification; or

(b)  densification into pellets or briquettes;

“solution gas” means a fossil fuel that is gas that would otherwise be flared and has been extracted from a solution of gas and produced oil;

“specified waste material” means wood waste, plant residue, municipal waste, sludge from an eligible sewage treatment facility, spent pulping liquor, food and animal waste, manure, pulp and paper by-product and separated organics;

“spent pulping liquor” means the by-product of a chemical process of transforming wood into pulp, consisting of wood residue and pulping agents;

“thermal waste” means waste heat energy extracted from a distinct point of rejection in an industrial process that would otherwise

(a)  be vented to the atmosphere or transferred to a liquid; and

(b)  not be used for a useful purpose;

“transmission equipment” means equipment used to transmit more than 75% of the annual electrical energy generated by electrical generating equipment, but does not include a building;

“wood waste” includes scrap wood, sawdust, wood chips, bark, limbs, saw-ends and hog fuel, but does not include spent pulping liquor and any waste that no longer has the physical or chemical properties of wood.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 8; O.C. 390-2012, s. 13; O.C. 701-2013, s. 7; O.C. 229-2014, s. 3; O.C. 1105-2014, s. 3; O.C. 66-2016, s. 2; O.C. 90-2023, s. 8.

130R16. Where property of a taxpayer is not operating in the manner required by subparagraph c of the first paragraph of Class 43.1 in Schedule B, as it reads having regard to, if applicable, paragraph a of Class 43.2 in that schedule, solely because of a deficiency, failing or shutdown, that is beyond the control of the taxpayer, of the system of which it is part and that previously operated in the manner required by that subparagraph, that property is deemed, for the purposes of that subparagraph, to be operating in the manner required under that subparagraph during the period of the deficiency, failing or shutdown, if the taxpayer makes all reasonable efforts to rectify the circumstances within a reasonable time.

For the purposes of the first paragraph, a taxpayer’s system referred to in that paragraph that has at any particular time operated in the manner required by subparagraph c of the first paragraph of Class 43.1 in Schedule B, as it reads having regard to, if applicable, paragraph a of Class 43.2 in that schedule, includes at any time after the particular time a property of another person or partnership if

(a)  the property would reasonably be considered to be part of the taxpayer’s system were the property owned by the taxpayer;

(b)  the property utilizes steam obtained from the taxpayer’s system primarily in an industrial process, other than the generation of electrical energy;

(c)  the operation of the property is necessary for the taxpayer’s system to operate in the manner required by subparagraph c of the first paragraph of Class 43.1 in Schedule B, as it reads having regard to, if applicable, paragraph a of Class 43.2 in that schedule; and

(d)  at the time that the taxpayer’s system first became operational, the deficiency, failing or shutdown in the operation of the property could not reasonably have been anticipated by the taxpayer to occur within 5 years after that time.

For the purposes of the first paragraph, a district energy system is deemed to meet the requirements of subparagraph c of the first paragraph of Class 43.1 in Schedule B, as it reads having regard to, if applicable, paragraph a of Class 43.2 in that schedule, if the electrical cogeneration equipment that produces the thermal energy used by the system is deemed by the first paragraph to meet the requirements of that subparagraph c, as it reads having regard to, if applicable, paragraph a of Class 43.2 in that schedule.

A property that would otherwise be eligible for inclusion in Class 43.1 or Class 43.2 in Schedule B by a taxpayer is deemed not to be eligible for inclusion in either of those classes if

(a)  the property is included in Class 43.1 in that Schedule because of subparagraph i of subparagraph c of the first paragraph of that class or is described in any of subparagraphs viii to x, xii, xiv, xv, xvii, xviii and xx to xxiii of subparagraph a of the second paragraph of Class 43.1 in that Schedule or in paragraph a of Class 43.2 in that Schedule; and

(b)  at the time the property becomes available for use by the taxpayer, the taxpayer has not satisfied the requirements, applicable in respect of the property, of all environmental laws, by-laws and regulations of Canada, a province or a municipality in Canada, or of a public or municipal body performing a function of government in Canada.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1; O.C. 229-2014, s. 4; O.C. 66-2016, s. 3; O.C. 204-2020, s. 4; O.C. 164-2021, s. 5; O.C. 90-2023, s. 9.

130R17. Where a taxpayer acquired a property that is described in Class 43.1 in Schedule B in circumstances in which the fourth paragraph of that class applied,

(a)  the portion of the property, determined by reference to capital cost, that does not exceed the capital cost of the property to the person from whom the property was acquired is included in that class; and

(b)  the portion of the property, determined by reference to capital cost, that exceeds the capital cost of the property to the person from whom the property was acquired is not included in that class.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1.

130R18. Where a taxpayer acquired a property that is described in Class 43.2 in Schedule B in circumstances in which the fourth paragraph of Class 43.1 in that schedule applied and the property was included in Class 43.2 of the person from whom the taxpayer acquired the property,

(a)  the portion of the property, determined by reference to capital cost, that does not exceed the capital cost of the property to the person from whom the property was acquired is included in Class 43.2 in Schedule B; and

(b)  the portion of the property, determined by reference to capital cost, that exceeds the capital cost of the property to the person from whom the property was acquired is not included in Class 43.1 or 43.2 in Schedule B.

s. 130R2; O.C. 1981-80, s. 130R2; O.C. 1983-80, s. 1; O.C. 3926-80, s. 1; O.C. 1535-81, s. 3; R.R.Q., 1981, c. I-3, r. 1, s. 130R2; O.C. 2962-82, s. 11; O.C. 500-83, s. 11; O.C. 2727-84, s. 2; S.Q. 1984, c. 47, s. 216; O.C. 2509-85, s. 2; O.C. 2583-85, s. 3; O.C. 615-88, s. 6; O.C. 1666-90, s. 3; O.C. 1114-92, s. 10; O.C. 1697-92, s. 6; O.C. 1539-93, s. 5; S.Q. 1994, c. 21, s. 50; O.C. 216-95; O.C. 35-96, s. 6; O.C. 1631-96, s. 1; O.C. 1707-97, s. 18; O.C. 1466-98, s. 20; O.C. 1454-99, s. 11; O.C. 1463-2001, s. 36; O.C. 1470-2002, s. 12; O.C. 1282-2003, s. 15; O.C. 1249-2005, s. 2; O.C. 1149-2006, s. 5; O.C. 1116-2007, s. 6; O.C. 134-2009, s. 1.

130R18.1. For the purposes of sections 130R23.3 and 130R70.1, a taxpayer’s income for a taxation year from eligible liquefaction activities in respect of an eligible liquefaction facility of the taxpayer is determined as if

(a)  the taxpayer carried on a separate business

i.  the only income of which is any combination of,

(1)  in the case of natural gas that is owned by the taxpayer at the time it enters the taxpayer’s eligible liquefaction facility, income from the sale by the taxpayer of the natural gas that has been liquefied, whether sold as liquefied natural gas or regasified natural gas; and

(2)  in any other case, income reasonably attributable to the liquefaction of natural gas at the taxpayer’s eligible liquefaction facility, and

ii.  in respect of which the only permitted deductions in computing the separate business income are those deductions that are attributable to income described in subparagraph i and, in the case of income described in subparagraph 1 of subparagraph i, that are reasonably attributable to income derived after the natural gas enters the eligible liquefaction facility; and

(b)  in the case of income described in subparagraph 1 of subparagraph i of paragraph a, the taxpayer acquired the natural gas that has been liquefied at a cost equal to the fair market value of the natural gas at the time it entered the eligible liquefaction facility.

O.C. 321-2017, s. 7.

CHAPTER III CLASSES OF PROPERTY

c. III; O.C. 1981-80, title VI, c. III; O.C. 1983-80, s. 2; R.R.Q., 1981, c. I-3, r. 1, title VI, c. III; O.C. 2847-84, s. 1; O.C. 134-2009, s. 1.

DIVISION I GENERAL ALLOWANCES

div. I; O.C. 1981-80, title VI, c. III, div. I; O.C. 1983-80, s. 2; R.R.Q., 1981, c. I-3, r. 1, title VI, c. III, div. I; O.C. 2847-84, s. 1; O.C. 134-2009, s. 1.

130R19. Subject to sections 130R21, 130R119 and 130R120, the allowance referred to in section 130R1 may not exceed, for a class of property mentioned in section 130R22, the amount obtained by applying the percentage determined in respect of that class in section 130R22 to the undepreciated capital cost of the property of the same class at the end of the taxation year for which the taxpayer claims such an allowance, before any deduction under this section for the year.

Where the class of property mentioned in section 130R22 includes an automobile acquired by the taxpayer after 18 April 1978 and before 18 June 1987 or after 17 June 1987 pursuant to an obligation in writing entered into before 18 June 1987, and the automobile is used exclusively for earning income, is not intended to be leased by the taxpayer to a person, where the principal business of the taxpayer is the leasing of automobiles to persons dealing with the taxpayer at arm’s length, and is not used under a permit for the transport of passengers for remuneration, the allowance under section 130R1 is respect of that class may not exceed the amount that would have been obtained under the first paragraph if the undepreciated capital cost of the property of the class, determined with reference to section 130R119 and before any deduction under this section for the year, had been reduced by the aggregate of

(a)  the amount by which, in respect of each automobile, its capital cost exceeds $16,000; and

(b)  50%, in respect of each automobile acquired during the taxation year, of its capital cost or $16,000, whichever is lesser.

s. 130R3; O.C. 1981-80, s. 130R3; O.C. 1983-80, s. 2; R.R.Q., 1981, c. I-3, r. 1, s. 130R3; O.C. 2847-84, s. 1; O.C. 1697-92, s. 7; O.C. 134-2009, s. 1.

130R20. Subparagraph b of the second paragraph of section 130R19 does not apply where the taxpayer acquired the automobile in any of the circumstances set forth in paragraph a or b of section 130R123 if,

(a)  the automobile was a depreciable property of the person from whom the taxpayer acquired it and belonged to that person without interruption for at least 364 days before the end of the taxation year of the taxpayer during which the taxpayer acquired the automobile, until the day of its acquisition by the taxpayer; or

(b)  this section was applied in respect of the automobile for the purpose of determining the amount that the person from whom the taxpayer acquired the property was entitled to deduct under section 130R1.

s. 130R3.1; O.C. 2847-84, s. 1; O.C. 1697-92, s. 8; O.C. 134-2009, s. 1.

130R21. The allowance under section 130R1 that a taxpayer may claim for a taxation year in respect of a class of property referred to in section 130R22 that includes an automobile, other than an automobile used under a permit for the transport of passengers for remuneration, that the taxpayer acquired before 18 June 1987, or after 17 June 1987 pursuant to an obligation in writing entered into before 18 June 1987, or an automobile that would have been such an automobile if the taxpayer had acquired it before 18 June 1987 and that is a passenger vehicle acquired during the taxpayer’s 1987 taxation year, may not exceed, where the taxpayer is an individual who, during the year, uses the automobile in part for the purpose of earning income and in part for personal use, the amount that would have been obtained under the first paragraph of section 130R19 in respect of the class for the year if

(a)  the cost of the automobile to the taxpayer, other than an automobile referred to in subparagraph a or c of the second paragraph of section 130.1R1 or a passenger vehicle, did not exceed $16,000; or

(b)  where the year is the 1988 taxation year or a taxation year subsequent to the 1988 taxation year and where the taxpayer has, without interruption since the year in question, used the automobile in part for the purpose of earning income and in part for personal use, the aggregate of the amounts each of which is an amount that the taxpayer deducted as an allowance in respect of the automobile in computing the taxpayer’s income for a preceding taxation year, referred to as “particular preceding taxation year” in this section, for which section 130R4 of the preceding Regulation, within the meaning of section 2000R1, applied in respect of the automobile and that, where applicable, is not a taxation year that ended before a taxation year prior to the 1988 taxation year, for which that section 130R4 did not apply in respect of the automobile was equal to the aggregate of the amounts each of which is an amount determined in respect of the automobile for a particular preceding taxation year according to the following formula:

(A – B) x C.

In the formula in subparagraph b of the first paragraph in respect of an automobile of a taxpayer for a particular taxation year,

(a)  A is the product obtained by multiplying the cost of the automobile for the taxpayer by the proportion that the number of kilometres travelled by the automobile during the 1988 taxation year for the purpose of enabling the taxpayer to earn income, is of the total number of kilometres travelled by the automobile during that year;

(b)  B is the aggregate of the amounts each of which is an amount determined using the formula in subparagraph b of the first paragraph in respect of the automobile for a taxation year that is prior to the particular year and that is a particular preceding taxation year in respect of the automobile; and

(c)  C is a rate of 15% where the particular year is the taxation year during which the automobile was acquired by the taxpayer, and 30% in all other cases.

For the purposes of subparagraph a of the second paragraph, the cost of an automobile to a taxpayer, other than an automobile referred to in subparagraph a or c of the second paragraph of section 130.1R1, may not exceed $16,000, where the automobile was acquired by the taxpayer before 18 June 1987 or after 17 June 1987 pursuant to an obligation in writing entered into before 18 June 1987, or $20,000 in all other cases.

s. 130R3.2; O.C. 1697-92, s. 9; O.C. 134-2009, s. 1.

130R22. The percentage mentioned in section 130R19, in respect of the property of classes mentioned in Schedule B, is the following:

(a)  Class 1: 4%;

(b)  Class 2: 6%;

(c)  Class 3: 5%;

(d)  Class 4: 6%;

(e)  Class 5: 10%;

(f)  Class 6: 10%;

(g)  Class 7: 15%;

(h)  Class 8: 20%;

(i)  Class 8.1: 33 1/3%;

(j)  Class 9: 25%;

(k)  Class 10: 30%;

(l)  Class 10.1: 30%;

(m)  Class 11: 35%;

(n)  Class 12: 100%;

(n.1)  Class 14.1: 5%;

(o)  Class 16: 40%;

(p)  Class 17: 8%;

(q)  Class 18: 60%;

(r)  Class 22: 50%;

(s)  Class 23: 100%;

(t)  Class 25: 100%;

(u)  Class 26: 5%;

(v)  Class 28: 30%;

(w)  Class 30: 40%;

(x)  Class 31: 5%;

(y)  Class 32: 10%;

(z)  Class 33: 15%;

(z.1)  Class 35: 7%;

(z.2)  Class 37: 15%;

(z.3)  Class 41: 25%;

(z.3.1)  Class 41.1: 25%;

(z.4)  Class 42: 12%;

(z.5)  Class 43: 30%;

(z.6)  Class 43.1: 30%;

(z.7)  Class 43.2: 50%;

(z.8)  Class 44: 25%;

(z.9)  Class 45: 45%;

(z.10)  Class 46: 30%;

(z.11)  Class 47: 8%;

(z.12)  Class 48: 15%;

(z.13)  Class 49: 8%;

(z.14)  Class 50: 55%;

(z.15)  Class 51: 6%;

(z.16)  Class 52: 100%;

(z.17)  Class 53: 50%;

(z.18)  Class 54: 30%;

(z.19)  Class 55: 40%; and

(z.20)  Class 56: 30%.

s. 130R6; O.C. 1981-80, s. 130R6; O.C. 1983-80, s. 5; R.R.Q.,1981, c. I-3, r. 1, s. 130R6; O.C. 2962-82, s. 12; O.C. 500-83, s. 12; O.C. 1697-92, s. 11; O.C. 1631-96, s. 2; O.C. 1454-99, s. 12; O.C. 1149-2006, s. 6; O.C. 1116-2007, s. 7; O.C. 134-2009, s. 1; O.C. 1176-2010, s. 9; O.C. 390-2012, s. 14; O.C. 321-2017, s. 8; S.Q. 2019, c. 14, s. 635; S.Q. 2021, c. 18, s. 236; O.C. 90-2023, s. 10.

130R23. Where the taxpayer’s taxation year is less than 12 months, the amount allowed as a deduction under this Title, otherwise than under sections 130R37, 130R40 to 130R43, 130R66 to 130R69, 130R106, 130R107, 130R113, 130R115 or 130R209 to 130R221, may not exceed the proportion of the maximum amount allowable that the number of days in the taxation year is of 365.

s. 130R7; O.C. 1981-80, s. 130R7; R.R.Q., 1981, c. I-3, r. 1, s. 130R7; O.C. 2847-84, s. 2; O.C. 1631-96, s. 3; O.C. 1282-2003, s. 16; O.C. 1249-2005, s. 3; O.C. 134-2009, s. 1.

DIVISION I.1 PROPERTY OF CLASS 1

O.C. 1176-2010, s. 10.

130R23.1. A taxpayer may deduct as additional allowance in respect of property that is a building for which section 130R163.1 prescribes a separate class, an amount not exceeding 6% of the undepreciated capital cost to the taxpayer of the property of that class as of the end of the taxation year, computed before any deduction under this section and Division I for the year, if at least 90% of the floor space of the building is used at the end of the year for the manufacturing or processing in Canada of goods for sale or lease.

O.C. 1176-2010, s. 10; O.C. 321-2017, s. 9.

130R23.2. A taxpayer may deduct as additional allowance in respect of property that is a building for which section 130R163.1 prescribes a separate class, an amount not exceeding 2% of the undepreciated capital cost to the taxpayer of the property of that class as of the end of the taxation year, computed before any deduction under this section and Division I for the year, if at least 90% of the floor space of the building is used at the end of the year for a non-residential use in Canada and an additional allowance is not allowed for the year under section 130R23.1 in respect of the property.

O.C. 1176-2010, s. 10; O.C. 321-2017, s. 10.

130R23.3. A taxpayer may deduct as additional allowance in respect of property that is used as part of an eligible liquefaction facility for which a separate class is prescribed by section 130R163.1.1, an amount not exceeding the lesser of

(a)  the income for the taxation year from the taxpayer’s eligible liquefaction activities in respect of the eligible liquefaction facility, computed taking into consideration any deduction under section 130R70.1 and before any deduction under this section, and

(b)  6% of the undepreciated capital cost to the taxpayer of property of that separate class as of the end of the year, computed before any deduction under this section and Division I for the year.

O.C. 321-2017, s. 11.

DIVISION II LEASEHOLD INTERESTS

div. III; O.C. 1981-80, title VI, c. III, div. III; R.R.Q., 1981, c. I-3, r. 1, title VI, c. III, div. III; O.C. 134-2009, s. 1.

130R24. In respect of property of Class 13 in Schedule B, the taxpayer may deduct an amount not exceeding the lesser of the aggregate of each amount equal to the proportion, described in section 130R27, of that part of the capital cost to the taxpayer, incurred in a taxation year of a particular leasehold interest, and the undepreciated capital cost of property of that class at the end of the taxation year, before any deduction under this section.

s. 130R13; O.C. 1981-80, s. 130R13; R.R.Q., 1981, c. I-3, r. 1, s. 130R13; O.C. 134-2009, s. 1.

130R25. For the purposes of this division, the capital cost to a taxpayer of a property is deemed to have been incurred at the time when the property became available for use by the taxpayer for the purposes of the Act.

s. 130R13.1; O.C. 1631-96, s. 4; O.C. 134-2009, s. 1.

130R26. For the purposes of section 130R24, capital cost includes any amount expended by a taxpayer for or in respect of an improvement or alteration to a leased property, other than an amount expended by reason of the fact that the taxpayer or a former lessee

(a)  erected a building or other structure on leased land;

(b)  made an addition to a leased building or other structure; or

(c)  made an alteration to a leased building or other structure that substantially changed its nature.

However, in the case of property not included in Class 31 or 32 in Schedule B and acquired from a former lessee before 1976, the first paragraph is to be read without reference to “or a former lessee”.

s. 130R14; O.C. 1981-80, s. 130R14; R.R.Q., 1981, c. I-3, r. 1, s. 130R14; O.C. 134-2009, s. 1.

130R27. The proportion of the capital cost referred to in section 130R24 is the lesser of:

(a)  1/5; and

(b)  that proportion that the number 1 is of the number of 12 month periods, not exceeding 40, falling between the beginning of the taxation year in which the capital cost was incurred and the day the lease is to terminate.

Despite the foregoing, if the part of the capital cost referred to in section 130R24 is incurred after 12 November 1981, the proportion of that part is equal, for the taxation year during which it is incurred,

(a)  if the property is an accelerated investment incentive property and the capital cost of the property is incurred before 1 January 2024, and subject to the third paragraph, to 150% of the amount that would be determined in its respect under the first paragraph; or

(b)  if the property is not an accelerated investment incentive property and is not described in any of subparagraphs 4 to 6 of subparagraph ii of subparagraph a of the fourth paragraph of section 130R120, to 50% of the amount that would be determined in its respect under the first paragraph.

Despite the foregoing, the amount that is the proportion of the part of the capital cost referred to in section 130R24 determined under subparagraph a of the second paragraph may not exceed the part of the undepreciated capital cost of property in Class 13, before any deduction under this division, at the end of the taxation year.

s. 130R15; O.C. 1981-80, s. 130R15; R.R.Q., 1981, c. I-3, r. 1, s. 130R15; O.C. 2847-84, s. 3; O.C. 366-94, s. 4; O.C. 1631-96, s. 5; O.C. 134-2009, s. 1; O.C. 164-2021, s. 6.

130R28. Where an item of the capital cost of a leasehold interest was incurred before the taxation year in which the interest was acquired, it is deemed to have been incurred in the taxation year in which the interest was acquired.

s. 130R16; O.C. 1981-80, s. 130R16; R.R.Q., 1981, c. I-3, r. 1, s. 130R16; O.C. 134-2009, s. 1.

130R29. Where, under a lease, a lessee has a right to renew the lease after the term and such term occurs after the end of the taxation year in which the capital cost was incurred, the lease is deemed to terminate on the day on which the term next succeeding the term in which the capital cost was incurred is to terminate.

s. 130R17; O.C. 1981-80, s. 130R17; R.R.Q., 1981, c. I-3, r. 1, s. 130R17; O.C. 134-2009, s. 1.

130R30. The proportion of the part of the capital cost incurred in a particular taxation year of a particular leasehold interest may not exceed the amount obtained by deducting from that part of the capital cost the aggregate of the amounts deductible and claimed in previous years in respect thereof.

s. 130R18; O.C. 1981-80, s. 130R18; R.R.Q., 1981, c. I-3, r. 1, s. 130R18; O.C. 134-2009, s. 1; O.C. 1303-2009, s. 3.

130R31. Where, at the end of a taxation year, the total of the aggregate referred to in section 130R30 and the proceeds of disposition of part or all of a particular leasehold interest equals or exceeds the capital cost of the interest, the proportion in that section is, for all subsequent years, deemed to be nil.

s. 130R19; O.C. 1981-80, s. 130R19; R.R.Q., 1981, c. I-3, r. 1, s. 130R19; O.C. 134-2009, s. 1.

130R32. Where, at the end of a taxation year, the undepreciated capital cost of property of Class 13 in Schedule B is nil, the proportion of any part of the capital cost is, for all subsequent years, deemed to be nil.

s. 130R20; O.C. 1981-80, s. 130R20; R.R.Q., 1981, c. I-3, r. 1, s. 130R20; O.C. 134-2009, s. 1.

130R33. Where the taxpayer has a leasehold interest, a reference in Schedule B to a property that is a building or other structure includes that leasehold interest to the extent that the taxpayer acquired it by reason of the fact that the taxpayer has carried out an operation referred to in any of subparagraphs a to c of the first paragraph of section 130R26, or acquired it after 1975 or, in the case of property of Class 31 or 32 in that schedule, after 18 November 1974, from a former lessee who has acquired it by reason of the fact that the lessee or a preceding lessee had carried out such an operation.

s. 130R21; O.C. 1981-80, s. 130R21; R.R.Q., 1981, c. I-3, r. 1, s. 130R21; O.C. 134-2009, s. 1.

130R34. Where a taxpayer acquires a property that, if it were acquired by a person with whom the taxpayer does not deal at arm’s length at the time of the acquisition, would be a leasehold interest referred to in section 130R33 for that person, a reference in Schedule B to a property that is a building or other structure includes that property.

s. 130R21.1; O.C. 1631-96, s. 6; O.C. 134-2009, s. 1.

130R35. Where a taxpayer acquires a property that, if it were acquired by a person with whom the taxpayer does not deal at arm’s length at the time of the acquisition, would be a leasehold interest of that person, a reference in this division to a leasehold interest includes, in respect of the taxpayer, that property, and the terms and conditions of the leasehold interest in that property for the taxpayer are deemed to be the same as those that would have applied to that person if the person had acquired the property.

s. 130R21.2; O.C. 1631-96, s. 6; O.C. 134-2009, s. 1.

130R36. For the purposes of this division, where an item of capital cost has been incurred before the commencement of the taxpayer’s 1949 taxation year, there is to be added to the capital cost of each item the amount that was allowed in respect thereof as depreciation under the Income War Tax Act (R.S.C. 1927, c. 97) and was deducted from the original cost to arrive at the capital cost of the item.

s. 130R22; O.C. 1981-80, s. 130R22; R.R.Q., 1981, c. I-3, r. 1, s. 130R22; O.C. 134-2009, s. 1.

DIVISION III PATENTS, CONCESSIONS AND LICENCES

div. IV; O.C. 1981-80, title VI, c. III, div. IV; R.R.Q., 1981, c. I-3, r. 1, title VI, c. III, div. IV; O.C. 134-2009, s. 1.

130R37. In respect of property of Class 14 in Schedule B, the taxpayer may deduct an amount not exceeding the lesser of

(a)  the total of the following amounts:

i.  the aggregate of the amounts obtained by apportioning the capital cost to the taxpayer of each property over the life of the property remaining at the time the cost is incurred,

ii.  if the property is accelerated investment incentive property, other than property described in subparagraph iii, the portion of the amount determined under subparagraph i that is in respect of the property multiplied by one of the following factors:

(1)  0.5, if the property is considered to be available for use in the year and before 1 January 2024, and

(2)  0.25, if the property is considered to be available for use in the year and after 31 December 2023; and

iii.  if the property is both accelerated investment incentive property and qualified intellectual property and is considered to be available for use in the year and before 1 January 2024, the amount by which the capital cost of the property exceeds the portion of the amount determined under subparagraph i that is in respect of the property; and

(b)  the undepreciated capital cost to the taxpayer of property of the class at the end of the taxation year, before any deduction under this section.

s. 130R23; O.C. 1981-80, s. 130R23; R.R.Q., 1981, c. I-3, r. 1, s. 130R23; O.C. 134-2009, s. 1; O.C. 164-2021, s. 7.

130R38. Where a part or all of the cost of a patent is determined by reference to the use of the patent, a taxpayer may, in computing the taxpayer’s income for a taxation year from a business or property, as the case may be, deduct in lieu of the deduction allowed under section 130R37 such amount as the taxpayer may claim in respect of property of Class 14 in Schedule B not exceeding the lesser of

(a)  the aggregate of that part of the capital cost determined by reference to the use of the patent in the year, and the amount that would be computed under paragraph a of that section 130R37 if the capital cost of the patent did not include the amount determined by reference to the use of the patent in that year and previous years; and

(b)  the undepreciated capital cost to the taxpayer of property of the class as of the end of the taxation year before making any deduction under this section.

s. 130R24; O.C. 1981-80, s. 130R24; R.R.Q., 1981, c. I-3, r. 1, s. 130R24; O.C. 134-2009, s. 1.

130R39. Where the capital cost to a taxpayer of a property that is a patent or a right to use patented information is determined in whole or in part by reference to the use of the property and that property is included in Class 44 in Schedule B, in lieu of the amount provided for in section 130R19, the taxpayer may deduct for a taxation year in respect of the property of that class an amount not exceeding the lesser of

(a)  the aggregate of

i.  the part of the capital cost that is determined by reference to the use of the property in the year, and

ii.  the amount that would be deductible for the year under section 130R19 in respect of property of that class if the capital cost thereof did not include the amounts determined under subparagraph i for the year and preceding taxation years; and

(b)  the undepreciated capital cost to the taxpayer at the end of the year, before any deduction under this section for the year, of property of that class.

s. 130R24.1; O.C. 1631-96, s. 7; O.C. 134-2009, s. 1.

DIVISION III.1 PROPERTY OF CLASS 14.1

S.Q. 2019, c. 14, s. 636.

130R39.1. A taxpayer may, for a taxation year that ends before 1 January 2027, deduct as additional allowance, in respect of property included in Class 14.1 of Schedule B, an amount not exceeding the greater of

(a)  2% of the amount by which the undepreciated capital cost of property of the class at the beginning of 1 January 2017 exceeds the aggregate of all amounts each of which is

i.  an amount deducted under paragraph a of section 130 of the Act in respect of the class for a preceding taxation year, and

ii.  an amount equal to three times the amount of the capital cost of a property deemed under section 93.19 of the Act to be acquired by the taxpayer in the year or a preceding year; and

(b)  the amount determined by the formula

A − B.

In the formula in subparagraph b of the first paragraph,

(a)  A is the lesser of $500 and the undepreciated capital cost of property of the class to the taxpayer as of the end of the year (before making any deduction under paragraph a of section 130 of the Act in respect of the class for the year); and

(b)  B is the total of all amounts deductible for the year under paragraph a of section 130 of the Act in respect of the class because of subparagraph a of the first paragraph or paragraph n.1 of section 130R22.

S.Q. 2019, c. 14, s. 636.

DIVISION IV PROPERTY USED IN TIMBER LIMITS

div. V; O.C. 1981-80, title VI, c. III, div. V; R.R.Q., 1981, c. I-3, r. 1, title VI, c. III, div. V; O.C. 134-2009, s. 1.

130R40. In respect of property of Class 15 in Schedule B, the taxpayer may deduct the lesser of

(a)  an amount equal to,

i.  if the property is an accelerated investment incentive property acquired in the taxation year,

(1)  the amount obtained by multiplying 1.5 by an amount computed on the basis of a rate of cubic metre of timber cut in the year, if the property is acquired before 1 January 2024, and

(2)  the amount obtained by multiplying 1.25 by an amount computed on the basis of a rate of cubic metre of timber cut in the year, if the property is acquired after 31 December 2023, and

ii.  in any other case, an amount computed on the basis of a rate per cubic metre of timber cut in the taxation year; and

(b)  the undepreciated capital cost to the taxpayer of property of that class at the end of the taxation year, before any deduction under this division.

s. 130R25; O.C. 1981-80, s. 130R25; R.R.Q., 1981, c. I-3, r. 1, s. 130R25; O.C. 134-2009, s. 1; O.C. 164-2021, s. 8.

130R41. The rate referred to in section 130R40, where all the property of the class is used in connection with a timber limit, is the amount determined by dividing the undepreciated capital cost, to the taxpayer, of the property at the end of the taxation year, before any deduction under this Title and computed without reference to subparagraph i of paragraph a of section 130R40, by the number of cubic metres of timber in that limit computed by deducting from the quantity shown by the latest cruise, the quantity cut since that cruise up to the beginning of the year.

s. 130R26; O.C. 1981-80, s. 130R26; R.R.Q., 1981, c. I-3, r. 1, s. 130R26; O.C. 134-2009, s. 1; O.C. 164-2021, s. 8.

130R42. Where a part of the property of Class 15 in Schedule B is used in connection with one timber limit and a part is used in connection with another limit, the rate is computed as though each part of the property were a separate class.

s. 130R27; O.C. 1981-80, s. 130R27; R.R.Q., 1981, c. I-3, r. 1, s. 130R27; O.C. 134-2009, s. 1.

130R43. In this division, capital cost includes the amount expended by the taxpayer on improvements to a watercourse in order to facilitate the removal of timber from a limit.

s. 130R28; O.C. 1981-80, s. 130R28; R.R.Q., 1981, c. I-3, r. 1, s. 130R28; O.C. 134-2009, s. 1.

DIVISION V PROPERTY OF CLASSES 24, 27, 29 AND 34

div. VI; O.C. 1981-80, title VI, c. III, div. IV; R.R.Q., 1981, c. I-3, r. 1, title VI, c. III, div. VI; O.C. 2847-84, s. 4; O.C. 134-2009, s. 1.

130R44. In this division,

“designated property” of a class means a property deemed to be such under section 130R124, a property of the class acquired by the taxpayer before 13 November 1981 or a property described in any of subparagraphs 4 to 6 of subparagraph ii of subparagraph a of the fourth paragraph of section 130R120;

“specified transaction” means a transaction in respect of which any of sections 527, 544, 556, 617, 620 and 626 of the Act applies.

s. 130R29; O.C. 1981-80, s. 130R29; R.R.Q., 1981, c. I-3, r. 1, s. 130R29; O.C. 2847-84, s. 4; O.C. 366-94, s. 5; O.C. 1631-96, s. 8; O.C. 134-2009, s. 1; O.C. 164-2021, s. 9.

130R45. For the purposes of this division, a property is deemed, subject to subparagraph d of the first paragraph of section 130R124, to have been acquired by a taxpayer at the time when the property became available for use by the taxpayer according to the Act.

s. 130R29.1; O.C. 1631-96, s. 9; O.C. 134-2009, s. 1.

130R46. In respect of property of Classes 24, 27, 29 and 34 in Schedule B, a taxpayer may, subject to section 130R49, deduct

(a)  for the taxation year including 12 November 1981, the amount prescribed by section 130R47; and

(b)  for a taxation year beginning after 12 November 1981, the amount prescribed by section 130R48.

s. 130R30; O.C. 1981-80, s. 130R30; R.R.Q., 1981, c. I-3, r. 1, s. 130R30; O.C. 2847-84, s. 4; O.C. 134-2009, s. 1.

130R47. The taxpayer may deduct under paragraph a of section 130R46 an amount not exceeding the aggregate of

(a)  50% of the lesser of the capital cost to the taxpayer of the designated property of the class acquired by the taxpayer during the year and the undepreciated capital cost to the taxpayer of the property of that class at the end of the year, computed before any deduction under section 130R46 for the year, and as if no amount had been included in respect of property acquired after 12 November 1981 that was not designated property of the class;

(b)  the amount by which the undepreciated capital cost referred to in paragraph a exceeds the capital cost of the designated property referred to in paragraph a; and

(c)  the lesser of 25% of the capital cost to the taxpayer of all property of the class that is not designated property and acquired by the taxpayer during the year and the undepreciated capital cost to the taxpayer of the property of the class at the end of the year, before any deduction under section 130R46 for the year.

s. 130R30.1; O.C. 2847-84, s. 4; O.C. 134-2009, s. 1.

130R48. A taxpayer may deduct under paragraph b of section 130R46 an amount not exceeding the aggregate of

(a)  the lesser of 50% of the capital cost to the taxpayer of all the designated properties of the class acquired by the taxpayer during the year and the undepreciated capital cost to the taxpayer of the property of that class at the end of the year, computed before any deduction under section 130R46 for the year and, where one of the designated properties referred to in this paragraph was acquired in a specified transaction, as if no amount had been included in respect of the property that was not designated property of the class acquired by the taxpayer during the year;

(b)  25% of the lesser of the undepreciated capital cost to the taxpayer of the property of the class at the end of the year, computed before any deduction under section 130R46 for the year and as if no amount had been included in respect of a designated property of that class acquired by the taxpayer during the year, and the capital cost to the taxpayer of the property in the class acquired by the taxpayer during the year and that was not designated property; and

(c)  the lesser of

i.  the amount by which the undepreciated capital cost to the taxpayer of the property of the class at the end of the year, before any deduction under section 130R46 for the year, exceeds the capital cost to the taxpayer of the property of the class acquired by the taxpayer during the year, and

ii.  the aggregate of 50% of the capital cost to the taxpayer of the property of the class acquired by the taxpayer during the preceding taxation year but that is not designated property acquired in a specified transaction and of the amount by which the amount determined under subparagraph i for the year in respect of the class exceeds the aggregate of 75% of the capital cost to the taxpayer of the property of the class that is not designated property acquired by the taxpayer during the preceding taxation year and of 50% of the capital cost to the taxpayer of the designated property of the class acquired by the taxpayer during the preceding taxation year that is not designated property acquired in a specified transaction.

s. 130R30.2; O.C. 2847-84, s. 4; O.C. 134-2009, s. 1.

130R49. The amount that a taxpayer may deduct for a taxation year under section 130R46 in respect of property of a class in Schedule B may also not exceed the undepreciated capital cost to the taxpayer of the property of the class at the end of the year, computed before any deduction under section 130R46 for the year.

s. 130R30.3; O.C. 2847-84, s. 4; O.C. 134-2009, s. 1.

DIVISION VI SPECIFIED ENERGY PROPERTY

div. VI.0.1; O.C. 91-94, s. 2; O.C. 134-2009, s. 1.

130R50. In no case may the aggregate of the deductions that a taxpayer may claim for a taxation year as capital cost allowance in respect of property of any of Classes 34, 43.1, 43.2, 47 and 48 in Schedule B that is specified energy property owned by the taxpayer exceed the amount by which the amount determined under the second paragraph exceeds the aggregate of the amounts each of which is

(a)  the aggregate of the following amounts:

i.  the amount that would be the income of the taxpayer for the year from property described in any of Classes 34, 43.1, 43.2, 47 and 48, other than specified energy property, or from the business of selling the product of the property, if that income were computed after deducting the maximum amount allowable in respect of the property for the year under paragraph a of section 130 of the Act, and

ii.  the taxpayer’s income for the year from specified energy property or from the business of selling the product of such property, computed without reference to paragraph a of section 130 of the Act, or

(b)  the aggregate of the following amounts:

i.  the taxpayer’s share of the amount that would be the income of a partnership for the year from property described in any of Classes 34, 43.1, 43.2, 47 and 48, other than specified energy property, or from the business of selling the product of the property, if that income were computed after deducting the maximum amount allowable in respect of the property for the year under paragraph a of section 130 of the Act, and

ii.  the income of a partnership for the year from specified energy property or from the business of selling the product of such property of the partnership, to the extent of the taxpayer’s share of such income.

The amount to which the first paragraph refers is the aggregate of the amounts each of which is

(a)  the taxpayer’s loss for the year from specified energy property or from the business of selling the product of such property, computed without reference to paragraph a of section 130 of the Act, or

(b)  the loss of a partnership for the year from specified energy property or from the business of selling the product of such property of the partnership, to the extent of the taxpayer’s share of such loss.

s. 130R30.3.1; O.C. 91-94, s. 2; O.C. 1707-97, s. 98; O.C. 1454-99, s. 13; O.C. 1116-2007, s. 8; O.C. 134-2009, s. 1.

130R51. Subject to sections 130R53 to 130R55, in this division and Chapter V, “specified energy property” of a taxpayer or partnership, in this section referred to as “the owner”, for a taxation year means property in Class 34 in Schedule B acquired by the owner after 9 February 1988 or property in any of Classes 43.1, 43.2, 47 and 48 in that schedule, other than, where the owner is a corporation or a partnership described in the second paragraph, a particular property

(a)  acquired to be used by the owner primarily for the purpose of gaining or producing income from a business carried on in Canada, other than the business of selling the product of the particular property, or from another property situated in Canada; or

(b)  leased in the year, in the ordinary course of carrying on a business of the owner in Canada, to

i.  a person who may reasonably be expected to use the property primarily for the purpose of gaining or producing income from a business carried on in Canada, other than the business of selling the product of the particular property, or from another property situated in Canada, or

ii.  a corporation or partnership described in section 130R52.

The corporation or the partnership to which the first paragraph refers in respect of a particular property for a taxation year is

(a)  a corporation at least 90% of whose gross revenue from all sources for the year is derived from a principal business that is, throughout the year, one of the following:

i.  the renting or leasing of leasing property or property that would be leasing property but for sections 130R97 to 130R99,

ii.  the renting or leasing of property referred to in subparagraph i combined with the selling and servicing of similar property, or

iii.  the manufacturing of property described in any of Classes 34, 43.1, 43.2, 47 and 48 in Schedule B that it sells or leases; or

(b)  a partnership each member of which is

i.  a corporation described in subparagraph a or in paragraph a of section 130R52, or

ii.  another partnership described in this subparagraph.

s. 130R30.3.2; O.C. 91-94, s. 2; O.C. 1707-97, s. 20; O.C. 1466-98, s. 126; O.C. 1454-99, s. 14; O.C. 1116-2007, s. 9; O.C. 134-2009, s. 1; O.C. 66-2016, s. 4.

130R52. Section 130R50 does not apply to a taxation year of a taxpayer that is, throughout the year,

(a)  a corporation whose principal business throughout the year is

i.  manufacturing or processing,

ii.  mining operations, or

iii.  the sale, distribution or production of electricity, natural gas, oil, steam, heat or any other form of energy or potential energy; or

(b)  a partnership each member of which is

i.  a corporation described in paragraph a, or

ii.  another partnership described in this paragraph.

s. 130R30.3.3; O.C. 91-94, s. 2; O.C. 1707-97, s. 98; O.C. 1454-99, s. 15; O.C. 134-2009, s. 1; O.C. 66-2016, s. 5.

130R53. Specified energy property of a person or partnership does not include property acquired by the person or partnership after 9 February 1988 but before 1 January 1990,

(a)  pursuant to an obligation in writing entered into by the person or partnership before 10 February 1988;

(b)  pursuant to the terms of a final prospectus, preliminary prospectus, registration statement or offering memorandum filed before 10 February 1988 with a public authority in Canada pursuant to the securities legislation of a province;

(c)  pursuant to the terms of an offering memorandum distributed as part of an offering of securities where the following conditions are fulfilled:

i.  the offering memorandum contains a complete or substantially complete description of the securities in the offering as well as the terms and conditions of the offering,

ii.  the offering memorandum was distributed before 10 February 1988,

iii.  solicitations in respect of the sale of the securities in the offering memorandum were made before 10 February 1988, and

iv.  the sale of the securities was substantially in accordance with the offering memorandum; or

(d)  as part of a project where, before 10 February 1988, the following conditions were fulfilled:

i.  some of the machinery or equipment to be used in the project was acquired, or agreements in writing for the acquisition of that machinery or equipment were entered into, by or on behalf of the person or partnership, and

ii.  an approval had been received by or on behalf of the person or partnership from a government environmental authority in respect of the location of the project.

s. 130R30.3.4; O.C. 91-94, s. 2; O.C. 1707-97, s. 98; O.C. 1466-98, s. 21; O.C. 134-2009, s. 1.

130R54. Where a taxpayer acquires a property in the course of a reorganization in respect of which, if a dividend were received by a corporation in the course of the reorganization, section 308.1 of the Act would not be applicable to the dividend by reason of the application of section 308.3 of the Act, or from a person with whom the taxpayer does not deal at arm’s length, otherwise than by virtue of a right referred to in paragraph b of section 20 of the Act, at the time the property was acquired, and where the property would otherwise be specified energy property of the taxpayer, the property is deemed not to be specified energy property of the taxpayer if, immediately before it was so acquired, it was not, by virtue of this section or section 130R53 or 130R55, specified energy property of the person from whom the property was so acquired.

s. 130R30.3.5; O.C. 91-94, s. 2; O.C. 1707-97, s. 98; O.C. 134-2009, s. 1.

130R55. Where a taxpayer or a partnership has acquired a property that is a replacement property within the meaning of subsection 3 of section 96 of the Act, and where the property would otherwise be specified energy property of the taxpayer or partnership, the property is deemed not to be specified energy property of the taxpayer or partnership if the former property, referred to in subsection 1 of that section, was not, by virtue of this section or section 130R53 or 130R54, specified energy property of the taxpayer or partnership immediately before it was disposed of by the taxpayer or partnership.

s. 130R30.3.6; O.C. 91-94, s. 2; O.C. 1707-97, s. 98; O.C. 134-2009, s. 1.

DIVISION VII PROPERTY OF CLASS 38

div. VI.1; O.C. 1697-92, s. 12; O.C. 134-2009, s. 1.

130R56. A taxpayer may deduct, in respect of property of Class 38 in Schedule B, an amount not exceeding the amount obtained by applying to the undepreciated capital cost to the taxpayer of the property of that class at the end of the taxation year, computed before any deduction under this section for the year, the percentage represented by the aggregate of the following percentages:

(a)  40% multiplied by the proportion that the number of days in the year that follow 31 December 1987 but that precede 1 January 1989, is of the number of days in the year that follow 31 December 1987;

(b)  35% multiplied by the proportion that the number of days in the year that follow 31 December 1988 but that precede 1 January 1990, is of the number of days in the year; and

(c)  30% multiplied by the proportion that the number of days in the year that follow 31 December 1989, is of the number of days in the year.

s. 130R30.4; O.C. 1697-92, s. 12; O.C. 134-2009, s. 1.

DIVISION VIII PROPERTY OF CLASS 39

div. VI.2; O.C. 1697-92, s. 12; O.C. 134-2009, s. 1.

130R57. A taxpayer may deduct, in respect of property of Class 39 in Schedule B, an amount not exceeding the amount obtained by applying to the undepreciated capital cost to the taxpayer of the property of that class at the end of the taxation year, computed before any deduction under this section for the year, the percentage represented by the aggregate of the following percentages:

(a)  40% multiplied by the proportion that the number of days in the year that follow 31 December 1987 but that precede 1 January 1989, is of the number of days in the year that follow 31 December 1987;

(b)  35% multiplied by the proportion that the number of days in the year that follow 31 December 1988 but that precede 1 January 1990, is of the number of days in the year;

(c)  30% multiplied by the proportion that the number of days in the year that follow 31 December 1989 but that precede 1 January 1991, is of the number of days in the year; and

(d)  25% multiplied by the proportion that the number of days in the year that follow 31 December 1990, is of the number of days in the year.

s. 130R30.5; O.C. 1697-92, s. 12; O.C. 134-2009, s. 1.

DIVISION IX PROPERTY OF CLASS 40

div. VI.3; O.C. 1697-92, s. 12; O.C. 134-2009, s. 1.

130R58. A taxpayer may deduct, in respect of property of Class 40 in Schedule B, an amount not exceeding the amount obtained by applying to the undepreciated capital cost to the taxpayer of the property of that class at the end of the taxation year, computed before any deduction under this section for the year, the percentage represented by the aggregate of the following percentages:

(a)  40% multiplied by the proportion that the number of days in the year that follow 31 December 1987 but that precede 1 January 1989, is of the number of days in the year that follow 31 December 1987;

(b)  35% multiplied by the proportion that the number of days in the year that follow 31 December 1988 but that precede 1 January 1990, is of the number of days in the year; and

(c)  30% multiplied by the proportion that the number of days in the year that follow 31 December 1989 but that precede 1 January 1991, is of the number of days in the year.

s. 130R30.6; O.C. 1697-92, s. 12; O.C. 134-2009, s. 1.

DIVISION X GRAIN STORAGE

div. VII; O.C. 1981-80, title VI, c. III, div. VII; R.R.Q., 1981, c. I-3, r. 1, title VI, c. III, div. VII; O.C. 134-2009, s. 1.

130R59. A taxpayer may deduct as additional allowance the amount provided by section 130R61 in respect of property that is

(a)  a grain elevator, situated in that part of Canada that is defined in section 2 of the Canada Grain Act (R.S.C. 1985, c. G-10) as the “Eastern Division”, the principal use of which

i.  is the receiving of grain directly from producers for storage or forwarding or both,

ii.  is the receiving and storing of grain for direct processing into other products, or

iii.  has been certified or authorized by the Minister to be the receiving of grain that has not been officially inspected or weighed;

(b)  an addition to a grain elevator described in paragraph a;

(c)  fixed machinery installed in a grain elevator in respect of which, or in respect of an addition to which, an additional amount has been or may be claimed under this section;

(d)  fixed machinery, designed for the purpose of drying grain, installed in a grain elevator described in paragraph a;

(e)  machinery designed for the purpose of drying grain on a farm; or

(f)  a building or other structure designed for the purpose of storing grain on a farm.

s. 130R31; O.C. 1981-80, s. 130R31; R.R.Q., 1981, c. I-3, r. 1, s. 130R31; O.C. 35-96, s. 86; O.C. 134-2009, s. 1.

130R60. The property referred to in section 130R59 must have been acquired by the taxpayer in the taxation year or in 1 of the 3 immediately preceding taxation years, at a time after 1 April 1972 but before 1 August 1974, and must not have been used for any purpose whatever before it was acquired by the taxpayer.

s. 130R32; O.C. 1981-80, s. 130R32; R.R.Q., 1981, c. I-3, r. 1, s. 130R32; O.C. 134-2009, s. 1.

130R61. The additional allowance provided by section 130R59 may not exceed the lesser of

(a)  where the property is included in Class 3 in Schedule B, 22% of the capital cost thereof; where the property is included in Class 6 in that schedule, 20% of the capital cost thereof; or where the property is included in Class 8 in that schedule,

i.  14% of the capital cost thereof in the case of property referred to in any of paragraphs c, d and f of section 130R59, or

ii.  14% of the lesser of $15,000 and the capital cost thereof in the case of property described in paragraph e of section 130R59; and

(b)  the undepreciated capital cost to the taxpayer as of the end of the taxation year of property of the class, before making any deduction under this section for the year.

s. 130R33; O.C. 1981-80, s. 130R33; R.R.Q., 1981, c. I-3, r. 1, s. 130R33; O.C. 134-2009, s. 1.

DIVISION XI VESSELS

div. VIII; O.C. 1981-80, title VI, c. III, div. VIII; R.R.Q., 1981, c. I-3, r. 1, title VI, c. III, div. VIII; O.C. 2847-84, s. 5; O.C. 134-2009, s. 1.

130R62. A taxpayer may deduct the amount provided for in section 130R63 in respect of a property that is

(a)  a vessel described in section 130R165;

(b)  a property included in a separate prescribed class by reason of section 104R10; or

(c)  a property constituted as a class under subsection 2 of section 24 of Chapter 91 of the Statutes of Canada, 1966-1967.

s. 130R34; O.C. 1981-80, s. 130R34; R.R.Q., 1981, c. I-3, r. 1, s. 130R34; O.C. 2847-84, s. 5; O.C. 1631-96, s. 10; O.C. 134-2009, s. 1.

130R63. The deduction under section 130R62 may not exceed the lesser of the following amounts:

(a)  the capital cost of the property to the taxpayer multiplied by

i.  50%, in the case of an accelerated investment incentive property acquired in the taxation year and before 1 January 2024;

ii