s-34 - Act respecting fiscal incentives to industrial development

Updated to 1 April 1999

This document has official status.

chapter S-34

Act respecting fiscal incentives to industrial development

Repealed, 1997, c. 14, s. 328.

1997, c. 14, s. 328.

CHAPTER I INTERPRETATION

1. In this Act and in the regulations, unless the context indicates otherwise, “taxation year” and “mineral resource” have the meaning assigned by sections 1, and 5 to 7, as the case may be, of the Taxation Act (chapter I-3), “related corporation” has the meaning assigned by sections 17 to 21 of that Act and

“production operations” means all the operations involved in the assembling, processing or conditioning of goods, resulting in other goods different in nature or characteristics from the former, or the reconditioning or repair of moveable property by its owner, and includes the operations of a business engaged in farming, logging, the extraction or treatment of mineral resources, or fisheries, but does not include construction, meal preparation, or any other prescribed operation;

“allowable expenditure” has the meaning given in section 13;

“manufacturing business” means a business in which the production factors involved in a prescribed manufacturing or processing operation are grouped and coordinated;

“fund” means the industrial incentives fund created by this Act;

“allowable investment” has the meaning given in section 21;

“prescribed”, in the case of a form or of information to be furnished on a form, means prescribed by the Minister of Industry, Trade, Science and Technology; in any other case, it means prescribed by regulation;

“regulation” means any regulation made under this Act by the Government;

“Zone I” or “Zone II” means that part of the territory of Québec prescribed as Zone I or Zone II, as the case may be.

1977, c. 59, s. 1; 1977, c. 5, s. 14; 1979, c. 77, s. 27; 1984, c. 36, s. 44; 1988, c. 41, s. 89; 1994, c. 16, s. 51; 1997, c. 3, s. 111.

1.1. In this Act and the regulations, a legal person, whether or not established for pecuniary gain, is designated by the word “corporation”.

1997, c. 3, s. 112.

CHAPTER II INDUSTRIAL INCENTIVES FUND

DIVISION I ESTABLISHMENT

2. A fund hereinafter called the “industrial incentives fund” is created to enable corporations to plan their expansion as well as to encourage the reinvestment of their profits and to facilitate the financing of operations susceptible of increasing their economic and financial performance.

The Minister of Finance shall administer the fund, and the Minister of Revenue shall keep accounts of the sums accruing in the fund in favour of each corporation.

1977, c. 59, s. 2.

3. The fund shall be established and sustained with the sums deposited therein by the Minister of Revenue in accordance with section 4.

1977, c. 59, s. 3.

DIVISION II DEPOSITS

4. Any corporation meeting all the conditions set out in section 6 for a taxation year ending before 1 July 1981 may elect for that year that a sum equal to one-half of the tax otherwise payable for the year by the corporation be deposited in the fund by the Minister of Revenue in favour of the corporation.

1977, c. 59, s. 4; 1981, c. 12, s. 17.

5. For the purposes of this chapter, the tax otherwise payable by a corporation for a taxation year is the tax otherwise payable by it for the year under Part I of the Taxation Act, computed after the application of section 2 of the Act to promote industrial development by means of fiscal advantages (chapter D-9), sections 22 and 23 of this act and sections 1183 and 1184 of the Taxation Act.

1977, c. 59, s. 5.

6. The election contemplated in section 4 shall not be made by a corporation in respect of a taxation year unless:

(a)  at least 50 % of the gross revenue, within the meaning of section 1 of the Taxation Act, of the corporation for the year is from production operations carried on by the corporation itself; and

(b)  the corporation meets, simultaneously, the two following requirements, for the year, for the preceding taxation year, or for the year preceding the preceding taxation year:

i.  the corporation and every other corporation related to it together had 200 employees or fewer either on the last day of the year or in the course of the year according to the average annual number of employees, computed by adding up the number of employees on the first day of each month of the year and dividing the sum so obtained by the number of months in the year, and

ii.  the assets of the corporation and those of every other corporation related to it together amounted to less than $7 500 000 at the end of the year, according to the value appearing in the balance sheet of such corporations submitted to the shareholders, after deducting from such assets the balance so appearing of the sums deposited in the fund, if any, the amounts invested in such related corporation and the amounts receivable from such related corporation.

1977, c. 59, s. 6.

7. For the purposes of section 6, where the taxation year of a corporation related to the electing corporation terminates on a date other than the date on which the taxation year of the electing corporation terminates, any reference to the taxation year, to the preceding taxation year or to the year preceding the preceding taxation year of such related corporation shall read as if such reference were to the taxation year of the related corporation terminating during the relevant taxation year of the electing corporation.

1977, c. 59, s. 7.

8. The election contemplated in section 4 is valid for a taxation year only if it is made by the corporation, in the form prescribed by the Minister of Revenue, in the fiscal return filed by the corporation for the year, in accordance with section 1000 of the Taxation Act (chapter I-3), and if it is accompanied with an authorization of the corporation, in the form prescribed by the Minister of Revenue, authorizing him to communicate to the Minister of Finance and to the Minister of Industry, Trade, Science and Technology, confidentially and for the sole purposes of this Act, any information relating to the balance of the sums so deposited in the fund in favour of the corporation.

1977, c. 59, s. 8; 1979, c. 77, s. 27; 1984, c. 36, s. 44; 1988, c. 41, s. 89; 1994, c. 16, s. 51.

9. The election contemplated in section 4 in respect of a taxation year takes effect at the time of the assessment, by the Minister of Revenue, of the fiscal return, mentioned in section 8, filed by the corporation for the year, if the corporation has paid, to the Minister of Revenue, at that time or earlier, all the duties, within the meaning of the Act respecting the Ministère du Revenu (chapter M-31), interest and penalties exigible from it, at such time, under a fiscal law; otherwise, the election takes effect from the time the corporation pays to the Minister of Revenue the total of all such duties, interest and penalties exigible from it at the time of such latter payment.

1977, c. 59, s. 9.

10. The Minister of Revenue may decrease or, as the case may be, increase the balance of the sums deposited in the fund in respect of a corporation for a taxation year, to take into account the decrease or, as the case may be, the increase in the tax otherwise payable by the corporation for a taxation year pursuant to a new assessment made under Part I of the Taxation Act, or to take into account the invalidity of an election contemplated in section 4 made by the corporation in respect of a taxation year for which it did not meet the conditions set out in section 6.

1977, c. 59, s. 10.

11. Every sum which, having been deposited in the fund in favour of a corporation, is not withdrawn in accordance with Division III within a period of five years and six months following the taxation year for which the corporation has made an election under section 4 regarding that sum, shall be transferred to the consolidated revenue fund.

Upon such transfer, all the rights granted to the corporation in respect of that sum by this act are extinguished.

1977, c. 59, s. 11.

12. Every sum deposited in the fund in favour of a corporation is unassignable and unseizable except with regard to the Minister of Revenue, and then, only to the extent provided for by this act.

1977, c. 59, s. 12.

DIVISION III WITHDRAWALS

13. For the purposes of this division, an expenditure is allowable if it is related to prescribed manufacturing or processing operations carried on in Québec and intended for:

(a)  the purchase, the leasing, or the construction, improvement or expansion, of plants or factories, or the purchase of the land required for the operation of such plants or factories and to be used for such purpose within a reasonable delay;

(b)  the purchase, including installation, of machinery, tools, equipment, or of their components, intended for the operation of plants or factories;

(c)  the consolidation of the production facilities of a number of businesses or the pooling, wholly or in part, of their operating facilities by way of amalgamation, grouping, the acquisition of other businesses or of their production facilities, or by any other grouping of their resources or interests;

(d)  the acquisition or the amalgamation of a distribution business or the purchase of distribution facilities;

(e)  the expansion of an export market;

(f)  the increase of research and development expenditures regarding the devising, improving or perfecting of a product or production techniques;

(g)  the acquisition of a patent or a licence, including the payment of a royalty attached thereto for the purpose of working it; or

(h)  any other prescribed purpose.

In addition, the purposes set out in subparagraph a or b of the first paragraph concerning an expenditure of $100 000 or more, and those set out in subparagraphs c to h of the said paragraph, must conform to the prescribed requirements.

1977, c. 59, s. 13.

14. Any corporation making a prior application for a certificate to the Minister of Industry, Trade, Science and Technology may, subject to the limits provided for in section 15, and if such certificate is issued in prescribed form and delivered to the Minister of Revenue by the Minister of Industry, Trade, Science and Technology, withdraw the sums deposited in the fund in favour of the corporation.

The application contemplated in the first paragraph must concern an allowable expenditure of not less than $20 000 that the corporation undertakes to make within a delay of 12 months immediately following the date of issue of the certificate.

1977, c. 59, s. 14; 1979, c. 77, s. 27; 1984, c. 36, s. 44; 1988, c. 41, s. 89; 1994, c. 16, s. 51.

15. Any withdrawal contemplated in section 14 shall not exceed, for an allowable expenditure in respect of which a certificate is issued, the lesser of the following amounts:

(a)  25 per cent of such allowable expenditure, when the certificate is issued before 11 March 1981, or 50 per cent of the allowable expenditure, when the certificate is issued after 10 March 1981; or

(b)  the balance of the sums deposited in the fund in favour of the corporation before the date of the withdrawal.

1977, c. 59, s. 15; 1981, c. 12, s. 18.

16. Any application for a certificate contemplated in section 14 concerning an allowable expenditure of less than $100 000 referred to in subparagraph a or b of the first paragraph of section 13 must set out, in particular, the date and the amount of the proposed expenditure and the place where it is to be made, and must also contain a description of such expenditure.

Any application for a certificate contemplated in section 14 concerning an allowable expenditure of $100 000 or more referred to in subparagraph a or b of the first paragraph of section 13 or an expenditure referred to in subparagraphs c to h of the said paragraph must contain, in addition to the information provided for in the first paragraph, confidentially and for the sole purposes of this Act, the corporation’s expansion programme in the prescribed form.

The Minister of Industry, Trade, Science and Technology shall not deny the benefit of this Act to a corporation on the basis of information contained in the corporation’s expansion programme.

1977, c. 59, s. 16; 1979, c. 77, s. 27; 1984, c. 36, s. 44; 1988, c. 41, s. 89; 1994, c. 16, s. 51.

17. Notwithstanding section 15, a corporation may also withdraw from the fund, in regard to an allowable expenditure for which a certificate is obtained, any balance of the sums deposited in the fund in favour of the corporation in respect of any taxation year of the corporation preceding the taxation year in which such certificate is issued, in respect of the taxation year during which such certificate is issued and in respect of the following taxation year.

The aggregate of the withdrawals contemplated in this section and in section 14 for all the taxation years, in respect of an allowable expenditure contemplated by a certificate shall not, however, exceed 25 per cent of such allowable expenditure if the certificate is issued before 11 March 1981 or 50 per cent of such expenditure if the certificate is issued after 10 March 1981.

1977, c. 59, s. 17; 1981, c. 12, s. 19.

18. The Minister of Industry, Trade, Science and Technology may, on an application from a corporation, extend the delay mentioned in section 14 in respect of an allowable expenditure for which a certificate has been obtained, if he is of opinion that the corporation could not, by reason of unforeseeable circumstances beyond its control, make the allowable expenditure within such delay.

He may also refuse to issue a certificate to a corporation if such corporation has not made, within the delay provided for in section 14 or within an extension of such delay granted under the first paragraph, the allowable expenditure for which another certificate was issued previously to the corporation, or if the corporation has previously obtained, or attempts to obtain, such a certificate under false representations.

Where a corporation has not, within the delay provided for in section 14 or within an extension of such delay granted under the first paragraph, made an allowable expenditure for which a certificate has been obtained or where a corporation has obtained a certificate under false representations, the corporation must reimburse to the Minister of Revenue the sums it has withdrawn from the fund under such certificate, with interest at the rate fixed in section 28 of the Act respecting the Ministère du Revenu (chapter M-31) for the period commencing on the day on which those sums were withdrawn and terminating on the day they are reimbursed.

1977, c. 59, s. 18; 1979, c. 77, s. 27; 1984, c. 36, s. 44; 1988, c. 41, s. 89; 1994, c. 16, s. 51.

19. The Minister of Finance, at the time that sums deposited in the fund in favour of a corporation are withdrawn by such corporation, may pay to the corporation, out of the revenues of the fund, if so provided by regulation, a bonus at the rate fixed by such regulation for the year of the withdrawal, applicable to the amount of the withdrawal.

1977, c. 59, s. 19.

20. Where a corporation has, at a given time, withdrawn from the fund an amount exceeding that which it should have withdrawn at that time pursuant to the application of section 10, the corporation must reimburse the excess amount to the Minister of Revenue with interest at the rate fixed in section 28 of the Act respecting the Ministère du Revenu, for the period commencing on the day on which such excess amount was withdrawn and terminating on the day it is reimbursed.

1977, c. 59, s. 20.

CHAPTER III TAX ABATEMENT TO ENCOURAGE REGIONAL INDUSTRIAL DEVELOPMENT

21. For the purposes of this chapter, the expression “allowable investment” means the amounts of money invested in Québec, in respect of prescribed manufacturing or processing operations other than initial processing operations in a resource-based industry, by a corporation carrying on a manufacturing operation therein, during the period commencing 1 April 1977 and terminating 31 March 1981, for

(a)  the purchase, the leasing, or the construction, improvement or expansion, of plants or factories, or the purchase of land required for the operation of such plants or factories and to be used for such purpose within a reasonable delay; or,

(b)  the purchase, including installation, of machinery, tools and equipment, or of their components, intended for the operation of plants or factories.

However, the amounts of money so invested during such period for which a certificate contemplated in section 14 was obtained do not come within the definition of “allowable investment”.

1977, c. 59, s. 21; 1980, c. 13, s. 122.

22. Any corporation operating a manufacturing business in Québec which makes an allowable investment of at least $50 000 in Zone I or in Zone II during the period commencing 1 April 1977 and terminating 31 March 1981 may, subject to section 24, deduct, from the tax otherwise payable by it for a taxation year, 25 per cent of the amount of such portion of that investment as was made during the part of that year which is comprised within the said period, provided that the corporation files with the Minister of Revenue, in support of its claim, the certificate contemplated in section 26 concerning such investment.

However, no deduction is allowed, under this section, in respect of any allowable investment, before the taxation year comprised within the period mentioned in the first paragraph in which the cumulative amount of such investment attains $50 000; any portion of such investment made before such latter year is, for the purposes of this section, deemed to have been made during that part of the year which is comprised within the said period.

1977, c. 59, s. 22; 1980, c. 13, s. 122.

22.1. Where a corporation has obtained, before 1 April 1981, the certificate referred to in section 26 in respect of an investment, sections 21 and 22 must, in regard to that corporation and in respect of any part of that investment that it has made before 1 April 1982, be read as though the year “1982” were substituted for the year “1981”.

1980, c. 13, s. 123.

23. Any amount that a corporation could deduct in respect of a taxation year, under section 22, if the tax otherwise payable by it for the year were sufficient, but does not deduct, may be deducted from the tax otherwise payable by the corporation for the four subsequent taxation years of the corporation, subject to section 24, and to the extent that it was not previously deducted.

1977, c. 59, s. 23.

24. The aggregate of the amounts that a corporation may deduct under sections 22 and 23 in respect of the same taxation year shall not exceed one-half of the tax otherwise payable by the corporation for the year.

Furthermore, the aggregate of the amounts that a corporation may deduct under the said sections for the aggregate of its taxation years shall not exceed $500 000 for the aggregate of the allowable investments made during the period mentioned in the first paragraph of the said section 22.

1977, c. 59, s. 24.

25. For the purposes of this chapter, the tax otherwise payable by a corporation for a taxation year shall be the tax otherwise payable by it for the year under Part I of the Taxation Act, computed before the application of this chapter but after the application of section 2 of the Act to promote industrial development by means of fiscal advantages and sections 1183 and 1184 of the Taxation Act.

1977, c. 59, s. 25.

26. To avail itself of the advantages provided for in this chapter in regard to an allowable investment, a corporation must, before the investment is made, obtain from the Minister of Industry, Trade, Science and Technology a certificate in respect of such investment, in prescribed form.

To obtain such certificate, a corporation must apply therefor to the Minister of Industry, Trade, Science and Technology and establish,

(a)  for an investment of less than $100 000 made in Zone I or an investment made in Zone II, that there exists a market for its new production without significant harm to the other businesses of the zone concerned; or

(b)  for an investment of $100 000 or more made in Zone I, that it conforms to the requirements of subparagraph a of the first paragraph of section 2 of the Industrial Development Assistance Act (chapter A-13) as it read on 22 June 1982.

1977, c. 59, s. 26; 1979, c. 77, s. 27; 1984, c. 36, s. 44; 1988, c. 41, s. 89; 1994, c. 16, s. 51.

CHAPTER IV REGULATIONS

27. The Government may make regulations:

(a)  to prescribe that which must be prescribed by regulation under this Act;

(b)  to provide for the payment of a bonus in accordance with section 19 and fix its rate;

(c)  to prescribe, generally, the measures required for the application of this act.

The regulations made under this act come into force on their date of publication in the Gazette officielle du Québec or on any later date fixed therein; they may also, once published and if they so provide, apply to a period prior to their publication, but not prior to the current year.

1977, c. 59, s. 27; 1977, c. 5, s. 14.

CHAPTER V FINAL PROVISIONS

28. Sections 2 to 12, the third paragraph of section 18, section 20 and sections 22 to 25 constitute a fiscal law within the meaning of the Act respecting the Ministère du Revenu (chapter M-31).

Sections 1005 to 1014, 1051 and 1052, 1057 to 1062 and 1066 to 1079 of the Taxation Act apply with the necessary modifications.

1977, c. 59, s. 28; 1995, c. 1, s. 362; 1995, c. 63, s. 298.

29. Section 1, except to the extent that it enacts the definitions of the expressions “allowable expenditure”, “manufacturing business”, “allowable investment” and “Zone I” or “Zone II”, sections 4 to 12 and section 20 apply to any taxation year of a corporation terminating after 12 April 1977 except that, with respect to a taxation year overlapping 12 April 1977, the amount in respect of which a corporation may make the election mentioned in section 4 shall not exceed the proportion of the amount otherwise established under the said section 4 for the year, represented by the ratio between the number of days in the year that follow 12 April 1977 and the total number of days in the year.

Furthermore, with regard to the application of sections 4 to 12 and 20 to the 1977, 1978 or 1979 taxation year of a corporation, sections 6 and 7 must read as if references to the preceding taxation year or to the year preceding the preceding taxation year of the corporation which made the election provided for in section 4 were references to such a taxation year terminating after 12 April 1977; however, such is the case and where account must be taken, for the purposes of sections 6 and 7, of data relating to a taxation year of a related corporation terminating during the relevant taxation year of the electing corporation, it shall not be necessary that the taxation year of such related corporation terminate after 12 April 1977.

1977, c. 59, s. 31.

30. The Minister of Industry, Trade, Science and Technology is responsible for the application of this Act, except the sections and the paragraph mentioned in section 28, the application of which is entrusted to the Minister of Revenue.

1977, c. 59, s. 34; 1979, c. 77, s. 27; 1984, c. 36, s. 44; 1988, c. 41, s. 89; 1994, c. 16, s. 51.

31. (This section ceased to have effect on 17 April 1987).

1982, c. 21, s. 1; U. K., 1982, c. 11, Sch. B, Part I, s. 33.

REPEAL SCHEDULE

In accordance with section 17 of the Act respecting the consolidation of the statutes (chapter R-3), chapter 59 of the statutes of 1977, in force on 31 December 1977, is repealed, except sections 29, 30, 32, 33 and 35, effective from the coming into force of chapter S-34 of the Revised Statutes.