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

Section 1079.1r3 Disposition versions

2013-07-03

1079.1R3. For the purposes of the definition of “tax shelter” in the first paragraph of section 1079.1 of the Act, a prescribed benefit in relation to an interest in a property means any amount that may reasonably be expected, having regard to statements or representations made in respect of the interest, to be received or enjoyed by a person, in this section referred to as “the purchaser”, who acquires the interest, or a person with whom the purchaser does not deal at arm’s length, which receipt or enjoyment would have the effect of reducing the impact of any loss that the purchaser may sustain in respect of the interest, and includes the amounts described in the second paragraph, but, subject to subparagraph ii of subparagraph b of that paragraph, does not include profits earned in respect of the interest.

The amounts mentioned in the first paragraph are in reference to

(a)  an amount owed, immediately or in the future, by the purchaser, or a person with whom the purchaser does not deal at arm’s length, to any other person to the extent that

i.  liability to pay that amount is contingent,

ii.  payment of that amount is or will be guaranteed, security is or will be provided in respect of the amount or an agreement to indemnify the other person to whom the amount is owed is or will be entered into by one of the following persons:

(1)  a promoter in respect of the interest,

(2)  a person with whom the promoter does not deal at arm’s length, or

(3)  a person who is to receive a payment, other than a payment made by the purchaser, in respect of the guarantee, security or agreement to indemnity,

iii.  the rights of that other person against the purchaser, or against a person with whom the purchaser does not deal at arm’s length, in respect of the collection of all or part of the purchase price, are limited to a maximum amount, are enforceable only against certain property, or are otherwise limited by agreement, or

iv.  payment of that amount is to be made in a foreign currency or is to be determined by reference to its value in a foreign currency and it may reasonably be considered, having regard to the history of the exchange rate between the foreign currency and Canadian currency, that the aggregate of all such payments, when converted to Canadian currency at the exchange rate expected to prevail at the date on which each such payment would be required to be made, will be substantially less than that aggregate would be if each such payment was converted to Canadian currency at the time that each such payment became owing;

(b)  an amount that the purchaser or a person with whom the purchaser does not deal at arm’s length is entitled at any time to receive, directly or indirectly, or to have available

i.  as a form of assistance from a government, municipality or other public authority, whether as a subsidy, grant, forgiveable loan, deduction from tax, other than an amount described in subparagraph b of the second paragraph of section 1079.1 of the Act, or investment allowance, or as any other form of assistance, or

ii.  by reason of a revenue guarantee or other agreement in respect of which revenue may be earned by the purchaser or a person with whom the purchaser does not deal at arm’s length, to the extent that the revenue guarantee or other agreement may reasonably be considered to ensure that the purchaser or person will receive a return of all or a portion of the purchaser’s outlays in respect of the interest;

(c)  an amount that is the proceeds of disposition to which the purchaser is entitled by way of an agreement or other arrangement under which the purchaser has a right, either absolutely or contingently, to dispose of the interest, otherwise than as a consequence of the purchaser’s death, including the fair market value of any property that the agreement or arrangement provides for the acquisition of in exchange for all or any part of the interest; and

(d)  an amount that is owed to a promoter, or a person with whom the promoter does not deal at arm’s length, by the purchaser or a person with whom the purchaser does not deal at arm’s length in respect of the acquisition of the interest.

s. 1079.1R3; O.C. 1114-92, s. 38; O.C. 1466-98, s. 126; O.C. 1451-2000, s. 50; O.C. 134-2009, s. 1; O.C. 701-2013, s. 62.

2012-09-01

1079.1R3. For the purposes of the definition of “tax shelter” in the first paragraph of section 1079.1 of the Act, a prescribed benefit in relation to an interest in a property means any amount that may reasonably be expected, having regard to statements or representations made in respect of the interest, to be received or enjoyed by a person, in this section referred to as “the purchaser”, who acquires the interest, or a person with whom the purchaser does not deal at arm’s length, which receipt or enjoyment would have the effect of reducing the impact of any loss that the purchaser may sustain in respect of the interest, and includes the amounts described in the second paragraph, but, subject to subparagraph ii of subparagraph b of that paragraph, does not include profits earned in respect of the interest.

The amounts mentioned in the first paragraph are in reference to

(a)  an amount owed, immediately or in the future, by the purchaser, or a person with whom the purchaser does not deal at arm’s length, to any other person to the extent that

i.  liability to pay that amount is contingent,

ii.  payment of that amount is or will be guaranteed, security is or will be provided in respect of the amount or an agreement to indemnify the other person to whom the amount is owed is or will be entered into by one of the following persons:

(1)  a promoter in respect of the interest,

(2)  a person with whom the promoter does not deal at arm’s length, or

(3)  a person who is to receive a payment, other than a payment made by the purchaser, in respect of the guarantee, security or agreement to indemnity,

iii.  the rights of that other person against the purchaser, or against a person with whom the purchaser does not deal at arm’s length, in respect of the collection of all or part of the purchase price, are limited to a maximum amount, are enforceable only against certain property, or are otherwise limited by agreement, or

iv.  payment of that amount is to be made in a foreign currency or is to be determined by reference to its value in a foreign currency and it may reasonably be considered, having regard to the history of the exchange rate between the foreign currency and Canadian currency, that the aggregate of all such payments, when converted to Canadian currency at the exchange rate expected to prevail at the date on which each such payment would be required to be made, will be substantially less than that aggregate would be if each such payment was converted to Canadian currency at the time that each such payment became owing;

(b)  an amount that the purchaser or a person with whom the purchaser does not deal at arm’s length is entitled at any time to receive, directly or indirectly, or to have available

i.  as a form of assistance from a government, municipality or other public authority, whether as a subsidy, grant, forgivable loan, deduction from tax or investment allowance, or as any other form of assistance, or

ii.  by reason of a revenue guarantee or other agreement in respect of which revenue may be earned by the purchaser or a person with whom the purchaser does not deal at arm’s length, to the extent that the revenue guarantee or other agreement may reasonably be considered to ensure that the purchaser or person will receive a return of all or a portion of the purchaser’s outlays in respect of the interest;

(c)  an amount that is the proceeds of disposition to which the purchaser is entitled by way of an agreement or other arrangement under which the purchaser has a right, either absolutely or contingently, to dispose of the interest, otherwise than as a consequence of the purchaser’s death, including the fair market value of any property that the agreement or arrangement provides for the acquisition of in exchange for all or any part of the interest; and

(d)  an amount that is owed to a promoter, or a person with whom the promoter does not deal at arm’s length, by the purchaser or a person with whom the purchaser does not deal at arm’s length in respect of the acquisition of the interest.

s. 1079.1R3; O.C. 1114-92, s. 38; O.C. 1466-98, s. 126; O.C. 1451-2000, s. 50; O.C. 134-2009, s. 1.