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

Section 1079.1r4 Disposition versions

2012-09-01

1079.1R4. For the purposes of the definition of “tax shelter” in the first paragraph of section 1079.1 of the Act, a prescribed benefit in respect of an interest in a property includes an amount that is a limited-recourse amount under any of sections 851.38, 851.42 and 851.48 of the Act, but does not include an amount of indebtedness that is a limited-recourse amount

(a)  solely because it is not required to be repaid within 10 years from the time the indebtedness arose where the debtor would, if the interest were acquired by the debtor immediately after that time, be

i.  a partnership at least 90% of the fair market value of the property of which is attributable to the partnership’s corporeal capital property located in Canada, and at least 90% of the value of all interests in which are held by limited partners within the meaning of section 613.6 of the Act, except where it is reasonable to conclude that one of the main reasons for the acquisition of one or more properties by the partnership, or for the acquisition of one or more interests in the partnership by limited partners, is to avoid the application of this section, or

ii.  a member of a particular partnership having fewer than 6 members, except where

(1)  the particular partnership is a member of another partnership,

(2)  there is a limited partner, within the meaning of section 613.6 of the Act, of the particular partnership,

(3)  less than 90% of the fair market value of the particular partnership’s property is attributable to the particular partnership’s corporeal capital property located in Canada, or

(4)  it is reasonable to conclude that one of the main reasons for the existence of a partnership that is a member of a group of partnerships, one of which is the particular partnership, or for the acquisition of one or more properties by the particular partnership, is to avoid the application of this Title to the member’s indebtedness;

(b)  of a partnership where

i.  the indebtedness is secured by and used to acquire the partnership’s corporeal capital property located in Canada, other than specified energy property within the meaning of section 130R51, rental property within the meaning of section 130R88 and leasing property within the meaning of section 130R93,

ii.  the person to whom the indebtedness is repayable is a member of the Canadian Payments Association, and

iii.  throughout the period during which any amount is outstanding in respect of the indebtedness, except where it is reasonable to conclude that one of the main reasons for the acquisition of one or more properties by the partnership, or for the acquisition of one or more interests in the partnership by limited partners, is to avoid the application of this section,

(1)  at least 90% of the fair market value of the property of the partnership is attributable to corporeal capital property located in Canada of the partnership,

(2)  at least 90% of the value of all interests in the partnership are held by limited partners, within the meaning of section 613.6 of the Act, that are corporations, and

(3)  the principal business of each limited partner referred to in subparagraph 2 is related to the principal business of the partnership; or

(c)  of a corporation where the amount is a bona fide business loan made to the corporation for the purpose of financing a business that the corporation operates and the loan is made pursuant to a loan program of the Government of Canada or of a province the purpose of which is to extend financing to small and medium-sized Canadian businesses.

s. 1079.1R4; O.C. 1282-2003, s. 70; O.C. 1249-2005, s. 42; O.C. 134-2009, s. 1.