T-0.1, r. 2 - Regulation respecting the Québec sales tax

Section 433.16.2r5 Disposition versions

2017-04-12

433.16.2R5. In the circumstances set out in the second paragraph, the positive amount determined by the following formula is a prescribed amount for a reporting period in a particular fiscal year, in respect of a taxation year, of a selected listed financial institution in respect of a particular series in the case of a stratified investment plan, or in respect of the investment plan in any other case:

50% × [(G1 − G2) / G3 × G4] × G5× G6 × (G7 / G8).

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

(1)  an amount, other than an amount paid in a remote location, is an expense incurred by the financial institution to earn income from a business or property in a taxation year — in this section referred to as the "composite amount" — and that, as the case may be,

(a)  becomes due from the financial institution or is an amount paid by the financial institution without having become due in respect of the supply of property or a service made to the financial institution; or

(b)  is paid by the financial institution as an allowance or reimbursement in respect of which the financial institution is deemed under section 174 or 175 of the Excise Tax Act (R.S.C. 1985, c. E-15) to have received a supply of property or a service;

(2)  section 421.1 of the Taxation Act (chapter I-3) applies, or would apply if the financial institution were a taxpayer under that Act, to all of the composite amount or that part of it that is, for the purposes of that Act, an amount paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment and section 421.1 of that Act deems the composite amount or that part to be 50% of a particular amount;

(3)  the particular amount exceeds twice that of the amount determined under section 175.6.1 of the Taxation Act that is deductible in computing the financial institution's income for the taxation year from the business or property, or that would be so deductible if the financial institution were a taxpayer under that Act; and

(4)  an amount of tax included in the composite amount and having become payable under Part IX of the Excise Tax Act or deemed under section 174 or 175 of that Act to have been paid by the financial institution is included in determining the input tax credit tax claimed by the financial institution in the return under Division V of Part IX of that Act filed by the financial institution for the particular reporting period.

For the purposes of the formula in the first paragraph,

(1)  G1 is the particular amount referred to in subparagraph 2 of the second paragraph;

(2)  G2 is twice the amount determined under section 175.6.1 of the Taxation Act that is deductible in computing the financial institution's income for the taxation year from the business or property, or that would be so deductible if the financial institution were a taxpayer under that Act;

(3)  G3 is the composite amount;

(4)  G4 is the aggregate of all amounts each of which is an amount in respect of an input tax credit taken into account in determining the amount under subparagraph 1 of the second paragraph of section 433.16.2 of the Act in respect of the particular series or the investment plan, as the case may be, for the particular reporting period, in respect of the composite amount;

(5)  G5 is

(a)  where the particular fiscal year begins before 1 January 2020 and the financial institution is a large business,

i.  if the particular fiscal year ends before 1 January 2018, zero; and

ii.  in any other case, the quotient obtained when the aggregate of all amounts, each of which is the rate referred to in the fourth paragraph applicable on a particular day in the particular reporting period, is divided by the number of days in the particular reporting period; and

(b)  in any other case, 1;

(6)  G6 is the specified percentage of the financial institution as regards Québec for the particular reporting period within the meaning of section 433.16R7;

(7)  G7 is the tax rate specified in the first paragraph of section 16 of the Act; and

(8)  G8 is the tax rate specified in subsection 1 of section 165 of the Excise Tax Act.

The rate referred to in subparagraph ii of subparagraph a of subparagraph 5 of the third paragraph applicable on a particular day is,

(1)  if the particular day is before 1 January 2018, 0%;

(2)  if the particular day is after 31 December 2017 but before 1 January 2019, 25%;

(3)  if the particular day is after 31 December 2018 but before 1 January 2020, 50%;

(4)  if the particular day is after 31 December 2019 but before 1 January 2021, 75%; and

(5)  if the particular day is after 31 December 2020, 100%.

In this section, "amount paid in a remote location", "business", "property" and "taxation year" have the meaning assigned by section 457.1.3 of the Act.

This section does not apply for the purposes of subdivision 8 of Division III of Chapter VIII of Title I of the Act or paragraph 1 of section 470.1 of the Act.

O.C. 320-2017, s. 4.