I-3 - Taxation Act

Section 1029.8.21.32 Disposition versions

2009-06-04

1029.8.21.32. (Repealed).

2001, c. 51, s. 103; 2002, c. 9, s. 53; 2002, c. 40, s. 120; 2005, c. 1, s. 226; 2009, c. 15, s. 224.

2006-03-01

1029.8.21.32. In this division,

“base period” of a qualified corporation or qualified partnership, in relation to an eligible production expenditure incurred in respect of an eligible e-commerce solution, means the period beginning on 15 March 2000 and ending on

(a)  30 September 2002, when either of the following conditions is satisfied:

i.  the expense is incurred pursuant to an agreement in writing entered into before 1 April 2002, or

ii.  the production work in relation to the eligible e-commerce solution, carried out by, or on behalf of, the qualified corporation or qualified partnership, as the case may be, has begun before 1 April 2002; or

(b)  31 March 2002, in any other case;

“deemed expenditure” of a qualified corporation for a taxation year or of a qualified partnership for a fiscal period means

(a)  the aggregate of all amounts each of which is the amount for the year in respect of an eligible e-commerce solution of the corporation that is determined under section 1029.8.21.47; or

(b)  the aggregate of all amounts each of which is the amount for the fiscal period in respect of an eligible e-commerce solution of the partnership that is determined under section 1029.8.21.48 or 1029.8.21.49 ;

“e-commerce solution” of a qualified corporation or qualified partnership, in respect of a business it carries on in Québec, means a transactional Web site using the Internet, a limited-access secure and confidential extranet, or a business-to-business transactions system using a private network, in relation to that business;

“eligible e-commerce solution” of a qualified corporation or qualified partnership, in respect of a business it carries on in Québec means, subject to the fourth paragraph, an e-commerce solution of the corporation or partnership, in respect of that business, that is not connected with pornography, violence or lottery games, provided that the following conditions were not satisfied in its respect on 14 March 2000, but that they are satisfied at any particular time after that date and on or before 31 March 2003:

(a)  it includes a transaction mode by secure computerized channel that ensures the confidentiality of information exchanged; and

(b)  the transaction mode referred to in paragraph a allows the purchase or sale of corporeal or incorporeal property or services, or allows the exchange of commercial documents;

“eligible production expenditure” of a qualified corporation for a taxation year or of a qualified partnership for a fiscal period, in respect of its eligible e-commerce solution, means the aggregate of the following amounts, to the extent that they are reasonable in the circumstances:

(a)  the aggregate of all amounts each of which is a production expenditure in respect of the eligible e-commerce solution that the qualified corporation or qualified partnership incurred in that portion of its base period that is in the taxation year or fiscal period, as the case may be, to the extent that the amount is paid;

(b)  the aggregate of all amounts each of which is the portion of the consideration paid by the qualified corporation or qualified partnership, under the terms of a contract, for production work in relation to the eligible e-commerce solution that was carried out on its behalf in that portion of its base period that is in the year or fiscal period, as the case may be, to a person or partnership who or which carried out all or substantially all of the production work and with whom or with which the qualified corporation or the qualified partnership is not dealing at arm’s length at the time the contract is entered into, that may reasonably be attributed to a production expenditure in respect of that eligible e-commerce solution that the person or partnership incurred and paid; and

(c)  the aggregate of all amounts each of which is 80% of the portion of the consideration paid by the qualified corporation or qualified partnership, under the terms of a contract, for production work in relation to the eligible e-commerce solution, to a person or partnership with whom or with which the qualified corporation or the qualified partnership is dealing at arm’s length at the time the contract is entered into, that may reasonably be attributed to the production work carried out on its behalf in that portion of its base period that is in the year or fiscal period, as the case may be, but only to the extent where the expenditure incurred by the person or partnership in connection with the carrying out of the production work is a production expenditure in respect of that eligible e-commerce solution;

“production expenditure” in respect of an eligible e-commerce solution of a qualified corporation or a qualified partnership means an amount that may reasonably be attributed to the salaries or wages a person or partnership incurred for production work in relation to the eligible e-commerce solution, or to the cost of an application software that a person or partnership acquired, as part of that production work, for integration into the eligible e-commerce solution, but does not include

(a)  the salary or wages incurred in respect of an employee of the qualified corporation or qualified partnership, as the case may be, who takes part in a training activity concerning the eligible e-commerce solution;

(b)  expenditures to commercialize the eligible e-commerce solution, except those relating to the design of a marketing plan;

(c)  expenditures for hosting the eligible e-commerce solution; or

(d)  where the production expenditure has been incurred by the person or partnership for production work carried out on behalf of the qualified corporation or qualified partnership, an amount, that is salaries or wages, that is not an amount that may reasonably be attributed to the salaries or wages the person or partnership incurred in respect of its employees in an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees;

“production work” in relation to an eligible e-commerce solution of a qualified corporation or qualified partnership means the work carried out as part of the stages required to implement the eligible e-commerce solution, including stages relating to

(a)  developing an implementation assessment of the eligible e-commerce solution;

(b)  developing a marketing plan of the eligible e-commerce solution;

(c)  designing or developing the eligible e-commerce solution, or integrating it in the business carried on in Québec by the qualified corporation or qualified partnership;

(d)  modifying an eligible e-commerce solution in respect of which not all the conditions set out in paragraphs a and b of the definition of “eligible e-commerce solution” were satisfied on 14 March 2000, such that the conditions may be satisfied;

(e)  the training of the employees of the qualified corporation or qualified partnership that is done in the particular period ending on or before the last day of the three-month period following the date of implementation of the eligible e-commerce solution, or the technical support provided to that corporation or partnership in the particular period; or

(f)  the maintenance of the eligible e-commerce solution that is carried out in the three-month period following the date of implementation of the eligible e-commerce solution;

“qualified corporation” for a taxation year means, subject to section 1029.8.21.37, a corporation that, in the year, has an establishment in Québec and carries on a qualified business in Québec, of which at least 50% of the salaries or wages it pays to its employees in the year are paid to employees of an establishment situated in Québec, but does not include

(a)  a corporation that is exempt from tax for the year under Book VIII, other than an insurer referred to in paragraph k of section 998 not so exempt from tax on all of its taxable income for the year by reason of section 999.0.1; or

(b)  a corporation that would be exempt from tax for the year under section 985, but for section 192;

“qualified partnership” for a fiscal period means a partnership that, if it were a corporation having the attributes described in subparagraphs a and b of the first paragraph of section 1029.8.21.34, would be a qualified corporation for that fiscal period;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “qualified corporation” in the first paragraph, for the purpose of determining the proportion of the salaries or wages of a corporation’s employees that the corporation paid to employees of an establishment situated in Québec, the following rules apply:

(a)  except where a commission is paid to a person who is not an employee of the corporation, an amount paid under an agreement by the corporation to a person for services that would normally be rendered by the employees of the corporation is deemed to be a salary or wages paid to such an employee of the establishment of the corporation to which the services are reasonably attributable and to the extent that they are so attributable; and

(b)  where an employee renders a service to or on behalf of a corporation that is not the employer of the employee, an amount that may reasonably be considered to be the salary or wages earned by the employee for the rendering of the service is deemed, for the taxation year during which the salary or wages are paid to the employee, to be a salary or wages paid by the corporation to an employee of an establishment of the corporation to which the service is reasonably attributable, if the amount is not otherwise included in the aggregate of the salaries or wages paid by the corporation that are determined for the purposes of this division and if the service rendered by the employee is

i.  performed by the employee in the normal course of the employee’s duties for the employer,

ii.  rendered to or on behalf of the corporation as part of the regular, ongoing activities of carrying on a business by the corporation, and

iii.  of the same type as services rendered by employees of entities carrying on the same type of business as the business referred to in subparagraph ii.

The eligible e-commerce solution of a qualified corporation or qualified partnership, in respect of which the conditions set out in paragraphs a and b of the definition of “eligible e-commerce solution” in the first paragraph cease to be satisfied at a particular time that is not after the end of the base period of the qualified corporation or qualified partnership, continues to qualify as such at and after that time provided the conditions are again satisfied on or before 31 March 2003.

For the purposes of the definition of “production work” in the first paragraph, the date of implementation of an eligible e-commerce solution is the date on which the eligible e-commerce solution is functional for the first time and all the conditions set out in paragraphs a and b of the definition of “eligible e-commerce solution” in the first paragraph are satisfied in its respect.

2001, c. 51, s. 103; 2002, c. 9, s. 53; 2002, c. 40, s. 120; 2005, c. 1, s. 226.