I-3 - Taxation Act

Section 1029.8.36.54 Disposition versions

2021-12-10

1029.8.36.54. In this division,

“apparent payment” means, except in sections 1029.8.36.55 and 1029.8.36.55.1, an amount paid or payable by a person or a partnership who or which, under the terms of a contract, carries out work or prepares plans and specifications for a qualified corporation, where the amount is paid or payable for the use of premises, facilities or equipment, or for the provision of services, and that may reasonably be considered to be included in a qualified construction expenditure or a qualified conversion expenditure;

“construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the construction of an eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the construction of the eligible vessel;

(c)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the construction of the eligible vessel incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership under the terms of the contract, that may reasonably be attributed to construction work provided for in the contract carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation, under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the conversion of the eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the conversion of the eligible vessel;

(c)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the conversion of the eligible vessel and incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership, under the terms of the contract, that may reasonably be attributed to conversion work provided for in the contract and carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“eligible contract” means a contract in respect of which a qualification certificate has been issued by the Minister of Economy and Innovation, entered into by a qualified corporation with a person or partnership and under which the qualified corporation entrusts the person or partnership with the carrying out of work in Québec which is related to the construction or conversion of an eligible vessel by the qualified corporation;

“eligible vessel” of a qualified corporation means a vessel in respect of which a qualification certificate was issued to the corporation by the Minister of Economy and Innovation for the purposes of this division;

“factor specified” in respect of an eligible vessel means,

(a)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out before 18 November 2000, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 8/3,

iii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 4, and

iv.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 8;

(b)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 17 November 2000 and before 13 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 20/9,

iii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 5/2, and

iv.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 20/7;

(b.1)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 12 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is a prototype vessel, 8/3,

ii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 80/27,

iii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 10/3, and

iv.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 80/21;

(c)  (paragraph repealed);

(d)  (paragraph repealed);

“qualified construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the construction expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a construction expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  in the case of an eligible vessel in respect of which the Minister of Economy and Innovation has issued a qualification certificate attesting that it is a prototype vessel and in respect of which work was carried out before 26 March 1997, the aggregate of

i.  250% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out before 26 March 1997, and

ii.  200% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out after 25 March 1997; and

(c)  in the case of an eligible vessel other than a vessel referred to in paragraph b, the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable, in respect of the eligible vessel for a preceding taxation year;

“qualified conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the conversion expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a conversion expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55.1 by the qualified corporation, on account of its tax payable, in respect of an eligible vessel for a preceding taxation year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, carries on a shipbuilding business in Québec and has an establishment in Québec, and that is neither a corporation that is exempt from tax for the year under Book VIII nor a corporation that would be exempt from tax under section 985 but for section 192;

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

“vessel” includes a semi-submersible rig and a floating plant.

For the purposes of paragraphs b and c of the definitions of “construction expenditure” and “conversion expenditure” in the first paragraph, the salaries or wages incurred by a person or a partnership in respect of an employee are attributable to the construction or conversion of an eligible vessel only where the employee works directly on the construction or conversion, as the case may be, of the vessel and only to the extent that the salaries or wages may reasonably be considered to relate to the construction or conversion, as the case may be, of the vessel in view of the time spent thereon by the employee and, in that respect, an employee who spends 90% or more of working time on the construction or conversion, as the case may be, of an eligible vessel is deemed to spend all working time thereon.

For the purposes of the first paragraph,

(a)  the amount of salaries or wages incurred, of a portion of the consideration paid or of a portion of the cost of a contract incurred, as the case may be, which relates to a construction expenditure or a conversion expenditure incurred by a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced, where applicable, by the amount of any government assistance and non-government assistance attributable to those salaries or wages, to that portion of the consideration or to that portion of the cost of a contract, as the case may be, that the qualified corporation has received, is entitled to receive or may reasonably expect to receive on or before its filing-due date for that year;

(a.1)  when referred to in subparagraph ii of paragraph a or paragraph c of the definition of “construction expenditure” or “conversion expenditure” in the first paragraph, the amount of a portion of a consideration paid in respect of a construction expenditure or a conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel, is to be reduced, where applicable, by the amount of any government assistance or non-government assistance that is attributable to the salaries or wages incurred in respect of the employees of an establishment of a person or partnership situated in Québec that are referred to in that subparagraph ii or that paragraph c, or that would be so attributable if the person or partnership had such employees, and that the person or partnership has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year;

(b)  an amount incurred or paid in a taxation year which relates to the activities or work to be carried out in a subsequent taxation year is deemed not to have been incurred or paid in that year but to have been incurred or paid in the subsequent year during which the activities or work to which the amount relates are carried out; and

(c)  the amount of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced by the amount of any apparent payment attributable to that expenditure, which the qualified corporation or a person with whom the qualified corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the qualified corporation’s filing-due date for that year.

For the purposes of subparagraph ii of paragraph a of the definitions of “qualified construction expenditure” and “qualified conversion expenditure” in the first paragraph, an amount of assistance received by a qualified corporation, a person or a partnership, as the case may be, is deemed to be repaid by the qualified corporation, person or partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, because of subparagraph a or a.1 of the third paragraph, the amount of the salaries or wages incurred, of a portion of a consideration paid or of a portion of the cost of a contract incurred, as the case may be, in respect of a construction expenditure or a conversion expenditure of a qualified corporation, for the purpose of computing the amount the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.36.55 or 1029.8.36.55.1;

(b)  was not received by the qualified corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the qualified corporation, the other person or the partnership may reasonably expect to receive.

1997, c. 14, s. 234; 1997, c. 31, s. 143; 1997, c. 85, s. 259; 1999, c. 8, s. 20; 1999, c. 83, s. 212; 2000, c. 5, s. 265; 2001, c. 7, s. 169; 2001, c. 51, s. 180; 2002, c. 9, s. 86; 2003, c. 29, s. 135; 2004, c. 21, s. 353; 2006, c. 8, s. 31; 2007, c. 12, s. 185; 2009, c. 15, s. 271; 2019, c. 14, s. 356; 2019, c. 29, s. 1; 2021, c. 36, s. 117.

2019-12-11

1029.8.36.54. In this division,

“apparent payment” means, except in sections 1029.8.36.55 and 1029.8.36.55.1, an amount paid or payable by a person or a partnership who or which, under the terms of a contract, carries out work or prepares plans and specifications for a qualified corporation, where the amount is paid or payable for the use of premises, facilities or equipment, or for the provision of services, and that may reasonably be considered to be included in a qualified construction expenditure or a qualified conversion expenditure;

“construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the construction of an eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the construction of the eligible vessel;

(c)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the construction of the eligible vessel incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership under the terms of the contract, that may reasonably be attributed to construction work provided for in the contract carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation, under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the conversion of the eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the conversion of the eligible vessel;

(c)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the conversion of the eligible vessel and incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership, under the terms of the contract, that may reasonably be attributed to conversion work provided for in the contract and carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“eligible contract” means a contract in respect of which a qualification certificate has been issued by the Minister of Economy and Innovation, entered into by a qualified corporation with a person or partnership and under which the qualified corporation entrusts the person or partnership with the carrying out of work in Québec which is related to the construction or conversion of an eligible vessel by the qualified corporation;

“eligible vessel” of a qualified corporation means a vessel constructed or converted in Québec by the corporation under a project in respect of which the Minister of Economy and Innovation has issued a qualification certificate, for the purposes of this division, attesting that the vessel will be a prototype vessel, or the first, second or third vessel constructed or converted, as the case may be, as part of a production run;

“factor specified” in respect of an eligible vessel means,

(a)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out before 18 November 2000, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 8/3,

iii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 4, and

iv.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 8;

(b)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 17 November 2000 and before 13 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 20/9,

iii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 5/2, and

iv.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 20/7;

(b.1)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 12 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is a prototype vessel, 8/3,

ii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 80/27,

iii.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 10/3, and

iv.  where the qualification certificate issued by the Minister of Economy and Innovation attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 80/21;

(c)  (paragraph repealed);

(d)  (paragraph repealed);

“qualified construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the construction expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a construction expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  in the case of an eligible vessel in respect of which the Minister of Economy and Innovation has issued a qualification certificate attesting that it is a prototype vessel and in respect of which work was carried out before 26 March 1997, the aggregate of

i.  250% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out before 26 March 1997, and

ii.  200% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out after 25 March 1997; and

(c)  in the case of an eligible vessel other than a vessel referred to in paragraph b, the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable, in respect of the eligible vessel for a preceding taxation year;

“qualified conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the conversion expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a conversion expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55.1 by the qualified corporation, on account of its tax payable, in respect of an eligible vessel for a preceding taxation year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, carries on a shipbuilding business in Québec and has an establishment in Québec, and that is neither a corporation that is exempt from tax for the year under Book VIII nor a corporation that would be exempt from tax under section 985 but for section 192;

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

“vessel” includes a semi-submergible rig stabilized by submerging pontoons and by anchoring.

For the purposes of paragraphs b and c of the definitions of “construction expenditure” and “conversion expenditure” in the first paragraph, the salaries or wages incurred by a person or a partnership in respect of an employee are attributable to the construction or conversion of an eligible vessel only where the employee works directly on the construction or conversion, as the case may be, of the vessel and only to the extent that the salaries or wages may reasonably be considered to relate to the construction or conversion, as the case may be, of the vessel in view of the time spent thereon by the employee and, in that respect, an employee who spends 90% or more of working time on the construction or conversion, as the case may be, of an eligible vessel is deemed to spend all working time thereon.

For the purposes of the first paragraph,

(a)  the amount of salaries or wages incurred, of a portion of the consideration paid or of a portion of the cost of a contract incurred, as the case may be, which relates to a construction expenditure or a conversion expenditure incurred by a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced, where applicable, by the amount of any government assistance and non-government assistance attributable to those salaries or wages, to that portion of the consideration or to that portion of the cost of a contract, as the case may be, that the qualified corporation has received, is entitled to receive or may reasonably expect to receive on or before its filing-due date for that year;

(a.1)  when referred to in subparagraph ii of paragraph a or paragraph c of the definition of “construction expenditure” or “conversion expenditure” in the first paragraph, the amount of a portion of a consideration paid in respect of a construction expenditure or a conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel, is to be reduced, where applicable, by the amount of any government assistance or non-government assistance that is attributable to the salaries or wages incurred in respect of the employees of an establishment of a person or partnership situated in Québec that are referred to in that subparagraph ii or that paragraph c, or that would be so attributable if the person or partnership had such employees, and that the person or partnership has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year;

(b)  an amount incurred or paid in a taxation year which relates to the activities or work to be carried out in a subsequent taxation year is deemed not to have been incurred or paid in that year but to have been incurred or paid in the subsequent year during which the activities or work to which the amount relates are carried out; and

(c)  the amount of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced by the amount of any apparent payment attributable to that expenditure, which the qualified corporation or a person with whom the qualified corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the qualified corporation’s filing-due date for that year.

For the purposes of subparagraph ii of paragraph a of the definitions of “qualified construction expenditure” and “qualified conversion expenditure” in the first paragraph, an amount of assistance received by a qualified corporation, a person or a partnership, as the case may be, is deemed to be repaid by the qualified corporation, person or partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, because of subparagraph a or a.1 of the third paragraph, the amount of the salaries or wages incurred, of a portion of a consideration paid or of a portion of the cost of a contract incurred, as the case may be, in respect of a construction expenditure or a conversion expenditure of a qualified corporation, for the purpose of computing the amount the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.36.55 or 1029.8.36.55.1;

(b)  was not received by the qualified corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the qualified corporation, the other person or the partnership may reasonably expect to receive.

1997, c. 14, s. 234; 1997, c. 31, s. 143; 1997, c. 85, s. 259; 1999, c. 8, s. 20; 1999, c. 83, s. 212; 2000, c. 5, s. 265; 2001, c. 7, s. 169; 2001, c. 51, s. 180; 2002, c. 9, s. 86; 2003, c. 29, s. 135; 2004, c. 21, s. 353; 2006, c. 8, s. 31; 2007, c. 12, s. 185; 2009, c. 15, s. 271; 2019, c. 14, s. 356; 2019, c. 29, s. 1.

2019-06-19

1029.8.36.54. In this division,

“apparent payment” means, except in sections 1029.8.36.55 and 1029.8.36.55.1, an amount paid or payable by a person or a partnership who or which, under the terms of a contract, carries out work or prepares plans and specifications for a qualified corporation, where the amount is paid or payable for the use of premises, facilities or equipment, or for the provision of services, and that may reasonably be considered to be included in a qualified construction expenditure or a qualified conversion expenditure;

“construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the construction of an eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the construction of the eligible vessel;

(c)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the construction of the eligible vessel incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership under the terms of the contract, that may reasonably be attributed to construction work provided for in the contract carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation, under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the conversion of the eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the conversion of the eligible vessel;

(c)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the conversion of the eligible vessel and incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership, under the terms of the contract, that may reasonably be attributed to conversion work provided for in the contract and carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“eligible contract” means a contract in respect of which a qualification certificate has been issued by the Minister of Economic Development, Innovation and Export Trade, entered into by a qualified corporation with a person or partnership and under which the qualified corporation entrusts the person or partnership with the carrying out of work in Québec which is related to the construction or conversion of an eligible vessel by the qualified corporation;

“eligible vessel” of a qualified corporation means a vessel constructed or converted in Québec by the corporation under a project in respect of which the Minister of Economic Development, Innovation and Export Trade has issued a qualification certificate, for the purposes of this division, attesting that the vessel will be a prototype vessel, or the first, second or third vessel constructed or converted, as the case may be, as part of a production run;

“factor specified” in respect of an eligible vessel means,

(a)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out before 18 November 2000, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 8/3,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 4, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 8;

(b)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 17 November 2000 and before 13 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 20/9,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 5/2, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 20/7;

(b.1)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 12 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 8/3,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 80/27,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 10/3, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 80/21;

(c)  (paragraph repealed);

(d)  (paragraph repealed);

“qualified construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the construction expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a construction expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  in the case of an eligible vessel in respect of which the Minister of Economic Development, Innovation and Export Trade has issued a qualification certificate attesting that it is a prototype vessel and in respect of which work was carried out before 26 March 1997, the aggregate of

i.  250% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out before 26 March 1997, and

ii.  200% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out after 25 March 1997; and

(c)  in the case of an eligible vessel other than a vessel referred to in paragraph b, the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable, in respect of the eligible vessel for a preceding taxation year;

“qualified conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the conversion expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a conversion expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55.1 by the qualified corporation, on account of its tax payable, in respect of an eligible vessel for a preceding taxation year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, carries on a shipbuilding business in Québec and has an establishment in Québec, and that is neither a corporation that is exempt from tax for the year under Book VIII nor a corporation that would be exempt from tax under section 985 but for section 192;

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

“vessel” includes a semi-submergible rig stabilized by submerging pontoons and by anchoring.

For the purposes of paragraphs b and c of the definitions of “construction expenditure” and “conversion expenditure” in the first paragraph, the salaries or wages incurred by a person or a partnership in respect of an employee are attributable to the construction or conversion of an eligible vessel only where the employee works directly on the construction or conversion, as the case may be, of the vessel and only to the extent that the salaries or wages may reasonably be considered to relate to the construction or conversion, as the case may be, of the vessel in view of the time spent thereon by the employee and, in that respect, an employee who spends 90% or more of working time on the construction or conversion, as the case may be, of an eligible vessel is deemed to spend all working time thereon.

For the purposes of the first paragraph,

(a)  the amount of salaries or wages incurred, of a portion of the consideration paid or of a portion of the cost of a contract incurred, as the case may be, which relates to a construction expenditure or a conversion expenditure incurred by a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced, where applicable, by the amount of any government assistance and non-government assistance attributable to those salaries or wages, to that portion of the consideration or to that portion of the cost of a contract, as the case may be, that the qualified corporation has received, is entitled to receive or may reasonably expect to receive on or before its filing-due date for that year;

(a.1)  when referred to in subparagraph ii of paragraph a or paragraph c of the definition of “construction expenditure” or “conversion expenditure” in the first paragraph, the amount of a portion of a consideration paid in respect of a construction expenditure or a conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel, is to be reduced, where applicable, by the amount of any government assistance or non-government assistance that is attributable to the salaries or wages incurred in respect of the employees of an establishment of a person or partnership situated in Québec that are referred to in that subparagraph ii or that paragraph c, or that would be so attributable if the person or partnership had such employees, and that the person or partnership has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year;

(b)  an amount incurred or paid in a taxation year which relates to the activities or work to be carried out in a subsequent taxation year is deemed not to have been incurred or paid in that year but to have been incurred or paid in the subsequent year during which the activities or work to which the amount relates are carried out; and

(c)  the amount of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced by the amount of any apparent payment attributable to that expenditure, which the qualified corporation or a person with whom the qualified corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the qualified corporation’s filing-due date for that year.

For the purposes of subparagraph ii of paragraph a of the definitions of “qualified construction expenditure” and “qualified conversion expenditure” in the first paragraph, an amount of assistance received by a qualified corporation, a person or a partnership, as the case may be, is deemed to be repaid by the qualified corporation, person or partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, because of subparagraph a or a.1 of the third paragraph, the amount of the salaries or wages incurred, of a portion of a consideration paid or of a portion of the cost of a contract incurred, as the case may be, in respect of a construction expenditure or a conversion expenditure of a qualified corporation, for the purpose of computing the amount the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.36.55 or 1029.8.36.55.1;

(b)  was not received by the qualified corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the qualified corporation, the other person or the partnership may reasonably expect to receive.

1997, c. 14, s. 234; 1997, c. 31, s. 143; 1997, c. 85, s. 259; 1999, c. 8, s. 20; 1999, c. 83, s. 212; 2000, c. 5, s. 265; 2001, c. 7, s. 169; 2001, c. 51, s. 180; 2002, c. 9, s. 86; 2003, c. 29, s. 135; 2004, c. 21, s. 353; 2006, c. 8, s. 31; 2007, c. 12, s. 185; 2009, c. 15, s. 271; 2019, c. 14, s. 356.

2009-06-04

1029.8.36.54. In this division,

“apparent payment” means, except in sections 1029.8.36.55 and 1029.8.36.55.1, an amount paid or payable by a person or a partnership who or which, under the terms of a contract, carries out work or prepares plans and specifications for a qualified corporation, where the amount is paid or payable for the use of premises, facilities or equipment, or for the provision of services, and that may reasonably be considered to be included in a qualified construction expenditure or a qualified conversion expenditure;

“construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of the following amounts, to the extent that they are reasonable in the circumstances:

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the construction of an eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the construction of the eligible vessel;

(c)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the construction of the eligible vessel incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership under the terms of the contract, that may reasonably be attributed to construction work provided for in the contract carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of the following amounts, to the extent that they are reasonable in the circumstances:

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation, under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the conversion of the eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the conversion of the eligible vessel;

(c)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the conversion of the eligible vessel and incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership, under the terms of the contract, that may reasonably be attributed to conversion work provided for in the contract and carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“eligible contract” means a contract in respect of which a qualification certificate has been issued by the Minister of Economic Development, Innovation and Export Trade, entered into by a qualified corporation with a person or partnership and under which the qualified corporation entrusts the person or partnership with the carrying out of work in Québec which is related to the construction or conversion of an eligible vessel by the qualified corporation;

“eligible vessel” of a qualified corporation means a vessel constructed or converted in Québec by the corporation under a project in respect of which the Minister of Economic Development, Innovation and Export Trade has issued a qualification certificate, for the purposes of this division, attesting that the vessel will be a prototype vessel, or the first, second or third vessel constructed or converted, as the case may be, as part of a production run;

“factor specified” in respect of an eligible vessel means,

(a)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out before 18 November 2000, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 8/3,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 4, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 8;

(b)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 17 November 2000 and before 13 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 20/9,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 5/2, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 20/7;

(b.1)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 12 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 8/3,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 80/27,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 10/3, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 80/21;

(c)  (paragraph repealed);

(d)  (paragraph repealed);

“qualified construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the construction expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a construction expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  in the case of an eligible vessel in respect of which the Minister of Economic Development, Innovation and Export Trade has issued a qualification certificate attesting that it is a prototype vessel and in respect of which work was carried out before 26 March 1997, the aggregate of

i.  250% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out before 26 March 1997, and

ii.  200% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out after 25 March 1997; and

(c)  in the case of an eligible vessel other than a vessel referred to in paragraph b, the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable, in respect of the eligible vessel for a preceding taxation year;

“qualified conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the conversion expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a conversion expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55.1 by the qualified corporation, on account of its tax payable, in respect of an eligible vessel for a preceding taxation year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, carries on a shipbuilding business in Québec and has an establishment in Québec, and that is neither a corporation that is exempt from tax for the year under Book VIII nor a corporation that would be exempt from tax under section 985 but for section 192;

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

“vessel” includes a semi-submergible rig stabilized by submerging pontoons and by anchoring.

For the purposes of paragraphs b and c of the definitions of “construction expenditure” and “conversion expenditure” in the first paragraph, the salaries or wages incurred by a person or a partnership in respect of an employee are attributable to the construction or conversion of an eligible vessel only where the employee works directly on the construction or conversion, as the case may be, of the vessel and only to the extent that the salaries or wages may reasonably be considered to relate to the construction or conversion, as the case may be, of the vessel in view of the time spent thereon by the employee and, in that respect, an employee who spends 90% or more of working time on the construction or conversion, as the case may be, of an eligible vessel is deemed to spend all working time thereon.

For the purposes of the first paragraph,

(a)  the amount of salaries or wages incurred, of a portion of the consideration paid or of a portion of the cost of a contract incurred, as the case may be, which relates to a construction expenditure or a conversion expenditure incurred by a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced, where applicable, by the amount of any government assistance and non-government assistance attributable to those salaries or wages, to that portion of the consideration or to that portion of the cost of a contract, as the case may be, that the qualified corporation has received, is entitled to receive or may reasonably expect to receive on or before its filing-due date for that year;

(a.1)  when referred to in subparagraph ii of paragraph a or paragraph c of the definition of “construction expenditure” or “conversion expenditure” in the first paragraph, the amount of a portion of a consideration paid in respect of a construction expenditure or a conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel, is to be reduced, where applicable, by the amount of any government assistance or non-government assistance that is attributable to the salaries or wages incurred in respect of the employees of an establishment of a person or partnership situated in Québec that are referred to in that subparagraph ii or that paragraph c, or that would be so attributable if the person or partnership had such employees, and that the person or partnership has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year;

(b)  an amount incurred or paid in a taxation year which relates to the activities or work to be carried out in a subsequent taxation year is deemed not to have been incurred or paid in that year but to have been incurred or paid in the subsequent year during which the activities or work to which the amount relates are carried out; and

(c)  the amount of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced by the amount of any apparent payment attributable to that expenditure, which the qualified corporation or a person with whom the qualified corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the qualified corporation’s filing-due date for that year.

For the purposes of subparagraph ii of paragraph a of the definitions of “qualified construction expenditure” and “qualified conversion expenditure” in the first paragraph, an amount of assistance received by a qualified corporation, a person or a partnership, as the case may be, is deemed to be repaid by the qualified corporation, person or partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, because of subparagraph a or a.1 of the third paragraph, the amount of the salaries or wages incurred, of a portion of a consideration paid or of a portion of the cost of a contract incurred, as the case may be, in respect of a construction expenditure or a conversion expenditure of a qualified corporation, for the purpose of computing the amount the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.36.55 or 1029.8.36.55.1;

(b)  was not received by the qualified corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the qualified corporation, the other person or the partnership may reasonably expect to receive.

1997, c. 14, s. 234; 1997, c. 31, s. 143; 1997, c. 85, s. 259; 1999, c. 8, s. 20; 1999, c. 83, s. 212; 2000, c. 5, s. 265; 2001, c. 7, s. 169; 2001, c. 51, s. 180; 2002, c. 9, s. 86; 2003, c. 29, s. 135; 2004, c. 21, s. 353; 2006, c. 8, s. 31; 2007, c. 12, s. 185; 2009, c. 15, s. 271.

2007-11-07

1029.8.36.54. In this division,

“apparent payment” means, except in sections 1029.8.36.55 and 1029.8.36.55.1, an amount paid or payable by a person or a partnership who or which, under the terms of a contract, carries out work or prepares plans and specifications for a qualified corporation, where the amount is paid or payable for the use of premises, facilities or equipment, or for the provision of services, and that may reasonably be considered to be included in a qualified construction expenditure or a qualified conversion expenditure;

“construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of the following amounts, to the extent that they are reasonable in the circumstances:

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the construction of an eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the construction of the eligible vessel;

(c)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the construction of the eligible vessel incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership under the terms of the contract, that may reasonably be attributed to construction work provided for in the contract carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of the following amounts, to the extent that they are reasonable in the circumstances:

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation, under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the conversion of the eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the conversion of the eligible vessel;

(c)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the conversion of the eligible vessel and incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership, under the terms of the contract, that may reasonably be attributed to conversion work provided for in the contract and carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“eligible contract” means a contract in respect of which a qualification certificate has been issued by the Minister of Economic Development, Innovation and Export Trade, entered into by a qualified corporation with a person or partnership and under which the qualified corporation entrusts the person or partnership with the carrying out of work in Québec which is related to the construction or conversion of an eligible vessel by the qualified corporation;

“eligible vessel” of a qualified corporation means a vessel constructed or converted in Québec by the corporation under a project in respect of which the Minister of Economic Development, Innovation and Export Trade has issued a qualification certificate attesting that the vessel will be a prototype vessel with a gross tonnage of at least 50 tons, or the first, second or third vessel with a gross tonnage of at least 50 tons, constructed or converted, as the case may be, as part of a production run according to essentially the same plans and specifications as those according to which a vessel in respect of which a qualification certificate was issued by the Minister of Economic Development, Innovation and Export Trade attesting that it was a prototype vessel with a gross tonnage of at least 50 tons was constructed or converted;

“factor specified” in respect of an eligible vessel means,

(a)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out before 18 November 2000, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 8/3,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 4, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 8;

(b)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 17 November 2000 and before 13 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 20/9,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 5/2, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 20/7;

(b.1)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 12 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 8/3,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 80/27,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 10/3, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 80/21;

(c)  (paragraph repealed);

(d)  (paragraph repealed);

“qualified construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the construction expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a construction expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  in the case of an eligible vessel in respect of which the Minister of Economic Development, Innovation and Export Trade has issued a qualification certificate attesting that it is a prototype vessel and in respect of which work was carried out before 26 March 1997, the aggregate of

i.  250% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out before 26 March 1997, and

ii.  200% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out after 25 March 1997; and

(c)  in the case of an eligible vessel other than a vessel referred to in paragraph b, the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable, in respect of the eligible vessel for a preceding taxation year;

“qualified conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the conversion expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation, another person or a partnership, as the case may be, in the year or a preceding taxation year, pursuant to a legal obligation, as a repayment of assistance received by the qualified corporation, the other person or the partnership, to the extent that the assistance reduced, because of subparagraph a or a.1 of the third paragraph, a conversion expenditure of the qualified corporation in respect of the eligible vessel in the year or a preceding taxation year; exceeds

(b)  the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55.1 by the qualified corporation, on account of its tax payable, in respect of an eligible vessel for a preceding taxation year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, carries on a shipbuilding business in Québec and has an establishment in Québec, and that is neither a corporation that is exempt from tax for the year under Book VIII nor a corporation that would be exempt from tax under section 985 but for section 192;

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

“vessel” includes a semi-submergible rig stabilized by submerging pontoons and by anchoring.

For the purposes of paragraphs b and c of the definitions of “construction expenditure” and “conversion expenditure” in the first paragraph, the salaries or wages incurred by a person or a partnership in respect of an employee are attributable to the construction or conversion of an eligible vessel only where the employee works directly on the construction or conversion, as the case may be, of the vessel and only to the extent that the salaries or wages may reasonably be considered to relate to the construction or conversion, as the case may be, of the vessel in view of the time spent thereon by the employee and, in that respect, an employee who spends 90% or more of working time on the construction or conversion, as the case may be, of an eligible vessel is deemed to spend all working time thereon.

For the purposes of the first paragraph,

(a)  the amount of salaries or wages incurred, of a portion of the consideration paid or of a portion of the cost of a contract incurred, as the case may be, which relates to a construction expenditure or a conversion expenditure incurred by a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced, where applicable, by the amount of any government assistance and non-government assistance attributable to those salaries or wages, to that portion of the consideration or to that portion of the cost of a contract, as the case may be, that the qualified corporation has received, is entitled to receive or may reasonably expect to receive on or before its filing-due date for that year;

(a.1)  when referred to in subparagraph ii of paragraph a or paragraph c of the definition of “construction expenditure” or “conversion expenditure” in the first paragraph, the amount of a portion of a consideration paid in respect of a construction expenditure or a conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel, is to be reduced, where applicable, by the amount of any government assistance or non-government assistance that is attributable to the salaries or wages incurred in respect of the employees of an establishment of a person or partnership situated in Québec that are referred to in that subparagraph ii or that paragraph c, or that would be so attributable if the person or partnership had such employees, and that the person or partnership has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year;

(b)  an amount incurred or paid in a taxation year which relates to the activities or work to be carried out in a subsequent taxation year is deemed not to have been incurred or paid in that year but to have been incurred or paid in the subsequent year during which the activities or work to which the amount relates are carried out; and

(c)  the amount of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced by the amount of any apparent payment attributable to that expenditure, which the qualified corporation or a person with whom the qualified corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the qualified corporation’s filing-due date for that year.

For the purposes of subparagraph ii of paragraph a of the definitions of “qualified construction expenditure” and “qualified conversion expenditure” in the first paragraph, an amount of assistance received by a qualified corporation, a person or a partnership, as the case may be, is deemed to be repaid by the qualified corporation, person or partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, because of subparagraph a or a.1 of the third paragraph, the amount of the salaries or wages incurred, of a portion of a consideration paid or of a portion of the cost of a contract incurred, as the case may be, in respect of a construction expenditure or a conversion expenditure of a qualified corporation, for the purpose of computing the amount the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.36.55 or 1029.8.36.55.1;

(b)  was not received by the qualified corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the qualified corporation, the other person or the partnership may reasonably expect to receive.

1997, c. 14, s. 234; 1997, c. 31, s. 143; 1997, c. 85, s. 259; 1999, c. 8, s. 20; 1999, c. 83, s. 212; 2000, c. 5, s. 265; 2001, c. 7, s. 169; 2001, c. 51, s. 180; 2002, c. 9, s. 86; 2003, c. 29, s. 135; 2004, c. 21, s. 353; 2006, c. 8, s. 31; 2007, c. 12, s. 185.

2006-06-08

1029.8.36.54. In this division,

“apparent payment” means, except in sections 1029.8.36.55 and 1029.8.36.55.1, an amount paid or payable by a person or a partnership who or which, under the terms of a contract, carries out work or prepares plans and specifications for a qualified corporation, where the amount is paid or payable for the use of premises, facilities or equipment, or for the provision of services, and that may reasonably be considered to be included in a qualified construction expenditure or a qualified conversion expenditure;

“construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of the following amounts, to the extent that they are reasonable in the circumstances:

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the construction of an eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the construction of the eligible vessel;

(c)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the construction of the eligible vessel incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership under the terms of the contract, that may reasonably be attributed to construction work provided for in the contract carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of the following amounts, to the extent that they are reasonable in the circumstances:

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation, under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the conversion of the eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the conversion of the eligible vessel;

(c)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the conversion of the eligible vessel and incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership, under the terms of the contract, that may reasonably be attributed to conversion work provided for in the contract and carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

“eligible contract” means a contract in respect of which a qualification certificate has been issued by the Minister of Economic Development, Innovation and Export Trade, entered into by a qualified corporation with a person or partnership and under which the qualified corporation entrusts the person or partnership with the carrying out of work in Québec which is related to the construction or conversion of an eligible vessel by the qualified corporation;

“eligible vessel” of a qualified corporation means a vessel constructed or converted in Québec by the corporation under a project in respect of which the Minister of Economic Development, Innovation and Export Trade has issued a qualification certificate attesting that the vessel will be a prototype vessel with a gross tonnage of at least 50 tons, or the first, second or third vessel with a gross tonnage of at least 50 tons, constructed or converted, as the case may be, as part of a production run according to essentially the same plans and specifications as those according to which a vessel in respect of which a qualification certificate was issued by the Minister of Economic Development, Innovation and Export Trade attesting that it was a prototype vessel with a gross tonnage of at least 50 tons was constructed or converted;

“factor specified” in respect of an eligible vessel means,

(a)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out before 18 November 2000, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 8/3,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 4, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 8;

(b)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 17 November 2000 and before 13 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 20/9,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 5/2, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 20/7;

(b.1)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 12 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is a prototype vessel, 8/3,

ii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 80/27,

iii.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 10/3, and

iv.  where the qualification certificate issued by the Minister of Economic Development, Innovation and Export Trade attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 80/21;

(c)  (paragraph repealed);

(d)  (paragraph repealed);

“qualified construction expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the construction expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation in the year or in a preceding taxation year, pursuant to a legal obligation, as repayment of assistance to the extent that such assistance, in the year or in a preceding taxation year, reduced, because of subparagraph a of the third paragraph, a construction expenditure of the qualified corporation in respect of the eligible vessel; exceeds

(b)  in the case of an eligible vessel in respect of which the Minister of Economic Development, Innovation and Export Trade has issued a qualification certificate attesting that it is a prototype vessel and in respect of which work was carried out before 26 March 1997, the aggregate of

i.  250% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out before 26 March 1997, and

ii.  200% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out after 25 March 1997; and

(c)  in the case of an eligible vessel other than a vessel referred to in paragraph b, the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable, in respect of the eligible vessel for a preceding taxation year;

“qualified conversion expenditure” of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the conversion expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation in the year or in a preceding taxation year, pursuant to a legal obligation, as repayment of assistance to the extent that such assistance, in the year or in a preceding taxation year, reduced, because of subparagraph a of the third paragraph, a conversion expenditure of the qualified corporation in respect of the eligible vessel; exceeds

(b)  the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55.1 by the qualified corporation, on account of its tax payable, in respect of an eligible vessel for a preceding taxation year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, carries on a shipbuilding business in Québec and has an establishment in Québec, and that is neither a corporation that is exempt from tax for the year under Book VIII nor a corporation that would be exempt from tax under section 985 but for section 192;

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

“vessel” includes a semi-submergible rig stabilized by submerging pontoons and by anchoring.

For the purposes of paragraphs b and c of the definitions of “construction expenditure” and “conversion expenditure” in the first paragraph, the salaries or wages incurred by a person or a partnership in respect of an employee are attributable to the construction or conversion of an eligible vessel only where the employee works directly on the construction or conversion, as the case may be, of the vessel and only to the extent that the salaries or wages may reasonably be considered to relate to the construction or conversion, as the case may be, of the vessel in view of the time spent thereon by the employee and, in that respect, an employee who spends 90% or more of working time on the construction or conversion, as the case may be, of an eligible vessel is deemed to spend all working time thereon.

For the purposes of the first paragraph,

(a)  the amount of salaries or wages incurred, of a portion of the consideration paid or of a portion of the cost of a contract incurred, as the case may be, which relates to a construction expenditure or a conversion expenditure incurred by a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced, where applicable, by the amount of any government assistance and non-government assistance attributable to those salaries or wages, to that portion of the consideration or to that portion of the cost of a contract, as the case may be, that the qualified corporation has received, is entitled to receive or may reasonably expect to receive on or before its filing-due date for that year;

(b)  an amount incurred or paid in a taxation year which relates to the activities or work to be carried out in a subsequent taxation year is deemed not to have been incurred or paid in that year but to have been incurred or paid in the subsequent year during which the activities or work to which the amount relates are carried out; and

(c)  the amount of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced by the amount of any apparent payment attributable to that expenditure, which the qualified corporation or a person with whom the qualified corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the qualified corporation’s filing-due date for that year.

For the purposes of subparagraph ii of paragraph a of the definitions of “qualified construction expenditure” and “qualified conversion expenditure” in the first paragraph, an amount of assistance is deemed to be repaid by a qualified corporation in a taxation year, pursuant to a legal obligation, where that amount

(a)  reduced, because of subparagraph a of the third paragraph, the amount of salaries or wages incurred, a portion of the consideration paid or a portion of the cost of a contract incurred, as the case may be, of a construction expenditure or a conversion expenditure of the qualified corporation for the purpose of computing the amount the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.36.55 or 1029.8.36.55.1;

(b)  was not received by the qualified corporation; and

(c)  ceased in the taxation year to be an amount that the qualified corporation may reasonably expect to receive.

1997, c. 14, s. 234; 1997, c. 31, s. 143; 1997, c. 85, s. 259; 1999, c. 8, s. 20; 1999, c. 83, s. 212; 2000, c. 5, s. 265; 2001, c. 7, s. 169; 2001, c. 51, s. 180; 2002, c. 9, s. 86; 2003, c. 29, s. 135; 2004, c. 21, s. 353; 2006, c. 8, s. 31.

2006-03-01

1029.8.36.54. In this division,

"apparent payment" means, except in sections 1029.8.36.55 and 1029.8.36.55.1, an amount paid or payable by a person or a partnership who or which, under the terms of a contract, carries out work or prepares plans and specifications for a qualified corporation, where the amount is paid or payable for the use of premises, facilities or equipment, or for the provision of services, and that may reasonably be considered to be included in a qualified construction expenditure or a qualified conversion expenditure;

"construction expenditure" of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of the following amounts, to the extent that they are reasonable in the circumstances:

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the construction of an eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the construction of the eligible vessel;

(c)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the construction of the eligible vessel incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, a portion of the construction of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership under the terms of the contract, that may reasonably be attributed to construction work provided for in the contract carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

"conversion expenditure" of a qualified corporation for a taxation year in respect of an eligible vessel means the aggregate of the following amounts, to the extent that they are reasonable in the circumstances:

(a)  in respect of plans and specifications relating to the eligible vessel,

i.  where the plans and specifications are, in whole or in part, prepared by the qualified corporation, the salaries or wages incurred in the year or in a preceding taxation year by the qualified corporation for the preparation, by its employees of an establishment of the corporation situated in Québec, of the plans and specifications,

ii.  where the plans and specifications are, in whole or in part, prepared for the qualified corporation, under the terms of a contract, by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length, the aggregate of all amounts each of which is the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages incurred by the person or partnership in the year or in a preceding taxation year for the preparation of the plans and specifications by its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees, and

iii.  in any other case, the portion of the cost of a contract, incurred by the qualified corporation in the year or in a preceding taxation year, that may reasonably be attributed to work carried out in Québec for the preparation of the plans and specifications;

(b)  where the conversion of the eligible vessel is carried out in whole or in part by the qualified corporation, the salaries or wages, incurred in the year or in a preceding taxation year, of its employees of an establishment situated in Québec and that are attributable to the conversion of the eligible vessel;

(c)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is not dealing at arm’s length at the time the contract is entered into, the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation, under the terms of the contract, that may reasonably be attributed to the salaries or wages that are attributable to the conversion of the eligible vessel and incurred by the person or partnership in the year or in a preceding year in respect of its employees of an establishment situated in Québec, or that could be so attributed if the person or partnership had such employees; and

(d)  where, under the terms of an eligible contract, part of the conversion of the eligible vessel is carried out for the qualified corporation by a person or partnership with whom or with which the qualified corporation is dealing at arm’s length at the time the contract is entered into, one-half of the portion of the consideration paid in the year or in a preceding taxation year by the qualified corporation to the person or partnership, under the terms of the contract, that may reasonably be attributed to conversion work provided for in the contract and carried out in the year or in a preceding year by the employees of an establishment of the person or partnership situated in Québec, or that could be so attributed if the person or partnership had such employees;

"eligible contract" means a contract in respect of which a qualification certificate has been issued by the Minister of Economic and Regional Development and Research, entered into by a qualified corporation with a person or partnership and under which the qualified corporation entrusts the person or partnership with the carrying out of work in Québec which is related to the construction or conversion of an eligible vessel by the qualified corporation;

"eligible vessel" of a qualified corporation means a vessel constructed or converted in Québec by the corporation under a project in respect of which the Minister of Economic and Regional Development and Research has issued a qualification certificate attesting that the vessel will be a prototype vessel with a gross tonnage of at least 50 tons, or the first, second or third vessel with a gross tonnage of at least 50 tons, constructed or converted, as the case may be, as part of a production run according to essentially the same plans and specifications as those according to which a vessel in respect of which a qualification certificate was issued by the Minister of Economic and Regional Development and Research attesting that it was a prototype vessel with a gross tonnage of at least 50 tons was constructed or converted;

"factor specified" in respect of an eligible vessel means,

(a)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out before 18 November 2000, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 8/3,

iii.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 4, and

iv.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 8;

(b)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 17 November 2000 and before 13 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is a prototype vessel, 2,

ii.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 20/9,

iii.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 5/2, and

iv.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 20/7;

(b.1)  in relation to the portion of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year, that may reasonably be attributed to work carried out after 12 June 2003, any of the following factors:

i.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is a prototype vessel, 8/3,

ii.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is the first vessel constructed or converted as part of a production run, 80/27,

iii.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is the second vessel constructed or converted as part of a production run, 10/3, and

iv.  where the qualification certificate issued by the Minister of Economic and Regional Development and Research attests that the eligible vessel is the third vessel constructed or converted as part of a production run, 80/21;

(c)  (paragraph repealed);

(d)  (paragraph repealed);

"qualified construction expenditure" of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the construction expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation in the year or in a preceding taxation year, pursuant to a legal obligation, as repayment of assistance to the extent that such assistance, in the year or in a preceding taxation year, reduced, because of subparagraph a of the third paragraph, a construction expenditure of the qualified corporation in respect of the eligible vessel; exceeds

(b)  in the case of an eligible vessel in respect of which the Minister of Economic and Regional Development and Research has issued a qualification certificate attesting that it is a prototype vessel and in respect of which work was carried out before 26 March 1997, the aggregate of

i.  250% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out before 26 March 1997, and

ii.  200% of the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable for a preceding taxation year, in respect of the portion of a qualified construction expenditure relating to the eligible vessel that may reasonably be attributed to work carried out after 25 March 1997; and

(c)  in the case of an eligible vessel other than a vessel referred to in paragraph b, the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55 by the qualified corporation, on account of its tax payable, in respect of the eligible vessel for a preceding taxation year;

"qualified conversion expenditure" of a qualified corporation for a taxation year in respect of an eligible vessel means the amount by which

(a)  the aggregate of

i.  the conversion expenditure of the qualified corporation for the year in respect of the eligible vessel, and

ii.  any amount paid by the qualified corporation in the year or in a preceding taxation year, pursuant to a legal obligation, as repayment of assistance to the extent that such assistance, in the year or in a preceding taxation year, reduced, because of subparagraph a of the third paragraph, a conversion expenditure of the qualified corporation in respect of the eligible vessel; exceeds

(b)  the product obtained by multiplying the factor specified in respect of the eligible vessel by the aggregate of all amounts each of which is an amount deemed to have been paid to the Minister under section 1029.8.36.55.1 by the qualified corporation, on account of its tax payable, in respect of an eligible vessel for a preceding taxation year;

"qualified corporation", in respect of a taxation year, means a corporation that, in the year, carries on a shipbuilding business in Québec and has an establishment in Québec, and that is neither a corporation that is exempt from tax for the year under Book VIII nor a corporation that would be exempt from tax under section 985 but for section 192;

"salary or wages" means the income computed pursuant to Chapters I and II of Title II of Book III;

"vessel" includes a semi-submergible rig stabilized by submerging pontoons and by anchoring.

For the purposes of paragraphs b and c of the definitions of "construction expenditure" and "conversion expenditure" in the first paragraph, the salaries or wages incurred by a person or a partnership in respect of an employee are attributable to the construction or conversion of an eligible vessel only where the employee works directly on the construction or conversion, as the case may be, of the vessel and only to the extent that the salaries or wages may reasonably be considered to relate to the construction or conversion, as the case may be, of the vessel in view of the time spent thereon by the employee and, in that respect, an employee who spends 90% or more of working time on the construction or conversion, as the case may be, of an eligible vessel is deemed to spend all working time thereon.

For the purposes of the first paragraph,

(a)  the amount of salaries or wages incurred, of a portion of the consideration paid or of a portion of the cost of a contract incurred, as the case may be, which relates to a construction expenditure or a conversion expenditure incurred by a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced, where applicable, by the amount of any government assistance and non-government assistance attributable to those salaries or wages, to that portion of the consideration or to that portion of the cost of a contract, as the case may be, that the qualified corporation has received, is entitled to receive or may reasonably expect to receive on or before its filing-due date for that year;

(b)  an amount incurred or paid in a taxation year which relates to the activities or work to be carried out in a subsequent taxation year is deemed not to have been incurred or paid in that year but to have been incurred or paid in the subsequent year during which the activities or work to which the amount relates are carried out; and

(c)  the amount of a qualified construction expenditure or a qualified conversion expenditure of a qualified corporation for a taxation year in respect of an eligible vessel shall be reduced by the amount of any apparent payment attributable to that expenditure, which the qualified corporation or a person with whom the qualified corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the qualified corporation’s filing-due date for that year.

For the purposes of subparagraph ii of paragraph a of the definitions of "qualified construction expenditure" and "qualified conversion expenditure" in the first paragraph, an amount of assistance is deemed to be repaid by a qualified corporation in a taxation year, pursuant to a legal obligation, where that amount

(a)  reduced, because of subparagraph a of the third paragraph, the amount of salaries or wages incurred, a portion of the consideration paid or a portion of the cost of a contract incurred, as the case may be, of a construction expenditure or a conversion expenditure of the qualified corporation for the purpose of computing the amount the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.36.55 or 1029.8.36.55.1;

(b)  was not received by the qualified corporation; and

(c)  ceased in the taxation year to be an amount that the qualified corporation may reasonably expect to receive.

1997, c. 14, s. 234; 1997, c. 31, s. 143; 1997, c. 85, s. 259; 1999, c. 8, s. 20; 1999, c. 83, s. 212; 2000, c. 5, s. 265; 2001, c. 7, s. 169; 2001, c. 51, s. 180; 2002, c. 9, s. 86; 2003, c. 29, s. 135; O.C. 222-2004; 2004, c. 21, s. 353.