I-3 - Taxation Act

Section 522.1 Disposition versions

2009-05-15

522.1. (Repealed).

2002, c. 40, s. 41; 2003, c. 9, s. 36; 2009, c. 5, s. 178.

2006-03-01

522.1. For the purposes of the first paragraph of section 522, the conditions described in the second paragraph of that section, where they would not be otherwise met, are deemed to be met where

(a)  the following conditions are met:

i.  the taxpayer is subject to tax under this Part for the taxpayer’s taxation year in which the disposition is made,

ii.  the taxpayer has carried on a business for at least 24 months before the beginning of the taxpayer’s taxation year in which the disposition is made,

iii.  the corporation has carried on a business for at least 24 months before the beginning of its taxation year in which the disposition is made, and

iv.  the difference between the proportion of the business carried on in Québec by the taxpayer for each taxation year of the taxpayer described in the second paragraph and that is referred to in subparagraph a of that paragraph, or in subparagraph b or c of that paragraph in relation to a particular calendar year referred to in that paragraph, and the proportion of the business carried on in Québec by the corporation for each taxation year of the corporation referred to in the same subparagraph and, where applicable, in relation to the same particular calendar year, does not exceed 1/10;

(b)  the following conditions are met:

i.  subparagraph a does not apply,

ii.  without restricting the generality of the other provisions of this subparagraph, the Minister permits the application of this subparagraph,

iii.  the taxpayer is subject to tax under this Part for the taxpayer’s taxation year in which the disposition is made,

iv.  the taxpayer has carried on a business for at least 24 months before the beginning of the taxpayer’s taxation year in which the disposition is made,

v.  the corporation has carried on a business for at least 24 months before the beginning of its taxation year in which the disposition is made,

vi.  the difference between the proportion of the business carried on in Québec by the taxpayer for each taxation year of the taxpayer described in the second paragraph and that is referred to in subparagraph a of that paragraph, or in subparagraph b or c of that paragraph in relation to a particular calendar year referred to in that paragraph, and the proportion of the business carried on in Québec by the corporation for each taxation year of the corporation referred to in the same subparagraph and, where applicable, in relation to the same particular calendar year, does not exceed 25/100,

vii.  the property disposed of is not the subject, in the 18 months following the day of the disposition, of a voluntary disposition, except a voluntary disposition that does not constitute a disposition that results, directly or indirectly, in the avoidance of all or part of the income tax payable under this Act or a similar Act of a province other than Québec by the taxpayer or corporation, by a third party replacing the taxpayer or corporation or by any member of the third party, and

viii.  except where the Minister authorizes reference not be made to this subparagraph,

(1)  the taxpayer carries on a business at least until the end of the 18 months following the taxpayer’s taxation year in which the disposition is made;

(2)  the corporation carries on a business at least until the end of the 18 months following its taxation year in which the disposition is made, and

(3)  the difference between the proportion of the business carried on in Québec by the taxpayer for each taxation year of the taxpayer described in the second paragraph and that is referred to in subparagraph d or e of that paragraph in relation to a particular calendar year referred to in that paragraph, and the proportion of the business carried on in Québec by the corporation for each taxation year of the corporation referred to in the same subparagraph in relation to the same particular calendar year, does not exceed 25/100; or

(c)  the following conditions are met:

i.  the taxpayer is subject to tax under this Part for the taxpayer’s taxation year in which the disposition is made,

ii.  the taxpayer or corporation is not a taxpayer or corporation, as the case may be, that has carried on a business for at least 24 months before the beginning of the taxation year of the taxpayer or corporation in which the disposition is made,

iii.  the difference between the proportion of the business carried on in Québec by the taxpayer for each taxation year of the taxpayer described in the second paragraph and that is referred to in subparagraph b of that paragraph in relation to a particular calendar year referred to in that paragraph, and the proportion of the business carried on in Québec by the corporation for each taxation year of the corporation referred to in the same subparagraph in relation to the same particular calendar year, does not exceed 1/10 or, if the Minister so authorizes, 25/100,

iv.  the property disposed of is not the subject, in the 18 months following the day of the disposition, of a voluntary disposition, except a voluntary disposition that does not constitute a disposition that results, directly or indirectly, in the avoidance of all or part of the income tax payable under this Act or a similar Act of a province other than Québec by the taxpayer or corporation, by a third party replacing the taxpayer or corporation or by any member of the third party,

v.  the taxpayer carries on a business at least until the end of the 18 months following the taxpayer’s taxation year in which the disposition is made;

vi.  the corporation carries on a business at least until the end of the 18 months following its taxation year in which the disposition is made, and

vii.  the difference between the proportion of the business carried on in Québec by the taxpayer for each taxation year of the taxpayer described in the second paragraph and that is referred to in subparagraph a of that paragraph, or in subparagraph d or e of that paragraph in relation to a particular calendar year referred to in that paragraph, and the proportion of the business carried on in Québec by the corporation for each taxation year of the corporation referred to in the same subparagraph and, where applicable, in relation to the same particular calendar year, does not exceed 1/10.

The taxation years to which subparagraphs a to c of the first paragraph refer are

(a)  the taxpayer’s taxation year and the corporation’s taxation year in which the disposition is made;

(b)  except to the extent provided in subparagraph a, and without restricting the generality of that subparagraph, any taxation year of the taxpayer and any taxation year of the corporation that ends in the same particular calendar year and that is,

i.  in the case of a taxation year of the taxpayer, a taxation year ending in the 24 months preceding the taxpayer’s taxation year referred to in subparagraph a, or the taxpayer’s taxation year referred to in that subparagraph a, and

ii.  in the case of a taxation year of the corporation, a taxation year ending in the 24 months preceding its taxation year referred to in subparagraph a, or its taxation year referred to in that subparagraph a;

(c)  without restricting the generality of subparagraphs a and b, where a taxation year of a particular party to the disposition that ends in the 24 months preceding its taxation year referred to in subparagraph a ends in a particular calendar year, and no taxation year of the other party to the disposition that is either a taxation year ending in the 24 months preceding its taxation year referred to in subparagraph a, or its taxation year referred to in subparagraph a, ends in that particular calendar year, any taxation year of the particular party to the disposition and any taxation year of the other party to the disposition that is

i.  in the case of a taxation year of the particular party to the disposition, a taxation year ending in both the particular calendar year and the 24 months preceding its taxation year referred to in subparagraph a, and

ii.  in the case of a taxation year of the other party to the disposition, a taxation year that is either a taxation year ending in the 24 months preceding its taxation year referred to in subparagraph a, or its taxation year referred to in subparagraph a, that ends in whichever of the calendar years in which the taxation year of the other party to the disposition ends is closer to the particular calendar year;

(d)  except to the extent provided in subparagraph a, and without restricting the generality of that subparagraph, any taxation year of the taxpayer and any taxation year of the corporation that ends in the same particular calendar year and that is

i.  in the case of a taxation year of the taxpayer, a taxation year beginning in the 18 months following the taxpayer’s taxation year referred to in subparagraph a, or the taxpayer’s taxation year referred to in that subparagraph a, and

ii.  in the case of a taxation year of the corporation, a taxation year beginning in the 18 months following its taxation year referred to in subparagraph a, or its taxation year referred to in that subparagraph a;

(e)  without restricting the generality of subparagraphs a and d, where a taxation year of a particular party to the disposition that begins in the 18 months following its taxation year referred to in subparagraph a ends in a particular calendar year, and no taxation year of the other party to the disposition that is either a taxation year beginning in the 18 months following its taxation year referred to in subparagraph a, or its taxation year referred to in subparagraph a, ends in that particular calendar year, any taxation year of the particular party to the disposition and any taxation year of the other party to the disposition that is

i.  in the case of a taxation year of the particular party to the disposition, a taxation year that ends in the particular calendar year and that began in the 18 months following its taxation year referred to in subparagraph a, and

ii.  in the case of a taxation year of the other party to the disposition, a taxation year that is either a taxation year beginning in the 18 months following its taxation year referred to in subparagraph a, or its taxation year referred to in subparagraph a, that ends in whichever of the calendar years in which the taxation year of the other party to the disposition ends is closer to the particular calendar year.

However, notwithstanding compliance with all the conditions required for the application of this section in respect of the disposition, this section does not apply if the Minister is of the opinion that its application may, directly or indirectly, in any manner whatever, result in the avoidance of all or part of the income tax otherwise payable under this Act or a similar Act of a province other than Québec by the taxpayer or corporation or by any other person.

2002, c. 40, s. 41; 2003, c. 9, s. 36.