I-3 - Taxation Act

Section 737.18.17.21 Disposition versions

2024-05-07

737.18.17.21. Where, at any time in a particular taxation year or fiscal period, a corporation or a partnership (in this section referred to as the “acquirer”) acquired all or substantially all of the activities arising from the carrying out of a large investment project from another corporation or partnership (in this section referred to as the “vendor”) and the Minister of Finance previously authorized the transfer of those activities to the acquirer, according to a qualification certificate issued by that Minister to the acquirer in respect of the project, the vendor and the acquirer shall enter into an agreement under which is transferred to the acquirer an amount not greater than the amount by which the amount determined under the second paragraph exceeds,

(a)  where the vendor is a corporation, the total of

i.  the aggregate of all amounts each of which is, for a preceding taxation year, in relation to the large investment project, equal to the amount determined by the formula

A × B × C, and

ii.  the aggregate of all amounts each of which is, for a preceding taxation year, in relation to the large investment project, equal to the amount determined by the formula

D × E; or

(b)  where the vendor is a partnership, the total of

i.  the aggregate of all amounts each of which is the amount agreed on, in respect of a preceding fiscal period of the vendor, in relation to the large investment project, pursuant to an agreement referred to in section 737.18.17.20 in respect of that fiscal period, and

ii.  the aggregate of all amounts each of which is, for a preceding fiscal period of the vendor, in relation to the large investment project, the amount determined by the formula

D × E.

The amount to which the first paragraph refers is equal either to the amount obtained by multiplying by the rate provided for in section 737.18.17.19 in respect of the large investment project the vendor’s cumulative total eligible expenses in relation to the project at the end of the particular taxation year or of the particular fiscal period, or, where the vendor acquired all or substantially all of the activities arising from the carrying out of the project following a previous transfer, subject to the fifth paragraph, to the amount that was transferred to the vendor pursuant to the agreement referred to in this section in respect of the acquisition.

In the formulas in the first paragraph,

(a)  A is 1, unless the vendor has an establishment situated outside Québec for the preceding year, in which case it is the proportion that the vendor’s business carried on in Québec is of the aggregate of its business carried on in Canada or in Québec and elsewhere, as determined under subsection 2 of section 771 for that preceding year;

(b)  B is the aggregate of

i.  the product obtained by multiplying by 3.2% the amount by which the amount that would be determined in respect of the vendor for the preceding year under section 771.2.1.2 if, for the purposes of paragraph b of section 771.2.1.2, its taxable income for the preceding year were computed without reference to section 737.18.17.17, exceeds the amount determined in its respect for that year under section 771.2.1.2, and

ii.  the product obtained by multiplying by 11.5% the amount by which the amount deducted by the vendor in computing its taxable income for the preceding year under section 737.18.17.17 exceeds the excess amount determined under subparagraph i;

(c)  C is the proportion that the vendor’s maximum annual tax exemption amount for the preceding year, in relation to the large investment project, is of the aggregate of all amounts each of which is the vendor’s maximum annual tax exemption amount for the preceding year, in relation to a large investment project of the vendor, or of a partnership of which it is a member, that is referred to in the first paragraph of section 737.18.17.17 for that year;

(d)  D is the aggregate of all amounts that are not payable by the vendor for the preceding taxation year or fiscal period under subparagraph d.2 of the sixth paragraph of section 34 of the Act respecting the Régie de l’assurance maladie du Québec (chapter R-5); and

(e)  E is the proportion that the vendor’s maximum annual contribution exemption amount for the preceding taxation year or fiscal period, in relation to the large investment project, is of the aggregate of all amounts each of which is the vendor’s maximum annual contribution exemption amount for the preceding year or fiscal period, in relation to a large investment project of the vendor that is referred to in subparagraph d.2 of the sixth paragraph of section 34 of the Act respecting the Régie de l’assurance maladie du Québec for that year or fiscal period.

Where the amount that was transferred to an acquirer, in relation to a large investment project, pursuant to an agreement referred to in the first paragraph is greater than the excess amount referred to in that paragraph, the amount transferred to the acquirer is, for the purposes of this Title and sections 34.1.0.5 and 34.1.0.6 of the Act respecting the Régie de l’assurance maladie du Québec, deemed to be equal to the excess amount.

Where the previous transfer to which the second paragraph refers occurred before the end of the investment period in respect of a large investment project, the amount that was transferred to the vendor pursuant to the agreement referred to in this section in respect of the acquisition must be increased by an amount equal to the product obtained by multiplying by the rate provided for in section 737.18.17.19, in respect of the project, the amount that would be the vendor’s total eligible expenses on the last day of the investment period or, if it is earlier, on the day that includes the time referred to in the first paragraph, if the definition of “total eligible expenses” in the first paragraph of section 737.18.17.14 were read as if “in the investment period” were replaced by “in the part of the investment period that follows the time of the transfer”.

2024, c. 11, s. 71.