I-3 - Taxation Act

Section 771.2.1.2.1 Disposition versions

2024-05-07

771.2.1.2.1. A corporation to which paragraph a of section 771.2.1.2 refers for a particular taxation year is a corporation in respect of which the number of remunerated hours referred to in either of the following subparagraphs exceeds 5,000:

(a)  the number of remunerated hours determined in respect of the employees of the corporation for the particular year; or

(b)  the number of remunerated hours determined in respect of the employees of the corporation and of those of the corporations with which the corporation is associated in the particular year, for the taxation years of those corporations that ended in the calendar year preceding the calendar year in which the particular year ends.

For the purposes of the first paragraph,

(a)  the number of remunerated hours determined in respect of a person that may be taken into account for a week may not exceed 40;

(b)  subject to the third paragraph, the remunerated hours may be taken into account only to the extent that they were paid; and

(c)  the remunerated hours may be taken into account for a taxation year only to the extent that the expenditure relating to those hours was incurred in that year.

For the purposes of this section, a person who holds, directly or indirectly, shares of the capital stock of a corporation carrying more than 50% of the votes that could be cast under any circumstances at the annual meeting of shareholders of the corporation is considered to be an employee of the corporation and the unremunerated hours of work the person carries out in a week to actively engage in the corporation’s activities are deemed to be remunerated hours in respect of that person for which the expenditure was incurred in that week, provided that the hours are recorded in a register that the corporation keeps in that respect and according to the formula

1.1 × A.

In the formula in the third paragraph, A is the number of unremunerated hours of work carried out by the person in a week, without exceeding 36.36.

For the purposes of subparagraph a of the first paragraph,

(a)  where the number of days in the corporation’s particular taxation year is less than 365, the number of remunerated hours determined in respect of the corporation’s employees in the particular year is deemed to be equal to the product obtained by multiplying that number otherwise determined by the proportion that 365 is of the number of days in the particular year; and

(b)  where the period that begins on 15 March 2020 and ends on 29 June 2020 (in this subparagraph referred to as the “period of closure”) is included, in whole or in part, in the corporation’s particular taxation year, the number of remunerated hours determined in respect of the corporation’s employees in the particular year is deemed to be equal to the product obtained by multiplying that number, otherwise determined without reference to subparagraph a, by the proportion that 365 is of the amount by which the number of days in the particular year exceeds the number of days in the period of closure that are included in the particular year.

For the purposes of subparagraph b of the first paragraph, a corporation (in this paragraph referred to as the “new corporation”) that is formed as a result of the amalgamation, within the meaning of section 544, of two or more corporations (each of which is in this paragraph referred to as a “predecessor corporation”) and in respect of which the particular taxation year to which the first paragraph refers is its first taxation year, is deemed to have a number of remunerated hours, determined in respect of its employees, for a taxation year that ended in the calendar year preceding the calendar year in which that first taxation year ends, equal to the aggregate of all remunerated hours each of which is a remunerated hour, determined in respect of an employee of a predecessor corporation, for the predecessor corporation’s taxation year that ended in the calendar year preceding the calendar year in which that first taxation year ends.

2017, c. 1, s. 214; 2017, c. 29, s. 157; 2021, c. 14, s. 91; 2024, c. 11, s. 79.

2021-06-02

771.2.1.2.1. A corporation to which paragraph a of section 771.2.1.2 refers for a particular taxation year is a corporation in respect of which the number of remunerated hours referred to in either of the following subparagraphs exceeds 5,000:

(a)  the number of remunerated hours determined in respect of the employees of the corporation for the particular year; or

(b)  the number of remunerated hours determined in respect of the employees of the corporation and of those of the corporations with which the corporation is associated in the particular year, for the taxation years of those corporations that ended in the calendar year preceding the calendar year in which the particular year ends.

For the purposes of the first paragraph,

(a)  the number of remunerated hours determined in respect of a person that may be taken into account for a week may not exceed 40;

(b)  subject to the third paragraph, the remunerated hours may be taken into account only to the extent that they were paid; and

(c)  the remunerated hours may be taken into account for a taxation year only to the extent that the expenditure relating to those hours was incurred in that year.

For the purposes of this section, a person who holds, directly or indirectly, shares of the capital stock of a corporation carrying more than 50% of the votes that could be cast under any circumstances at the annual meeting of shareholders of the corporation is considered to be an employee of the corporation and the unremunerated hours of work the person carries out in a week to actively engage in the corporation’s activities are deemed to be remunerated hours in respect of that person for which the expenditure was incurred in that week, provided that the hours are recorded in a register that the corporation keeps in that respect and according to the formula

1.1 × A.

In the formula in the third paragraph, A is the number of unremunerated hours of work carried out by the person in a week, without exceeding 36.36.

For the purposes of subparagraph a of the first paragraph,

(a)  where the number of days in the corporation’s particular taxation year is less than 365, the number of remunerated hours determined in respect of the corporation’s employees in the particular year is deemed to be equal to the product obtained by multiplying that number otherwise determined by the proportion that 365 is of the number of days in the particular year; and

(b)  where the period that begins on 15 March 2020 and ends on 29 June 2020 (in this subparagraph referred to as the “period of closure”) is included, in whole or in part, in the corporation’s particular taxation year, the number of remunerated hours determined in respect of the corporation’s employees in the particular year is deemed to be equal to the product obtained by multiplying that number, otherwise determined without reference to subparagraph a, by the proportion that 365 is of the amount by which the number of days in the particular year exceeds the number of days in the period of closure that are included in the particular year.

2017, c. 1, s. 214; 2017, c. 29, s. 157; 2021, c. 14, s. 91.

2017-12-07

771.2.1.2.1. A corporation to which paragraph a of section 771.2.1.2 refers for a particular taxation year is a corporation in respect of which the number of remunerated hours referred to in either of the following subparagraphs exceeds 5,000:

(a)  the number of remunerated hours determined in respect of the employees of the corporation for the particular year; or

(b)  the number of remunerated hours determined in respect of the employees of the corporation and of those of the corporations with which the corporation is associated in the particular year, for the taxation years of those corporations that ended in the calendar year preceding the calendar year in which the particular year ends.

For the purposes of the first paragraph,

(a)  the number of remunerated hours determined in respect of a person that may be taken into account for a week may not exceed 40;

(b)  subject to the third paragraph, the remunerated hours may be taken into account only to the extent that they were paid; and

(c)  the remunerated hours may be taken into account for a taxation year only to the extent that the expenditure relating to those hours was incurred in that year.

For the purposes of this section, a person who holds, directly or indirectly, shares of the capital stock of a corporation carrying more than 50% of the votes that could be cast under any circumstances at the annual meeting of shareholders of the corporation is considered to be an employee of the corporation and the unremunerated hours of work the person carries out in a week to actively engage in the corporation’s activities are deemed to be remunerated hours in respect of that person for which the expenditure was incurred in that week, provided that the hours are recorded in a register that the corporation keeps in that respect and according to the formula

1.1 × A.

In the formula in the third paragraph, A is the number of unremunerated hours of work carried out by the person in a week, without exceeding 36.36.

For the purposes of subparagraph a of the first paragraph, where the number of days in the corporation’s particular taxation year is less than 365, the number of remunerated hours determined in respect of the corporation’s employees in the particular year is deemed to be equal to the product obtained by multiplying that number otherwise determined by the proportion that 365 is of the number of days in the particular taxation year.

2017, c. 1, s. 214; 2017, c. 29, s. 157.

2017-02-08

771.2.1.2.1. A corporation to which paragraph a of section 771.2.1.2 refers for a particular taxation year is a corporation in respect of which the number of hours of work referred to in either of the following subparagraphs exceeds 5,000:

(a)  the number of hours of work carried out by the employees of the corporation in the particular year; or

(b)  the number of hours of work carried out by the employees of the corporation and by those of the corporations with which it is associated in the particular year, in the taxation years of those corporations that ended in the calendar year preceding the calendar year in which the particular year ends.

For the purposes of the first paragraph, the following rules apply:

(a)  the number of hours of work carried out by a person in a week that may be taken into account may not exceed 40; and

(b)  subject to the third paragraph, the hours worked may be taken into account only to the extent that they were paid.

For the purposes of this section, a person who holds, directly or indirectly, shares in the capital stock of a corporation is considered to be an employee of the corporation and the hours of work the person carries out for the corporation may be taken into account even if they are not remunerated.

For the purposes of subparagraph a of the first paragraph, where the number of days in the corporation’s particular taxation year is less than 365, the number of hours of work carried out by the corporation’s employees in the particular year is deemed to be equal to the product obtained by multiplying that number otherwise determined by the proportion that 365 is of the number of days in the particular taxation year.

2017, c. 1, s. 214.