I-3 - Taxation Act

Section 776.1.36 Disposition versions

2021-06-04

776.1.36. In this Title,

“authorized investment certificate” held by a corporation means a certificate that was issued to the corporation for the purposes of this Title;

“eligible investment” of a qualified investor for a taxation year in a corporation in relation to an authorized investment certificate held by the corporation means the aggregate of all amounts each of which is an amount paid in the year to the corporation by the qualified investor for the acquisition, in the year, of a share of the capital stock of the corporation in relation to that certificate, where

(a)  the share issued to the qualified investor, at the time of acquisition, is a common share having full voting rights under all circumstances;

(b)  the share is acquired by the qualified investor as first purchaser;

(c)  the share is fully paid-up, at the time of acquisition, for consideration in money equal to its fair market value at that time;

(d)  the authorized investment certificate is valid at the time the share is issued;

(e)  the qualified investor disposed of no other share of the capital stock of the corporation on the day the share was issued or in the 24 months preceding that day;

(f)  the qualified investor and the corporation are dealing at arm’s length with each other at the time the share is issued;

(g)  the qualified investor and the corporation are not associated with each other in the year; and

(h)  the qualified investor neither disposed of nor exchanged the share in the year, except in the following cases:

i.  bankruptcy or insolvency of the qualified investor or the corporation,

ii.  unilateral redemption of the share by the corporation, or

iii.  redemption of the share by the corporation at the qualified investor’s request where the law confers on the qualified investor the right to demand that all its shares be redeemed;

“excluded investor” for a taxation year means

(a)  a specified financial institution at any time in the year;

(b)  an investment corporation for the year;

(c)  a mortgage investment corporation for the year;

(d)  a mutual fund corporation at any time in the year;

(e)  a corporation whose principal business for the year is

i.  the leasing, rental, development or sale of immovable property owned by it,

ii.  the making of loans or investment of funds in the form of shares of the capital stock of other corporations, notes, hypothecary claims, mortgages, debentures, bills, bonds or other similar obligations, or

iii.  any combination of the activities described in subparagraphs i and ii;

(f)  a corporation that is exempt from tax for the year under Book VIII; or

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

“qualified investor” for a taxation year means a corporation (other than an excluded investor for the year) that, in the year, carries on a business in Québec and has an establishment in Québec;

“unused portion of the tax credit” of a qualified investor for a taxation year means the amount by which the maximum amount that the qualified investor could deduct under section 776.1.38 for the year if it had sufficient tax payable under this Part for that year exceeds the tax payable by the qualified investor for the year under this Part, determined before the application of that section and of the second paragraph of section 776.1.39.

For the purposes of the definition of “eligible investment” in the first paragraph, the amount of a qualified investor’s eligible investment for a taxation year in a corporation in relation to an authorized investment certificate may not be greater than the amount by which the lesser of the amount of the authorized investment specified in the authorized investment certificate of which the qualified investor obtained a copy in accordance with subparagraph b of the second paragraph of section 776.1.38 and the portion of such an amount that the corporation assigned to the qualified investor exceeds the amount of the qualified investor’s eligible investment for a preceding taxation year in the corporation in relation to the authorized investment certificate.

2021, c. 18, s. 67.