I-3 - Taxation Act

Section 737.18.17.15 Disposition versions

2024-05-07

737.18.17.15. Where, at any time, a corporation or a partnership (in this section referred to as the “acquirer”) acquired from another corporation or partnership (in this section referred to as the “vendor”) all or substantially all of the activities arising from the carrying out of a large investment project 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 following rules must be taken into consideration, as the case may be:

(a)  for the purposes of subparagraph a of the first paragraph of section 737.18.17.16, if applicable,

i.  where the vendor and the acquirer are corporations, the vendor’s non-capital loss for a taxation year ending before that time that is deductible in computing the vendor’s adjusted taxable income for its taxation year including that time is deemed, according to the proportion provided for in the second paragraph, to be a non-capital loss of the acquirer,

ii.  where the vendor is a partnership and the acquirer is a corporation, the non-capital loss that, if throughout its existence the vendor were a corporation whose taxation year corresponded to its fiscal period, would be determined in its respect for a taxation year that ends before that time and would be deductible in computing the vendor’s adjusted taxable income for its taxation year that includes that time is deemed, according to the proportion provided for in the second paragraph and subject to the third paragraph, to be a non-capital loss of the acquirer, or

iii.  the vendor’s non-capital loss referred to in subparagraph i or ii is deemed to be reduced, for the vendor’s taxation year or fiscal period that includes that time, by the amount determined under subparagraph i or ii, as the case may be, in respect of that loss, for the purpose of computing the vendor’s adjusted taxable income for a taxation year that ends after that time, where the vendor is a corporation, and for the purpose of applying subparagraph ii in relation to a subsequent transfer of another large investment project of the vendor, where the vendor is a partnership;

(b)  for the purposes of subparagraph b of the first paragraph of section 737.18.17.16, if applicable,

i.  where the vendor is a corporation and the acquirer is a partnership, the vendor’s non-capital loss for a taxation year ending before that time that is deductible in computing the vendor’s adjusted taxable income for its taxation year including that time is deemed, according to the proportion provided for in the second paragraph, to be a non-capital loss of the acquirer (in subparagraph iii of subparagraph b of the first paragraph of section 737.18.17.16 referred to as the “deemed non-capital loss”),

ii.  where the vendor and the acquirer are partnerships, the non-capital loss that, if throughout its existence the vendor were a corporation whose taxation year corresponded to its fiscal period, would be determined in its respect for a taxation year that ends before that time and would be deductible in computing the vendor’s adjusted taxable income for its taxation year that includes that time is deemed, according to the proportion provided for in the second paragraph and subject to the third paragraph, to be a non-capital loss of the acquirer (in subparagraph iii of subparagraph b of the first paragraph of section 737.18.17.16 referred to as the “deemed non-capital loss”), or

iii.  the vendor’s non-capital loss referred to in subparagraph i or ii is deemed to be reduced, for the vendor’s taxation year or fiscal period that includes that time, by the amount determined under subparagraph i or ii, as the case may be, in respect of that loss, for the purpose of computing the vendor’s adjusted taxable income for a taxation year that ends after that time, where the vendor is a corporation, and for the purpose of applying subparagraph ii in relation to a subsequent transfer of another large investment project of the vendor, where the vendor is a partnership; or

(c)  for the purposes of subparagraphs b and c of the second paragraph of section 737.18.17.18,

i.  the vendor’s taxation year or fiscal period that includes the day on which the time occurs is deemed to end at the end of that day,

ii.  the vendor’s last day of the tax-free period, in relation to the large investment project, is deemed to correspond to the day that includes that time,

iii.  the acquirer’s taxation year or fiscal period that includes the day on which the time occurs is deemed to begin at the beginning of that day, and

iv.  the date of the beginning of the acquirer’s tax-free period, in relation to the large investment project, is deemed to correspond to the date of the day that includes that time.

The proportion to which the first paragraph refers is the result obtained by multiplying the proportion that the amount transferred to the acquirer pursuant to the agreement referred to in the first paragraph of section 737.18.17.21 is of the excess amount determined under that first paragraph by the proportion that the amount determined under the second paragraph of section 737.18.17.21, in respect of the large investment project the activities of which are transferred (in this paragraph referred to as the “particular amount”), is of the aggregate of all amounts each of which is either the particular amount or the amount that would be determined under that second paragraph in respect of another large investment project of the vendor if it were transferred to the acquirer at the time referred to in the first paragraph, unless the vendor carries out only one large investment project, in which case the latter proportion is equal to 1.

For the purposes of subparagraph ii of subparagraphs a and b of the first paragraph, the non-capital loss referred to in that subparagraph ii does not include any portion of the loss that—for a taxation year of a corporation, member of the vendor at the time referred to in the first paragraph, that ends in a fiscal period of the vendor that ends before that time—reduced the corporation’s adjusted taxable income.

This section also applies to the transfer of a large investment project, within the meaning of the first paragraph of section 737.18.17.1, in relation to which the vendor has made a computation method election within the meaning of that first paragraph.

2024, c. 11, s. 71.