I-3 - Taxation Act

Section 737.18.17.16 Disposition versions

2024-05-07

737.18.17.16. For the purposes of this Title, the following rules apply:

(a)  except where the third paragraph applies, a corporation’s adjusted taxable income for a particular taxation year is equal to the amount that would be its taxable income for that year if it were determined without reference to this Title and subparagraph b of the first paragraph of section 737.18.17.5 and if the following rules applied:

i.  the adjusted income of a partnership of which the corporation is a member at the end of the partnership’s fiscal period that ends in the particular year and that holds a certificate, in relation to a large investment project, for the fiscal period is the partnership’s income for that fiscal period, and

ii.  the corporation’s share of the incomes or losses of a partnership of which the corporation is a member at the end of the partnership’s fiscal period that ends in the particular year but that does not hold such a certificate for that fiscal period is equal to zero,

iii.  the corporation’s income is computed without taking into account

(1)  the amount by which the corporation’s taxable capital gains exceed its allowable capital losses,

(2)  the amount by which the aggregate of the corporation’s incomes that are attributable to a source that is a property exceeds the aggregate of its losses attributable to that source, and

(3)  the portion of the aggregate of its losses referred to in subparagraph 2 that reduced the aggregate of the corporation’s incomes referred to in that subparagraph, and

iv.  the corporation deducts, in computing its income or taxable income for the particular year and for any preceding taxation year, the maximum amount in respect of any reserve, allowance or other amount; and

(b)  a partnership’s adjusted income for a particular fiscal period is equal to the amount that would be its income for that fiscal period if the following rules applied:

i.  the income is computed without taking into account

(1)  the amount by which the partnership’s taxable capital gains exceed its allowable capital losses,

(2)  the amount by which the aggregate of the partnership’s incomes that are attributable to a source that is a property exceeds the aggregate of its losses attributable to that source, and

(3)  the portion of the aggregate of its losses referred to in subparagraph 2 that reduced the aggregate of the partnership’s incomes referred to in that subparagraph,

ii.  the income is computed taking into consideration that the partnership deducts, in computing its income for the particular fiscal period or for any preceding fiscal period, the maximum amount in respect of any reserve, allowance or other amount, and

iii.  where the partnership is the acquirer referred to in section 737.18.17.15 of a large investment project, Title VII applies for the purpose of determining the amount that is deductible as a deemed non-capital loss of the acquirer, within the meaning of subparagraph b of the first paragraph of that section, in computing the partnership’s adjusted income for a fiscal period that ends after the transfer time as if

(1)  the partnership were a corporation whose taxation year corresponds to its fiscal period, and

(2)  the partnership’s adjusted income otherwise determined for any subsequent fiscal period were its adjusted taxable income for that year.

For the purposes of the first paragraph, the undepreciated capital cost of depreciable property of a prescribed class to the corporation or partnership, on the date of the beginning of the tax-free period in respect of a large investment project of the corporation or partnership that occurs first, is deemed, except to the extent that it may reasonably be considered that the second paragraph of section 737.18.17.2 applied previously in respect of that class, to include the amount that is the amount by which the total depreciation, within the meaning of subparagraph b of the first paragraph of section 93, allowed to the corporation or partnership, as the case may be, before that date, in respect of the property of that class, exceeds the aggregate of all amounts each of which is an amount that the corporation or partnership has included, under section 94, in respect of the property of that class, in computing its income for a taxation year or fiscal period that ended before that date.

Where no qualification certificate has been issued to the corporation by the Minister of Finance in relation to a large investment project at the end of the particular taxation year, but the corporation is a member of a qualified partnership that holds a certificate, in relation to such a project, for its fiscal period that ends in that particular year, the corporation’s adjusted taxable income for the particular year is equal to the amount that would be its taxable income for that particular year if the following rules were taken into account:

(a)  the taxable income is determined without reference to this Title and subparagraph b of the first paragraph of section 737.18.17.5 and as if the adjusted income of such a partnership for its fiscal period that ends in the particular year were its income for that fiscal period and as if the only incomes and losses of the corporation for the particular year were its share of the incomes and losses of such a partnership for such a fiscal period; and

(b)  the taxable income, determined after applying subparagraph a, is reduced for the particular year by the aggregate of all amounts each of which would be a non-capital loss of the corporation for a preceding taxation year that would be deductible in computing its taxable income for the particular year if the only incomes or losses of the corporation for the preceding year were its share of the incomes and losses of such a partnership that are taken into account in computing its income for its fiscal period that ends in that preceding year and if the corporation had deducted, in computing its taxable income for another taxation year preceding the particular year, computed in accordance with this paragraph, the maximum amount deductible in respect of that loss.

For the purpose of applying paragraph f of section 600 in computing the adjusted taxable income of a corporation that is a member of a partnership, the aggregate of all of the partnership’s incomes each of which is from a source that is a business, for a fiscal period of the partnership, must, if applicable, be reduced by the deemed non-capital losses referred to in subparagraph iii of subparagraph b of the first paragraph that, for that fiscal period, were deducted from the partnership’s adjusted income.

For the purposes of this section, the following rules must be taken into consideration:

(a)  a large investment project includes a large investment project in respect of which a computation method election within the meaning of Title VII.2.3.1 has been made; and

(b)  the share of a member of a partnership of an amount for a fiscal period is equal to the agreed proportion, in respect of the member for that fiscal period, of that amount.

2024, c. 11, s. 71.