I-3 - Taxation Act

Section 737.18.17.18 Disposition versions

2024-05-07

737.18.17.18. The amount to which subparagraphs a and b of the first paragraph of section 737.18.17.17 refer in respect of a qualified corporation for a particular taxation year, in relation to one or more large investment projects of the corporation or of a qualified partnership of which it is a member, is equal to the lesser of

(a)  the tax that would be determined, in respect of the corporation for the particular year, in accordance with subsection 1 of section 771, if its taxable income for the particular year were computed without reference to section 737.18.17.17 or, where the corporation has an establishment outside Québec, the result obtained by multiplying that tax by the proportion that its 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; and

(b)  the aggregate of all amounts each of which is, for the particular year, in relation to any of those large investment projects,

i.  in the case of a large investment project of the corporation, the amount determined by the formula

(A × B/C) – D, or

ii.  in the case of a large investment project of a partnership of which the corporation is a member, the amount determined by the formula

E – D.

In the formulas in subparagraph b of the second paragraph,

(a)  A is either the product obtained by multiplying by the rate provided for in section 737.18.17.19, in respect of the large investment project, the corporation’s cumulative total eligible expenses in relation to the project at the end of the particular year or, where the corporation acquired all or substantially all of the activities arising from the carrying out of the project, subject to the fourth paragraph, the amount that was transferred to the corporation pursuant to the agreement referred to in section 737.18.17.21 in respect of the transfer;

(b)  B is the number of days in the period that begins on the date of the beginning of the tax-free period in respect of the large investment project and that ends on the last day of the particular taxation year or, if it is earlier, the last day of the tax-free period in respect of the project;

(c)  C is the number of days in the period that begins on the date of the beginning of the tax-free period in respect of the large investment project and that ends on the last day of the tax-free period in respect of the project;

(d)  D is

i.  where the large investment project is that of the corporation, the aggregate of

(1)  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

F × G × H,

(2)  the aggregate of all amounts each of which is, for the particular taxation year or a preceding taxation year, in relation to the large investment project, equal to the amount determined by the formula

I × J, and

(3)  where, at any time in the particular taxation year, the corporation transfers all or substantially all of its activities arising from the carrying out of the large investment project to another corporation or a partnership, the amount that was transferred to the other corporation or the partnership pursuant to the agreement referred to in section 737.18.17.21 in respect of the transfer, or

ii.  where the large investment project is that of a partnership of which the corporation is a member, 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

F × G × H; and

(e)  E is the aggregate of all amounts each of which is either the amount that was allocated to the corporation for the particular year, or for a preceding taxation year, pursuant to the agreement referred to in section 737.18.17.20, in relation to the large investment project, in respect of the partnership’s fiscal period that ends in that year, or zero if, in respect of that fiscal period, no such agreement has been entered into in relation to the project.

In the formulas in subparagraph d of the second paragraph,

(a)  F is 1, unless the corporation has an establishment situated outside Québec for the preceding taxation year, in which case it is the proportion that its 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 the preceding year;

(b)  G is the aggregate of

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

ii.  11.5% of the amount by which the amount deducted by the corporation in computing its taxable income for the preceding taxation year under section 737.18.17.17 exceeds the excess amount determined under subparagraph i;

(c)  H is the proportion that the corporation’s maximum annual tax exemption amount for the preceding taxation year, in relation to the large investment project, is of the aggregate of all amounts each of which is the corporation’s maximum annual tax exemption amount for the preceding year, in relation to a large investment project of the corporation 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)  I is the aggregate of the amounts that are not payable by the corporation for the taxation year 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)  J is the proportion that the corporation’s maximum annual contribution exemption amount for the taxation year, in relation to the large investment project, is of the aggregate of all amounts each of which is the corporation’s maximum annual contribution exemption amount for the year, in relation to a large investment project of the corporation, 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 the year.

Where a corporation has acquired all or substantially all of the activities arising from the carrying out of a large investment project before the end of the investment period in respect of that project, the amount that was transferred to the corporation pursuant to the agreement referred to in section 737.18.17.21 in respect of the transfer, for any taxation year that ends on or after the day of the transfer, 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 corporation’s total eligible expenses, in respect of the large investment project, at the end of the investment period 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 day of the transfer”.

2024, c. 11, s. 71.