I-3 - Taxation Act

Section 1175.21 Disposition versions

2007-11-07

1175.21. Every corporation that, in relation to a property described in the first paragraph of section 1137.5, has deducted, for a particular taxation year, an amount under paragraph b.3 or b.4 of section 1137 and, if the corporation is a member of a partnership, because of subsection 3 of section 1136, in computing its paid-up capital determined under Part IV for the purpose of computing the tax payable by the corporation for the particular year under that Part, shall pay the tax computed under the second paragraph, for a subsequent taxation year, in this section referred to as the “repayment year”, in which

(a)  an amount relating to costs incurred to acquire the property, or to its share of such costs, in respect of which the corporation has deducted an amount for a taxation year preceding the repayment year is, directly or indirectly, refunded or otherwise paid to the corporation, or allocated to a payment to be made by the corporation; or

(b)  ends a fiscal period of the partnership in which an amount relating to costs incurred by the partnership to acquire the property, in respect of which the corporation has deducted, in relation to its share of those costs, an amount for a taxation year preceding the repayment year is, directly or indirectly, refunded or otherwise paid to the partnership, or allocated to a payment to be made by the partnership.

The tax to which the first paragraph refers is equal to the amount by which the amount determined in accordance with the third paragraph is exceeded by the aggregate of all amounts each of which is the amount by which the amount of the tax that would have been payable by the corporation under Part IV for a particular taxation year preceding the repayment year and in respect of which the corporation has deducted an amount relating to costs incurred to acquire the property referred to in the first paragraph, or to its share of such costs, if every amount that, at or before the end of the repayment year or of the fiscal period that ended in the repayment year, as the case may be, is so refunded, paid or allocated, in relation to those costs, had been refunded, paid or allocated in that particular taxation year or in the fiscal period that ended in the particular taxation year, as the case may be, and in the case where the property was acquired by the partnership referred to in the first paragraph, if the corporation’s share of the income or loss of the partnership for the partnership’s fiscal period that ends in that particular taxation year and the income or loss of the partnership for that fiscal period had been the same as those for the partnership’s fiscal period that ends in the repayment year, exceeds the amount of the tax payable by the corporation under Part IV for that particular taxation year or, in the case where the property was acquired by the partnership referred to in the first paragraph, that would have been payable by the corporation under that Part if the corporation’s share of the income or loss of the partnership for the partnership’s fiscal period that ends in that particular taxation year and the partnership’s income or loss for that fiscal period had been the same as those for the partnership’s fiscal period that ends in the repayment year.

The amount to which the second paragraph refers is equal to the aggregate of all amounts each of which is a tax payable by the corporation to the Minister under this section, in respect of the costs incurred to acquire the property referred to in the first paragraph, for a taxation year preceding the repayment year or that would have been so payable, in the case where the property was acquired by the partnership referred to in the first paragraph, if the corporation’s share of the income or loss of the partnership for the partnership’s fiscal period that ends in that preceding taxation year and the partnership’s income or loss for that fiscal period had been the same as those for the partnership’s fiscal period that ends in the repayment year.

However, no tax is payable under this section, in relation to costs incurred to acquire the property referred to in the first paragraph, if section 1175.21.0.1 applies in respect of the property for the repayment year or applied in respect of the property for a preceding taxation year.

1997, c. 85, s. 323; 2000, c. 39, s. 264; 2003, c. 9, s. 433; 2007, c. 12, s. 292.

2006-03-01

1175.21. Any corporation that, in relation to property described in the first paragraph of section 1137.5, has deducted for any taxation year, under paragraph b.3 or b.4 of section 1137 and, where the corporation is a member of a partnership, because of subsection 3 of section 1136, an amount in computing its paid-up capital determined under Part IV for the purpose of computing the tax payable by the corporation for the year under that Part, shall pay, for a particular taxation year, tax equal to the amount obtained by applying the appropriate rate determined in section 1132 for the purpose of computing the tax payable by the corporation for that taxation year to the amount equal to

(a)  the amount by which the aggregate of all amounts each of which is an amount deducted by the corporation under paragraph b.3 or b.4 of section 1137 and, where the corporation is a member of a partnership, because of subsection 3 of section 1136, in computing its paid-up capital determined in accordance with Part IV, in respect of that property for a taxation year preceding the particular year, exceeds the aggregate of all amounts each of which is, in respect of the corporation, an amount determined under this subparagraph or subparagraph b or c, in relation to that property, for a taxation year preceding the particular year, where

i.  at any time between the corporation’s filing-due date for the preceding taxation year and the day after the earlier of the day that is the end of the period of 730 days following the beginning of the use of the property by the first purchaser or by a subsequent purchaser of the property that acquired the property in any of the circumstances described in section 130R71 of the Regulation respecting the Taxation Act (R.R.Q., 1981, chapter I-3, r.1), and the filing-due date, for the particular year, of the purchaser that is the owner of the property at the end of the particular year, the property ceases, otherwise than by reason of the loss or involuntary destruction of the property by fire, theft or water or of a major breakdown of the property, to be used solely in Québec to earn income for a business carried on

(1)  by the first purchaser of the property and where that time is also in the portion of that period in which the first purchaser owns the property; or

(2)  by a subsequent purchaser of the property that acquired the property in any of the circumstances described in section 130R71 of the Regulation respecting the Taxation Act, and where that time also is in the portion of that period in which the subsequent purchaser owns the property, or

ii.  if the property is property described in subparagraph c of the first paragraph of section 1137.5 and if the property was acquired for the carrying on of an activity described in subparagraph d of the second paragraph of that section, on or before the corporation’s filing-due date for the particular year, the qualification certificate issued in relation to that activity is revoked;

(b)  where subparagraph a does not apply in the particular year or a preceding taxation year in relation to that property and, in the particular year, an amount relating to the costs for the acquisition of the property, or to its part of such costs, in respect of which the corporation has deducted an amount for a taxation year preceding the particular year, is, directly or indirectly, repaid to the corporation or allocated to a payment to be made by the corporation, to the amount so repaid or allocated; or

(c)  where the corporation is a member of a partnership, it has deducted an amount in computing its paid-up capital for a taxation year, because of subsection 3 of section 1136 and paragraphs b.3 and b.4 of section 1137, in respect of its share of the costs incurred to acquire the property by the partnership in a fiscal period of the partnership and in a subsequent fiscal period of the partnership ending in the particular year, an amount relating to the costs is, directly or indirectly, repaid to the partnership or allocated to a payment to be made by the partnership, to the amount so repaid or allocated.

For the purposes of subparagraph c of the first paragraph, the corporation’s share of an amount repaid or allocated is equal to such proportion of that amount as the share of the corporation of the income or loss of the partnership for the fiscal period of the partnership ending in the particular taxation year is of the income or loss of the partnership for that fiscal period, on the assumption that, if the income and loss of the partnership for that fiscal period are nil, the partnership’s income for that fiscal period is equal to $1,000,000.

1997, c. 85, s. 323; 2000, c. 39, s. 264; 2003, c. 9, s. 433.