I-3 - Taxation Act

Section 119.15 Disposition versions

2006-03-01

119.15. In this division,

“eligible issuer” at any time means

(a)  an individual, other than a trust, who is resident in Canada and who

i.  has not made a joint election before that time in respect of a small business bond,

ii.  is not a majority-interest partner of a partnership that has made a joint election before that time in respect of a small business bond, and

iii.  neither controls nor is a member of a related group that controls a corporation that has made a joint election before that time in respect of a small business development bond, or a corporation that is associated with such a corporation; or

(b)  a partnership

i.  each member of which is an individual, other than a trust, who is resident in Canada,

ii.  each majority-interest partner, if any, of which is an eligible issuer, and

iii.  that has not made a joint election before that time in respect of a small business bond;

“joint election” in respect of any obligation means an election that is made in prescribed form, containing prescribed information, jointly by the issuer of the obligation and the person who is the holder of the obligation at the time of the election, that is filed with the Minister by the holder and in which the holder and the issuer elect that this division apply to the obligation;

“qualifying debt obligation” of an individual or a partnership at a particular time means an obligation that is a bill, note, hypothecary claim, mortgage or similar obligation issued between 25 February 1992 and 1 January 1995 and not more than five years before the particular time, the principal amount of which is not less than $10,000 nor more than $500,000, that is issued for a term of not more than five years and, except in the event of a failure or default under the terms or conditions of the obligation, not less than one year, if the proceeds from the issue of the obligation are used in Canada in a business the individual or partnership carried on immediately before the time of issue, and if the obligation is issued by the individual or partnership

(a)  as part of a proposal to, or an arrangement with, his or its creditors that has been approved by a competent court under the Bankruptcy and Insolvency Act (Revised Statutes of Canada, 1985, chapter B-3);

(b)  at a time when all or substantially all of his or its assets are under the control of a receiver, receiver-manager, sequestrator or trustee in bankruptcy; or

(c)  in whole or in part, directly or indirectly in exchange or substitution for a debt incurred in the course of the business of the individual or partnership and held by a person with whom the individual or each member of the partnership was dealing at arm’s length, at a time when, because of financial difficulty, the individual or partnership

i.  is in default on that debt, or

ii.  could reasonably be expected to default on that debt;

“small business bond” at any time means an obligation that is at that time a qualifying debt obligation issued by

(a)  an individual or a partnership in respect of which a joint election was made within 90 days after its issue date; or

(b)  an individual or a partnership if

i.  it is reasonable to consider that the holder of the obligation and the individual or partnership, as the case may be, intended that this division apply to the obligation, having regard to such factors as may be relevant, including the rate of interest stipulated under the terms of the obligation and the manner in which the holder and the individual or partnership, as the case may be, have treated the obligation for the purposes of this Part, and

ii.  the holder files with the Minister a joint election in respect of the obligation within 90 days from the date of notification by the Minister that a joint election in respect of the obligation has not been filed in accordance with paragraph a.

1984, c. 15, s. 28; 1985, c. 25, s. 29; 1987, c. 67, s. 32; 1994, c. 22, s. 90; 1995, c. 49, s. 43; 1996, c. 39, s. 40; 1997, c. 3, s. 71; 2000, c. 5, s. 41; 2005, c. 1, s. 52.