I-3 - Taxation Act

Section 140.1 Disposition versions

2006-03-01

140.1. The particular amount, referred to in paragraph b of section 140, for a taxation year in respect of impaired loans or lending assets of a taxpayer is equal to the aggregate of

(a)  the percentage, not exceeding 100%, that the taxpayer claims of the prescribed reserve amount for the taxpayer for the year, and

(b)  in respect of loans, lending assets or specified debt obligations that are impaired and for which no amount was deductible for the year under subparagraph a, each of which in this paragraph is referred to as a “particular loan”, the taxpayer’s specified percentage for the year of the lesser of

i.  the aggregate of all amounts each of which is a reasonable amount as a reserve, other than any portion of which is in respect of a sectoral reserve, for a particular loan in respect of the amortized cost of the particular loan to the taxpayer at the end of the year, and

ii.  the amount determined by the formula

0.9 A − B.

In the formula provided for in subparagraph ii of subparagraph b of the first paragraph,

(a)  A is the amount that is the taxpayer’s reserve or allowance for impairment, other than any portion of the amount that is in respect of a sectoral reserve, for all of the taxpayer’s particular loans that is determined for the year in accordance with generally accepted accounting principles; and

(b)  B is the aggregate of all amounts each of which is the specified reserve adjustment for a particular loan, other than an income bond, an income debenture, a small business bond or small business development bond, for the year or a preceding taxation year.

1990, c. 59, s. 83; 2001, c. 7, s. 22.