I-3 - Taxation Act

Section 217.18 Disposition versions

2013-06-05

217.18. In this division,

“adjusted stub period accrual” of a corporation in respect of a partnership—in which the corporation has a significant interest at the end of the last fiscal period of the partnership that ends in the corporation’s taxation year in circumstances where another fiscal period (in subparagraphs c and e of the second paragraph and in section 217.33 referred to as the “particular fiscal period”) begins in the year and ends after the end of the year—means

(a)  if paragraph b does not apply, the amount determined by the formula

[(A - B) × C/D] - (E + F); or

(b)  if a fiscal period of the partnership ends in the corporation’s taxation year and the year is the first taxation year in which the fiscal period of the partnership (in this paragraph and subparagraphs j to m of the second paragraph referred to as the “eligible fiscal period”) is aligned with the fiscal period of one or more other partnerships under a multi-tier alignment,

i.  where a fiscal period of the partnership ends in the year and before the eligible fiscal period, the amount determined by the formula

[(G - H) × C/I] - (E + F), and

ii.  where the eligible fiscal period of the partnership is the first fiscal period of the partnership that ends in the corporation’s taxation year, the amount determined by the formula

[(J - K - L) × C/M] - (E + F);

“eligible alignment income”, of a corporation, means

(a)  if a partnership is subject to a single-tier alignment, the first aligned fiscal period of the partnership ends in the first taxation year of the corporation ending after 22 March 2011 (in this paragraph and subparagraphs n to p of the second paragraph referred to as the “eligible fiscal period”) and the corporation is a member of the partnership at the end of the eligible fiscal period,

i.  where the eligible fiscal period is preceded by another fiscal period of the partnership that ends in the corporation’s first taxation year that ends after 22 March 2011 and the corporation is a member of the partnership at the end of that preceding fiscal period, the amount determined by the formula

N - O - P, or

ii.  where the eligible fiscal period is the first fiscal period of the partnership that ends in the corporation’s first taxation year ending after 22 March 2011, an amount equal to zero; or

(b)  if a partnership is subject to a multi-tier alignment, the first aligned fiscal period of the partnership ends in the taxation year of the corporation (in this paragraph and subparagraphs q to s of the second paragraph referred to as the “eligible fiscal period”) and the corporation is a member of the partnership at the end of the eligible fiscal period, the amount determined by the formula

Q - R - S;

“multi-tier alignment”, in respect of a partnership, means the alignment of the fiscal period of the partnership and the fiscal period of one or more other partnerships that results from a valid alignment election the members of the partnership make under subsection 9 of section 249.1 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) or from the deemed alignment election under subsection 11 of that section;

“qualified resource expense”, of a corporation for a taxation year in respect of a fiscal period of a partnership that begins in the year and ends after the end of the year, means an expense incurred by the partnership in the portion of the fiscal period that is in the year and that is a Canadian exploration expense, a Canadian development expense, a foreign resource expense or a Canadian oil and gas property expense;

“qualifying transitional income”, of a corporation that is a member of a partnership on 22 March 2011, means the amount that is the aggregate of the following amounts, computed in accordance with section 217.31,

(a)  the corporation’s eligible alignment income in respect of the partnership; and

(b)  the corporation’s adjusted stub period accrual in respect of the partnership for

i.  if there is a multi-tier alignment in respect of the partnership, the corporation’s taxation year during which ends the fiscal period of the partnership that is aligned with the fiscal period of one or more other partnerships under the multi-tier alignment, or

ii.  in any other case, the corporation’s first taxation year that ends after 22 March 2011;

“significant interest”, of a corporation in a partnership at any time, means an interest of the corporation in the partnership if the corporation, or the corporation together with one or more persons or partnerships related to or affiliated with the corporation, is entitled at that time to more than 10% of

(a)  the income or loss of the partnership; or

(b)  the net assets of the partnership if it were to cease to exist;

“single-tier alignment”, in respect of a partnership, means the determination of the partnership’s fiscal period end date as part of a valid alignment election the members of the partnership make under subsection 8 of section 249.1 of the Income Tax Act;

“specified percentage”, of a corporation for a particular taxation year in respect of a partnership, means

(a)  if the first taxation year in respect of which the corporation has qualifying transitional income ends in the calendar year 2011 and the particular year ends in

i.  the calendar year 2011, 100%,

ii.  the calendar year 2012, 85%,

iii.  the calendar year 2013, 65%,

iv.  the calendar year 2014, 45%,

v.  the calendar year 2015, 25%, and

vi.  the calendar year 2016, 0%;

(b)  if the first taxation year in respect of which the corporation has qualifying transitional income ends in the calendar year 2012 and the particular year ends in

i.  the calendar year 2012, 100%,

ii.  the calendar year 2013, 85%,

iii.  the calendar year 2014, 65%,

iv.  the calendar year 2015, 45%,

v.  the calendar year 2016, 25%, and

vi.  the calendar year 2017, 0%; and

(c)  if the first taxation year in respect of which the corporation has qualifying transitional income ends in the calendar year 2013 and the particular year ends in

i.  the calendar year 2013, 85%,

ii.  the calendar year 2014, 65%,

iii.  the calendar year 2015, 45%,

iv.  the calendar year 2016, 25%, and

v.  the calendar year 2017, 0%.

In the formulas in the definitions of “adjusted stub period accrual” and “eligible alignment income” in the first paragraph,

(a)  A is the aggregate of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for a fiscal period of the partnership that ends in the year (other than any amount in respect of which a deduction is available under sections 738 to 749);

(b)  B is the aggregate of all amounts each of which is the corporation’s share of a loss or allowable capital loss—to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the aggregate described in subparagraph a—of the partnership for a fiscal period of the partnership that ends in the year;

(c)  C is the number of days that are in both the year and the particular fiscal period;

(d)  D is the number of days in fiscal periods of the partnership that end in the year;

(e)  E is the amount of the qualified resource expense in respect of the particular fiscal period of the partnership that is designated by the corporation for the year under section 217.23 in its fiscal return for the year filed with the Minister on or before its filing-due date for the year;

(f)  F is an amount (other than an amount included in the amount described in subparagraph e) designated by the corporation in its fiscal return for the year filed with the Minister on or before its filing-due date for the year;

(g)  G is the aggregate of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the first fiscal period of the partnership that ends in the year (other than any amount in respect of which a deduction is available under sections 738 to 749);

(h)  H is the aggregate of all amounts each of which is the corporation’s share of a loss or allowable capital loss—to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the aggregate described in subparagraph g—of the partnership for the first fiscal period of the partnership that ends in the year;

(i)  I is the number of days in the first fiscal period of the partnership that ends in the year;

(j)  J is the aggregate of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period (other than any amount in respect of which a deduction is available under sections 738 to 749);

(k)  K is the aggregate of all amounts each of which is the corporation’s share of a loss or allowable capital loss—to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the aggregate described in subparagraph j—of the partnership for the eligible fiscal period;

(l)  L is the corporation’s eligible alignment income for the eligible fiscal period;

(m)  M is the number of days that are in the eligible fiscal period that ends in the year;

(n)  N is the aggregate of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period (other than any amount in respect of which a deduction is available under sections 738 to 749);

(o)  O is the aggregate of all amounts each of which is the corporation’s share of a loss or allowable capital loss—to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the aggregate described in subparagraph n—of the partnership for the eligible fiscal period;

(p)  P is, where an outlay or expense of the partnership is deemed by section 359.18 to have been made or incurred by the corporation at the end of the eligible fiscal period, the aggregate of all amounts each of which is an amount that would be deductible by the corporation for the taxation year under any of Divisions III to IV.1 of Chapter X of Title VI if each such outlay or expense were the only amount used in determining the amount deductible;

(q)  Q is the aggregate of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period, other than any amount

i.  in respect of which a deduction is available under sections 738 to 749, or

ii.  that would be included in computing the income of the corporation for the year if there were no multi-tier alignment;

(r)  R is the aggregate of all amounts each of which is the corporation’s share of a loss or allowable capital loss—to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the aggregate described in subparagraph q—of a partnership for the eligible fiscal period; and

(s)  S is, where an outlay or expense of the partnership is deemed by section 359.18 to have been made or incurred by the corporation at the end of the eligible fiscal period, the aggregate of all amounts each of which is an amount that would be deductible by the corporation for the taxation year under any of Divisions III to IV.1 of Chapter X of Title VI if each such outlay or expense were the only amount used in determining the amount deductible.

Chapter V.2 of Title II of Book I applies in relation to an election made under subsection 8 or 9 of section 249.1 of the Income Tax Act.

2013, c. 10, s. 21.