I-3 - Taxation Act

Section 737.18.17.5.1 Disposition versions

2024-05-07

737.18.17.5.1. The amount to which subparagraph b of the first paragraph of section 737.18.17.5 refers, in respect of a corporation for a particular taxation year, is equal to the aggregate of the following amounts that is multiplied, where the corporation has an establishment situated outside Québec, by the reciprocal of 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:

(a)  100/11.5 of the lesser of the corporation’s maximum tax holiday amount for the particular year in respect of one or more large investment projects of the corporation, or of a partnership of which it is a member, that are referred to in the first paragraph of section 737.18.17.5 and the amount determined in its respect for the year under the fourth paragraph; and

(b)  100/3.2 of the amount by which the corporation’s maximum tax holiday amount for the particular year in respect of one or more large investment projects of the corporation, or of a partnership of which it is a member, that are referred to in the first paragraph of section 737.18.17.5 exceeds the amount determined in its respect for the year under the fourth paragraph.

For the purposes of this section, a corporation’s maximum tax holiday amount for a particular taxation year in respect of one or more large investment projects of the corporation, or of a 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 year were computed without reference to section 737.18.17.5, 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

[(A × B/C) + E] – D.

In the formulas in the second paragraph,

(a)  A is

i.  where the large investment project is the corporation’s project, the unused portion of the corporation’s tax assistance limit for the particular year, in relation to the project, that is determined under the fifth paragraph, or

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

(1)  the amount that would be the balance of the corporation’s tax assistance limit in relation to the large investment project, determined in accordance with subparagraph b of the third paragraph of section 737.18.17.6, for its first taxation year in which a fiscal period of the partnership in respect of which the computation method election in relation to the project applies ends, if the partnership had not made that election, and

(2)  if the computation method election applicable to the partnership’s fiscal period that ends in the particular year is deemed to have been made by the partnership under the fifth paragraph of section 737.18.17.1 and the particular year is not the year referred to in subparagraph 1, 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 (other than the year referred to in subparagraph 1) in which a fiscal period of the partnership to which the computation method election applies ends, pursuant to the agreement referred to in section 737.18.17.10, 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;

(b)  B is the number of days in the period that begins on the first day of the corporation’s first taxation year, or of the partnership’s first fiscal period, to which the computation method election applies, in relation to the large investment project, or, if it is later, on the date of the beginning of the tax-free period in respect of the project, and that ends on the earlier of

i.  the last day of the particular taxation year or of the partnership’s fiscal period that ends in the particular year, or

ii.  the last day of the tax-free period in respect of the large investment project;

(c)  C is the number of days in the period that begins on the first day of the corporation’s first taxation year, or of the partnership’s first fiscal period, to which the computation method election applies, in relation to the large investment project, or, if it is later, on the date of the beginning of the tax-free period in respect of the project, and that ends on the last day of the tax-free period in respect of the project;

(d)  D is the cumulative value of the corporation’s tax assistance for the particular taxation year, in respect of the large investment project, that is determined under the sixth paragraph; 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 a preceding taxation year, pursuant to the agreement referred to in section 737.18.17.10.1, in relation to the partnership’s 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.

The amount to which subparagraphs a and b of the first paragraph refer for a particular taxation year is equal to

(a)  the amount by which 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 year were computed without reference to section 737.18.17.5, exceeds 3.2% of the amount that would be determined in respect of the corporation for the particular year under section 771.2.1.2 if, for the purposes of paragraph b of that section, its taxable income for the year were computed without reference to section 737.18.17.5; or

(b)  where the corporation has an establishment situated outside Québec for the particular year, the product obtained by multiplying the excess amount determined under subparagraph a 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 for that year.

The unused portion of a corporation’s tax assistance limit for a particular taxation year, in relation to a large investment project, is, subject to the eighth paragraph, either the amount (in this paragraph referred to as the “particular amount”) that would be the balance of the corporation’s tax assistance limit in respect of the large investment project, determined in accordance with subparagraph a of the third paragraph of section 737.18.17.6, for its first taxation year to which the computation method election in relation to the project applies (in this paragraph referred to as the “first taxation year”), if the corporation had not made such an election and subparagraph ii of that subparagraph a were read without reference to “the particular taxation year or”, or, in the case of a deemed large investment project within the meaning of section 737.18.17.1.1, where the first taxation year is not later than the taxation year that includes the date of the beginning of the tax-free period in respect of the second large investment project and where the particular year is not that first year and is referred to in subparagraph a or b, whichever of the following amounts is applicable:

(a)  where the particular year begins before the date of the beginning of the tax-free period in respect of the second large investment project and ends on that date or later, the total of the particular amount and the amount determined by the formula

F × G; or

(b)  where the particular year begins on the date of the beginning of the tax-free period in respect of the second large investment project or later, the total of the particular amount and the corporation’s tax assistance limit in relation to that second large project.

The cumulative value of a corporation’s tax assistance, for a particular taxation year, in respect of a large investment project, is equal to

(a)  in the case of a large investment project of the corporation, the aggregate of

i.  the aggregate of all amounts each of which is, in respect of the large investment project, for a preceding taxation year to which the computation method election in relation to the project applies, equal to the amount determined by the formula

H × I × J,

ii.  the aggregate of all amounts each of which is, in respect of the large investment project, for the particular year or a preceding taxation year to which the computation method election in relation to the project applies, equal to the amount determined by the formula

K × L,

iii.  where, at any time in the particular taxation year, the corporation transfers its recognized business in relation to 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 737.18.17.12 in respect of the transfer, and

iv.  in the case of a deemed large investment project within the meaning of section 737.18.17.1.1, either of the following amounts, if any:

(1)  where the particular taxation year includes the last day of the tax-free period in respect of the first large investment project and ends after that day, the amount determined by the formula

M – [(M × N) + (F × O)], or

(2)  where the particular taxation year is subsequent to the year that includes the last day of the tax-free period in respect of the first large investment project, the amount determined by the formula

M – F; or

(b)  in the case of a large investment project of a partnership of which the corporation is a member, the aggregate of all amounts each of which is, in respect of the project, for a preceding taxation year to which the computation method election applies, equal to the amount determined by the formula

H × I × J.

In the formulas in the fifth and sixth paragraphs,

(a)  F is the corporation’s tax assistance limit in relation to the second large investment project;

(b)  G is the proportion that the number of days in the part of the particular year that begins on the date of the beginning of the tax-free period in respect of the second large investment project is of the number of days in that year;

(c)  H 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;

(d)  I 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 737.18.17.5, 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 year under section 737.18.17.5 exceeds the excess amount determined under subparagraph i;

(e)  J 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 737.18.17.5 for that year;

(f)  K is the aggregate of the amounts that are not payable by the corporation for the taxation year under subparagraph ii of subparagraph d.1 of the sixth paragraph of section 34 of the Act respecting the Régie de l’assurance maladie du Québec (chapter R-5);

(g)  L 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.1 of the sixth paragraph of section 34 of the Act respecting the Régie de l’assurance maladie du Québec for that year;

(h)  M is

i.  where the particular taxation year is referred to in subparagraph 1 of subparagraph iv of subparagraph a of the sixth paragraph, the amount by which the unused portion of the corporation’s tax assistance limit, in relation to the deemed large investment project, for the particular year, exceeds the cumulative value of the corporation’s tax assistance for that year in respect of the project, determined without reference to that subparagraph 1, or

ii.  where the particular taxation year is referred to in subparagraph 2 of subparagraph iv of subparagraph a of the sixth paragraph, the amount by which the unused portion of the corporation’s tax assistance limit, in relation to the deemed large investment project, for the first taxation year that follows the year that includes the last day of the tax-free period in respect of the first large investment project, exceeds the cumulative value of the corporation’s tax assistance for that first year in respect of the project, determined without reference to that subparagraph 2;

(i)  N is the proportion that the number of days in the part of the particular year that ends on the last day of the tax-free period in respect of the first large investment project is of the number of days in that year; and

(j)  O is the proportion that the number of days in the particular year that follow the last day of the tax-free period in respect of the first large investment project is of the number of days in that year.

Where the first taxation year to which the computation method election applies, in relation to a large investment project of a corporation, ends before the date of the end of the start-up period of the large investment project, the unused portion of the corporation’s tax assistance limit, in relation to the project, must be increased, for a particular taxation year that is subsequent to that first year, by the amount that is the product obtained by multiplying by 15% the amount that would be the corporation’s total qualified capital investments on the date of the end of the start-up period or, if it is earlier, the date of the end of the particular year, if the definition of “total qualified capital investments” in the first paragraph of section 737.18.17.1 were read as if “from the beginning of the carrying out of the large investment project” were replaced by “from the time that immediately follows the end of the corporation’s first taxation year to which the computation method election applies”.

For the purpose of applying subparagraphs b and c of the third paragraph to a deemed large investment project within the meaning of section 737.18.17.1.1, the following rules must be taken into consideration:

(a)  the date of the beginning of the tax-free period that is referred to in those subparagraphs is the date that is determined in respect of the first large investment project; and

(b)  the last day of the tax-free period that is referred to in those subparagraphs is the day that is determined in respect of the second large investment project, unless the particular year precedes the year for which a first certificate has been issued in relation to the project, in which case it is the day that is determined in respect of the first large investment project.

2024, c. 11, s. 64.