I-3 - Taxation Act

Section 771.2.1.8 Disposition versions

2023-09-26

771.2.1.8. Despite the first paragraph of section 771.2.1.3 and sections 771.2.1.4, 771.2.1.5, 771.2.1.6 and 771.2.1.7, a Canadian-controlled private corporation’s business limit for a taxation year ending in a calendar year is equal to the amount by which its business limit for the taxation year, determined without reference to this section, exceeds the greater of

(a)  the amount determined by the formula

A × [(B − $10,000,000)/$40,000,000]; and

(b)  the amount determined by the formula

A/$500,000 × 5 (C − $50,000).

In the formulas in the first paragraph,

(a)  A is the corporation’s business limit for the taxation year, determined without reference to this section;

(b)  B is

i.  if the corporation is not associated with any other corporation in the taxation year, the corporation’s paid-up capital determined as provided in section 771.2.1.9 of its preceding taxation year or, if the corporation is in its first fiscal period, on the basis of its financial statements prepared at the beginning of the fiscal period in accordance with generally accepted accounting principles, and

ii.  if the corporation is associated with one or more other corporations in the taxation year, the aggregate of all amounts each of which is, for the corporation or any of the other corporations, the amount of its paid-up capital determined as provided in section 771.2.1.9 for its last taxation year ending in the preceding calendar year or, if the corporation is in its first fiscal period, on the basis of its financial statements prepared at the beginning of the fiscal period in accordance with generally accepted accounting principles; and

(c)  C is the total of all amounts each of which is the adjusted aggregate investment income of the corporation, or of a corporation with which it is associated at any time in the taxation year, for each taxation year of the corporation, or associated corporation, as the case may be, that ends in the preceding calendar year.

For the purposes of subparagraph c of the second paragraph, a particular corporation and another corporation are deemed to be associated with each other at a particular time if

(a)  the particular corporation transfers or lends a property at any time, either directly or indirectly, by means of a trust or otherwise, to the other corporation;

(b)  the other corporation is, at the particular time, related to the particular corporation but is not associated with it; and

(c)  it may reasonably be considered that one of the reasons the transfer or loan was made was to reduce the amount determined under subparagraph c of the second paragraph in respect of the particular corporation, or of any corporation with which it is associated, for a taxation year.

2005, c. 38, s. 173; 2019, c. 14, s. 248; 2020, c. 16, s. 116; 2023, c. 19, s. 58.

2020-09-24

771.2.1.8. Despite the first paragraph of section 771.2.1.3 and sections 771.2.1.4, 771.2.1.5, 771.2.1.6 and 771.2.1.7, a Canadian-controlled private corporation’s business limit for a taxation year ending in a calendar year is equal to the amount by which its business limit for the taxation year, determined without reference to this section, exceeds the greater of

(a)  the amount determined by the formula

A × [(B − $10,000,000)/$5,000,000]; and

(b)  the amount determined by the formula

A/$500,000 × 5 (C − $50,000).

In the formulas in the first paragraph,

(a)  A is the corporation’s business limit for the taxation year, determined without reference to this section;

(b)  B is

i.  if the corporation is not associated with any other corporation in the taxation year, the corporation’s paid-up capital determined as provided in section 771.2.1.9 of its preceding taxation year or, if the corporation is in its first fiscal period, on the basis of its financial statements prepared at the beginning of the fiscal period in accordance with generally accepted accounting principles, and

ii.  if the corporation is associated with one or more other corporations in the taxation year, the aggregate of all amounts each of which is, for the corporation or any of the other corporations, the amount of its paid-up capital determined as provided in section 771.2.1.9 for its last taxation year ending in the preceding calendar year or, if the corporation is in its first fiscal period, on the basis of its financial statements prepared at the beginning of the fiscal period in accordance with generally accepted accounting principles; and

(c)  C is the total of all amounts each of which is the adjusted aggregate investment income of the corporation, or of a corporation with which it is associated at any time in the taxation year, for each taxation year of the corporation, or associated corporation, as the case may be, that ends in the preceding calendar year.

For the purposes of subparagraph c of the second paragraph, a particular corporation and another corporation are deemed to be associated with each other at a particular time if

(a)  the particular corporation transfers or lends a property at any time, either directly or indirectly, by means of a trust or otherwise, to the other corporation;

(b)  the other corporation is, at the particular time, related to the particular corporation but is not associated with it; and

(c)  it may reasonably be considered that one of the reasons the transfer or loan was made was to reduce the amount determined under subparagraph c of the second paragraph in respect of the particular corporation, or of any corporation with which it is associated, for a taxation year.

2005, c. 38, s. 173; 2019, c. 14, s. 248; 2020, c. 16, s. 116.

2019-06-19

771.2.1.8. Despite the first paragraph of section 771.2.1.3 and sections 771.2.1.4, 771.2.1.5, 771.2.1.6 and 771.2.1.7, a Canadian-controlled private corporation’s business limit for a taxation year ending in a calendar year is equal to the amount by which its business limit for the taxation year, determined without reference to this section, exceeds the amount determined by the formula 

A × [(B − $10,000,000) / $5,000,000].

In the formula in the first paragraph,

(a)  A is the corporation’s business limit for the taxation year, determined without reference to this section; and

(b)  B is

i.  if the corporation is not associated with any other corporation in the taxation year, the corporation’s paid-up capital determined as provided in section 771.2.1.9 of its preceding taxation year or, if the corporation is in its first fiscal period, on the basis of its financial statements prepared at the beginning of the fiscal period in accordance with generally accepted accounting principles, and

ii.  if the corporation is associated with one or more other corporations in the taxation year, the aggregate of all amounts each of which is, for the corporation or any of the other corporations, the amount of its paid-up capital determined as provided in section 771.2.1.9 for its last taxation year ending in the preceding calendar year or, if the corporation is in its first fiscal period, on the basis of its financial statements prepared at the beginning of the fiscal period in accordance with generally accepted accounting principles.

2005, c. 38, s. 173; 2019, c. 14, s. 248.

2006-03-01

771.2.1.8. Despite the first paragraph of section 771.2.1.3 and sections 771.2.1.4 to 771.2.1.7, a Canadian-controlled private corporation’s business limit for a taxation year ending in a calendar year is equal to the amount by which its business limit for the taxation year, determined without reference to this section, exceeds the amount determined by the formula

A × [(B − $10,000,000) / $5,000,000].

In the formula in the first paragraph,

(a)  A is the corporation’s business limit for the taxation year, determined without reference to this section; and

(b)  B is

i.  if the corporation is not associated with any other corporation in the taxation year, the corporation’s paid-up capital determined as provided in section 771.2.1.9 of its preceding taxation year or, if the corporation is in its first fiscal period, on the basis of its financial statements prepared at the beginning of the fiscal period in accordance with generally accepted accounting principles, and

ii.  if the corporation is associated with one or more other corporations in the taxation year, the aggregate of all amounts each of which is, for the corporation or any of the other corporations, the amount of its paid-up capital determined as provided in section 771.2.1.9 for its last taxation year ending in the preceding calendar year or, if the corporation is in its first fiscal period, on the basis of its financial statements prepared at the beginning of the fiscal period in accordance with generally accepted accounting principles.

2005, c. 38, s. 173.