I-3 - Taxation Act

Section 965.17.3.3 Disposition versions

2017-12-07

965.17.3.3. (Repealed).

2002, c. 9, s. 34; 2004, c. 21, s. 237; 2017, c. 29, s. 166.

2006-03-01

965.17.3.3. The conditions to which subparagraph iii of paragraph c of section 965.17.3 refers in relation to a subsidiary are the following:

(a)  the subsidiary carries on a particular business that may, if the Minister so decides, be considered in fact to consist mainly in the continuance of a business or part of a business carried on by another taxpayer before the time of the beginning of the carrying on of the particular business by that subsidiary; and

(b)  the qualified corporation referred to in section 965.17.3 makes a public share issue, convertible security issue or non-guaranteed convertible security issue not later than 365 days after the beginning of the carrying on, by the subsidiary, of the particular business referred to in paragraph a and

i.  on the date of the receipt for the final prospectus or the exemption from filing a prospectus relating to that issue, the subsidiary meets the requirements of subparagraphs a, b, d and e of the first paragraph of section 965.17.2,

ii.  throughout the period extending from the time of the beginning of the carrying on of the particular business to the date of the receipt for the final prospectus or of the exemption from filing a prospectus relating to that issue, the subsidiary had not fewer than five full-time employees who are not insiders within the meaning of section 89 of the Securities Act (chapter V-1.1) or persons related to such insiders, and

iii.  immediately before the time of the beginning of the carrying on of the particular business by the subsidiary, the other taxpayer referred to in subparagraph a had, in relation to that business or part of a business, not fewer than five full-time employees who are not insiders within the meaning of section 89 of the Securities Act or persons related to such insiders,

(1)  throughout a 12-month period that includes the time of the beginning of the carrying on of the particular business by the subsidiary and that is established as if the period from the time of the beginning of that carrying on of the particular business to the date of the receipt for the final prospectus or of the exemption from filing a prospectus were applicable to the other taxpayer and not to the subsidiary, or

(2)  throughout a 6-month period that includes the time of the beginning of the carrying on of the particular business by the subsidiary and that is established as if the period from the time of the beginning of that carrying on of the particular business to the date of the receipt for the final prospectus or of the exemption from filing a prospectus were applicable to the other taxpayer and not to the subsidiary, where the conditions set out in the second paragraph are met.

The conditions to which subparagraph 2 of subparagraph iii of subparagraph b of the first paragraph refers are the following:

(a)  the other taxpayer has already made a public issue of shares with the stipulation that they could be included in a stock savings plan;

(b)  a class of shares of the capital stock of the other taxpayer is listed on a Canadian stock exchange immediately before the time of the beginning of the carrying on of the particular business; and

(c)  a class of shares of the capital stock of the subsidiary is listed on a Canadian stock exchange on the date of the receipt for the final prospectus or of the exemption from filing a prospectus.

For the purposes of the first paragraph, the continuance of a business or part of a business carried on by another taxpayer before the beginning of the carrying on, by a subsidiary, of the particular business results from

(a)  the acquisition or rental, by the subsidiary, of property from the other taxpayer who, throughout the part of the period described in subparagraph 1 or 2 of subparagraph iii of subparagraph b of the first paragraph preceding that acquisition or rental, carried on a business in which the other taxpayer used that property; or

(b)  the carrying on, by the subsidiary, of a new business that may reasonably be considered in fact to consist in the extension of a business or part of a business carried on by the other taxpayer.

For the purposes of subparagraph 1 of subparagraph iii of subparagraph b of the first paragraph, the other taxpayer is deemed to have had not fewer than five full-time employees who are not insiders within the meaning of section 89 of the Securities Act or persons related to such insiders, where

(a)  a class of shares of its capital stock is, throughout the 12-month period preceding the time of the beginning of the carrying on of the particular business by the subsidiary, listed on a Canadian stock exchange; and

(b)  a person, other than such an insider or a person related thereto, or a partnership provides the other taxpayer, in the period referred to in subparagraph a, with services under a service contract and that other taxpayer would normally require the services of more than five full-time employees if those services were not provided.

2002, c. 9, s. 34; 2004, c. 21, s. 237.