Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Act current to 2014-04-02 and last amended on 2014-01-01. Previous Versions

Marginal note:Information return
  •  (1) Every corporation that is or would, but for section 191.3, be liable to pay tax under this Part for a taxation year shall, not later than the day on or before which it is required by section 150 to file its return of income for the year under Part I, file with the Minister a return for the year under this Part in prescribed form containing an estimate of the tax payable by it under this Part for the year.

  • Marginal note:Provisions applicable to Part

    (2) Sections 152, 158 and 159, subsection 161(11), sections 162 to 167 and Division J of Part I apply to this Part with such modifications as the circumstances require.

  • Marginal note:Provisions applicable -- Crown corporations

    (3) Section 27 applies to this Part with any modifications that the circumstances require.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 191.4;
  • 1994, c. 7, Sch. VIII, s. 116;
  • 1998, c. 19, s. 208.

PART VIIREFUNDABLE TAX ON CORPORATIONS ISSUING QUALIFYING SHARES

Marginal note:Corporation to pay tax
  •  (1) Every corporation shall pay a tax under this Part for a taxation year equal to the total of all amounts each of which is an amount designated under subsection 192(4) in respect of a share issued by it in the year.

  • Definition of “Part VII refund”

    (2) In this Part, the “Part VII refund” of a corporation for a taxation year means an amount equal to the lesser of

    • (a) the total of

      • (i) the amount, if any, by which the share-purchase tax credit of the corporation for the year exceeds the amount, if any, deducted in respect thereof by it for the year under subsection 127.2(1) from its tax otherwise payable under Part I for the year or the amount deemed by subsection 127.2(2) to have been paid on account of its tax payable under Part I for the year, as the case may be, and

      • (ii) such amount as the corporation may claim, not exceeding the amount that would, if paragraph (i) of the definition “investment tax credit” in subsection 127(9) were read without reference to the words “the year or”, be its investment tax credit at the end of the year in respect of property acquired, or an expenditure made, after April 19, 1983 and on or before the last day of the year, and

    • (b) the refundable Part VII tax on hand of the corporation at the end of the year.

  • Definition of “refundable Part VII tax on hand”

    (3) In this Part, “refundable Part VII tax on hand” of a corporation at the end of a taxation year means the amount, if any, by which

    • (a) the total of the taxes payable by it under this Part for the year and all preceding taxation years

    exceeds the total of

    • (b) the total of its Part VII refunds for all preceding taxation years, and

    • (c) the total of all amounts each of which is an amount of tax included in the total described in paragraph 192(3)(a) in respect of a share that was issued by the corporation and that, at the time it was issued, was not a qualifying share.

  • Marginal note:Corporation may designate amount

    (4) Every taxable Canadian corporation may, by filing a prescribed form with the Minister at any time on or before the last day of the month immediately following the month in which it issued a qualifying share of its capital stock (other than a share issued before July, 1983 or after 1986, or a share in respect of which the corporation has, on or before that day, designated an amount under subsection 194(4)), designate, for the purposes of this Part and Part I, an amount in respect of that share not exceeding 25% of the amount by which

    • (a) the amount of the consideration for which the share was issued

    exceeds

    • (b) the amount of any assistance (other than an amount included in computing the share-purchase tax credit of a taxpayer in respect of that share) provided or to be provided by a government, municipality or any other public authority in respect of, or for the acquisition of, the share.

  • Marginal note:Computing paid-up capital after designation

    (4.1) Where a corporation has designated an amount under subsection 192(4) in respect of shares issued at any time after May 23, 1985, in computing, at any particular time after that time, the paid-up capital in respect of the class of shares of the capital stock of the corporation that includes those shares

    • (a) there shall be deducted the amount, if any, by which

      • (i) the increase as a result of the issue of those shares in the paid-up capital in respect of all shares of that class, determined without reference to this subsection as it applies to those shares,

      exceeds

      • (ii) the amount, if any, by which the total amount of consideration for which those shares were issued exceeds the total amount designated by the corporation under subsection 192(4) in respect of those shares; and

    • (b) there shall be added an amount equal to the lesser of

      • (i) the amount, if any, by which

        • (A) the total of all amounts each of which is an amount deemed by subsection 84(3), 84(4) or 84(4.1) to be a dividend on shares of that class paid by the corporation after May 23, 1985 and before the particular time

        exceeds

        • (B) the total that would be determined under clause 192(4.1)(b)(i)(A) if this Act were read without reference to paragraph 192(4.1)(a), and

      • (ii) the total of all amounts each of which is an amount required by paragraph 192(4.1)(a) to be deducted in computing the paid-up capital in respect of that class of shares after May 23, 1985 and before the particular time.

  • Marginal note:Presumption

    (5) For the purposes of this Act, the Part VII refund of a corporation for a taxation year shall be deemed to be an amount paid on account of its tax under this Part for the year on the last day of the second month following the end of the year.

  • Definition of “qualifying share”

    (6) In this Part, “qualifying share”, at any time, means a prescribed share of the capital stock of a taxable Canadian corporation issued after May 22, 1985 and before 1987.

  • Marginal note:Effect of obligation to acquire shares

    (7) When determining under section 251 whether a corporation and any other person do not deal with each other at arm’s length for the purposes of any regulations made for the purposes of subsection 192(6), a person who has an obligation in equity, under a contract or otherwise, either immediately or in the future and either absolutely or contingently, to acquire shares in a corporation, shall be deemed to be in the same position in relation to the control of the corporation as if that person owned the shares.

  • Marginal note:Late designation

    (8) Where a taxable Canadian corporation that issued a share does not designate an amount under subsection 192(4) in respect of the share on or before the day on or before which the designation was required by that subsection, the corporation shall be deemed to have made the designation on that day if

    • (a) the corporation has filed with the Minister a prescribed information return relating to the share-purchase tax credit in respect of the share within the time that it would have been so required to file the return had the designation been made on that day, and

    • (b) within 3 years after that day, the corporation has

      • (i) designated an amount in respect of the share by filing a prescribed form with the Minister, and

      • (ii) paid to the Receiver General, at the time the prescribed form referred to in subparagraph 192(8)(b)(i) is filed, an amount that is a reasonable estimate of the penalty payable by the corporation for the late designation in respect of the share,

    except that, where the Minister has mailed a notice to the corporation that a designation has not been made in respect of the share under subsection 192(4), the designation and payment described in paragraph 192(8)(b) must be made by the corporation on or before the day that is 90 days after the day of the mailing.

  • Marginal note:Penalty for late designation

    (9) Where, pursuant to subsection 192(8), a corporation made a late designation in respect of a share issued in a month, the corporation shall pay, for each month or part of a month that elapsed during the period beginning on the last day on or before which an amount could have been designated by the corporation under subsection 192(4) in respect of the share and ending on the day that the late designation is made, a penalty for the late designation in respect of the share in an amount equal to 1% of the amount designated in respect of the share, except that the maximum penalty payable under this subsection by the corporation for a month shall not exceed $500.

  • Marginal note:Deemed deduction

    (10) For the purposes of this Act, other than the definition “investment tax credit” in subsection 127(9), the amount, if any, claimed under subparagraph 192(2)(a)(ii) by a taxpayer for a taxation year shall be deemed to have been deducted by the taxpayer under subsection 127(5) for the year.

  • Marginal note:Restriction

    (11) Where at any time a corporation has designated an amount under subsection 192(4) in respect of a share, no amount may be designated by the corporation at any subsequent time in respect of that share.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1970-71-72, c. 63, s. 1 “192”;
  • 1973-74, c. 14, s. 62(F);
  • 1974-75-76, c. 26, s. 111;
  • 1976-77, c. 4, s. 66;
  • 1977-78, c. 1, s. 88;
  • 1984, c. 1, s. 95, c. 45, s. 80;
  • 1985, c. 45, s. 103;
  • 1986, c. 6, s. 101.