Income Tax Regulations (C.R.C., c. 945)

Regulations are current to 2016-04-12 and last amended on 2016-02-26. Previous Versions

Railway Corporations

[SOR/94-686, s. 57(F)]
  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that shall be deemed to have been earned by a railway corporation in a taxation year in a province in which it had a permanent establishment is, unless subsection (2) applies, 1/2 the aggregate of

    • (a) that proportion of the taxable income of the corporation for the year that the equated track miles of the corporation in the province is of the equated track miles of the corporation in Canada; and

    • (b) that proportion of the taxable income of the corporation for the year that the gross ton miles of the corporation for the year in the province is of the gross ton miles of the corporation for the year in Canada.

  • (2) Where a corporation to which subsection (1) would apply, if this subsection did not apply thereto, operates an airline service, ships or hotels or receives substantial revenues that are petroleum or natural gas royalties, or does a combination of two or more of those things, the amount of its taxable income that shall be deemed to have been earned in a taxation year in a province in which it had a permanent establishment is the aggregate of the amounts computed

    • (a) by applying the provisions of section 407 to that part of its taxable income for the year that may reasonably be considered to have arisen from the operation of the airline service;

    • (b) by applying the provisions of section 410 to that part of its taxable income for the year that may reasonably be considered to have arisen from the operation of the ships;

    • (c) by applying the provisions of section 402 to that part of its taxable income for the year that may reasonably be considered to have arisen from the operation of the hotels;

    • (d) by applying the provisions of section 402 to that part of its taxable income for the year that may reasonably be considered to have arisen from the ownership by the taxpayer of petroleum or natural gas rights or any interest therein; and

    • (e) by applying the provisions of subsection (1) to the remaining portion of its taxable income for the year.

  • (3) In this section, equated track miles in a specified place means the aggregate of

    • (a) the number of miles of first main track,

    • (b) 80 per cent of the number of miles of other main tracks, and

    • (c) 50 per cent of the number of miles of yard tracks and sidings,

    in that place.

  • (4) For the purpose of making an allocation under paragraph (2)(b), a reference in section 410 to “salaries and wages paid in the year by the corporation to employees” shall be read as a reference to salaries and wages paid by the corporation to employees employed in the operation of permanent establishments (other than ships) maintained for the shipping business.

  • (5) For the purpose of making an allocation under paragraph (2)(c),

    • (a) a reference in section 402 to “gross revenue for the year reasonably attributable to the permanent establishment in the province” shall be read as a reference to the gross revenue of the taxpayer from operating hotels therein;

    • (b) a reference in section 402 to “total gross revenue for the year” shall be read as a reference to the total gross revenue of the taxpayer for the year from operating hotels; and

    • (c) a reference in section 402 to “salaries and wages paid in the year by the corporation to employees” shall be read as a reference to salaries and wages paid to employees engaged in the operations of its hotels.

  • (6) Notwithstanding subsection 402(5), for the purpose of making an allocation under paragraph (2)(d),

    • (a) a reference in section 402 to “gross revenue for the year reasonably attributable to the permanent establishment in the province” shall be read as a reference to the gross revenue of the taxpayer from the ownership by the taxpayer of petroleum and natural gas rights in lands in the province and any interest therein;

    • (b) a reference in section 402 to “total gross revenue for the year” shall be read as a reference to the total gross revenue of the taxpayer from ownership by the taxpayer of petroleum and natural gas rights and any interest therein; and

    • (c) a reference in section 402 to “salaries and wages paid in the year by the corporation to employees” shall be read as a reference to salaries and wages paid to employees employed in connection with the corporation’s petroleum and natural gas rights and interests therein.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 4;
  • SOR/94-686, ss. 57(F), 79(F);
  • SOR/2011-195, s. 3(F).

Airline Corporations

  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that shall be deemed to have been earned in a taxation year by an airline corporation in a province in which it had a permanent establishment is the amount that is equal to 1/4 of the aggregate of

    • (a) that proportion of its taxable income for the year that the capital cost of all the corporation’s fixed assets, except aircraft, in the province at the end of the year is of the capital cost of all its fixed assets, except aircraft, in Canada at the end of the year; and

    • (b) that proportion of its taxable income for the year that three times the number of revenue plane miles flown by its aircraft during the year in the province is of the total of all amounts, each of which is the total number of revenue plane miles flown by its aircraft during the year in a province in which the corporation had a permanent establishment.

  • (2) For the purposes of this section, “revenue plane miles flown” shall be weighted according to take-off weight of the aircraft operated.

  • (3) For the purposes of this section, take-off weight of an aircraft means

    • (a) for an aircraft in respect of which an application form for a Certificate of Airworthiness has been submitted to and accepted by the Department of Transport, the maximum permissible take-off weight, in pounds, shown on the form; and

    • (b) for any other aircraft, the weight, in pounds, that may reasonably be considered to be the equivalent of the weight referred to in paragraph (a).

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts and regulations. SOR/78-326, s. 1;
  • SOR/80-949, s. 5;
  • SOR/94-327, s. 2;
  • SOR/94-686, s. 6(F);
  • 2013, c. 34, s. 381.

Grain Elevator Operators

 Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the operation of grain elevators that shall be deemed to have been earned by that corporation in a taxation year in a province in which it had a permanent establishment is 1/2 of the aggregate of

  • (a) that proportion of its taxable income for the year that the number of bushels of grain received in the year in the elevators operated by the corporation in the province is of the total number of bushels of grain received in the year in all the elevators operated by the corporation; and

  • (b) that proportion of its taxable income for the year that the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishment in the province is of the aggregate of all salaries and wages paid in the year by the corporation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 6;
  • SOR/94-686, s. 79(F).

Bus and Truck Operators

 Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the transportation of goods or passengers (other than by the operation of a railway, ship or airline service) that shall be deemed to have been earned by that corporation in a taxation year in a province in which it had a permanent establishment is 1/2 of the aggregate of

  • (a) that proportion of its taxable income for the year that the number of kilometres driven by the corporation’s vehicles, whether owned or leased, on roads in the province in the year is of the total number of kilometres driven by those vehicles in the year on roads other than roads in provinces or countries in which the corporation had no permanent establishment; and

  • (b) that proportion of its taxable income for the year that the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishment in the province is of the aggregate of all salaries and wages paid in the year by the corporation.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 7;
  • SOR/86-585, s. 1;
  • SOR/94-686, s. 79(F).

Ship Operators

  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the operation of ships that shall be deemed to have been earned by the corporation in a taxation year in a province in which it had a permanent establishment is the aggregate of,

    • (a) that proportion of its allocable income for the year that its port-call-tonnage in the province is of its total port-call-tonnage in all the provinces in which it had a permanent establishment; and

    • (b) if its taxable income for the year exceeds its allocable income for the year, that proportion of the excess that the aggregate of the salaries and wages paid in the year by the corporation to employees of the permanent establishment (other than a ship) in the province is of the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishments (other than ships) in Canada.

  • (2) In this section,

    • (a) allocable income for the year means that proportion of the taxable income of the corporation for the year that its total port-call-tonnage in Canada is of its total port-call-tonnage in all countries; and

    • (b) port-call-tonnage in a province or country means the aggregate of the products obtained by multiplying, for each ship operated by the corporation, the number of calls made in the year by that ship at ports in that province or country by the number of tons of the registered net tonnage of that ship.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending regulations. SOR/80-949, s. 7;
  • SOR/94-686, s. 79(F).
 
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