Global Minimum Tax Act (S.C. 2024, c. 17, s. 81)

Marginal note:GloBE income — flow-through ultimate parent entity

• 20 (1) The GloBE income, for a fiscal year, of an ultimate parent entity that is a flow-through entity excludes any amount that would, in the absence of this subsection, be included in computing the entity’s GloBE income or loss for the fiscal year and that is attributable to an ownership interest in the entity (referred to in this subsection as the “attributable amount”), if

  • (a) one of the following conditions is met:

    • (i) the holder of the ownership interest is subject to tax, for a taxable period ending within 12 months of the end of the fiscal year, on the full attributable amount at a nominal rate that is equal to, or exceeds, the minimum rate, or

    • (ii) it can reasonably be expected that

      (A + B) ≥ C × D

      where

      A

      is the amount that would, in the absence of this subsection and paragraph 22(4)(a), be adjusted covered taxes payable by the ultimate parent entity in respect of the attributable amount for the fiscal year,

      B

      is the tax payable by the holder in respect of the attributable amount for a taxable period ending within 12 months of the end of the fiscal year,

      C

      is the attributable amount, and

      D

      is the minimum rate;

  • (b) the holder is a natural person who

    • (i) is tax resident in the jurisdiction where the ultimate parent entity is located, and

    • (ii) does not hold ownership interests that in the aggregate entitle the holder to more than 5% of the profits or assets of the ultimate parent entity; or

  • (c) the holder is a governmental entity, international organization, non-profit organization or pension fund that

    • (i) is resident in the jurisdiction where the ultimate parent entity is located, and

    • (ii) does not hold ownership interests that in the aggregate entitle the holder to more than 5% of the profits or assets of the ultimate parent entity.

• Marginal note:Resident — interpretation

  (2) For the purposes of subparagraph (1)(c)(i) and paragraph 21(1)(c),

  • (a) an entity (other than a governmental entity) is resident in the jurisdiction where it is created and managed; and

  • (b) a governmental entity is resident in the jurisdiction of the government of which it is a part or that owns it.

• Marginal note:GloBE loss — flow-through ultimate parent entity

  (3) The GloBE loss, for a fiscal year, of an ultimate parent entity that is a flow-through entity is the amount determined by the formula

  A − B

  where

  A

  is the amount that would, in the absence of this subsection, be the ultimate parent entity’s GloBE loss for the year; and

  B

  is the portion of the loss amount referred to in the description of A that is attributable to an ownership interest in the entity, to the extent the holder of the ownership interest is allowed to use its share of the loss in computing the holder’s income for tax purposes.

• Marginal note:Permanent establishment — flow-through ultimate parent entity

  (4) Subsections (1) to (3) apply to a permanent establishment in the same manner as they apply to an ultimate parent entity that is a flow-through entity, if

  • (a) the ultimate parent entity carries on its business, in whole or in part, through the permanent establishment; or

  • (b) the following conditions are met:

    • (i) a flow-through entity carries on its business, in whole or in part, through the permanent establishment, and

    • (ii) the ultimate parent entity holds its interest in the flow-through entity directly or through a tax transparent structure.