Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))
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Act current to 2024-11-26 and last amended on 2024-07-01. Previous Versions
PART IIncome Tax (continued)
DIVISION EComputation of Tax (continued)
SUBDIVISION BRules Applicable to Corporations (continued)
Marginal note:Definitions
125.7 (1) The following definitions apply in this section and in subsections 163(2.901) and (2.902).
- baseline remuneration
baseline remuneration, in respect of an eligible employee of an eligible entity, means the average weekly eligible remuneration, excluding any period of seven or more consecutive days for which the employee was not remunerated, paid to the eligible employee by the eligible entity during the period that
(a) begins on January 1, 2020 and ends on March 15, 2020; or
(b) if the eligible entity elects,
(i) begins on March 1, 2019 and ends on May 31, 2019, in respect of any of the first qualifying period to the third qualifying period,
(ii) begins on March 1, 2019 and ends on June 30, 2019, in respect of the fourth qualifying period, unless the eligible entity elects to use the period that begins on March 1, 2019 and ends on May 31, 2019 for that qualifying period,
(iii) begins on July 1, 2019 and ends on December 31, 2019, in respect of any of the fifth qualifying period to the thirteenth qualifying period,
(iii.1) begins on March 1, 2019 and ends on June 30, 2019, in respect of any of the fourteenth qualifying period to the seventeenth qualifying period, unless the eligible entity elects to use the period that begins on July 1, 2019 and ends on December 31, 2019 for that qualifying period,
(iii.2) begins on July 1, 2019 and ends on December 31, 2019, in respect of the eighteenth qualifying period and any subsequent qualifying period, or
(iv) if the eligible employee was on leave for any reason mentioned in subsection 12(3) of the Employment Insurance Act or section 2 of the Act respecting parental insurance, CQLR, c. A-29.011 throughout the period that begins on July 1, 2019 and ends on March 15, 2020, begins 90 days prior to the date on which the employee commenced that leave and ends on the day prior to the date on which they commenced their leave, in respect of the fifth qualifying period and any subsequent qualifying period. (rémunération de base)
- base percentage
base percentage, of an eligible entity for a qualifying period, means
(a) for the fifth qualifying period,
(i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 60%, and
(ii) in any other case, 1.2 multiplied by the revenue reduction percentage;
(b) for the sixth qualifying period,
(i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 60%, and
(ii) in any other case, 1.2 multiplied by the revenue reduction percentage;
(c) for the seventh qualifying period,
(i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 50%, and
(ii) in any other case, 1 multiplied by the revenue reduction percentage;
(d) for the eighth qualifying period,
(i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 40%, and
(ii) in any other case, 0.8 multiplied by the revenue reduction percentage;
(e) for the ninth qualifying period,
(i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 40%, and
(ii) in any other case, 0.8 multiplied by the revenue reduction percentage;
(f) for the tenth qualifying period,
(i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 40%, and
(ii) in any other case, 0.8 multiplied by the revenue reduction percentage;
(g) for the eleventh qualifying period to the seventeenth qualifying period,
(i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 40%, and
(ii) in any other case, the percentage determined by the formula
0.8 × A
where
- A
- is the revenue reduction percentage;
(h) for the eighteenth qualifying period,
(i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 35%, and
(ii) in any other case, the percentage determined by the formula
0.875 × (A − 10%)
where
- A
- is the revenue reduction percentage;
(i) for the nineteenth qualifying period,
(i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 25%, and
(ii) in any other case, the percentage determined by the formula
0.625 × (A − 10%)
where
- A
- is the revenue reduction percentage;
(j) for the twentieth qualifying period,
(i) if the eligible entity’s revenue reduction percentage is greater than or equal to 50%, 25%, and
(ii) in any other case, the percentage determined by the formula
0.625 × (A − 10%)
where
- A
- is the revenue reduction percentage;
(k) for the twenty-first qualifying period,
(i) if the eligible entity’s revenue reduction percentage is greater than or equal to 50%, 10%, and
(ii) in any other case, the percentage determined by the formula
0.25 × (A − 10%)
where
- A
- is the revenue reduction percentage;
(l) for the twenty-second qualifying period to the twenty-sixth qualifying period,
(i) the lesser of 75% and the eligible entity’s revenue reduction percentage for the qualifying period, if, for the qualifying period,
(A) the eligible entity’s revenue reduction percentage is greater than or equal to 40%, and
(B) either of the following conditions is met:
(I) the eligible entity is a qualifying tourism or hospitality entity, or
(II) the eligible entity is subject to a qualifying public health restriction,
(ii) if subparagraph (i) does not apply to the eligible entity, the eligible entity’s revenue reduction percentage for the qualifying period is greater than or equal to 50% and the prior year revenue decline of the eligible entity is greater than or equal to 50%, the lesser of 50% and the percentage determined by the formula
1.6 × (A − 50%) + 10%
where
- A
- is the eligible entity’s revenue reduction percentage for the qualifying period, and
(iii) in any other case, nil;
(m) for the twenty-seventh qualifying period and the twenty-eighth qualifying period,
(i) the lesser of 37.5% and one half of the eligible entity’s revenue reduction percentage for the qualifying period, if, for the qualifying period,
(A) the eligible entity’s revenue reduction percentage is greater than or equal to 40%, and
(B) either of the following conditions is met:
(I) the eligible entity is a qualifying tourism or hospitality entity, or
(II) the eligible entity is subject to a qualifying public health restriction,
(ii) if subparagraph (i) does not apply to the eligible entity, the eligible entity’s revenue reduction percentage is for the qualifying period greater than or equal to 50% and the prior year revenue decline of the eligible entity is greater than or equal to 50%, the lesser of 25% and the percentage determined by the formula
0.8 × (A − 50%) + 5%
where
- A
- is the eligible entity’s revenue reduction percentage for the qualifying period, and
(iii) in any other case, nil; and
(n) for a qualifying period after the twentieth qualifying period, a percentage determined by regulation in respect of the eligible entity for the qualifying period or, for a qualifying period after the twenty-eighth qualifying period, if there is no percentage determined by regulation for the qualifying period, nil. (pourcentage de base)
- current reference period
current reference period, for a qualifying period, means
(a) for the first qualifying period, March 2020;
(b) for the second qualifying period, April 2020;
(c) for the third qualifying period, May 2020;
(c.1) for the fourth qualifying period, June 2020;
(c.2) for the fifth qualifying period, July 2020;
(c.3) for the sixth qualifying period, August 2020;
(c.4) for the seventh qualifying period, September 2020;
(c.5) for the eighth qualifying period, October 2020;
(c.6) for the ninth qualifying period, November 2020;
(c.7) for the tenth qualifying period, December 2020;
(c.8) for the eleventh qualifying period, December 2020;
(c.9) for the twelfth qualifying period, January 2021;
(c.91) for the thirteenth qualifying period, February 2021;
(c.92) for the fourteenth qualifying period, March 2021;
(c.93) for the fifteenth qualifying period, April 2021;
(c.94) for the sixteenth qualifying period, May 2021;
(c.95) for the seventeenth qualifying period, June 2021;
(c.96) for the eighteenth qualifying period, July 2021;
(c.97) for the nineteenth qualifying period, August 2021;
(c.98) for the twentieth qualifying period, September 2021;
(c.99) for the twenty-first qualifying period, October 2021;
(c.991) for the twenty-second qualifying period, November 2021;
(c.992) for the twenty-third qualifying period, December 2021;
(c.993) for the twenty-fourth qualifying period, January 2022;
(c.994) for the twenty-fifth qualifying period, February 2022;
(c.995) for the twenty-sixth qualifying period, March 2022;
(c.996) for the twenty-seventh qualifying period, April 2022;
(c.997) for the twenty-eighth qualifying period, May 2022; and
(d) for the qualifying period referred to in paragraph (d) of the definition qualifying period, a prescribed period. (période de référence actuelle)
- eligible employee
eligible employee, of an eligible entity in respect of a week in a qualifying period, means an individual employed by the eligible entity primarily in Canada throughout the qualifying period (or the portion of the qualifying period throughout which the individual was employed by the eligible entity), other than, if the qualifying period is any of the first qualifying period to the fourth qualifying period, an individual who is without remuneration by the eligible entity in respect of 14 or more consecutive days in the qualifying period. (employé admissible)
- eligible entity
eligible entity means
(a) a corporation or a trust, other than a corporation or a trust that is exempt from tax under this Part or is a public institution;
(b) an individual other than a trust;
(c) a registered charity, other than a public institution;
(d) a person that is exempt from tax under this Part because of paragraph 149(1)(e), (j), (k) or (l), other than a public institution;
(e) a partnership, all of the members of which are described in this paragraph or any of paragraphs (a) to (d); or
(f) a prescribed organization. (entité déterminée)
- eligible remuneration
eligible remuneration, of an eligible employee of an eligible entity, means amounts described in paragraph 153(1)(a) or (g), other than
(a) for greater certainty, a retiring allowance;
(b) amounts deemed to have been received by the eligible employee as a benefit under or because of any of paragraphs 7(1)(a) to (d.1);
(c) any amount received that can reasonably be expected to be paid or returned, directly or indirectly, in any manner whatever, to
(i) the eligible entity,
(ii) a person or partnership not dealing at arm’s length with the eligible entity, or
(iii) another person or partnership at the direction of the eligible entity; and
(d) any amount that is paid in respect of a week in the qualifying period, if, as part of an arrangement involving the eligible employee and the eligible entity,
(i) the amount is in excess of the eligible employee’s baseline remuneration,
(ii) after the qualifying period, the eligible employee is reasonably expected to be paid a lower weekly amount than their baseline remuneration, and
(iii) one of the main purposes for the arrangement is to increase the amount of the deemed overpayment under subsection (2). (rémunération admissible)
- executive compensation repayment amount
executive compensation repayment amount, of an eligible entity, means
(a) nil, unless
(i) shares of the capital stock of the eligible entity are listed or traded on a stock exchange or other public market, or
(ii) the eligible entity is controlled by a corporation described in subparagraph (i); and
(b) if the conditions in subparagraph (a)(i) or (ii) are met, the amount determined by the formula
A × B
where
- A
- is
(i) a percentage assigned to the eligible entity under an agreement in respect of the seventeenth qualifying period to the twenty-third qualifying period if
(A) the agreement is entered into by
(I) the eligible entity,
(II) an eligible entity, shares of the capital stock of which are listed or traded on a stock exchange or other public market, that controls the eligible entity (referred to in this definition as the “public parent corporation”), if the public parent corporation received a deemed overpayment under subsection (2) in respect of any of the seventeenth qualifying period to the twenty-third qualifying period, and
(III) each other eligible entity that received a deemed overpayment under subsection (2) in respect of any of the seventeenth qualifying period to the twenty-third qualifying period and was controlled in that period by the eligible entity or the public parent corporation, if any,
(B) the agreement is filed in prescribed form and manner with the Minister,
(C) the agreement assigns, for the purposes of this definition, a percentage in respect of each eligible entity referred to in clause (A) of this subparagraph,
(D) the total of all the percentages assigned under the agreement equals 100%, and
(E) the percentage allocated to any eligible entity under the agreement would not result in an amount allocated to the eligible entity in excess of the total of all amounts of deemed overpayments of the eligible entity under subsection (2) for any of the seventeenth qualifying period to the twenty-third qualifying period,
(i.1) a percentage assigned to the eligible entity under an agreement in respect of the twenty-fourth qualifying period and any subsequent qualifying period if
(A) the agreement is entered into by
(I) the eligible entity,
(II) the public parent corporation, if the public parent corporation received a deemed overpayment under subsection (2) in respect of the twenty-fourth qualifying period or any subsequent qualifying period, and
(III) each other eligible entity that received a deemed overpayment under subsection (2) in respect of the twenty-fourth qualifying period or any subsequent qualifying period and was controlled in that period by the eligible entity or the public parent corporation, if any,
(B) the agreement is filed in prescribed form and manner with the Minister,
(C) the agreement assigns, for the purposes of this definition, a percentage in respect of each eligible entity referred to in clause (A) of this subparagraph,
(D) the total of all the percentages assigned under the agreement equals 100%, and
(E) the percentage allocated to any eligible entity under the agreement would not result in an amount allocated to the eligible entity in excess of the total of all amounts of deemed overpayments of the eligible entity under subsection (2) for the twenty-fourth qualifying period and any subsequent qualifying period, and
(ii) in any other case, 100%, and
- B
- is
(i) for the seventeenth qualifying period to the twenty-third qualifying period, the lesser of
(A) the total of all amounts each of which is an amount of a deemed overpayment under subsection (2) for each of the eligible entities described in clause (i)(A) of the description of A for the seventeenth qualifying period to the twenty-third qualifying period, other than amounts in respect of employees on leave with pay, and
(B) the amount determined by the formula
C − D
where
- C
- is the executive remuneration of the eligible entity, or of the public parent corporation that controls the eligible entity, if any, for the 2021 calendar year (prorated based upon the number of days of the eligible entity’s, or the public parent corporation’s, fiscal periods in the calendar year, if those fiscal periods are not the calendar year), and
- D
- is the executive remuneration of the eligible entity, or of the public parent corporation that controls the eligible entity, if any, for the 2019 calendar year (prorated based upon the number of days of the eligible entity’s, or the public parent corporation’s, fiscal periods in the calendar year, if those fiscal periods are not the calendar year), and
(ii) for the twenty-fourth qualifying period and any subsequent qualifying period, the lesser of
(A) the total of all amounts each of which is an amount of a deemed overpayment under subsection (2) for each of the eligible entities described in clause (i.1)(A) of the description of A for the twenty-fourth qualifying period and any subsequent qualifying period, other than amounts in respect of employees on leave with pay, and
(B) the amount determined by the formula
E + F − G
where
- E
- is the amount, if any, by which the amount determined under clause (i)(B) exceeds the amount determined under clause (i)(A),
- F
- is the executive remuneration of the eligible entity, or of the public parent corporation that controls the eligible entity, if any, for the 2022 calendar year (prorated based upon the number of days of the eligible entity’s, or the public parent corporation’s, fiscal periods in the calendar year, if those fiscal periods are not the calendar year), and
- G
- is the executive remuneration of the eligible entity, or of the public parent corporation that controls the eligible entity, if any, for the 2019 calendar year (prorated based upon the number of days of the eligible entity’s, or the public parent corporation’s, fiscal periods in the calendar year, if those fiscal periods are not the calendar year). (montant du remboursement de la rémunération de la haute direction)
- executive remuneration
executive remuneration, of an eligible entity, means
(a) the total amount of compensation that is reported in the eligible entity’s Statement of Executive Compensation for Named Executive Officers pursuant to National Instrument 51-102 Continuous Disclosure Obligations, as amended from time to time, of the Canadian Securities Administrators in respect of Named Executive Officers of the eligible entity;
(b) if paragraph (a) does not apply and the eligible entity is required to make a similar disclosure to shareholders under the laws of another jurisdiction, the amount of total compensation reported in that disclosure (if the compensation of more than five individuals is required to be reported under that disclosure, using the five most highly compensated of those individuals); and
(c) if paragraphs (a) and (b) do not apply, the amount that would be required to be reported by the eligible entity using the methodology for preparing the Statement of Executive Compensation referred to in paragraph (a). (rémunération de la haute direction)
- prior reference period
prior reference period, for a qualifying period of an eligible entity, means
(a) subject to paragraph (b),
(i) for the first qualifying period, March 2019,
(ii) for the second qualifying period, April 2019,
(iii) for the third qualifying period, May 2019,
(iv) for the fourth qualifying period, June 2019,
(v) for the fifth qualifying period, July 2019,
(vi) for the sixth qualifying period, August 2019,
(vii) for the seventh qualifying period, September 2019,
(viii) for the eighth qualifying period, October 2019,
(ix) for the ninth qualifying period, November 2019,
(x) for the tenth qualifying period, December 2019,
(xi) for the eleventh qualifying period, December 2019,
(xii) for the twelfth qualifying period, January 2020,
(xiii) for the thirteenth qualifying period, February 2020,
(xiv) for the fourteenth qualifying period, March 2019,
(xv) for the fifteenth qualifying period, April 2019,
(xvi) for the sixteenth qualifying period, May 2019,
(xvii) for the seventeenth qualifying period, June 2019,
(xviii) for the eighteenth qualifying period, July 2019,
(xix) for the nineteenth qualifying period, August 2019,
(xx) for the twentieth qualifying period, September 2019,
(xxi) for the twenty-first qualifying period, October 2019,
(xxii) for the twenty-second qualifying period, November 2019,
(xxiii) for the twenty-third qualifying period, December 2019,
(xxiv) for the twenty-fourth qualifying period, January 2020,
(xxv) for the twenty-fifth qualifying period, February 2020,
(xxvi) for the twenty-sixth qualifying period, March 2019,
(xxvii) for the twenty-seventh qualifying period, April 2019, and
(xxviii) for the twenty-eighth qualifying period, May 2019;
(b) January and February 2020, if
(i) on March 1, 2019, the eligible entity was not carrying on business or otherwise carrying on its ordinary activities and the qualifying period is any of the first qualifying period to the fourth qualifying period, or
(ii) the qualifying period is any of
(A) the first qualifying period to the fourth qualifying period and the eligible entity elects for all of the first qualifying period to the third qualifying period,
(B) the fifth qualifying period to the qualifying period referred to in paragraph (d) of the definition qualifying period and the eligible entity elects for all of those qualifying periods,
(C) the fourteenth qualifying period to the seventeenth qualifying period, if
(I) on March 1, 2019, the eligible entity was not carrying on business or otherwise carrying on its ordinary activities, and
(II) the eligible entity elects for all of those qualifying periods, or
(D) the twenty-sixth qualifying period to the twenty-eighth qualifying period, if
(I) on March 1, 2019, the eligible entity was not carrying on business or otherwise carrying on its ordinary activities, and
(II) the eligible entity elects for all of those qualifying periods; and
(c) for the qualifying period referred to in paragraph (d) of the definition qualifying period, a prescribed period. (période de référence antérieure)
- prior year revenue decline
prior year revenue decline, of an eligible entity means, the average of all percentages each of which would, if the Act were read without reference to subsection 125.7(9) and section 257, be the revenue reduction percentage of the eligible entity for a qualifying period
(a) that is any of the first qualifying period to the thirteenth qualifying period (but including only one of the tenth qualifying period or the eleventh qualifying period); and
(b) throughout which the eligible entity was
(i) carrying on its ordinary activities, or
(ii) not carrying on its ordinary activities because of a public health restriction. (réduction du revenu d’une année antérieure)
- public health restriction
public health restriction, in respect of a qualifying property of an eligible entity for a qualifying period, means an order or decision in respect of which the following conditions are met:
(a) it is made under a law of Canada or a province, or the authority granted under such a law;
(b) it is made in response to the coronavirus disease 2019 (COVID-19) pandemic;
(c) it is limited in scope based on one or more factors, such as
(i) defined geographical boundaries,
(ii) type of business or other activity, or
(iii) risks associated with a particular location;
(d) non-compliance with the order or decision is a federal or provincial offence or can result in the imposition of an administrative monetary penalty or other sanction by the Government of Canada or a province;
(e) it does not result from a violation by the eligible entity – or a party with which the eligible entity does not deal at arm’s length that rents, directly or indirectly, the qualifying property from the eligible entity (referred to in this definition as the “specified tenant”) – of an order or decision that meets the conditions in paragraphs (a) to (d);
(f) as a result of the order or decision, some or all of the activities of the eligible entity – or the specified tenant – at, or in connection with, the qualifying property (that it is reasonable to expect the eligible entity – or the specified tenant – would, absent the order or decision, otherwise have engaged in) are required to cease (referred to in this definition as the “restricted activities”) based, for greater certainty, on the type of activity rather than the extent to which an activity may be performed or limits placed on the time during which an activity may be performed;
(g) it is reasonable to conclude that at least approximately 25% of the qualifying revenues of the eligible entity – or the specified tenant – for the prior reference period that were earned from, or in connection with, the qualifying property were derived from the restricted activities; and
(h) the restricted activities are required to cease for a period of at least one week. (restrictions sanitaires)
- public institution
public institution means
(a) an organization described in any of paragraphs 149(1)(a) to (d.6); or
(b) a school, school board, hospital, health authority, public university or college. (institution publique)
- qualifying entity
qualifying entity, for a qualifying period, means an eligible entity that meets the following conditions:
(a) it files an application with the Minister in respect of the qualifying period in prescribed form and manner on or before the later of
(i) January 31, 2021, and
(ii) 180 days after the end of the qualifying period;
(b) the individual who has principal responsibility for the financial activities of the eligible entity attests that the application is complete and accurate in all material respects;
(c) if the qualifying period is any of the first qualifying period to the fourth qualifying period, its qualifying revenues for the current reference period are equal to or less than the specified percentage, for the qualifying period, of
(i) if paragraph (a) or (c) of the definition prior reference period applies, its qualifying revenues for the prior reference period, and
(ii) if paragraph (b) of the definition prior reference period applies, the amount determined by the formula
0.5A(B/C)
where
- A
- is its qualifying revenues for the prior reference period,
- B
- is the number of days in the prior reference period, and
- C
- is the number of days in the prior reference period during which the eligible entity was carrying on business; and
(d) it meets either of the following conditions:
(i) it had, on March 15, 2020, a business number in respect of which it is registered with the Minister to make remittances required under section 153, or
(ii) it is the case that
(A) on March 15, 2020,
(I) it employed one or more individuals in Canada,
(II) the payroll for its employees was administered by another person or partnership (referred to in this subparagraph as the “payroll service provider”), and
(III) the payroll service provider had a business number in respect of which it is registered with the Minister to make remittances required under section 153,
(B) the payroll service provider used its business number to make the remittances referred to in subclause (A)(III) in respect of the employees of the eligible entity, and
(C) the Minister is satisfied that the conditions in clauses (A) and (B) are met. (entité admissible)
- qualifying period
qualifying period means
(a) the period that begins on March 15, 2020 and ends on April 11, 2020 (referred to in this section as the “first qualifying period”);
(b) the period that begins on April 12, 2020 and ends on May 9, 2020 (referred to in this section as the “second qualifying period”);
(c) the period that begins on May 10, 2020 and ends on June 6, 2020 (referred to in this section as the “third qualifying period”);
(c.1) the period that begins on June 7, 2020 and ends on July 4, 2020 (referred to in this section as the “fourth qualifying period”);
(c.2) the period that begins on July 5, 2020 and ends on August 1, 2020 (referred to in this section as the “fifth qualifying period”);
(c.3) the period that begins on August 2, 2020 and ends on August 29, 2020 (referred to in this section as the “sixth qualifying period”);
(c.4) the period that begins on August 30, 2020 and ends on September 26, 2020 (referred to in this section as the “seventh qualifying period”);
(c.5) the period that begins on September 27, 2020 and ends on October 24, 2020 (referred to in this section as the “eighth qualifying period”);
(c.6) the period that begins on October 25, 2020 and ends on November 21, 2020 (referred to in this section as the “ninth qualifying period”);
(c.7) the period that begins on November 22, 2020 and ends on December 19, 2020 (referred to in this section as the “tenth qualifying period”);
(c.8) the period that begins on December 20, 2020 and ends on January 16, 2021 (referred to in this section as the “eleventh qualifying period”);
(c.9) the period that begins on January 17, 2021 and ends on February 13, 2021 (referred to in this section as the “twelfth qualifying period”);
(c.91) the period that begins on February 14, 2021 and ends on March 13, 2021 (referred to in this section as the “thirteenth qualifying period”);
(c.92) the period that begins on March 14, 2021 and ends on April 10, 2021 (referred to in this section as the “fourteenth qualifying period”);
(c.93) the period that begins on April 11, 2021 and ends on May 8, 2021 (referred to in this section as the “fifteenth qualifying period”);
(c.94) the period that begins on May 9, 2021 and ends on June 5, 2021 (referred to in this section as the “sixteenth qualifying period”);
(c.95) the period that begins on June 6, 2021 and ends on July 3, 2021 (referred to in this section as the “seventeenth qualifying period”);
(c.96) the period that begins on July 4, 2021 and ends on July 31, 2021 (referred to in this section as the “eighteenth qualifying period”);
(c.97) the period that begins on August 1, 2021 and ends on August 28, 2021 (referred to in this section as the “nineteenth qualifying period”);
(c.98) the period that begins on August 29, 2021 and ends on September 25, 2021 (referred to in this section as the “twentieth qualifying period”);
(c.99) the period that begins on September 26, 2021 and ends on October 23, 2021 (referred to in this section as the “twenty-first qualifying period”);
(c.991) the period that begins on October 24, 2021 and ends on November 20, 2021 (referred to in this section as the “twenty-second qualifying period”);
(c.992) the period that begins on November 21, 2021 and ends on December 18, 2021 (referred to in this section as the “twenty-third qualifying period”);
(c.993) the period that begins on December 19, 2021 and ends on January 15, 2022 (referred to in this section as the “twenty-fourth qualifying period”);
(c.994) the period that begins on January 16, 2022 and ends on February 12, 2022 (referred to in this section as the “twenty-fifth qualifying period”);
(c.995) the period that begins on February 13, 2022 and ends on March 12, 2022 (referred to in this section as the “twenty-sixth qualifying period”);
(c.996) the period that begins on March 13, 2022 and ends on April 9, 2022 (referred to in this section as the “twenty-seventh qualifying period”);
(c.997) the period that begins on April 10, 2022 and ends on May 7, 2022 (referred to in this section as the “twenty-eighth qualifying period”); and
(d) a prescribed period that ends no later than July 2, 2022. (période d’admissibilité)
- qualifying property
qualifying property, of an eligible entity for a qualifying period, means real or immovable property (other than property that is a self-contained domestic establishment used by the eligible entity or by a person not dealing at arm’s length with the eligible entity, or part of such a self-contained domestic establishment, the land subjacent to the self-contained domestic establishment and such portion of any immediately contiguous land as can reasonably be regarded as contributing to the use and enjoyment of the self-contained domestic establishment as a residence) in Canada used by the eligible entity in the course of its ordinary activities. (bien admissible)
- qualifying public health restriction
qualifying public health restriction, of an eligible entity for a qualifying period, means that
(a) one or more qualifying properties of the eligible entity — or of one or more specified tenants (within the meaning of the definition public health restriction) of the eligible entity — is subject to a public health restriction for at least seven days in the qualifying period; and
(b) it is reasonable to conclude that at least approximately 25% of the qualifying revenues of the eligible entity — together with the qualifying revenues of any specified tenants of the eligible entity — for the prior reference period were derived from the restricted activities. (restrictions sanitaires admissibles)
- qualifying recovery entity
qualifying recovery entity, for a qualifying period, means an eligible entity that meets the following conditions:
(a) it files an application with the Minister in respect of the qualifying period in prescribed form and manner no later than 180 days after the end of the qualifying period;
(b) it would be a qualifying entity for the qualifying period if the definition qualifying entity were read without reference to its paragraph (a);
(c) if it is a corporation (other than a corporation that is exempt from tax under this Part), it
(i) is a Canadian-controlled private corporation, or
(ii) would be a Canadian-controlled private corporation absent the application of subsection 136(1);
(d) if it is a partnership, throughout the qualifying period it is the case that
A ≤ 0.5B
where
- A
- is the total of all amounts, each of which is the fair market value of an interest in the partnership held — directly or indirectly, through one or more partnerships — by
(i) a person or partnership other than an eligible entity, or
(ii) a corporation, other than a corporation that
(A) is exempt from tax under this Part, or
(B) is described in subparagraph (c)(i) or (ii), and
- B
- is the total fair market value of all interests in the partnership; and
(e) it has a revenue reduction percentage
(i) greater than 0%, if it is the seventeenth qualifying period, or
(ii) greater than 10% (or a percentage determined by regulation for the qualifying period), if it is any of the eighteenth qualifying period and subsequent qualifying periods. (entité de relance admissible)
- qualifying rent expense
qualifying rent expense, in respect of a qualifying property for an eligible entity for a qualifying period, means the amount determined by the formula
A − B
where
- A
- is the lesser of $75,000 and the total of all amounts paid — under a written agreement entered into before October 9, 2020, or pursuant to the renewal (on substantially similar terms) or assignment of a written agreement entered into before October 9, 2020 — in respect of the qualifying period by the eligible entity to a party with which the eligible entity deals at arm’s length, each of which is
(a) rent for the use of, or right to use, the qualifying property,
(i) including
(A) gross rent,
(B) rent based on a percentage of sales, profit or a similar criterion,
(C) amounts required to be paid under a net lease by the eligible entity either to the lessor or a third party, as
(I) base rent,
(II) regular instalments of operating expenses, such as insurance, utilities and common area maintenance expenses, customarily charged to the lessee under a net lease,
(III) property and similar taxes, including school and municipal taxes, and
(IV) regular instalments of other amounts payable to the lessor for services ancillary to the rental of real or immovable properties and customarily supplied or rendered in connection with the rental of real or immovable properties, and
(D) amounts received by the lessor under the Canada Emergency Commercial Rent Assistance program that were applied against rent payable in respect of the qualifying period, if those amounts would otherwise be required to be refunded to the eligible entity, and
(ii) excluding
(A) sales taxes,
(B) amounts paid as, on account of, in lieu of payment of or in satisfaction of, damages,
(C) amounts paid under a guarantee, security or similar indemnity or covenant,
(D) payments arising due to default under the agreement by the eligible entity,
(E) interest and penalties on unpaid amounts,
(F) fees payable for discrete items or special services, and
(G) reconciliation adjustment payments, and
(b) in the case of qualifying property owned by the eligible entity that is not used by the eligible entity primarily to earn rental income or, where the qualifying property is used primarily by the eligible entity to earn rental income directly or indirectly from a person or partnership not dealing at arm’s length with the eligible entity, that is not used by that person or partnership primarily to earn rental income,
(i) if there is a debt obligation secured by a mortgage or hypothec on the qualifying property, interest on the debt obligation to the extent that the amount of the debt obligation does not exceed the lesser of
(A) the lowest total principal amount secured by one or more mortgages or hypothecs (provided the mortgage or hypothec has an amortization period) on the qualifying property at any time after it was acquired by the eligible entity (excluding any temporary period in the course of a refinancing transaction between the time when an existing mortgage is discharged and a new mortgage is registered), and
(B) the cost amount of the qualifying property,
(ii) amounts paid for insurance on the qualifying property, and
(iii) property and similar taxes on the qualifying property, including school and municipal taxes; and
- B
- is the total of all amounts, each of which is received or receivable by the eligible entity in respect of the qualifying period, either directly or indirectly, from a party with which the entity deals at arm’s length and is described in paragraph (a) of the description of A. (dépenses de loyer admissibles)
- qualifying renter
qualifying renter, for a qualifying period, means an eligible entity that meets the following conditions:
(a) it files an application with the Minister in respect of the qualifying period in prescribed form and manner no later than 180 days after the end of the qualifying period;
(b) the individual who has principal responsibility for the financial activities of the eligible entity attests that the application is complete and accurate in all material respects; and
(c) it meets any of the following conditions:
(i) it meets the condition in paragraph (d) of the definition qualifying entity,
(ii) it had a business number on September 27, 2020 and provides records and other information satisfactory to the Minister in support of its application, or
(iii) it meets prescribed conditions. (locataire admissible)
- qualifying revenue
qualifying revenue, of an eligible entity for a prior reference period or a current reference period, means the inflow of cash, receivables or other consideration arising in the course of the ordinary activities of the eligible entity — generally from the sale of goods, the rendering of services and the use by others of resources of the eligible entity — in Canada in the particular period, subject to the following:
(a) in the case of an eligible entity described in paragraph (c) of the definition eligible entity,
(i) it includes revenue from a related business (as defined in subsection 149.1(1)), gifts and other amounts received in the course of its ordinary activities, and
(ii) notwithstanding subparagraph (i), the eligible entity may elect to exclude funding received from government sources in the determination of its qualifying revenue for all of its prior reference periods and current reference periods;
(b) in the case of an eligible entity described in paragraph (d) of the definition eligible entity,
(i) it includes membership fees and other amounts received in the course of its ordinary activities, and
(ii) notwithstanding subparagraph (i), the eligible entity may elect to exclude funding received from government sources in the determination of its qualifying revenue for all of its prior reference periods and current reference periods;
(b.1) in the case of an eligible entity prescribed in paragraph (f) of the definition eligible entity that would be described in paragraph (c) or (d) of that definition if it were not a public institution, subparagraphs (a)(i) and (ii) apply to an eligible entity that would be described in paragraph (c) of that definition and subparagraphs (b)(i) and (ii) apply to an eligible entity that would be described in paragraph (d) of that definition;
(c) it excludes, for greater certainty, extraordinary items;
(d) it excludes amounts derived from persons or partnerships not dealing at arm’s length with the eligible entity; and
(e) it excludes, for greater certainty, deemed overpayments under subsection (2) and deemed remittances under subsection 153(1.02). (revenu admissible)
- qualifying tourism or hospitality entity
qualifying tourism or hospitality entity, for a qualifying period, has the meaning assigned by regulation. (entité touristique ou d’accueil admissible)
- recovery wage subsidy rate
recovery wage subsidy rate, for a qualifying period, means
(a) for any of the seventeenth qualifying period to the nineteenth qualifying period, 50%;
(b) for the twentieth qualifying period, 40%;
(c) for the twenty-first qualifying period, 30%; and
(d) for any of the twenty-second qualifying period and subsequent qualifying periods, 50% or a percentage determined by regulation for the qualifying period. (taux de subvention salariale de relance)
- rent subsidy percentage
rent subsidy percentage, of an eligible entity for a qualifying period, means
(a) if the qualifying period is any of the eighth qualifying period to the seventeenth qualifying period,
(i) if the eligible entity’s revenue reduction percentage is greater than or equal to 70%, 65%,
(ii) if the eligible entity’s revenue reduction percentage is greater than or equal to 50%, but less than 70%, the percentage determined by the formula
40% + (A − 50%) × 1.25
where
- A
- is the eligible entity’s revenue reduction percentage, and
(iii) if the eligible entity’s revenue reduction percentage is less than 50%, the percentage determined by the formula
0.8 × B
where
- B
- is the eligible entity’s revenue reduction percentage;
(a.1) if the qualifying period is any of the eighteenth qualifying period to the twenty-eighth qualifying period, the percentage determined by the formula
A + B
where
- A
- is the eligible entity’s base percentage for the qualifying period, and
- B
- is the eligible entity’s top-up percentage for the qualifying period; and
(b) for a qualifying period after the twenty-eighth qualifying period, a percentage determined by regulation in respect of the eligible entity or, if there is no percentage determined by regulation for the qualifying period, nil. (pourcentage de subvention pour le loyer)
- rent top-up percentage
rent top-up percentage, of an eligible entity in respect of a qualifying property for a qualifying period, means the percentage determined by the formula
A × B ÷ C
where
- A
- is 25%, or a prescribed percentage, for any of the eighth qualifying period to the twenty-eighth qualifying period and nil, or a prescribed percentage, for any subsequent qualifying period,
- B
- is the number of days in the qualifying period throughout which the qualifying property is subject to a public health restriction, and
- C
- is the number of days in the qualifying period. (pourcentage compensatoire pour le loyer)
- revenue reduction percentage
revenue reduction percentage, of an eligible entity for a qualifying period, means the result (expressed as a percentage) of the formula
1 − A/B
where
- A
- is the eligible entity’s qualifying revenue for the current reference period for the qualifying period; and
- B
- is the eligible entity’s qualifying revenue for the prior reference period for the qualifying period – or, if the prior reference period is January and February 2020, the amount determined by the formula in subparagraph (c)(ii) of the definition qualifying entity – or a period prescribed by regulation in respect of the eligible entity for the qualifying period. (pourcentage de baisse de revenu)
- specified percentage
specified percentage, for a qualifying period, means
(a) for the first qualifying period, 85%; and
(b) for any of the second qualifying period to the fourth qualifying period, 70%. (pourcentage déterminé)
(c) [Repealed, 2021, c. 23, s. 24]
- top-up percentage
top-up percentage, of an eligible entity for a qualifying period, means the percentage determined by regulation for the qualifying period or, if there is no percentage determined by regulation for the qualifying period,
(a) for any of the fifth qualifying period to the tenth qualifying period, the lesser of 25% and the percentage determined by the formula
1.25 × (A − 50%)
where
- A
- is the entity’s top-up revenue reduction percentage for the qualifying period;
(b) for any of the eleventh qualifying period to the seventeenth qualifying period, the lesser of 35% and the percentage determined by the formula
1.75 × (A − 50%)
where
- A
- is the entity’s top-up revenue reduction percentage for the qualifying period;
(c) for the eighteenth qualifying period, the lesser of 25% and the percentage determined by the formula
1.25 × (A − 50%)
where
- A
- is the entity’s top-up revenue reduction percentage for the qualifying period;
(d) for the nineteenth qualifying period, the lesser of 15% and the percentage determined by the formula
0.75 × (A − 50%)
where
- A
- is the entity’s top-up revenue reduction percentage for the qualifying period;
(e) for the twentieth qualifying period, the lesser of 15% and the percentage determined by the formula
0.75 × (A − 50%)
where
- A
- is the entity’s top-up revenue reduction percentage for the qualifying period;
(f) for the twenty-first qualifying period, the lesser of 10% and the percentage determined by the formula
0.5 × (A − 50%)
where
- A
- is the entity’s top-up revenue reduction percentage for the qualifying period; and
(g) for each qualifying period after the twenty-first qualifying period, nil. (pourcentage compensatoire)
- top-up revenue reduction percentage
top-up revenue reduction percentage, of an eligible entity for a qualifying period, means
(a) for any of the fifth qualifying period to the seventh qualifying period, the result (expressed as a percentage) of the formula
1 − A ÷ B
where
- A
- is the average monthly qualifying revenue of the eligible entity for the last three calendar months that ended prior to the current reference period for the qualifying period, and
- B
- is the average monthly qualifying revenue of the eligible entity for
(i) if the prior reference period for the qualifying period is January and February 2020, January and February 2020, and
(ii) in any other case, the last three calendar months that ended prior to the prior reference period for the qualifying period;
(b) for any of the eighth qualifying period to the tenth qualifying period, the greater of
(i) the result (expressed as a percentage) of the formula in paragraph (a), and
(ii) the revenue reduction percentage of the eligible entity for the qualifying period; and
(c) for the eleventh qualifying period and each subsequent qualifying period, the eligible entity’s revenue reduction percentage for the qualifying period. (pourcentage compensatoire de baisse de revenue)
- total base period remuneration
total base period remuneration, of an eligible entity, means the total of all amounts, each of which is for an eligible employee in respect of a week in the fourteenth qualifying period, equal to the least of
(a) $1,129,
(b) the eligible remuneration paid to the eligible employee in respect of the week,
(c) if the eligible employee does not deal at arm’s length with the eligible entity in the qualifying period, the baseline remuneration in respect of the eligible employee determined for that week, and
(d) if the eligible employee is on leave with pay in the week, nil. (rémunération totale de la période de base)
- total current period remuneration
total current period remuneration, of an eligible entity for a qualifying period, means the total of all amounts, each of which is for an eligible employee in respect of a week in the qualifying period, equal to the least of
(a) $1,129,
(b) the eligible remuneration paid to the eligible employee in respect of the week,
(c) if the eligible employee does not deal at arm’s length with the eligible entity in the qualifying period, the baseline remuneration in respect of the eligible employee determined for that week, and
(d) if the eligible employee is on leave with pay in the week, nil. (rémunération totale de la période actuelle)
Marginal note:COVID-19 — wage subsidy
(2) For a qualifying entity for a qualifying period, an overpayment on account of the qualifying entity’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen during the qualifying period in an amount determined by the formula
A − B − C + D
where
- A
- is the total of all amounts, each of which is for an eligible employee in respect of a week in the qualifying period,
(a) if the qualifying period is described in any of paragraphs (a) to (c.1) of the definition qualifying period in subsection (1), equal to the greater of
(i) the least of
(A) 75% of eligible remuneration paid to the eligible employee by the qualifying entity in respect of that week,
(B) $847, and
(C) if the eligible employee does not deal at arm’s length with the qualifying entity in the qualifying period, nil, and
(ii) the least of
(A) the amount of eligible remuneration paid to the eligible employee by the qualifying entity in respect of that week,
(B) 75% of baseline remuneration in respect of the eligible employee determined for that week, and
(C) $847, and
(b) if the qualifying period is described in any of paragraphs (c.2) to (d) of the definition qualifying period in subsection (1),
(i) if the eligible employee is not on leave with pay for that week and the qualifying period is described in paragraph (c.2) or (c.3) of the definition qualifying period in subsection (1), the greater of
(A) an amount equal to
(I) nil, if the revenue reduction percentage of the qualifying entity for the qualifying period is less than 30%, and
(II) in any other case, the greater of the amount determined under subparagraph (a)(i) and the amount determined under subparagraph (a)(ii), and
(B) the amount determined by the formula in subparagraph (ii),
(ii) if the eligible employee is not on leave with pay for that week and the qualifying period is described in any of paragraphs (c.4) to (d) of the definition qualifying period in subsection (1), the amount determined by the formula
(E + F) × G
where
- E
- is the qualifying entity’s base percentage for the qualifying period,
- F
- is the qualifying entity’s top-up percentage for the qualifying period, and
- G
- is the least of
(A) the amount of eligible remuneration paid to the eligible employee by the qualifying entity in respect of that week,
(B) $1,129, and
(C) if the eligible employee does not deal at arm’s length with the qualifying entity in the qualifying period, the baseline remuneration in respect of the eligible employee determined for that week,
(iii) if the eligible employee is on leave with pay for that week and the qualifying period is described in paragraph (c.2) or (c.3) of the definition qualifying period in subsection (1),
(A) nil, unless
(I) the revenue reduction percentage of the qualifying entity for the qualifying period is greater than 0%, or
(II) the top-up percentage of the qualifying entity for the qualifying period is greater than 0%, and
(B) in any other case, the greater of the amount determined under subparagraph (a)(i) and the amount determined under subparagraph (a)(ii), and
(iv) if the eligible employee is on leave with pay for that week and the qualifying period is described in any of paragraphs (c.4) to (d) of the definition qualifying period in subsection (1), the least of
(A) the amount of eligible remuneration paid to the eligible employee by the qualifying entity in respect of that week,
(B) an amount determined by regulation in respect of the qualifying entity for the qualifying period,
(C) nil, if
(I) the eligible employee does not deal at arm’s length with the qualifying entity in the qualifying period, and
(II) the baseline remuneration of the eligible employee for that week is nil, and
(D) nil, unless
(I) the revenue reduction percentage of the qualifying entity for the qualifying period is greater than 0%, or
(II) the top-up percentage of the qualifying entity for the qualifying period is greater than 0%;
- B
- is the total of all amounts each of which is an amount deemed to have been remitted under subsection 153(1.02) by the qualifying entity in the qualifying period;
- C
- is the total of all amounts received by the eligible employee for each week in the qualifying period as a work-sharing benefit under the Employment Insurance Act; and
- D
- is
(a) nil, if the qualifying period is any of the fifth qualifying period to the nineteenth qualifying period, unless
(i) the revenue reduction percentage of the qualifying entity for the qualifying period is greater than 0%, or
(ii) the top-up percentage of the qualifying entity for the qualifying period is greater than 0%,
(a.1) nil, if the qualifying period is after the nineteenth qualifying period, and
(b) in any other case, the total of all amounts, each of which is for an eligible employee in respect of a week in the qualifying period, if the eligible employee is on leave with pay for that week and the amount is
(i) an amount payable by the qualifying entity
(A) as an employer’s premium under the Employment Insurance Act, or
(B) as an employer’s contribution under the Canada Pension Plan or under a provincial pension plan as defined in section 3 of the Canada Pension Plan, or
(ii) an amount payable by the qualifying entity as an employer’s premium under the Act respecting parental insurance, CQLR, c. A-29.011.
Marginal note:Exception
(2.01) Despite subsection (2), no overpayment on account of a qualifying entity’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen with respect to a qualifying entity that is a publicly traded company or a subsidiary of such a company if, in the qualifying period, it paid taxable dividends to an individual who is a holder of common shares of the company or of the subsidiary of the company.
Marginal note:COVID-19 — rent subsidy
(2.1) For a qualifying renter for a qualifying period referred to in any of paragraphs (c.5) to (d) of the definition qualifying period in subsection (1), an overpayment on account of the qualifying renter’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen during the qualifying period in an amount determined by the formula
A + B
where
- A
- is the amount determined by the formula
C × D
where
- C
- is the qualifying renter’s rent subsidy percentage for the qualifying period, and
- D
- is the lesser of
(a) the total of all amounts, each of which is the qualifying renter’s qualifying rent expense for a qualifying property for the qualifying period, and
(b) the amount determined by the formula
E × E.1
where
- E
- is
(i) 100%, unless the qualifying renter is affiliated at any time in the qualifying period with one or more eligible entities that claims an amount under this subsection in respect of the qualifying period,
(ii) a percentage assigned to the qualifying renter under an agreement, if
(A) the agreement is entered into by the qualifying renter and each eligible entity that
(I) is affiliated with the qualifying renter in the qualifying period, and
(II) claims an amount under this subsection in respect of the qualifying period,
(B) the agreement is filed in prescribed form and manner with the Minister in respect of the qualifying period by the qualifying renter and each eligible entity referred to in clause (A) with their application for the qualifying period,
(C) the agreement assigns, for the purposes of this subsection, a percentage in respect of each eligible entity referred to in clause (B) for the qualifying period, and
(D) the total of all the percentages assigned under the agreement does not exceed 100%, and
(iii) in any other case, nil, and
- E.1
- is
(i) $300,000 for the eighth qualifying period to the twenty-first qualifying period, and
(ii) $1,000,000 for the twenty-second qualifying period and subsequent qualifying periods; and
- B
- is the total of all amounts, each of which is an amount in respect of a qualifying property for the qualifying period, determined by the formula
F × G
where
- F
- is
(i) nil, unless the rent subsidy percentage of the qualifying renter for the qualifying period is greater than 0%, and
(ii) in any other case, the rent top-up percentage of the qualifying renter in respect of the qualifying property for the qualifying period, and
- G
- is the qualifying rent expense of the qualifying renter in respect of the qualifying property for the qualifying period.
Marginal note:Canada recovery hiring program
(2.2) For a qualifying recovery entity for a qualifying period, an overpayment on account of the qualifying entity’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen during the qualifying period in an amount determined by the formula
A × (B − C)
where
- A
- is the recovery wage subsidy rate for the qualifying period;
- B
- is the qualifying recovery entity’s total current period remuneration for the qualifying period; and
- C
- is the qualifying recovery entity’s total base period remuneration.
Marginal note:When assistance received
(3) For the purposes of this Act other than this section, and for greater certainty, an amount that an eligible entity is deemed under any of subsections (2) to (2.2) to have overpaid is assistance received by it from a government immediately before the end of the qualifying period to which it relates.
Marginal note:Computation of revenue
(4) For the purposes of the definition qualifying revenue in subsection (1), the qualifying revenue of an eligible entity is to be determined in accordance with its normal accounting practices, except that
(a) if a group of eligible entities normally prepares consolidated financial statements, each member of the group may determine its qualifying revenue separately, provided every member of the group determines its qualifying revenue on that basis;
(b) if an eligible entity and each member of an affiliated group of eligible entities of which the eligible entity is a member jointly elect, the qualifying revenue of the group determined on a consolidated basis in accordance with relevant accounting principles is to be used for each member of the group;
(c) if all of the interests in an eligible entity are owned by participants in a joint venture and all or substantially all of the qualifying revenue of the eligible entity for a qualifying period is in respect of the joint venture, then the eligible entity may use the qualifying revenues of the joint venture (determined as if the joint venture were an eligible entity) as its qualifying revenues for the qualifying period for the purposes of this section;
(d) if all or substantially all of an eligible entity’s qualifying revenue — determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1) — for a qualifying period is from one or more particular persons or partnerships with which it does not deal at arm’s length and each particular person or partnership jointly elects with the eligible entity, for the purposes of this section
(i) the eligible entity’s qualifying revenue for the prior reference period is deemed to be $100, and
(ii) the eligible entity’s qualifying revenue for the current reference period is deemed to be the total of all amounts, each of which is determined by the formula
$100(A/B)(C/D)
where
- A
- is the eligible entity’s qualifying revenue (determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1)) for the current reference period attributable to a particular person or partnership,
- B
- is the total of all amounts, each of which is the eligible entity’s qualifying revenue (determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1)) for the current reference period attributable to a particular person or partnership,
- C
- is the particular person or partnership’s qualifying revenue (determined as if the definition qualifying revenue in subsection (1) were read without reference to “in Canada”) for the current reference period, and
- D
- is the particular person or partnership’s qualifying revenue (determined as if the definition qualifying revenue in subsection (1) were read without reference to “in Canada”) for the prior reference period; and
(e) an eligible entity may make an election, which must apply for all qualifying periods, to determine its qualifying revenues based on
(i) the cash method, within the meaning assigned by subsection 28(1) with any modifications that the circumstances require, or
(ii) the accrual method, in accordance with generally accepted accounting principles.
Marginal note:Asset sales — conditions
(4.1) Subsection (4.2) applies to an eligible entity in respect of a qualifying period if
(a) the eligible entity acquired assets (referred to in this subsection and subsection (4.2) as the “acquired assets”) of a person or partnership (referred to in this subsection and subsection (4.2) as the “seller”) during the qualifying period or at any time before that period;
(b) immediately prior to the acquisition, the fair market value of the acquired assets constituted
(i) all or substantially all of the fair market value of the property of the seller used in the course of carrying on business, or
(ii) if the seller and the eligible entity deal with each other at arm’s length, all or substantially all of the property of the seller that can reasonably be regarded as being necessary for the eligible entity to be capable of carrying on a business of the seller, or part of a business of the seller, as a business;
(c) the acquired assets were used by the seller in the course of a business carried on in Canada by the seller;
(d) it is reasonable to conclude that none of the main purposes of the acquisition was to increase the amount of a deemed overpayment under subsection (2); and
(e) the eligible entity elects in respect of the qualifying period and files the election in prescribed form and manner with the Minister or, if the seller is in existence during the qualifying period, the eligible entity and the seller jointly elect in respect of that period and so file with the Minister.
Marginal note:Asset sales — application
(4.2) If this subsection applies to an eligible entity in respect of a qualifying period,
(a) the amount of the qualifying revenue of the seller for the prior reference period, or the current reference period, for the qualifying period that is reasonably attributable to the acquired assets (referred to in this subsection as the “assigned revenue”) is to be included in determining the qualifying revenue of the eligible entity for its prior reference period or current reference period, as the case may be, for the qualifying period;
(b) the assigned revenue is to be subtracted from the qualifying revenue of the seller for its prior reference period or current reference period, as the case may be, for the qualifying period;
(c) if a portion of the assigned revenue is from a person or partnership that did not deal at arm’s length with the seller and that person or partnership deals at arm’s length with the eligible entity throughout the current reference period, then that portion of the assigned revenue is deemed to not be derived from persons or partnerships not dealing at arm’s length for the purposes of paragraph (d) of the definition qualifying revenue in subsection (1);
(d) if the seller meets any of the following conditions, the eligible entity is deemed to meet that condition:
(i) either of the conditions in paragraph (d) of the definition qualifying entity in subsection (1), and
(ii) both of the conditions in subparagraph (c)(ii), or the condition in subparagraph (c)(iii), of the definition qualifying renter in subsection (1); and
(e) for the purposes of subparagraph (b)(i) of the definition prior reference period in subsection (1) and the description of C in subparagraph (c)(ii) of the definition qualifying entity in subsection (1), the eligible entity is deemed to have commenced carrying on the business in which the acquired assets are used at the earlier of
(i) the date on which the eligible entity commenced carrying on that business, and
(ii) the date on which the seller commenced carrying on the business in which the acquired assets were used.
Marginal note:Deemed overpayment
(5) For the purposes of this section,
(a) the amount of any deemed overpayment by an eligible entity under any of subsections (2) to (2.2) in respect of a qualifying period cannot exceed the amount claimed by the eligible entity in the application referred to in paragraph (a) of the definition qualifying entity in subsection (1) — or paragraph (a) of the definition qualifying renter in subsection (1) or paragraph (a) of the definition qualifying recovery entity in subsection (1) — in respect of that qualifying period; and
(b) if an eligible employee is employed in a week by two or more qualifying entities that do not deal with each other at arm’s length, the total amount of the deemed overpayment under subsection (2) or (2.2) in respect of the eligible employee for that week shall not exceed the amount that would arise if the eligible employee’s eligible remuneration for that week were paid by one qualifying entity.
Marginal note:Anti-avoidance — qualifying revenues
(6) Notwithstanding any other provision in this section, the qualifying revenue of an eligible entity for a current reference period for a qualifying period is deemed to be equal to the qualifying revenue of the eligible entity for the relevant prior reference period, if
(a) the eligible entity, or a person or partnership not dealing at arm’s length with the eligible entity, enters into a transaction or participates in an event (or a series of transactions or events) or takes an action (or fails to take an action) — other than, for greater certainty, a decision under subparagraph (a)(ii) or (b)(ii) of the definition qualifying revenue in subsection (1) or the decision to use one of the methods of computing qualifying revenues under subsection (4) — that has the effect of
(i) reducing the qualifying revenues (determined without reference to this subsection) of the eligible entity for the current reference period, or
(ii) increasing the qualifying rent expenses of the eligible entity for the qualifying period; and
(b) it is reasonable to conclude that one of the main purposes of the transaction, event, series or action in paragraph (a) is to
(i) cause an eligible entity to qualify for the deemed overpayment under subsection (2) in respect of that qualifying period,
(ii) in respect of the fifth qualifying period and subsequent qualifying periods, increase the amount of a deemed overpayment under subsection (2), or
(iii) increase the amount of a deemed overpayment under subsection (2.1).
Marginal note:Anti-avoidance — recovery wage subsidy
(6.1) Notwithstanding any other provision in this section, the total current period remuneration of an eligible entity for a qualifying period is deemed to be equal to the total base period remuneration of the eligible entity, if
(a) the eligible entity, or a person or partnership not dealing at arm’s length with the eligible entity, enters into a transaction or participates in an event (or a series of transactions or events) or takes an action (or fails to take an action) that has the effect of increasing the difference between the total current period remuneration and the total base period remuneration of the eligible entity for the qualifying period; and
(b) it is reasonable to conclude that one of the main purposes of the transaction, event, series or action in paragraph (a) is to increase the amount of a deemed overpayment under subsection (2.2).
Marginal note:Partnerships
(7) A partnership is deemed
(a) for the purposes of subsections (2) to (2.2) and subsections 152(3.4) and 160.1(1), to be a taxpayer; and
(b) for the purposes of subsections (2) to (2.2), to have a liability under this Part for a taxation year in which a qualifying period ends.
Marginal note:Prescribed amounts
(8) The following may be prescribed for the purposes of:
(a) the definition base percentage in subsection (1),
(i) the percentages in subparagraphs (a)(i), (b)(i), (c)(i), (d)(i), (e)(i), (f)(i), (g)(i), (h)(i), (i)(i) and (j)(i), and
(ii) the factors in subparagraphs (a)(ii), (b)(ii), (c)(ii), (d)(ii), (e)(ii), (f)(ii), (g)(ii), (h)(ii), (i)(ii) and (j)(ii); and
(b) the definition rent subsidy percentage in subsection (1), the factors and percentages in paragraphs (a) and (a.1) of that definition;
(b.1) the definition recovery wage subsidy rate in subsection (1), the percentages in that definition; and
(c) the definition qualifying rent expense in subsection (1), specific, or classes of, expenses that are included or excluded as qualifying rent expenses under paragraph (a) or (b) of that definition.
Marginal note:Deeming rules — revenue decline tests
(9) If, absent the application of this subsection,
(a) an eligible entity meets the conditions in paragraph (c) of the definition qualifying entity in subsection (1) in respect of a particular qualifying period described in any of paragraphs (a) to (c) of the definition qualifying period in subsection (1), then the eligible entity is deemed to meet the conditions of that paragraph in respect of the immediately following qualifying period; or
(b) a lower revenue reduction percentage is determined in respect of an eligible entity for a particular qualifying period described in any of paragraphs (c.2) to (d) of the definition qualifying period in subsection (1) than for the immediately preceding qualifying period, then the revenue reduction percentage in respect of the eligible entity for the particular qualifying period is deemed to be equal to its revenue reduction percentage for the immediately preceding qualifying period.
Marginal note:Special case
(9.1) For the purposes of paragraph (9)(b), if the particular qualifying period is the eleventh qualifying period, then the immediately preceding qualifying period is deemed to be the ninth qualifying period.
Marginal note:Greater of wage and recovery subsidies
(9.2) For a qualifying period,
(a) if the amount of any deemed overpayment under subsection (2) is equal to or greater than the amount of any deemed overpayment under subsection (2.2), the amount of any deemed overpayment under subsection (2.2) is deemed to be nil; and
(b) if the amount of any deemed overpayment under subsection (2.2) is greater than the amount of any deemed overpayment under subsection (2), the amount of any deemed overpayment under subsection (2) is deemed to be nil.
Marginal note:Amending or revoking elections
(10) An eligible entity may amend or revoke an election made under this section on or before the date that the application is due for the first qualifying period in respect of which the election is made.
Marginal note:Affiliated entities
(11) For the purposes of the description of E in subsection (2.1), if two eligible entities are affiliated with the same eligible entity, they are deemed to be affiliated with each other.
Marginal note:Deeming rule — qualifying rent expense
(12) For the purposes of the definition qualifying rent expense in subsection (1), an amount is deemed to have been paid by an eligible entity on the date it first became due under an agreement, and not at a later date, if the individual referred to in paragraph (b) of the definition qualifying renter in subsection (1) attests that the eligible entity intends to pay the amount due under the agreement no later than 60 days after the day on which the Minister makes the first refund under subsection 164(1.6) in respect of the amount deemed to have been paid (referred to in subsection (13) as the “payment deadline”).
Marginal note:Deeming rule — qualifying rent expense
(13) Subsection (12) is deemed not to have produced its effect if the amount due referred to in subsection (12) is not actually paid on or before the payment deadline.
Marginal note:Executive compensation
(14) The amount of a refund made by the Minister to an eligible entity in respect of a deemed overpayment under subsection (2) on a particular date under subsection 164(1.6), in respect of any of the seventeenth qualifying period to the twenty-third qualifying period, is deemed to be an amount that has been refunded to the eligible entity on that particular date (for the taxation year in which the refund was made) in excess of the amount to which the eligible entity was entitled as a refund under this Act to the extent of the lesser of the amount of the refund and the amount determined by the formula
A − B
where
- A
- is the executive compensation repayment amount of the eligible entity; and
- B
- is the total of all amounts deemed to be an excess refund to the eligible entity under this subsection in respect of refunds made after the particular date.
Marginal note:Executive compensation
(14.1) The amount of a refund made by the Minister to an eligible entity in respect of a deemed overpayment under subsection (2) on a particular date under subsection 164(1.6), in respect of any of the twenty-fourth qualifying period and any subsequent qualifying period, is deemed to be an amount that has been refunded to the eligible entity on that particular date (for the taxation year in which the refund was made) in excess of the amount to which the eligible entity was entitled as a refund under this Act to the extent of the lesser of the amount of the refund and the amount determined by the formula
A − B
where
- A
- is the greater of
(a) the executive compensation repayment amount of the eligible entity, and
(b) with respect to a qualifying entity that is a publicly traded company or a subsidiary of such a company, the amount of taxable dividends paid by the company or its subsidiary to an individual who is a holder of common shares of the company or of the subsidiary of the company; and
- B
- is the total of all amounts deemed to be an excess refund to the eligible entity under this subsection in respect of refunds made after the particular date.
Marginal note:Foreign currency — executive remuneration
(15) For the purposes of paragraphs 261(2)(b) and (5)(c), amounts referred to in the definition executive remuneration in subsection (1) are deemed to arise on the last day of the eligible entity’s fiscal period to which the amount relates and not at any other time.
Marginal note:Extension of time by Minister
(16) For the purposes of determining whether an eligible entity is a qualifying entity, a qualifying recovery entity or a qualifying renter, the Minister may, at any time, extend the time for filing an application under this section.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- 2020, c. 6, s. 2
- 2020, c. 11, s. 2
- 2020, c. 13, s. 2
- 2021, c. 7, s. 4
- 2021, c. 23, s. 24
- 2021, c. 26, s. 1
- 2022, c. 10, s. 14
- Date modified: