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

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Regulations are current to 2022-06-20 and last amended on 2022-06-09. Previous Versions

PART XLVIInvestment Tax Credit (continued)

Prescribed Activities

 For the purposes of the definition for an approved purpose in paragraph (e) of the definition approved project property in subsection 127(9) of the Act, a prescribed activity of a taxpayer is

  • (a) operating a hotel, motel, camping ground, travel trailer park or any similar lodging facility;

  • (b) providing facilities that are ancillary to a lodging facility referred to in paragraph (a) that is owned by the taxpayer and that are intended for the use and enjoyment of the occupants of the lodging facility;

  • (c) providing facilities that are primarily for the receiving, storage and distribution of goods owned by persons with whom the taxpayer deals at arm’s length;

  • (d) providing to a business owned by a person with whom the taxpayer deals at arm’s length

    • (i) engineering or architectural services,

    • (ii) computer services, or

    • (iii) other technical or scientific services,

    but not including financial, legal, accounting, medical or dental services;

  • (e) providing to a business owned by a person with whom the taxpayer deals at arm’s length

    • (i) the services of an employment agency, or

    • (ii) advertising services, other than advertising services in a medium owned by the taxpayer; or

  • (f) operating a vessel described in paragraph 4604(2)(l).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/86-1136, s. 7

Prescribed Amount

 For the purposes of paragraph (b) of the definition contract payment in subsection 127(9) of the Act, a prescribed amount is an amount received from the Canadian Commercial Corporation in respect of an amount received by that Corporation from a government, municipality or other public authority other than the government of Canada or of a province, a Canadian municipality or other Canadian public authority.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/86-1136, s. 7
  • SOR/94-686, s. 24(F)

Prescribed Designated Regions

 For the purposes of the definition specified percentage in subsection 127(9) of the Act, prescribed designated region means a region of Canada, other than the Gaspé peninsula and the provinces of Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland, including Labrador, that was a designated region on December 31, 1984, under the Regional Development Incentives Designated Region Order, 1974.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/88-165, s. 23

Prescribed Expenditure for Qualified Canadian Exploration Expenditure

  •  (1) In this section,

    joint exploration corporation

    joint exploration corporation has the meaning assigned by paragraph 66(15)(g) of the Act; (société d’exploration en commun)

    principal-business corporation

    principal-business corporation has the meaning assigned by paragraph 66(15)(h) of the Act; (société exploitant une entreprise principale)

    shareholder corporation

    shareholder corporation has the meaning assigned by paragraph 66(15)(i) of the Act; (société actionnaire)

    well

    well means an exploratory probe or an oil or gas well. (puits)

  • (2) For the purposes of the definition qualified Canadian exploration expenditure in subsection 127(9) of the Act, the prescribed expenditure of a taxpayer for a taxation year is the aggregate of all amounts each of which is the amount, if any, by which

    • (a) the specified expenses of the taxpayer for the year in respect of the well

    exceed

    • (b) the base amount of the taxpayer at the end of the year in respect of the well.

  • (3) For the purposes of this section, the specified expenses of a taxpayer for a taxation year in respect of a well that is an exploratory probe is the aggregate of all expenses that

    • (a) would be Canadian exploration expenses of the taxpayer by reason of any of subparagraphs 66.1(6)(a)(i), (iv) and (v) of the Act if the references in subparagraphs 66.1(6)(a)(iv) and (v) of the Act (as those subparagraphs read on November 30, 1985) to “any of subparagraphs (i) to (iii.1)” were read as references to “subparagraph (i)”;

    • (b) were incurred

      • (i) in the year, and

      • (ii) after November 1985 and before 1991;

    • (c) were incurred in the drilling or completing of the exploratory probe or in building a temporary access road to, or preparing the site in respect of, the probe; and

    • (d) are not non-qualifying expenses of the taxpayer.

  • (4) For the purposes of this section, the specified expenses of a taxpayer for a taxation year in respect of a well that is an oil or gas well is the aggregate of all expenses that

    • (a) would be Canadian exploration expenses of the taxpayer by virtue of any of subparagraphs 66.1(6)(a)(ii) to (ii.2), (iv) and (v) of the Act if the references in subparagraphs 66.1(6)(a)(iv) and (v) of the Act (as those subparagraphs read on November 30, 1985) to “subparagraphs (i) to (iii.1)” were read as references to “subparagraphs (ii) to (ii.2)”;

    • (b) were incurred in respect of the well

      • (i) in the year, and

      • (ii) after November 1985 and before 1991; and

    • (c) are not non-qualifying expenses of the taxpayer.

  • (5) For the purposes of subsections (3) and (4), a non-qualifying expense of a taxpayer is an expense that

    • (a) may reasonably be regarded as having been incurred as consideration for services to be rendered after 1990 or for property that cannot reasonably be considered to be for use by the taxpayer before 1991;

    • (b) was or is to be renounced by the taxpayer at any time under subsection 66(10.1) or (12.6) of the Act;

    • (c) is or was a Canadian exploration and development overhead expense, within the meaning of section 1206, of the taxpayer, of a partnership of which the taxpayer was a member or of a joint exploration corporation of which the taxpayer was a shareholder corporation;

    • (d) is an eligible cost or expense within the meaning of the Petroleum Incentives Program Act or the Petroleum Incentives Program Act, Chapter P-4.1 of the Statutes of Alberta, 1981, in respect of which, or in respect of part of which, the taxpayer, a partnership of which the taxpayer was a member, a joint exploration corporation of which the taxpayer was a shareholder corporation or a principal-business corporation of which the taxpayer was a shareholder, has received, is deemed to have received, is entitled to receive or may reasonably be expected to receive an incentive under either of those Acts; or

    • (e) was included in determining the specified expenses of any other taxpayer for a taxation year.

  • (6) For the purposes of this section, the base amount of a taxpayer at the end of a particular taxation year in respect of a well is the amount, if any, by which the taxpayer’s threshold amount in respect of the well exceeds the aggregate of

    • (a) all amounts that would have been the taxpayer’s specified expenses for any taxation year in respect of the well if

      • (i) the references in subparagraphs (3)(b)(ii) and (4)(b)(ii) to “after November 1985 and before 1991” were read as “after March 1985 and before December 1985”, and

      • (ii) subsection (5) were read without reference to paragraph (d) thereof;

    • (b) all amounts referred to in paragraph (5)(d) for the particular taxation year or a preceding taxation year in respect of the well that would have been included in determining the taxpayer’s specified expenses for the particular taxation year or the preceding taxation year but for that paragraph; and

    • (c) all amounts that are the taxpayer’s specified expenses for any preceding taxation year in respect of the well.

  • (7) For the purposes of this section, the threshold amount of a taxpayer in respect of a well is

    • (a) where no agreement has been filed with the Minister under subsection (8) in respect of the well, $5,000,000; and

    • (b) where an agreement has been filed with the Minister under subsection (8) in respect of the well, the amount, if any, allocated to the taxpayer under the agreement.

  • (8) For the purposes of this section, where the aggregate of all expenses in respect of a well, each of which

    • (a) would be included in determining the specified expenses of a taxpayer for a taxation year in respect of the well if subsection (5) were read without reference to paragraph (d) thereof, or

    • (b) would be included in determining the specified expenses of a taxpayer for a taxation year in respect of the well if

      • (i) the references in subparagraphs (3)(b)(ii) and (4)(b)(ii) to “after November 1985 and before 1991” were read as “after March 1985 and before December 1985”, and

      • (ii) subsection (5) were read without reference to paragraph (d) thereof,

    exceeds $5,000,000, all taxpayers who have incurred those expenses or in whose favour or to whom any of those expenses have been renounced under subsection 66(10.1) or (12.6) of the Act may file with the Minister an agreement in writing in the prescribed form in respect of the well allocating amounts to some or all of those taxpayers if

    • (c) the amount allocated to each taxpayer does not exceed the total of such expenses that were incurred by the taxpayer in respect of the well, and that are not to be renounced by the taxpayer under subsection 66(10.1) or (12.6) of the Act in favour of or to any other person, and

    • (d) the aggregate of all amounts so allocated is not less than $5,000,000.

  • (9) For the purposes of this section, where

    • (a) the drilling of a well (in this subsection referred to as the “abandoned well”) is abandoned not because of the results obtained but because of geological or mechanical difficulties and the drilling of a new well (in this subsection referred to as the “new well”) is commenced, and

    • (b) having regard to all the circumstances, including the lapse of time between the abandonment of the abandoned well and the commencement of the new well and the proximity of the sites of the wells, it is reasonable to regard the new well as a replacement for the abandoned well,

    the abandoned well and the new well shall be deemed to be one well.

  • (10) For the purpose of this section, where an expense of a joint exploration corporation is deemed by subsection 66(10.1) or (10.2) of the Act to be an expense of a shareholder corporation of the joint exploration corporation, the shareholder corporation shall be deemed to have incurred the expense at the time it was incurred by the joint exploration corporation.

  • (11) For the purpose of this section, where an expense of a principal-business corporation is deemed by subsection 66(12.61) or (12.63) of the Act to be an expense of a shareholder of the corporation, the shareholder shall be deemed to have incurred the expense at the time it was incurred by the principal-business corporation.

  • (12) For the purposes of this section, where an expense incurred by a partnership is, under subparagraph 66.1(6)(a)(iv) of the Act, a Canadian exploration expense of a taxpayer who was a member of the partnership, the taxpayer shall be deemed to have incurred the Canadian exploration expense at the time the expense was incurred by the partnership.

  • (13) For the purposes of this section, where an expense is a Canadian development expense of a taxpayer that is, under subsection 66.1(9) of the Act, deemed to be a Canadian exploration expense of the taxpayer, the taxpayer shall be deemed to have incurred the Canadian exploration expense at the time the Canadian development expense was incurred.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/89-463, s. 1
  • SOR/92-681, s. 3
  • SOR/94-686, ss. 58(F), 78(F), 79(F)

Prescribed Offshore Region

 For the purposes of the definition specified percentage in subsection 127(9) of the Act, the following region is a prescribed offshore region:

  • (a) that submarine area, not within a province, adjacent to the coast of Canada and extending throughout the natural prolongation of that portion of the land territory of Canada comprising the Gaspé Peninsula and the provinces of Newfoundland, Prince Edward Island, Nova Scotia and New Brunswick to the outer edge of the continental margin or to a distance of two hundred nautical miles from the baselines from which the territorial sea of Canada is measured, whichever is the greater; and

  • (b) the waters above the submarine area referred to in paragraph (a).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/89-463, s. 1

Prescribed Area

 For the purpose of paragraph (c.1) of the definition qualified property in subsection 127(9) of the Act, the area prescribed is the area comprising the Provinces of Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and the Gaspé Peninsula.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/95-244, s. 5

PART XLVIIElection in Respect of Certain Property Owned on December 31, 1971

 Any election by an individual under subsection 26(7) of the Income Tax Application Rules, shall be made by filing with the Minister the form prescribed.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/94-686, s. 48

PART XLVIIIStatus of Corporations and Trusts

[
  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/94-686, s. 79(F)
]
  •  (1) For the purposes of subparagraph (b)(i) of the definition public corporation in subsection 89(1) of the Act, the following conditions are prescribed in respect of a corporation other than a cooperative corporation (within the meaning assigned by section 136 of the Act) or a credit union:

    • (a) a class of shares of the capital stock of the corporation designated by the corporation in its election or by the Minister in his notice to the corporation, as the case may be, shall be qualified for distribution to the public;

    • (b) there shall be no fewer than

      • (i) where the shares of that class are equity shares, 150, and

      • (ii) in any other case, 300

      persons, other than insiders of the corporation, each of whom holds

      • (iii) not less than one block of shares of that class, and

      • (iv) shares of that class having an aggregate fair market value of not less than $500; and

    • (c) insiders of the corporation shall not hold more than 80 per cent of the issued and outstanding shares of that class.

  • (2) For the purposes of subparagraph (c)(i) of the definition public corporation in subsection 89(1) of the Act, the following conditions are prescribed in respect of a corporation:

    • (a) insiders of the corporation shall hold more than 90 per cent of the issued and outstanding shares of each class of shares of the capital stock of the corporation that

      • (i) was, at any time after the corporation last became a public corporation, listed on a designated stock exchange in Canada, or

      • (ii) was a class, designated as described in paragraph (1)(a), by virtue of which the corporation last became a public corporation;

    • (b) in respect of each class of shares described in subparagraph (a)(i) or (ii), there shall be fewer than

      • (i) where the shares of that class are equity shares, 50, and

      • (ii) in any other case, 100

      persons, other than insiders of the corporation, each of whom holds

      • (iii) not less than one block of shares of that class, and

      • (iv) shares of that class having an aggregate fair market value of not less than $500; and

    • (c) there shall be no class of shares of the capital stock of the corporation that is qualified for distribution to the public and complies with the conditions described in paragraphs (1)(b) and (c).

  • (3) Where, by virtue of an amalgamation (within the meaning assigned by section 87 of the Act) of predecessor corporations any one or more of which was, immediately before the amalgamation, a public corporation, shares of any class of the capital stock of any such public corporation that was

    • (a) at any time after the corporation last became a public corporation, listed on a designated stock exchange in Canada, or

    • (b) the class, designated as described in paragraph (1)(a), by virtue of which the corporation last became a public corporation,

    are converted into shares of any class (in this subsection referred to as the “new class”) of the capital stock of the new corporation, the new class shall, for the purposes of subsection (2), be deemed to be a class, designated as described in paragraph (1)(a), by virtue of which the new corporation last became a public corporation.

  • (4) Any election under subparagraphs (b)(i) or (c)(i) of the definition public corporation in subsection 89(1) of the Act shall be made by filing with the Minister the following documents:

    • (a) the form prescribed by the Minister;

    • (b) where the directors of the corporation are legally entitled to administer the affairs of the corporation, a certified copy of their resolution authorizing the election to be made;

    • (c) where the directors of the corporation are not legally entitled to administer the affairs of the corporation, a certified copy of the authorization of the making of the election by the person or persons legally entitled to administer the affairs of the corporation; and

    • (d) a statutory declaration made by a director of the corporation stating that, after reasonable inquiry for the purpose of informing himself in that regard, to the best of his knowledge the corporation complies with all the prescribed conditions that must be complied with at the time the election is made.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/83-268, s. 8
  • SOR/94-686, ss. 74(F), 79(F)
  • SOR/2001-216, s. 3
  • 2007, c. 35, s. 77
  • 2013, c. 34, s. 396(F)
 
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