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Electricity Act, 1998
Loi de 1998 sur l’électricité

ontario REGULATION 124/99

TRANSFER TAX ON MUNICIPAL ELECTRICITY PROPERTY

Consolidation Period:  From April 25, 2016 to the e-Laws currency date.

Last amendment: O. Reg. 110/16.

This Regulation is made in English only.

Prescribed Percentage

1. The following percentages are prescribed for the purposes of subsection 94 (1) of the Act:

1. 22 per cent, in respect of a transfer that meets the following conditions:

i. The transfer is made after December 31, 2015.

ii. If the approval of the Ontario Energy Board for the transfer is required under the Ontario Energy Board Act, 1998, an application for approval of the transfer is made to the Ontario Energy Board before January 1, 2019.

iii. A written agreement to make the transfer is complete before January 1, 2019 and is not materially changed after that date.

2. 33 per cent, in respect of all other transfers. O. Reg. 110/16, s. 1.

Deemed Transfers

2. (1) Each of the transactions or series of transactions described in this section shall be deemed, for the purpose of section 94 of the Act, to be a transfer to a person of an interest in real or personal property that has been used in connection with generating, transmitting, distributing or retailing electricity.  O. Reg. 124/99, s. 2 (1).

(2) A transaction or series of transactions shall be deemed to constitute a transfer described in subsection (1),

(a) if, as a result of the transaction or series of transactions, a municipal corporation or a municipal electricity utility ceases to own the interest in property described in subsection (1) and another person acquires a similar interest in the property; and

(b) if it is reasonable to conclude that one of the primary purposes of the transaction or the series of transactions is to avoid the application of subsection 94 (1) of the Act.  O. Reg. 124/99, s. 2 (2).

(3) When a corporation ceases to be a subsidiary of a municipal electricity utility, the corporation’s interest in property described in subsection (1) shall be deemed to have been transferred from the corporation to another person immediately before the corporation ceases to be such a subsidiary.  The deemed transfer of the interest in property from the corporation shall be deemed to constitute a transfer described in subsection (1).  O. Reg. 124/99, s. 2 (3).

(4) If a municipal corporation or a municipal electricity utility transfers an interest in property described in subsection (1) to a partnership, a portion of the interest in property that is transferred shall be deemed to constitute a transfer described in subsection (1).  The portion that is deemed to be transferred is calculated using the formula,

A × ( B / C )

where,

  “A” is the fair market value of the interest in property described in subsection (1) that the municipal corporation or municipal electricity utility transfers to the partnership;

  “B” is the fair market value of that portion of interests in the partnership that are owned by persons other than the municipal corporation or the municipal electricity utility; and

  “C” is the fair market value of all ownership interests in the partnership.

O. Reg. 124/99, s. 2 (4).

(5) If a corporation (the “successor corporation”) is formed as a result of the amalgamation or merger of two or more corporations (the “predecessor corporations”), an interest in property described in subsection (1) that is held by a predecessor corporation immediately before the amalgamation or merger shall be deemed to have been transferred to the successor corporation upon the amalgamation or merger.  That transfer shall be deemed to constitute a transfer described in subsection (1).  O. Reg. 18/00, s. 1.

(6) Subsection (5) does not apply with respect to an amalgamation of two or more municipal corporations or municipal electricity utilities, if the amalgamation is required by an Act or is otherwise required by law.  O. Reg. 18/00, s. 1.

(7) If a shareholder of a corporation ceases to own a share of the capital stock of the corporation because the corporation redeems, acquires or cancels the share, the shareholder shall be deemed to have transferred to a person other than a municipal electricity utility an interest in the corporation having a fair market value equal to the fair market value of the share.  That transfer shall be deemed to constitute a transfer described in subsection (1).  O. Reg. 18/00, s. 1.

(8) If a shareholder of a corporation receives an amount on the reduction of capital in respect of a share of the corporation otherwise than by way of a redemption, acquisition or cancellation of the share, the shareholder shall be deemed to have transferred to a person other than a municipal electricity utility an interest in the corporation having a fair market value equal to the amount received on the reduction of capital.  That transfer shall be deemed to constitute a transfer described in subsection (1).  O. Reg. 18/00, s. 1.

(9) Subsections (7) and (8) do not apply if the Minister of Finance is satisfied that the redemption, acquisition or cancellation of the share by the corporation or the reduction of capital in respect of the share is not part of a transaction or series of transactions that results in a change in the direct or indirect ownership of the corporation.  O. Reg. 18/00, s. 1.

(10) Subsections (5) and (6) do not apply with respect to an amalgamation or merger pursuant to an agreement in writing that the Minister of Finance is satisfied was entered into before January 31, 2000, if the Minister is satisfied that the parties have a binding obligation under the agreement to proceed with the amalgamation or merger.  O. Reg. 18/00, s. 1.

(11) Subsections (7) to (9) do not apply with respect to a redemption, acquisition or cancellation of a share or to a reduction of capital in respect of a share pursuant to a written resolution of the directors or shareholders of a corporation if the Minister of Finance is satisfied that the resolution was made before January 31, 2000.  O. Reg. 18/00, s. 1.

Excluded Transfers

3. (1) Each of the transfers described in this section is prescribed as a transfer to which subsection 94 (1) of the Act does not apply.  O. Reg. 124/99, s. 3 (1).

(2) Subsection (3) applies if,

(a) a municipal corporation or municipal electricity utility (the “first transferor”) transfers an interest in property described in subsection 94 (1) or (2) of the Act (the “first transfer”) to another municipal corporation or municipal electricity utility (the “first transferee”);

(b) the first transferor pays an amount under subsection 94 (1) of the Act in respect of that transfer; and

(c) the first transferee subsequently transfers the interest in the same property (the “second transfer”) to any person. O. Reg. 124/99, s. 3 (2).

(3) Subsection 94 (1) of the Act does not apply to the second transfer described in subsection (2), to the extent that the first transferor has already paid an amount under subsection 94 (1) of the Act in respect of the first transfer.  O. Reg. 124/99, s. 3 (3).

(4) Subsection (5) applies if,

(a) a municipal corporation or municipal electricity utility (the “first transferor”) transfers an interest in property described in subsection 94 (1) or (2) of the Act (the “first transfer”) to another municipal corporation or municipal electricity utility (the “first transferee”);

(b) the first transferor pays an amount under subsection 94 (1) of the Act in respect of the first transfer;

(c) the first transferee or a corporation that owns (directly or indirectly) at least 95 per cent of the total issued and outstanding share capital, excluding the directors’ qualifying shares, of the first transferee subsequently transfers an interest in property described in subsection 94 (1) or (2) of the Act (the “second transfer”) to another person; and

(d) the interest transferred in the second transfer derives its value from the property referred to in clause (a).  O. Reg. 124/99, s. 3 (4).

(5) Subsection 94 (1) of the Act does not apply to the second transfer described in subsection (4) to the extent that the first transferor has already paid an amount under subsection 94 (1) of the Act in respect of the first transfer.  O. Reg. 124/99, s. 3 (5).

(6) Subsection (7) applies if,

(a) a municipal corporation or municipal electricity utility (the “first transferor”) transfers an interest in property described in subsection 94 (1) or (2) of the Act (the “first transfer”) to another municipal corporation or municipal electricity utility (the “first transferee”);

(b) the first transferor pays an amount under subsection 94 (1) of the Act in respect of the first transfer;

(c) the first transferee or a corporation in which the first transferee owns (directly or indirectly) at least 95 per cent of the total issued and outstanding share capital, excluding the directors’ qualifying shares, subsequently transfers an interest in property described in subsection 94 (1) or (2) of the Act (the “second transfer”) to another person; and

(d) the interest transferred in the second transfer derives its value from the property referred to in clause (a).  O. Reg. 124/99, s. 3 (6).

(7) Subsection 94 (1) of the Act does not apply to the second transfer described in subsection (6) to the extent that the first transferor has already paid an amount under subsection 94 (1) of the Act in respect of the first transfer.  O. Reg. 124/99, s. 3 (7).

(8) Subsection (9) applies if,

(a) a municipal corporation or municipal electricity utility (the “transferor”) transfers an interest in property described in subsection 94 (1) or (2) of the Act to a corporation that is a municipal electricity utility (the “transferee”); and

(b) the transferor owns (directly or indirectly) at least 95 per cent of the total issued and outstanding share capital, excluding the directors’ qualifying shares,

(i) of the transferee, or

(ii) of a corporation that owns (directly or indirectly) at least 95 per cent of the total issued and outstanding share capital of the transferee, excluding the directors’ qualifying shares.  O. Reg. 124/99, s. 3 (8).

(9) Subsection 94 (1) of the Act does not apply to the transfer described in subsection (8) from the transferor to the transferee.  O. Reg. 124/99, s. 3 (9).

(10) Subsection (11) applies if,

(a) a municipal electricity utility (the “transferor”) transfers an interest in property described in subsection 94 (1) or (2) of the Act to a corporation that is a municipal electricity utility (the “transferee”); and

(b) a corporation owns (directly or indirectly) at least 95 per cent of the total issued and outstanding share capital, excluding the directors’ qualifying shares,

(i) of the transferor and of the transferee, or

(ii) of another corporation that owns (directly or indirectly) at least 95 per cent of the total issued and outstanding share capital, excluding the directors’ qualifying shares, of the transferor and of the transferee.  O. Reg. 124/99, s. 3 (10).

(11) Subsection 94 (1) of the Act does not apply to the transfer described in subsection (10) from the transferor to the transferee.  O. Reg. 124/99, s. 3 (11).

(12) Subsection (13) applies if a municipal corporation or municipal electricity utility (the “transferor”) transfers an interest in property described in subsection 94 (1) or (2) of the Act and,

(a) the property is not used for any purpose at any time during the 12-month period before the transfer or, if the transfer occurs less than 12 months after October 16, 2006, during the period after October 16, 2006 and before the transfer;

(a.1) the property became obsolete before the transfer; or

(b) the transfer is made in the ordinary course of business of the transferor and it is reasonable to conclude that the primary purpose of the transfer is to replace the transferor’s property.  O. Reg. 124/99, s. 3 (12); O. Reg. 470/07, s. 1 (1).

(13) Subsection 94 (1) of the Act does not apply to the transfer described in subsection (12) if the aggregate fair market value of all such interests that are transferred by the transferor during a particular taxation year is not greater than 5 per cent of the fair market value of the interests in property described in subsections 94 (1) and (2) of the Act that are owned by the transferor at the end of the preceding taxation year.  O. Reg. 124/99, s. 3 (13).

(14) Subsection 94 (1) of the Act does not apply to the transfer of a leasehold interest in property described in subsection 94 (1) of the Act unless, at the time of the transfer,

(a) the lessee automatically acquires title to the leased property at less than its fair market value before or upon the termination of the lease;

(b) the lessee has a conditional or unconditional right to acquire the title to the leased property at less than its fair market value before or upon the termination of the lease;

(c) the term of the lease, including any renewal or extension provided for in the lease or in another agreement entered into as part of the arrangement relating to the lease, is greater than or equal to at least 75 per cent of the anticipated economic life of the leased property; or

(d) the net present value when the lease begins of the lease payments that are required by the lease agreement at that time, including any guarantee of the residual value of the leased property and any penalty payable for a failure to renew the lease or to extend its term, is greater than or equal to 90 per cent of the value of the leased property when the lease begins.  O. Reg. 124/99, s. 3 (14); O. Reg. 454/00, s. 1 (1).

(14.1) Clause (14) (d), as remade by Ontario Regulation 454/00, applies with respect to lease agreements entered into after August 3, 2000.  O. Reg. 454/00, s. 1 (2).

(15) Subsection 94 (1) of the Act does not apply to the transfer of an interest in property described in subsection 94 (1) or (2) of the Act,

(a) if the transfer does not result in a change in the beneficial ownership of the interest in the property;

(b) if the transfer is made for the purpose of securing a debt or a loan and for no other purpose; or

(c) if the transfer entitles the transferor to an amount described in paragraphs (b) to (f) of the definition of “proceeds of disposition” in section 54 of the Income Tax Act (Canada).  O. Reg. 124/99, s. 3 (15).

(16) Subsection (17) applies to a transfer of an interest in property described in subsection 94 (1) or (2) of the Act,

(a) if the transfer is made after November 6, 2000 to a municipal electricity utility that is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer; or

(b) if the transfer is made after November 6, 2000 to the Generation Corporation, the Services Corporation or a subsidiary of the Generation Corporation or the Services Corporation (the “Transferee”) and the transferee is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer.  O. Reg. 524/00, s. 1.

(17) Subsection 94 (1) of the Act does not apply to a transfer described in subsection (16) if an application for approval of the transfer is made to the Ontario Energy Board before November 7, 2000 and if a written agreement to make the transfer is complete before November 7, 2000 and is not materially changed after that date.  O. Reg. 524/00, s. 1.

(18) Subsection 94 (1) of the Act does not apply to a transfer of an interest in property made after March 27, 2003 and before March 28, 2005 if,

(a) the transfer is made to a municipal corporation in Ontario that, at the time of the transfer, is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act, and the interest that is transferred is an interest in a corporation, partnership or other entity that derives its value in whole or in part from real or personal property that has been used in connection with generating, transmitting, distributing or retailing electricity;

(b) the transfer is made to a municipal electricity utility that, at the time of the transfer, is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act; or

(c) the transfer is made to Hydro One Inc., Ontario Power Generation Inc. or a subsidiary of Hydro One Inc. or Ontario Power Generation Inc. (“the transferee”), and, at the time of the transfer, the transferee is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act.  O. Reg. 292/03, s. 1.

(19) Subsection 94 (1) of the Act does not apply to a transfer of an interest in property described in subsection 94 (1), (1.1) or (2) of the Act if the following conditions are satisfied:

1. The transfer is made after March 27, 2005,

2. The transfer is made to,

i. a municipal electricity utility that is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer, or

ii. Hydro One Inc., Ontario Power Generation, Inc. or a subsidiary of either of them (the “transferee”) and the transferee is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer.

3. An application for approval of the transfer is made to the Ontario Energy Board before March 28, 2005.

4. A written agreement to make the transfer is complete before March 28, 2005 and is not materially changed after that date.  O. Reg. 9/05, s. 1.

(20) Subsection 94 (1) of the Act does not apply to a transfer of an interest in property described in subsection 94 (1), (1.1) or (2) of the Act if the following conditions are satisfied:

1. The transfer is made to,

i. a municipal corporation in Ontario that is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer,

ii. a municipal electricity utility that is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer, or

iii. Hydro One Inc., Ontario Power Generation, Inc. or a subsidiary of either of them (the “transferee”) and the transferee is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer.

2. The transfer is made after October 16, 2006.

3. If the approval of the Ontario Energy Board for the transfer is required under the Ontario Energy Board Act, 1998, an application for approval of the transfer is made to the Ontario Energy Board before October 17, 2009.

4. A written agreement to make the transfer is complete before October 17, 2009 and is not materially changed after that date.  O. Reg. 485/06, s. 1; O. Reg. 470/07, s. 1 (2); O. Reg. 352/08, s. 1.

(21) Subsection 94 (1) of the Act does not apply to a transfer of an interest in property described in subsection 94 (1), (1.1) or (2) of the Act if the following conditions are satisfied:

1. The transfer is made to,

i. a municipal corporation in Ontario that is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer,

ii. a municipal electricity utility that is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer, or

iii. Hydro One Inc., Ontario Power Generation, Inc. or a subsidiary of either of them (the “transferee”) and the transferee is exempt under subsection 149 (1) of the Income Tax Act (Canada) from the payment of tax under that Act at the time of the transfer.

2. The transfer is made after October 16, 2009.  O. Reg. 395/09, s. 1.

(22) Subsection 94 (1) of the Act does not apply to a transfer by a municipal corporation or by a municipal electricity utility of an interest in property described in subsection 94 (1), (1.1) or (2) of the Act if the following conditions are satisfied:

1. The transfer is made after December 31, 2015.

2. The total number of customers of the municipal electricity utility is less than 30,000, as set out in the Ontario Energy Board 2014 Yearbook of Electricity Distributors.

3. If at any time between December 31, 2014 and the date of the transfer, the municipal corporation or municipal electricity utility acquires an interest, option, warrant or right described in subsection (23), the total number of consumers of the municipal corporation or municipal electricity utility is less than 30,000, as determined in accordance with subsection (24).

4. If the approval of the Ontario Energy Board for the transfer is required under the Ontario Energy Board Act, 1998, an application for approval of the transfer is made to the Ontario Energy Board before January 1, 2019.

5. A written agreement to make the transfer is complete before January 1, 2019 and is not materially changed after that date.

6. The municipal corporation or the municipal electricity utility provides the Minister with written notice of the transfer before the date of the transfer and confirms in the notice that the transfer satisfies the conditions set out in paragraphs 1 to 5. O. Reg. 110/16, s. 2.

(23) For the purposes of paragraph 3 of subsection (22), the following are the interests, options, warrants and rights:

1. An interest in a municipal electricity utility, partnership or trust that generates transmits, distributes or retails electricity in Ontario.

2. An option, a warrant or a right under a contract in equity or otherwise to acquire an interest in a municipal electricity utility, partnership or trust that generates, transmits, distributes or retails electricity in Ontario.

3. An interest in property described in subsection 94 (1), (1.1) or (2) of the Act from a municipal electricity utility, partnership or trust that includes the right to provide electricity to consumers. O. Reg. 110/16, s. 2.

(24) For the purposes of paragraph 3 of subsection (22), the total number of consumers of the municipal corporation or municipal electricity utility is the sum of the following:

1. The total number of consumers of the municipal corporation or municipal electricity utility.

2. The total number of consumers of each person, partnership or trust that does not deal at arm’s length with, or is affiliated with, the municipal corporation or municipal electricity utility.

3. The total number of consumers of each person, partnership or trust in which the municipal corporation or municipal electricity utility has a direct or indirect interest. O. Reg. 110/16, s. 2.

(25) For the purposes of subsection (24),

(a) a person, partnership or trust is deemed not to deal at arm’s length with a municipal corporation or municipal electricity utility if they do not deal with each other at arm’s length within the meaning of section 251 of the Income Tax Act (Canada); and

(b) a person, partnership or trust is deemed to be affiliated with a municipal corporation or municipal electricity utility if they are affiliated with each other within the meaning of section 251.1 of the Income Tax Act (Canada). O. Reg. 110/16, s. 2.

Modifications to the Method of Calculating the Transfer Tax

3.1 (1) This section applies if a municipal corporation or municipal electricity utility proposes to transfer to a person an interest in the shares of a corporation, in a partnership or in another entity and if the interest to be transferred derives its value, in whole or in part, from real or personal property that has been used in connection with generating, transmitting, distributing or retailing electricity.  O. Reg. 18/00, s. 2.

(2) The amount payable under subsection 94 (1) of the Act to the Financial Corporation is the amount calculated using the formula,

A × (B/C) × D

in which,

  “A” is the fair market value of all real or personal property,

(a) that has been used in connection with generating, transmitting, distributing or retailing electricity (other than interests described in subsection 94 (2) of the Act), and

(b) in which the corporation, partnership or other entity has a direct or indirect interest;

  “B” is the fair market value of the interest in the shares of the corporation, in the partnership or in the entity that the municipal corporation or municipal electricity utility proposes to transfer to the person;

  “C” is the aggregate fair market value of all issued and outstanding shares of the corporation, all ownership interests in the partnership or all ownership interests in the entity; and

  “D” is the percentage set out in section 1.

O. Reg. 18/00, s. 2.

(3) For the purposes of subsection (2), fair market value is determined as of the date on which the proposed transfer is to take place.  O. Reg. 18/00, s. 2.

(4) This section does not apply with respect to a transfer pursuant to an agreement in writing that the Minister of Finance is satisfied was entered into before January 31, 2000, if the Minister is satisfied that the parties have a binding obligation under the agreement to proceed with the transfer.  O. Reg. 18/00, s. 2.

Refund of Transfer Tax on Acquisition of Reinvestment Property

3.2 (1) In this section,

“eligible property” means an interest in real or personal property described in subsection 94 (1) or (1.1) of the Act, other than an interest in a corporation, partnership or other entity described in subsection 94 (2) of the Act;

“reinvestment property” means, in respect of a municipal electricity utility, land or depreciable property, within the meaning assigned by subsection 13 (21) of the Income Tax Act (Canada),

(a) that has not been used by any person or entity before being acquired by the municipal electricity utility,

(b) that is acquired by the municipal electricity utility after October 16, 2006 and that, at the time an application is made under this section,

(i) is used by the municipal electricity utility in connection with generating, transmitting, distributing or retailing electricity in Ontario, if the property is not real property or the property is real property that is not under construction, or

(ii) is proposed to be used by the municipal electricity utility, after the property is constructed, in connection with generating, transmitting, distributing or retailing electricity in Ontario, if the property is real property that is under construction, and

(c) that is not acquired by the municipal electricity utility in a transfer to which subsection 94 (1) of the Act does not apply by reason of subsection 3 (9), (11) or (14) or clause 3 (15) (a) or (b).  O. Reg. 470/07, s. 2.

(2) For the purposes of this section, a shareholder of a municipal electricity utility is an eligible shareholder of the municipal electricity utility in respect of the acquisition of a reinvestment property by the shareholder if, at the time of the acquisition,

(a) the municipal electricity utility no longer generates, transmits, distributes or retails electricity, and

(b) all of the shareholders of the municipal electricity utility are municipal electricity utilities.  O. Reg. 470/07, s. 2.

(3) On an application made to the Minister of Finance in accordance with this section, a municipal electricity utility is entitled to a refund in the amount determined in accordance with this section with respect to the amount paid by it under subsection 94 (1) of the Act in respect of the transfer of an eligible property if,

(a) the municipal electricity utility or an eligible shareholder of the municipal electricity utility acquires a reinvestment property after the transfer and continues to hold it at the time of the application;

(b) a refund in respect of the cost or portion of the cost of the reinvestment property to which the application relates has not previously been made under this section to the municipal electricity utility; and

(c) the amount of the municipal electricity utility’s refundable balance in respect of the application exceeds nil.  O. Reg. 470/07, s. 2.

(4) An application for a refund under this section in respect of a reinvestment property must be made during the period that is,

(a) after the municipal electricity utility or eligible shareholder,

(i) incurred costs for the construction of the reinvestment property, if the reinvestment property is real property constructed or under construction for the municipal electricity utility or eligible shareholder,

(ii) entered into a binding agreement for the construction of the reinvestment property, if the reinvestment property is real property to be constructed by the municipal electricity utility or eligible shareholder and it is reasonable to believe that the construction is intended to commence within six months after the date of the agreement, or

(iii) acquired the reinvestment property, in any other case; and

(b) before the end of the first taxation year of the municipal electricity utility after the taxation year in which the municipal electricity utility or eligible shareholder,

(i) incurred the costs, if the reinvestment property is real property constructed or under construction for the municipal electricity utility or eligible shareholder,

(ii) entered into the agreement referred to in subclause (a) (ii), if the reinvestment property is real property to be constructed by the municipal electricity utility or eligible shareholder, or

(iii) acquired the reinvestment property, in any other case.  O. Reg. 470/07, s. 2.

(5) An application under subsection (4) must contain the following:

1. A detailed calculation of the amount of the refund claimed by the municipal electricity utility, including a calculation of the utility’s refundable balance in respect of the application, as determined under this section, and copies of the documents on which it relied in making the calculations.

2. Copies of invoices, statements and such other material as may be necessary,

i. to verify that the property qualifies as a reinvestment property under this section, and

ii. to confirm the amount of the costs to which the application relates and the date of acquisition of the property by the municipal electricity utility or eligible shareholder or, in the case of real property constructed or under construction for the municipal electricity utility or eligible shareholder, the dates the costs were incurred.

3. A statement signed by a signing officer of the municipal electricity utility certifying that no prior application has been made by the municipal electricity utility under this section in respect of the cost or part of the cost of the property to which the application relates. 

4. Such other information or material as may be requested by the Minister of Finance for the purposes of determining if the municipal electricity utility is entitled to a refund under this section and the amount of any refund to which it is entitled.  O. Reg. 470/07, s. 2.

(6) If the Minister of Finance determines that a municipal electricity utility is entitled to a refund under this section in respect of the acquisition of a reinvestment property, the Minister of Finance may direct the Financial Corporation to pay to the municipal electricity utility an amount equal to the lesser of,

(a) the amount of the municipal electricity utility’s refundable balance in respect of the application, as determined under this section; and

(b) 33 per cent of the cost or portion of the cost of the reinvestment property to which the application relates.  O. Reg. 470/07, s. 2.

(7) Subject to subsections (8) and (9) and subparagraph 2 ii of subsection (11), the amount of a municipal electricity utility’s refundable balance in respect of an application is the amount calculated using the formula,

A – B – C

where,

  “A” is the total of all amounts paid by the municipal electricity utility under subsection 94 (1) of the Act in respect of the transfer of an eligible property,

(a) before the reinvestment property was acquired or the costs were incurred to which the application relates, and

(b) on or after the commencement of the second taxation year immediately preceding the taxation year in which the reinvestment property was acquired or the costs were incurred to which the application relates,

  “B” is the total of all amounts, if any, included in the calculation of “A” that were previously paid to the municipal electricity utility under this section or that are payable to the municipal electricity utility pursuant to a previous application for a refund under this section, and

  “C” is the total of all amounts, if any, included in the calculation of “A” that were previously paid or that are payable to the municipal electricity utility as a refund otherwise than pursuant to this section.

O. Reg. 470/07, s. 2.

(8) The following rules apply for the purposes of determining a municipal electricity’s refundable balance in respect of an application:

1. All amounts paid before October 17, 2006 by a municipal electricity utility under subsection 94 (1) of the Act in respect of the transfer of an eligible property are deemed to have been paid on October 17, 2006.

2. If the reinvestment property to which a particular application relates is acquired by an eligible shareholder of the municipal electricity utility, the amount of “A” in subsection (7) includes, for the purposes of that application, only amounts that are paid by the municipal electricity utility before October 17, 2006 and deemed under paragraph 1 to have been paid on October 17, 2006.  O. Reg. 470/07, s. 2.

(9) Subject to subsection (11), a municipal electricity utility’s refundable balance is deemed to be nil immediately after the issue or transfer of any shares representing a direct or indirect interest in the municipal electricity utility.  O. Reg. 470/07, s. 2.

(10) Subject to subsection (11), only the municipal electricity utility that paid an amount under subsection 94 (1) of the Act is entitled to a refund under this section in respect of that amount.  O. Reg. 470/07, s. 2.

(11) The following rules apply if a municipal electricity utility amalgamates or merges with another entity:

1. The entity formed as a result of the amalgamation or merger shall not be considered to have paid any amount under subsection 94 (1) of the Act that was paid or payable before the amalgamation or merger by the municipal electricity utility if,

i. the amalgamation or merger is after October 16, 2006, or

ii. the amalgamation or merger is with an entity that is not a municipal electricity utility.

2. If the amalgamation or merger is with another municipal electricity utility to form a municipal electricity utility and occurs before October 17, 2006,

i. the municipal electricity utility formed as a result of the amalgamation or merger shall be considered for the purposes of subsection (10) to be the same as and a continuation of each of its predecessor municipal electricity utilities, and

ii. the municipal electricity utility formed as a result of the amalgamation or merger shall have a refundable balance equal to the sum of the refundable balances, if any, of each of its predecessor municipal electricity utilities immediately before the amalgamation or merger.  O. Reg. 470/07, s. 2.

(12) The cost or portion of the cost of a reinvestment property that is real property under construction for a municipal electricity utility,

(a) shall include all costs related to the construction that are incurred by the municipal electricity utility after October 16, 2006 and before the application is made;

(b) shall not include any costs incurred by the municipal electricity utility before October 17, 2006 or any progress billings related to the construction paid or payable before that day; and

(c) shall be reduced by the amount of any holdbacks the municipal electricity utility has claimed or is entitled to claim in respect of amounts that would otherwise be included in the cost or portion of the cost of the reinvestment property to which the application relates.  O. Reg. 470/07, s. 2.

(13) If the Financial Corporation pays a refund under this section to which a municipal electricity utility is not entitled or pays a refund in an amount in excess of the amount to which the municipal electricity utility is entitled,

(a) the refund or portion of the refund to which the municipal electricity utility is not entitled is a liability of the municipal electricity utility; and

(b) the Minister may assess the municipal electricity utility for the amount of the liability plus interest from the day the refund was paid to the day the amount of the liability is paid to the Minister, calculated at the rate or rates and in the manner applicable to unpaid taxes under the Corporations Tax Act.  O. Reg. 470/07, s. 2.

(14) For the purposes of subsection (13), a municipal electricity utility shall be considered to have received a refund to which it was not entitled or a refund in an amount in excess of the amount to which it was entitled if it receives a refund under this section in respect of the acquisition of a reinvestment property after the transfer of an eligible property and it is subsequently determined that,

(a) subsection 94 (1) of the Act did not apply to the transfer of the eligible property; or

(b) the amount payable under subsection 94 (1) of the Act with respect to the transfer of the eligible property is less than the amount used in the calculation of the municipal electricity utility’s refundable balance.  O. Reg. 470/07, s. 2.

(15) No interest is payable to a municipal electricity utility in respect of any amounts refunded under this section.  O. Reg. 470/07, s. 2.

(16) An amount paid as a refund under this section shall not be included in computing an amount payable by a municipal electricity utility under section 93 of the Act except to the extent that the refund relates to an amount paid under subsection 94 (1) of the Act that has been claimed or deducted as an outlay or expense by a municipal electricity utility in computing an amount payable under section 93 of the Act for a taxation year.  O. Reg. 470/07, s. 2.

Administration

4. (1) A municipal corporation or municipal electricity utility (the “transferor”) that proposes to transfer an interest in property described in subsection 94 (1) or (2) of the Act shall give the Minister of Finance written notice of the proposed transfer.  O. Reg. 124/99, s. 4 (1).

(2) The notice of the proposed transfer must be received by the Minister,

(a) at any time before the date of the proposed transfer if,

(i) subsection 94 (1) of the Act does not apply to the transfer by reason of section 3, or

(ii) the amount required to be paid under subsection 94 (1) of the Act is reduced to nil by the deduction of amounts permitted to be deducted under subsection 94 (3) or (4) of the Act; or

(b) at least 60 days before the date of the proposed transfer in any other case.  O. Reg. 470/07, s. 3.

(3) The notice must include the following information:

1. The name and address of the proposed transferee.

2. A detailed description of the interest that is being transferred.

3. A reasonable estimate of the fair market value of the interest that is being transferred, immediately before the date of the proposed transfer.

4. The estimated amount payable under subsection 94 (1) of the Act in respect of the transfer.  O. Reg. 124/99, s. 4 (3).

5. A municipal corporation or municipal electricity utility that proposes to make a transfer to which subsection 94 (1) of the Act applies shall do one of the following before the date of the proposed transfer:

1. Give the Financial Corporation security satisfactory to the Financial Corporation for the payment required by subsection 94 (1) of the Act.

2. Pay the Financial Corporation the amount that the transferor reasonably estimates will be required by subsection 94 (1) of the Act in respect of the transfer.  O. Reg. 124/99, s. 5.

6. If the municipal corporation or municipal electricity utility gives the notice required by section 4 and gives the security or makes the payment described in section 5, the Minister of Finance shall give the municipal corporation or municipal electricity utility and the proposed transferee a certificate setting out the details of the proposed transfer and of the security or payment.  O. Reg. 124/99, s. 6.

7. (1) Subject to subsection (4), a municipal corporation or municipal electricity utility that transfers an interest in property described in subsection 94 (1) or (2) of the Act shall give the Minister of Finance written notice of the transfer.  O. Reg. 124/99, s. 7 (1).

(2) The notice must be received by the Minister within 30 days after the date on which the transfer is made.  O. Reg. 124/99, s. 7 (2).

(3) The notice must include the following information and documents:

1. The name and address of the transferee.

2. A detailed description of the interest that was transferred.

3. The fair market value of the interest that was transferred, immediately before the transfer.

4. The estimated amount payable under subsection 94 (1) of the Act in respect of the transfer.

5. The amount, if any, paid to the Financial Corporation under subsection 94 (1) of the Act in respect of the transfer.

6. A copy of the Minister’s certificate, if any, under section 6 for the transfer.  O. Reg. 124/99, s. 7 (3).

(4) Notice is not required,

(a) if the municipal corporation or municipal electricity utility gave notice of the proposed transfer to the Minister under section 4 before the date of the transfer;

(b) if the transferee is the same as the person identified as the proposed transferee in the notice of the proposed transfer;

(c) if the fair market value of the interest transferred is less than or equal to the estimated fair market value set out in the notice of the proposed transfer; and

(d) if the amount of the payment made under section 5 or the amount in respect of which security is given under section 5, as the case may be, is greater than or equal to the estimated amount payable set out in the notice of the proposed transfer.  O. Reg. 124/99, s. 7 (4).

8. When a municipal corporation or municipal electricity utility makes a transfer to which subsection 94 (1) of the Act applies, the municipal corporation or municipal electricity utility shall pay to the Financial Corporation the amount by which “A” exceeds “B” where,

  “A” is the amount payable under subsection 94 (1) of the Act in respect of the transfer, and

  “B” is the amount of the payment made under section 5 or the amount in respect of which security is given under section 5, as the case may be.  O. Reg. 124/99, s. 8.