O. Reg. 18/00: TRANSFER TAX ON MUNICIPAL ELECTRICITY PROPERTY

 

ONTARIO REGULATION 18/00

made under the

Electricity Act, 1998

Made: January 28, 2000
Filed: January 31, 2000

Amending O. Reg. 124/99

(Transfer Tax on Municipal Electricity Property)

1. Section 2 of Ontario Regulation 124/99 is amended by adding the following subsections:

(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).

(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.

(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).

(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).

(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.

(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.

(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.

2. The Regulation is amended by adding the following section:

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.

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

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.

(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.

(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.

Ernie Eves

 Minister of Finance

Dated on January 28, 2000.