O. Reg. 232/03: GENERAL

 

ontario regulation 232/03

made under the

corporations tax act

Made: June 4, 2003
Filed: June 6, 2003
Printed in The Ontario Gazette: June 21, 2003

Amending Reg. 183 of R.R.O. 1990

(General)

1. Section 401 of Regulation 183 of the Revised Regulations of Ontario, 1990 is  amended by adding the following paragraph:

42. Canada Post Corporation, for taxation years ending after December 31, 2002.

2. (1) Subsection 703 (2) of the Regulation is amended by adding the following paragraph:

6.1 Associates Capital Corporation of Canada,

i. for the purposes of third party investors, for taxation years ending after December 31, 2001, and

ii. for the purposes of the Corporation and related corporations, for taxation years ending after December 31, 1997.

(2) Paragraphs 7, 8, 9 and 10 of subsection 703 (2) of the Regulation are revoked and the following substituted:

7. Associates Financial Services of Canada Ltd., for taxation years ending after March 1, 1998 and before May 1, 2001.

8. Associates Mortgage Corporation, for taxation years ending after March 1, 1998 and before May 1, 2001.

8.1 Citibank Canada Investment Funds Limited,

i. for the purposes of third party investors, for taxation years ending after December 31, 2000, and

ii. for the purposes of the Corporation and related corporations, for taxation years ending after December 31, 1999.

8.2 CitiCapital Commercial Corporation, for taxation years ending after December 31, 1999.

8.3 CitiFinancial Canada, Inc., for taxation years ending after May 31, 1999.

8.4 CitiFinancial Services of Canada Ltd., for taxation years ending after April 30, 2001.

8.5 CitiFinancial Mortgage Corporation, for taxation years ending after April 30, 2001.

8.6 Commercial Credit Corporation CCC Limited, for taxation years ending after December 31, 1997 and before June 1, 1999.

9. GE Capital Canada Limited, for taxation years ending before August 2, 2000.

10. GE Capital Canada Retailer Financial Services Company, for taxation years ending before August 2, 2000.

10.1 GE Card Services Canada Inc., for taxation years ending after August 1, 2000.

(3) Subsection 703 (2) of the Regulation is amended by adding the following paragraphs:

12.1 Trans Canada Retail Services Company, for taxation years ending after January 14, 2002.

12.2 National Retail Credit Services Company, for taxation years ending after December 31, 1998 and before January 15, 2002.

12.3 Northwest Financial Canada Company, for taxation years ending after December 31, 1998 and before September 7, 2001.

(4) Paragraphs 20, 25 and 26 of subsection 703 (2) of the Regulation are revoked.

(5) Subsection 703 (2) of the Regulation is amended by adding the following paragraphs:

29. State Farm Finance Corporation of Canada, for taxation years ending after December 31, 2001.

30. Wells Fargo Financial Canada Corporation, for taxation years ending after September 6, 2001.

31. Every corporation that is a financial institution for the purposes of Part I.3 of the Income Tax Act (Canada) by virtue of paragraph (g) of the definition of “financial institution” in subsection 181 (1) of that Act, other than,

i. a corporation described in paragraph 1 to 30,

ii. a corporation that has notified the Minister in writing that the corporation does not wish to be prescribed for the purposes of Part III of the Corporations Tax Act, or

iii. a corporation that is a financial institution for the purposes of Part I.3 of the Income Tax Act (Canada), as of a date before December 21, 2002.

3. (1) Section 906 of the Regulation is amended by adding the following subsection:

(2.1) For the purposes of this section,

“qualifying predecessor corporation” has the meaning assigned by subsection 43.11 (15) of the Act.

(2) Paragraphs 2, 3, 5 and 6 of subsection 906 (4) of the Regulation are revoked and the following substituted:

2. All or substantially all of the product was developed in Ontario by the qualifying corporation or by the qualifying corporation and a qualifying predecessor corporation.

3. The product was developed for commercial exploitation by the qualifying corporation or by the qualifying corporation and a qualifying predecessor corporation.

. . . . .

5. The product is not used primarily to present or promote the qualifying corporation or a qualifying predecessor corporation.

6. The product is not used primarily to present, promote or sell the products or services of the qualifying corporation or of a qualifying predecessor corporation.

(3) Subsection 906 (5) of the Regulation is revoked and the following substituted:

(5) For the purposes of the definition of “Ontario labour expenditure” in subsection 43.11 (15) of the Act, the amount of the Ontario labour expenditure of the qualifying corporation or of the qualifying predecessor corporation, as the case may be, incurred in a taxation year with respect to an eligible product is the sum of,

(a) the qualifying wage amount described in subsection (6) of the qualifying corporation or qualifying predecessor corporation for the taxation year with respect to the eligible product; and

(b) 50 per cent of the qualifying remuneration amount as described in subsection (7) of the qualifying corporation or qualifying predecessor corporation for the taxation year with respect to the eligible product.

(4) Subsection 906 (6) of the Regulation is revoked and the following substituted:

(6) Subject to subsection (8), the qualifying wage amount of the qualifying corporation or qualifying predecessor corporation for a taxation year with respect to the eligible product is the amount incurred during the taxation year and after June 30, 1998 on account of salaries or wages of its employees.

(5) Subsection 906 (7) of the Regulation is amended by striking out the portion before paragraph 1 and substituting the following:

(7) Subject to subsection (8), the qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation for a taxation year with respect to the eligible product is the amount incurred during the taxation year and after May 4, 1999 by the qualifying corporation or qualifying predecessor corporation on account of remuneration, which is paid to any of the following persons or entities in the circumstances that are described:

. . . . .

(6) Paragraph 1 of subsection 906 (7) of the Regulation is revoked and the following substituted:

1. An individual who is not an employee of the qualifying corporation or qualifying predecessor corporation, as the case may be, and who deals at arm’s length with that corporation, if the expenditure is attributable to services personally rendered by the individual.

(7) Subparagraph 3 ii of subsection 906 (7) of the Regulation is revoked and the following substituted:

ii. if the individual deals at arm’s length with the qualifying corporation or qualifying predecessor corporation, as the case may be, and

(8) Paragraph 4 of subsection 906 (7) of the Regulation is amended by inserting “or qualifying predecessor corporation” after “qualifying corporation”.

(9) Subsection 906 (8) of the Regulation is amended by striking out the portion before paragraph 1 and substituting the following:

(8) An expenditure is not to be included in the qualifying wage amount or qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation, as the case may be, for a taxation year with respect to the eligible product unless it meets all of the following conditions:

. . . . .

(10) Paragraphs 5, 6 and 7 of subsection 906 (8) of the Regulation are revoked and the following substituted:

5. In the case of the qualifying wage amount, the expenditure is paid to an employee of the qualifying corporation or qualifying predecessor corporation, as the case may be, who reported to a permanent establishment of that corporation in Ontario at which the eligible product was being developed.

6. In the case of the qualifying remuneration amount, the expenditure is paid for services rendered at a permanent establishment in Ontario of the qualifying corporation, of a qualifying predecessor corporation or of a person or entity described in one of the paragraphs of subsection (7).

7. The expenditure is not an amount,

i. for which the qualifying corporation or qualifying predecessor corporation makes a claim under section 43.5, 43.8 or 43.10 of the Act, or

ii. incurred by the qualifying corporation or a qualifying predecessor corporation in carrying out activities that constitute scientific research and experimental development for the purposes of paragraph 37 (1) (a) of the Income Tax Act (Canada) or subparagraph 37 (1) (b) (i) of that Act.

(11) Subsections 906 (8.1) and (9) of the Regulation are revoked and the following substituted:

(8.1) If an expenditure is not included in the qualifying wage amount or qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation, as the case may be, for a taxation year because of paragraph 3 of subsection (8), the expenditure may be included in the qualifying wage amount or qualifying remuneration amount for a subsequent taxation year if the expenditure is paid no later than 60 days after the end of that subsequent taxation year.

(9) For the purposes of paragraph 5 of subsection (7), an eligible partnership is a partnership carrying on business in Canada whose members are all individuals.  However, a partnership is not an eligible partnership in relation to a qualifying corporation or in relation to a qualifying predecessor corporation, as the case may be, if more than 50 per cent of the income of the partnership is allocable (or would be allocable if it had income) to one or more members,

(a) who directly or indirectly control the qualifying corporation or qualifying predecessor corporation; or

(b) who are related to one or more persons who directly or indirectly control the qualifying corporation or qualifying predecessor corporation.

(12) Subsection 906 (10) of the Regulation is amended by striking out the portion before paragraph 1 and substituting the following:

(10) For the purposes of the definition of “marketing and distribution expenditure” in subsection 43.11 (15) of the Act and subject to subsection (11), the marketing and distribution expenditure incurred by a qualifying corporation or qualifying predecessor corporation in respect of an eligible product is the amount of any expenditure incurred by the qualifying corporation or qualifying predecessor corporation in the taxation year that meets all of the following conditions:

. . . . .

(13) Paragraphs 4 and 6 of subsection 906 (10) of the Regulation are revoked and the following substituted:

4. The expenditure is not an amount,

i. for which the qualifying corporation or qualifying predecessor corporation, as the case may be, makes a claim under section 43.5, 43.8 or 43.10 of the Act, or

ii. incurred by the qualifying corporation or qualifying predecessor corporation in carrying out activities that constitute scientific research and experimental development for the purposes of paragraph 37 (1) (a) of the Income Tax Act (Canada) or subparagraph 37 (1) (b) (i) of that Act.

. . . . .

6. If the expenditure relates to an amount paid or payable for meals or entertainment, only 50 per cent of the amount is included in the marketing and distribution expenditure incurred by the qualifying corporation or qualifying predecessor corporation, as the case may be, in a taxation year.

(14) Subsection 906 (11) of the Regulation is amended by striking out “by a qualifying corporation” and substituting “by the qualifying corporation or qualifying predecessor corporation, as the case may be,”.

4. (1) Subject to subsections (2) to (5), this Regulation comes into force on the day it is filed.

(2) Section 2 shall be deemed to have come into force on December 21, 2002.

(3) Subsections 3 (1) to (4) and (9) to (11) shall be deemed to have come into force on July 1, 1998.

(4) Subsections 3 (5) to (8) shall be deemed to have come into force on May 5, 1999.

(5) Subsections 3 (12) to (14) shall be deemed to have come into force on May 3, 2000.