O. Reg. 456/08: Tax Incentive for Investing in Ontario Jobs and Opportunity Bonds

 

ontario regulation 456/08

made under the

corporations Tax Act

Made: December 19, 2008
Filed: December 30, 2008
Published on e-Laws: December 31, 2008
Printed in The Ontario Gazette: January 17, 2009

Amending O. Reg. 155/03

(Tax Incentive for Investing in Ontario Jobs and Opportunity Bonds)

1. Section 1 of Ontario Regulation 155/03 is revoked and the following substituted:

Tax incentive

1. The tax incentive to which a corporation is entitled under subsection 37.1 (2) of the Act for a taxation year in respect of the interest received or receivable by the corporation on an Ontario Jobs and Opportunity Bond is,

(a) a deduction in computing income from a business or property for the year, in the amount determined under section 2, if the taxation year ends before January 1, 2009; or

(b) the payment of a refund determined under section 2.1 if the taxation year ends after December 31, 2008.

2. (1) Subsection 2 (1) of the Regulation is amended by striking out the portion before the definition of “A” and substituting the following:

Deduction for taxation years ending before January 1, 2009

(1) Subject to subsections (2) and (3), the amount of the deduction referred to in clause 1 (a) that a corporation is entitled to claim in computing its income from a business or property for the purposes of Part II of the Act for a taxation year ending before January 1, 2009 is the amount by which “A” exceeds “B” where,

. . . . .

(2) Subsection 2 (2) of the Regulation is revoked and the following substituted:

(2) If a corporation is a member of a partnership and the partnership owns an interest in an Ontario Jobs and Opportunity Bond in a fiscal period of the partnership that ends in a taxation year of the corporation ending before January 1, 2009, the amount of the corporation’s deduction under this section for that taxation year in respect of the interest earned by the partnership on the bond for that fiscal period cannot exceed the amount that may reasonably be considered to be the share of the interest earned to which the corporation is entitled under the partnership agreement.

(3) Subsection 2 (3) of the Regulation is amended by striking out “No deduction may be claimed by a corporation” at the beginning and substituting “No deduction may be claimed by a corporation for a taxation year ending before January 1, 2009”.

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

Refund for taxation years ending after December 31, 2008

2.1 (1) Subject to subsections (3) and (4), the amount of the refund referred to in clause 1 (b) for a taxation year ending after December 31, 2008 is determined as follows:

1. If the corporation is exempt from tax for the year under Part III of the Taxation Act, 2007, the refund is nil.

2. If the corporation would have had no taxable income for the year for the purposes of the Taxation Act, 2007 if the corporation had been entitled to deduct its Ontario Jobs and Opportunity Bond income when calculating its income for the year for the purposes of Division B of Part III of that Act, the refund is calculated using the formula,

C + [(D – E) × F]

in which,

“C” is the amount of tax that would be payable by the corporation under the Taxation Act, 2007 for the year if that amount were determined under only subdivision a of Division B of Part III of that Act,

“D” is the amount, if any, of the corporation’s Ontario Jobs and Opportunity Bond income for the year as determined under subsection (2),

“E” is the corporation’s taxable income for the year as determined under the Taxation Act, 2007, and

“F” is the corporation’s adjusted basic rate for the year as determined under subsection 46 (1) of the Taxation Act, 2007.

3. If neither paragraph 1 nor 2 applies to the corporation for the taxation year, the refund is calculated using the formula,

C – G

in which,

“C” has the same meaning as in paragraph 2, and

“G” is the amount of tax that would be payable by the corporation under the Taxation Act, 2007 for the year if that amount were,

(a) determined under only subdivision a of Division B of Part III of that Act, and

(b) determined as if the corporation were entitled to deduct in computing its income an amount equal to its Ontario Jobs and Opportunity Bond income, if any, for the year.

(2) For the purposes of subsection (1), a corporation’s Ontario Jobs and Opportunity Bond income for a taxation year is the amount calculated using the formula,

H – I

in which,

  “H” is the sum of all amounts, each of which is interest in respect of an Ontario Jobs and Opportunity Bond that is included in computing the corporation’s income for the taxation year under section 12 or subsection 20 (14) of the Income Tax Act (Canada), and

“I” is the sum of all amounts, each of which is a deduction that is claimed by the corporation for the taxation year under subsection 20 (14) of the Income Tax Act (Canada) in respect of interest on an Ontario Jobs and Opportunity Bond that is included in computing the corporation’s income for the year.

(3) If a corporation is a member of a partnership and the partnership owns an interest in an Ontario Jobs and Opportunity Bond in a fiscal period of the partnership that ends in a taxation year of the corporation ending after December 31, 2008, the amount of the corporation’s Ontario Jobs and Opportunity Bond income in respect of that bond cannot exceed the amount that may reasonably be considered to be the share of the interest earned by the partnership on the bond to which the corporation is entitled under the partnership agreement.

(4) The amount of a refund referred to in clause 1 (b) for a taxation year ending after December 31, 2008 is nil unless a written application for the refund, containing sufficient information to enable the Minister to determine the amount of the refund, is received by the Minister not more than 365 days after the end of the taxation year to which the refund relates.

(5) Except as otherwise provided in subsection (6), interest compounded daily at the applicable rate or rates determined under section 503 of Regulation 183 of the Revised Regulations of Ontario, 1990 (General), made under the Act, is calculated and allowed to a corporation on the amount of the refund described in clause 1 (b) beginning on the later of the following dates and ending on the date the refund is paid:

1. The last day of the second month ending after the end of the taxation year.

2. The day on which an application for the refund, made in accordance with subsection (4), is received by the Minister.

(6) No interest is payable in respect of a refund referred to in clause 1 (b) for a taxation year if the corporation’s tax under Division B of Part III of the Taxation Act, 2007 for the year is nil.

(7) If the Minister receives an application for a refund made in accordance with subsection (4), the Minister shall,

(a) send a notice of entitlement to the corporation setting out,

(i) whether the corporation is entitled to a refund and the amount of the refund, if any, to which the corporation is entitled,

(ii) the basis on which the Minister determined that the corporation is or is not entitled to a refund, and

(iii) information about the corporation’s right to object to the notice of entitlement; and

(b) if the corporation is entitled to a refund, pay the refund and any interest payable under subsection (5) to the corporation, except that if the corporation is liable or is about to become liable for an amount to the Crown in right of Ontario under any Act, the Minister may apply all or part of the refund and interest to that liability and notify the corporation of that action.

(8) A corporation that receives a refund or interest to which it is not entitled under this section, or receives an amount greater than the amount to which it is entitled, shall repay the amount or the excess amount, as the case may be, to the Minister. 

(9) All amounts repayable under subsection (8) shall bear interest as if they were tax payable under the Act and may be assessed and collected as if they were tax payable under the Act.

(10) Part V of the Act applies with necessary modifications in respect of a refund and notice of entitlement under this section as if a notice of entitlement were a notice of assessment.

4. This Regulation comes into force on the day it is filed.

Made by:

Dwight Douglas Duncan

Minister of Finance

Date made: December 19, 2008.