Government of Canada / Gouvernement du Canada
Symbol of the Government of Canada

Search

Income Tax Act

Version of section 125 from 2023-06-22 to 2024-11-26:


Marginal note:Small business deduction

  •  (1) There may be deducted from the tax otherwise payable under this Part for a taxation year by a corporation that was, throughout the taxation year, a Canadian-controlled private corporation, an amount equal to the corporation’s small business deduction rate for the taxation year multiplied by the least of

    • (a) the amount, if any, by which the total of

      • (i) the total of all amounts each of which is the amount of income of the corporation for the year from an active business carried on in Canada, other than an amount that is

        • (A) described in paragraph (a) of the description of A in the definition specified partnership income in subsection (7) for the year,

        • (B) described in subparagraph (a)(i) of the definition specified corporate income in subsection (7) for the year, or

        • (C) paid or payable to the corporation by another corporation with which it is associated, that is deemed by subsection 129(6) to be income for the year from an active business carried on by the corporation in circumstances where the associated corporation is not a Canadian-controlled private corporation or is a Canadian-controlled private corporation that has made an election under subsection 256(2) in respect of its taxation year in which the amount was paid or payable,

      • (ii) the specified partnership income of the corporation for the year, and

      • (ii.1) the specified corporate income of the corporation for the year

      exceeds the total of

      • (iii) the total of all amounts each of which is a loss of the corporation for the year from an active business carried on in Canada (other than a loss of the corporation for the year from a business carried on by it as a member of a partnership), and

      • (iv) the specified partnership loss of the corporation for the year,

    • (b) the amount, if any, by which the corporation’s taxable income for the year exceeds the total of

      • (i) 100/28 of the total of the amounts that would be deductible under subsection 126(1) from the tax for the year otherwise payable under this Part by it if those amounts were determined without reference to sections 123.3 and 123.4,

      • (ii) the amount determined by multiplying the total of the amounts that would be deductible under subsection 126(2) from the tax for the year otherwise payable under this Part by it, if those amounts were determined without reference to section 123.4, by the relevant factor for the year, and

      • (iii) the amount, if any, of the corporation’s taxable income for the year that is not, because of an Act of Parliament, subject to tax under this Part, and

    • (c) the corporation’s business limit for the year.

  • Marginal note:Small business deduction rate

    (1.1) For the purpose of subsection (1), a corporation’s small business deduction rate for a taxation year is the total of

    • (a) that proportion of 17.5% that the number of days in the taxation year that are before 2018 is of the number of days in the taxation year,

    • (b) that proportion of 18% that the number of days in the taxation year that are in 2018 is of the number of days in the taxation year, and

    • (c) that proportion of 19% that the number of days in the taxation year that are after 2018 is of the number of days in the taxation year.

    • (d) and (e) [Repealed, 2016, c. 7, s. 34]

  • Marginal note:Business limit

    (2) For the purpose of this section, a corporation’s business limit for a taxation year is $500,000 unless the corporation is associated in the taxation year with one or more other Canadian-controlled private corporations, in which case, except as otherwise provided in this section, its business limit is nil.

  • Marginal note:Associated corporations

    (3) Notwithstanding subsection (2), if all the Canadian-controlled private corporations that are associated with each other in a taxation year file with the Minister in prescribed form an agreement that assigns for the purpose of this section a percentage to one or more of them for the year, the business limit for the year of each of the corporations is

    • (a) if the total of the percentages assigned in the agreement does not exceed 100%, $500,000 multiplied by the percentage assigned to that corporation in the agreement; and

    • (b) in any other case, nil.

  • Marginal note:Reduction — business limit

    (3.1) The business limit for the year of a corporation under subsection (2), (3) or (4) is reduced by the total of all amounts each of which is the portion, if any, of the business limit that the corporation assigns to another corporation under subsection (3.2).

  • Marginal note:Assignment

    (3.2) For the purpose of this section, a Canadian-controlled private corporation (in this subsection referred to as the first corporation) may assign all or any portion of its business limit under subsection (2), (3) or (4) for a taxation year of the first corporation to another Canadian-controlled private corporation (in this subsection referred to as the second corporation) for a taxation year of the second corporation if

    • (a) the second corporation has an amount of income, for its taxation year, referred to in subparagraph (a)(i) of the definition specified corporate income in subsection (7) from the provision of services or property directly to the first corporation;

    • (b) the first corporation’s taxation year ends in the second corporation’s taxation year;

    • (c) the amount assigned does not exceed the amount determined by the formula

      A − B

      where

      A
      is the amount of income referred to in paragraph (a), and
      B
      is the portion of the amount described in A that is deductible by the first corporation in respect of the amount of income referred to in clause (1)(a)(i)(A) or (B) for the year; and
    • (d) a prescribed form is filed with the Minister by

      • (i) the first corporation in its return of income for its taxation year, and

      • (ii) the second corporation in its return of income for its taxation year.

  • Marginal note:Failure to file agreement

    (4) If any of the Canadian-controlled private corporations that are associated with each other in a taxation year has failed to file with the Minister an agreement as contemplated by subsection (3) within 30 days after notice in writing by the Minister has been forwarded to any of them that such an agreement is required for the purpose of any assessment of tax under this Part, the Minister shall, for the purpose of this section, allocate an amount to one or more of them for the taxation year. The total amount so allocated must equal the least of the amounts that would, if none of the corporations were associated with any other corporation during the year and if this Act were read without reference to subsections (5) and (5.1), be the business limits of the corporations for the year.

  • Marginal note:Special rules for business limit

    (5) Notwithstanding subsections (2), (3) and (4),

    • (a) where a Canadian-controlled private corporation (in this paragraph referred to as the “first corporation”) has more than one taxation year ending in the same calendar year and it is associated in 2 or more of those taxation years with another Canadian-controlled private corporation that has a taxation year ending in that calendar year, the business limit of the first corporation for each taxation year ending in the calendar year in which it is associated with the other corporation that ends after the first such taxation year ending in that calendar year is, subject to the application of paragraph 125(5)(b), an amount equal to the lesser of

      • (i) its business limit determined under subsection 125(3) or 125(4) for the first such taxation year ending in the calendar year, and

      • (ii) its business limit determined under subsection 125(3) or 125(4) for the particular taxation year ending in the calendar year; and

    • (b) where a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, its business limit for the year is that proportion of its business limit for the year determined without reference to this paragraph that the number of days in the year is of 365.

  • Marginal note:Business limit reduction

    (5.1) Notwithstanding subsections (2), (3), (4) and (5), a Canadian-controlled private corporation’s business limit for a particular taxation year ending in a calendar year is the amount, if any, by which its business limit otherwise determined for the particular taxation year exceeds the greater of

    • (a) the amount determined by the formula

      A × B ÷ $90,000

      where

      A
      is the amount that would, but for this subsection, be the corporation’s business limit for the particular taxation year, and
      B
      is the amount determined by the formula

      0.225% × (C – $10 million)

      where

      C
      is
      • (i) if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the preceding taxation year,

      • (ii) if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the particular taxation year, or

      • (iii) if, in the particular taxation year, the corporation is associated with one or more particular corporations, the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation or of any of the particular corporations for its last taxation year that ended in the preceding calendar year, and

    • (b) the amount determined by the formula

      D/$500,000 × 5(E − $50,000)

      where

      D
      is the amount determined for A in paragraph (a), and
      E
      is the total of all amounts each of which is the adjusted aggregate investment income of the corporation, or of any corporation with which it is associated at any time in the particular taxation year, for each taxation year of the corporation, or associated corporation, as the case may be, that ended in the preceding calendar year.
  • Marginal note:Anti-avoidance

    (5.2) A particular corporation and another corporation are deemed to be associated with each other at a particular time for the purposes of paragraph (5.1)(b) if

    • (a) the particular corporation lends or transfers property at any time, either directly or indirectly, by means of a trust or by any other means whatever, to the other corporation;

    • (b) the other corporation is, at the particular time, related to the particular corporation but is not associated with it; and

    • (c) it may reasonably be considered that one of the reasons the loan or transfer was made was to reduce the amount determined for E in paragraph (5.1)(b) in respect of the particular corporation, or of any corporation with which it is associated, for a taxation year.

  • Marginal note:Corporate partnerships

    (6) Where in a taxation year a corporation is a member of a particular partnership and in the year the corporation or a corporation with which it is associated in the year is a member of one or more other partnerships and it may reasonably be considered that one of the main reasons for the separate existence of the partnerships is to increase the amount of a deduction of any corporation under subsection 125(1), the specified partnership income of the corporation for the year shall, for the purposes of this section, be computed in respect of those partnerships as if all amounts each of which is the income of one of the partnerships for a fiscal period ending in the year from an active business carried on in Canada were nil except for the greatest of those amounts.

  • Marginal note:Corporation deemed member of partnership

    (6.1) For the purposes of this section, a corporation that is a member, or is deemed by this subsection to be a member, of a partnership that is a member of another partnership shall be deemed to be a member of the other partnership and the corporation’s share of the income of the other partnership for a fiscal period shall be deemed to be equal to the amount of that income to which the corporation was directly or indirectly entitled.

  • Marginal note:Specified partnership income deemed nil

    (6.2) Notwithstanding any other provision of this section, where a corporation is a member of a partnership that was controlled, directly or indirectly in any manner whatever, by one or more non-resident persons, by one or more public corporations (other than a prescribed venture capital corporation) or by any combination thereof at any time in its fiscal period ending in a taxation year of the corporation, the income of the partnership for that fiscal period from an active business carried on in Canada shall, for the purposes of computing the specified partnership income of a corporation for the year, be deemed to be nil.

  • Marginal note:Partnership deemed to be controlled

    (6.3) For the purposes of subsection 125(6.2), a partnership shall be deemed to be controlled by one or more persons at any time if the total of the shares of that person or those persons of the income of the partnership from any source for the fiscal period of the partnership that includes that time exceeds 1/2 of the income of the partnership from that source for that period.

  • Marginal note:Definitions

    (7) In this section,

    active asset

    active asset, of a particular corporation at any time, means property that is

    • (a) used at that time principally in an active business carried on primarily in Canada by the particular corporation or by a Canadian-controlled private corporation that is related to the particular corporation,

    • (b) a share of the capital stock of another corporation if, at that time,

      • (i) the other corporation is connected with the particular corporation (within the meaning assigned by subsection 186(4) on the assumption that the other corporation is at that time a payer corporation within the meaning of that subsection), and

      • (ii) the share would be a qualified small business corporation share (as defined in subsection 110.6(1)) if

        • (A) the references in that definition to an “individual” were references to the particular corporation, and

        • (B) that definition were read without reference to “the individual’s spouse or common-law partner”, or

    • (c) an interest in a partnership, if

      • (i) at that time, the fair market value of the particular corporation’s interest in the partnership is equal to or greater than 10% of the total fair market value of all interests in the partnership,

      • (ii) throughout the 24–month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b), and

      • (iii) at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b); (bien actif)

    active business carried on by a corporation

    active business carried on by a corporation means any business carried on by the corporation other than a specified investment business or a personal services business and includes an adventure or concern in the nature of trade; (entreprise exploitée activement)

    adjusted aggregate investment income

    adjusted aggregate investment income, of a corporation (other than a corporation that is deemed not to be a private corporation by subsection 136(1) or 137(7) or section 141.1) for a taxation year, means the amount that would be the aggregate investment income (as defined in subsection 129(4)) of the corporation for the year, if

    • (a) paragraph (a) of that definition read as follows:

      • (a) the amount, if any, by which

        • (i) the eligible portion of the corporation’s taxable capital gains (other than taxable capital gains from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year

        exceeds

        • (ii) the eligible portion of its allowable capital losses (other than allowable capital losses from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year, or

    • (b) subparagraph (b)(iii) of that definition read as follows:

      • (iii) a dividend from a corporation connected with it (within the meaning assigned by subsection 186(4) on the assumption that the corporation is at that time a payer corporation within the meaning of that subsection), and

    • (c) paragraph (a) of the definition income or loss in subsection 129(4) read as follows:

      • (a) includes

        • (i) the income or loss from a specified investment business carried on by it, and

        • (ii) amounts in respect of a life insurance policy that are included in computing the corporation’s income for the year, to the extent that the amounts would not otherwise be included in the computation of the corporation’s aggregate investment income, but

    and

    • (d) no amount were deducted under subsection 91(4) by the corporation in computing its income for the year; (revenu de placement total ajusté)

    Canadian-controlled private corporation

    Canadian-controlled private corporation means a private corporation that is a Canadian corporation other than

    • (a) a corporation controlled, directly or indirectly in any manner whatever, by one or more non-resident persons, by one or more public corporations (other than a prescribed venture capital corporation), by one or more corporations described in paragraph (c), or by any combination of them,

    • (b) a corporation that would, if each share of the capital stock of a corporation that is owned by a non-resident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation described in paragraph (c) were owned by a particular person, be controlled by the particular person,

    • (c) a corporation a class of the shares of the capital stock of which is listed on a designated stock exchange, or

    • (d) in applying subsection (1), paragraphs 87(2)(vv) and (ww) (including, for greater certainty, in applying those paragraphs as provided under paragraph 88(1)(e.2)), the definitions excessive eligible dividend designation, general rate income pool and low rate income pool in subsection 89(1) and subsections 89(4) to (6), (8) to (10) and 249(3.1), a corporation that has made an election under subsection 89(11) and that has not revoked the election under subsection 89(12); (société privée sous contrôle canadien)

    designated member

    designated member, of a particular partnership in a taxation year, means a Canadian-controlled private corporation that provides (directly or indirectly, in any manner whatever) services or property to the particular partnership at any time in the corporation’s taxation year where, at any time in the year,

    • (a) the corporation is not a member of the particular partnership, and

    • (b) either

      • (i) one of its shareholders holds a direct or indirect interest in the particular partnership, or

      • (ii) if subparagraph (i) does not apply,

        • (A) the corporation does not deal at arm’s length with a person that holds a direct or indirect interest in the particular partnership, and

        • (B) it is not the case that all or substantially all of the corporation’s income for the year from an active business is from providing services or property to

          • (I) persons with which the corporation deals at arm’s length, or

          • (II) partnerships (other than the particular partnership) with which the corporation deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest; (associé désigné)

    income of the corporation for the year from an active business

    income of the corporation for the year from an active business means the total of

    • (a) the corporation’s income for the year from an active business carried on by it including any income for the year pertaining to or incident to that business, other than income for the year from a source in Canada that is a property (within the meaning assigned by subsection 129(4)), and

    • (b) the amount, if any, included under subsection 12(10.2) in computing the corporation’s income for the year; (revenu de la société pour l’année provenant d’une entreprise exploitée activement)

    personal services business

    personal services business carried on by a corporation in a taxation year means a business of providing services where

    • (a) an individual who performs services on behalf of the corporation (in this definition and paragraph 18(1)(p) referred to as an “incorporated employee”), or

    • (b) any person related to the incorporated employee

    is a specified shareholder of the corporation and the incorporated employee would reasonably be regarded as an officer or employee of the person or partnership to whom or to which the services were provided but for the existence of the corporation, unless

    • (c) the corporation employs in the business throughout the year more than five full-time employees, or

    • (d) the amount paid or payable to the corporation in the year for the services is received or receivable by it from a corporation with which it was associated in the year; (entreprise de prestation de services personnels)

    specified cooperative income

    specified cooperative income[Repealed, 2019, c. 29, s. 22]

    specified corporate income,

    specified corporate income, of a corporation for a taxation year, means the lesser of

    • (a) the lesser of

      • (i) the total of all amounts each of which is income (other than specified farming or fishing income of the corporation for the year) from an active business of the corporation for the year from the provision of services or property to a private corporation (directly or indirectly, in any manner whatever) if

        • (A) at any time in the year, the corporation (or one of its shareholders) or a person who does not deal at arm’s length with the corporation (or one of its shareholders) holds a direct or indirect interest in the private corporation, and

        • (B) it is not the case that all or substantially all of the corporation’s income for the year from an active business is from the provision of services or property to

          • (I) persons (other than the private corporation) with which the corporation deals at arm’s length, or

          • (II) partnerships with which the corporation deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest, and

      • (ii) the total of all amounts each of which is the portion, if any, of the business limit of a private corporation described in subparagraph (i) for a taxation year that the private corporation assigns to the corporation under subsection (3.2), and

    • (b) an amount that the Minister determines to be reasonable in the circumstances; (revenu de société déterminé)

    specified farming or fishing income

    specified farming or fishing income, of a particular corporation for a taxation year, means income of the particular corporation (other than an amount included in the particular corporation’s income under subsection 135(7)), if

    • (a) the income is from the sale of the farming products or fishing catches of the particular corporation’s farming or fishing business to another corporation, and

    • (b) the particular corporation deals at arm’s length with the other corporation; (revenu d’agriculture ou de pêche déterminé)

    specified investment business

    specified investment business, carried on by a corporation in a taxation year, means a business (other than a business carried on by a credit union or a business of leasing property other than real or immovable property) the principal purpose of which is to derive income (including interest, dividends, rents and royalties) from property but, except where the corporation was a prescribed labour-sponsored venture capital corporation at any time in the year, does not include a business carried on by the corporation in the year where

    • (a) the corporation employs in the business throughout the year more than 5 full-time employees, or

    • (b) any other corporation associated with the corporation provides, in the course of carrying on an active business, managerial, administrative, financial, maintenance or other similar services to the corporation in the year and the corporation could reasonably be expected to require more than 5 full-time employees if those services had not been provided; (entreprise de placement déterminée)

    specified partnership business limit,

    specified partnership business limit, of a person for a taxation year, at any particular time, means the amount determined by the formula

    (K/L) × M – T

    where

    K
    is the total of all amounts each of which is the person’s share of the income (determined in accordance with Subdivision J of Division B) of a partnership of which the person was a member for a fiscal period ending in the year from an active business carried on in Canada,
    L
    is the total of all amounts each of which is the income of the partnership for a fiscal period referred to in paragraph (a) of the description of A in the definition specified partnership income in this subsection from an active business carried on in Canada,
    M
    is the lesser of
    • (a) the amount of the business limit indicated in subsection (2) for a corporation that is not associated in a taxation year with one or more other Canadian-controlled private corporations, and

    • (b) the product obtained by the formula

      (Q/R) × S

      where

      Q
      is the amount referred to in paragraph (a),
      R
      is 365, and
      S
      is the total of all amounts each of which is the number of days in a fiscal period of the partnership that ends in the year, and
    T
    is the total of all amounts each of which is an amount, if any, that the person assigns under subsection (8); (plafond des affaires de société de personnes déterminé)
    specified partnership income

    specified partnership income of a corporation for a taxation year means the amount determined by the formula

    A + B

    where

    A
    is the total of all amounts each of which is an amount in respect of a partnership of which the corporation was a member, or a designated member, in the year equal to the least of
    • (a) the total of all amounts each of which is an amount in respect of an active business carried on in Canada by the corporation as a member, or a designated member, of the partnership determined by the formula

      G – H

      where

      G
      is the total of all amounts each of which is
      • (i) the corporation’s share of the income (determined in accordance with Subdivision J of Division B) of the partnership for a fiscal period of the business that ends in the year,

      • (ii) income of the corporation for the year from the provision (directly or indirectly, in any manner whatever) of services or property to the partnership, or

      • (iii) an amount included in the corporation’s income for the year in respect of the business under any of subsections 34.2(2), (3) and (12), and

      H
      is the total of all amounts deducted in computing the corporation’s income for the year from the business (other than amounts that were deducted in computing the income of the partnership from the business or the income of the corporation described under subparagraph (ii) of the description of G) or in respect of the business under subsection 34.2(4) or (11),
    • (b) an amount equal to

      • (i) if the corporation was a member of the partnership, the corporation’s specified partnership business limit for the year, and

      • (ii) if the corporation was a designated member of the partnership, the total of all amounts assigned to it under subsection (8) for the year and, where no such amounts have been assigned, nil, and

    • (c) nil, if

      • (i) the corporation is a member, or a designated member, of the partnership (including indirectly through one or more other partnerships) in the year, and

      • (ii) the partnership provides services or property to either

        • (A) a private corporation (directly or indirectly in any manner whatever) in the year, if

          • (I) the corporation (or one of its shareholders) or a person who does not deal at arm’s length with the corporation (or one of its shareholders) holds a direct or indirect interest in the private corporation, and

          • (II) it is not the case that all or substantially all of the partnership’s income for the year from an active business is from the provision of services or property to

            • 1 persons (other than the private corporation) that deal at arm’s length with the partnership and each person that holds a direct or indirect interest in the partnership, or

            • 2 partnerships with which the partnership deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest, or

        • (B) a particular partnership (directly or indirectly in any manner whatever) in the year, if

          • (I) the corporation (or one of its shareholders) does not deal at arm’s length with the particular partnership or a person that holds a direct or indirect interest in the particular partnership, and

          • (II) it is not the case that all or substantially all of the partnership’s income for the year from an active business is from the provision of services or property to

            • 1 persons that deal at arm’s length with the partnership and each person that holds a direct or indirect interest in the partnership, or

            • 2 partnerships (other than the particular partnership) with which the partnership deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest, and

    B
    is the lesser of
    • (a) the total of the amounts determined in respect of the corporation for the year under subparagraphs 125(1)(a)(iii) and 125(1)(a)(iv), and

    • (b) the total of all amounts each of which is an amount in respect of a partnership of which the corporation was a member, or a designated member, in the year equal to the amount determined by the formula

      N – O

      where

      N
      is the amount determined in respect of the partnership for the year under paragraph (a) of the description of A, and
      O
      is the amount determined in respect of the partnership for the year
      • (i) if the corporation was a member of the partnership, under subparagraph (b)(i) of the description of A, and

      • (ii) if the corporation was a designated member of the partnership, under subparagraph (b)(ii) of the description of A; (revenu de société de personnes déterminé)

    specified partnership loss

    specified partnership loss of a corporation for a taxation year means the total of all amounts each of which is an amount in respect of a partnership of which the corporation was a member in the year determined by the formula

    A + B

    where

    A
    is the total of all amounts each of which is the corporation’s share of the loss (determined in accordance with Subdivision J of Division B) of the partnership for a fiscal period ending in the year from an active business carried on in Canada by the corporation as a member of the partnership, and
    B
    is the total of all amounts each of which is an amount determined by the formula

    G - H

    where

    G
    is the amount determined for H in the definition specified partnership income in this subsection for the year in respect of the corporation’s income from an active business carried on in Canada by the corporation as a member of the partnership, and
    H
    is the amount determined for G in the definition specified partnership income in this subsection for the year in respect of the corporation’s share of the income from the business. (perte de société de personnes déterminée)
  • Marginal note:Assignment — specified partnership business limit

    (8) For the purpose of the definition specified partnership income in subsection (7), a person that is a member of a partnership in a taxation year may assign to a designated member of the partnership — for a taxation year of the designated member — all or any portion of the person’s specified partnership business limit (determined without reference to this assignment) in respect of the person’s taxation year if

    • (a) the person is described in paragraph (b) of the definition designated member in subsection (7) in respect of the designated member in the designated member’s taxation year;

    • (b) the specified partnership business limit of the person is in respect of a fiscal period of the partnership that ends in the designated member’s taxation year; and

    • (c) a prescribed form is filed with the Minister by

      • (i) the designated member in its return of income for the designated member’s taxation year, and

      • (ii) the person in its return of income for the person’s taxation year.

  • Marginal note:Anti-avoidance

    (9) If a corporation provides services or property to a person or partnership that holds a direct or indirect interest in a particular partnership or corporation and one of the reasons for the provision of the services or property to the person or partnership, instead of to the particular partnership or corporation, is to avoid the application of subparagraph (1)(a)(ii) or (ii.1) in respect of the income from the provision of the services or property, no amount in respect of the corporation’s income from the provision of the services or property is to be included in the total amount determined under paragraph (1)(a).

  • Marginal note:Computational rule — specified corporate income

    (10) For the purpose of determining an amount for a taxation year in respect of a corporation under clause (1)(a)(i)(B) or subparagraph (1)(a)(ii.1), an amount of income is to be excluded if the amount is

    • (a) income from an active business of the corporation for the year from the provision of services or property to another corporation with which the corporation is associated (in this subsection referred to as the associated corporation); and

    • (b) not deductible by the associated corporation for its taxation year in respect of an amount included in the income of the associated corporation that is

      • (i) referred to in any of clauses (1)(a)(i)(A) to (C), or

      • (ii) reasonable to consider as being attributable to or derived from an amount referred to in clause (1)(a)(i)(C).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • R.S., 1985, c. 1 (5th Supp.), s. 125
  • 1994, c. 7, Sch. II, s. 100, Sch. VIII, s. 63
  • 1995, c. 3, s. 35
  • 1996, c. 21, s. 26
  • 1998, c. 19, s. 145
  • 2001, c. 17, s. 113
  • 2003, c. 15, s. 79
  • 2007, c. 2, ss. 33, 49, c. 35, ss. 68, 182
  • 2009, c. 2, s. 39
  • 2013, c. 34, ss. 126, 262, c. 40, s. 55
  • 2015, c. 36, s. 11
  • 2016, c. 7, s. 34, c. 12, s. 44
  • 2017, c. 33, s. 48
  • 2018, c. 12, s. 20
  • 2019, c. 29, s. 22
  • 2022, c. 19, s. 21
  • 2023, c. 26, s. 32(F)

Date modified: