Global Minimum Tax Act (S.C. 2024, c. 17, s. 81)

Short Title

Marginal note:Short title

1 This Act may be cited as the Global Minimum Tax Act.

PART 1Interpretation and Application

Interpretation

Marginal note:Definitions

• 2 (1) The following definitions apply in this Act.

  acceptable financial accounting standard

  acceptable financial accounting standard means

  • (a) Canadian generally accepted accounting principles (GAAP);

  • (b) IFRS; or

  • (c) the generally accepted accounting principles of

    • (i) Australia,

    • (ii) Brazil,

    • (iii) European Economic Area member states,

    • (iv) European Union member states,

    • (v) Hong Kong (Special Administrative Region of the People’s Republic of China),

    • (vi) Japan,

    • (vii) Mexico,

    • (viii) New Zealand,

    • (ix) People’s Republic of China,

    • (x) Republic of India,

    • (xi) Republic of Korea,

    • (xii) Singapore,

    • (xiii) Switzerland,

    • (xiv) United Kingdom, or

    • (xv) United States. (norme de comptabilité financière admissible)

  adjusted covered taxes

  adjusted covered taxes, of a constituent entity of an MNE group for a fiscal year, has the same meaning as in subsection 22(1). (impôts concernés ajustés)

  adjustment year

  adjustment year means a fiscal year in respect of which an adjustment is made to the GloBE income or loss or adjusted covered taxes, for the fiscal year, of a constituent entity of an MNE group or the jurisdictional adjusted covered taxes of an MNE group for the fiscal year because of the application of an ETR adjustment provision. (année d’ajustement)

  aggregate asset gain

  aggregate asset gain, in respect of an election under subsection 18(23), means the net gain in a fiscal year from the disposition of local tangible assets by all of the constituent entities of an MNE group that are located in a particular jurisdiction, excluding any gain or loss on a transfer of assets between group entities. (profit cumulé sur cession d’actifs)

  aggregate asset loss

  aggregate asset loss, in respect of an election under subsection 18(23), means the net loss in a fiscal year from the disposition of local tangible assets by all of the constituent entities of an MNE group that are located in a particular jurisdiction, excluding any gain or loss on a transfer of assets between group entities. (perte cumulée sur cession d’actifs)

  allocable share

  allocable share has the same meaning as in subsection 15(2). (part à répartir)

  allocated adjustment top-up amount

  allocated adjustment top-up amount has the same meaning as in subsection 30(5). (montant complémentaire d’ajustement attribué)

  ancillary international shipping activity

  ancillary international shipping activity has the same meaning as in subsection 19(11). (activité de transport maritime international accessoire)

  ancillary international shipping costs

  ancillary international shipping costs has the same meaning as in subsection 19(10). (coûts relatifs au transport maritime international accessoires)

  ancillary international shipping income

  ancillary international shipping income has the same meaning as in subsection 19(8). (revenu de transport maritime international accessoire)

  ancillary international shipping revenue

  ancillary international shipping revenue has the same meaning as in subsection 19(9). (recettes de transport maritime international accessoire)

  authorized financial accounting standard

  authorized financial accounting standard, in respect of an entity, means a set of generally acceptable accounting principles permitted by the body responsible for prescribing, establishing or accepting accounting standards for financial reporting purposes in the jurisdiction where the entity is located. (norme de comptabilité financière agréée)

  blended controlled foreign company tax regime

  blended controlled foreign company tax regime, of a particular jurisdiction, means a controlled foreign company tax regime under which

  • (a) the tax liability of an owner located in the particular jurisdiction is determined by reference to an aggregate of the income, losses and creditable taxes of other entities, located in one or more other jurisdictions, in which the owner holds an ownership interest;

  • (b) the lowest rate that, if it were the corporate tax rate applicable in the one or more jurisdictions in which the other entities are located, would result in the tax charge in those jurisdictions being sufficient to prevent a tax charge on the owner under the controlled foreign company tax regime in respect of the other entities for a fiscal year, is less than the minimum rate; and

  • (c) income of entities located in the particular jurisdiction is not taken into account. (régime fiscal intégré des sociétés étrangères contrôlées)

  consolidated financial statements

  consolidated financial statements, of an entity, means

  • (a) if the entity is not the ultimate parent entity of a group described in paragraph 10(2)(b), the financial statements of the entity prepared in accordance with an acceptable financial accounting standard, in which the assets, liabilities, income, expenses and cash flows of that entity and the entities in which it has a controlling interest are presented as those of a single economic unit;

  • (b) if the entity is the ultimate parent entity of a group described in paragraph 10(2)(b), the financial statements of the entity that are prepared in accordance with an acceptable financial accounting standard;

  • (c) if the entity has financial statements that would be described in paragraph (a) or (b) except that they are not prepared in accordance with an acceptable financial accounting standard, those financial statements, adjusted to prevent any material competitive distortions; and

  • (d) if the entity does not prepare financial statements described in any of paragraphs (a) to (c), the financial statements — in which the assets, liabilities, income, expenses and cash flows of that entity and other entities are presented as those of a single economic unit — that would have been prepared in accordance with an authorized financial accounting standard that is

    • (i) an acceptable financial accounting standard, or

    • (ii) a financial accounting standard that is adjusted to prevent any material competitive distortions. (états financiers consolidés)

  constituent entity

  constituent entity has the same meaning as in subsection 11(1). (entité constitutive)

  constituent entity-owner

  constituent entity-owner means a constituent entity that directly or indirectly holds an ownership interest in another constituent entity of the same MNE group. (entité détentrice de titres d’une entité constitutive)

  controlled foreign company tax regime

  controlled foreign company tax regime, of a particular jurisdiction, means a set of tax rules (other than an IIR) under which an entity (referred to in this definition as the “owner”) — that is located in the particular jurisdiction and that holds an ownership interest in another entity (referred to in this definition as the “controlled foreign company”) that is located in another jurisdiction — is subject to current taxation on its share of all or part of the income earned by the controlled foreign company, irrespective of whether that income is distributed on a current basis to the owner. (régime fiscal des sociétés étrangères contrôlées)

  controlling interest

  controlling interest means

  • (a) an ownership interest in an entity such that the interest holder

    • (i) is required to consolidate the assets, liabilities, income, expenses and cash flows of the entity on a line-by-line basis in accordance with an acceptable financial accounting standard, or

    • (ii) would have been required to consolidate the assets, liabilities, income, expenses and cash flows of the entity on a line-by-line basis if the interest holder had prepared consolidated financial statements; or

  • (b) the controlling interest that a main entity is deemed to hold in a permanent establishment under paragraph (2)(b). (participation conférant le contrôle)

  cooperative

  cooperative means an entity that 

  • (a) collectively markets or acquires goods or services on behalf of its members; and

  • (b) is subject to a tax regime in the jurisdiction in which it is located that is designed to ensure the tax neutrality of the cooperative in respect of the property or services of its members that are sold through the cooperative and property or services that are acquired by members through the cooperative. (coopérative)

  core international shipping activity

  core international shipping activity has the same meaning as in subsection 19(6). (activité de transport maritime international principale)

  core international shipping costs

  core international shipping costs has the same meaning as in subsection 19(5). (coûts relatifs au transport maritime international principal)

  core international shipping income

  core international shipping income has the same meaning as in subsection 19(3). (revenu de transport maritime international principal)

  core international shipping revenue

  core international shipping revenue has the same meaning as in subsection 19(4). (recettes de transport maritime international principal)

  corporation

  corporation includes an incorporated company, arrangement, association, organization or body. (société)

  covered taxes

  covered taxes has the same meaning as in subsection 23(1). (impôts concernés)

  deductible dividend

  deductible dividend, in respect of a constituent entity that is subject to a deductible dividend regime, means

  • (a) a distribution of profits, by the constituent entity to the holder of an ownership interest in the constituent entity, that is deductible from income for tax purposes of the constituent entity under the laws of the jurisdiction in which it is located; or

  • (b) a patronage dividend distributed to a member of a cooperative. (dividende déductible)

  deductible dividend regime

  deductible dividend regime means a tax regime that

  • (a) is designed to yield a single level of taxation, on the owners of an entity, through a deduction from the income of the entity for distributions of profits to the owners (which, for this purpose, are considered to include patronage dividends); or

  • (b) is applicable to cooperatives and exempts the cooperative from taxation. (régime des dividendes déductibles)

  deemed distribution tax

  deemed distribution tax has the same meaning as in subsection 37(2). (impôt sur les distributions présumées)

  deemed distribution tax recapture account

  deemed distribution tax recapture account means an account established and maintained in accordance with subsection 37(1). (compte de récupération de l’impôt sur les distributions présumées)

  departing constituent entity

  departing constituent entity, of an MNE group, means an entity that is a standard constituent entity of the MNE group located in a jurisdiction in a fiscal year in respect of which an election is made under subsection 37(1) and that has subsequently

  • (a) left the MNE group; or

  • (b) transferred substantially all of its assets to a recipient that is not, at the time of the transfer, a standard constituent entity of the MNE group located in the jurisdiction. (entité constitutive sortante)

  disallowed accrual

  disallowed accrual, of a constituent entity, means any movement in deferred tax expense recorded in the constituent entity’s financial accounts that relates to

  • (a) an uncertain tax position; or

  • (b) a distribution from a group entity in respect of the constituent entity. (accumulation non admise)

  disposition recapture ratio

  disposition recapture ratio has the same meaning as in subsection 37(6). (ratio de récupération de disposition)

  disqualified refundable imputation tax

  disqualified refundable imputation tax means an amount of tax paid or accrued by a constituent entity (other than an amount of tax paid or accrued that is a qualified imputation tax) that is

  • (a) refundable to the beneficial owner of a dividend or similar distribution by the constituent entity;

  • (b) creditable against a tax liability (other than a tax liability in respect of the distribution) of the beneficial owner; or

  • (c) refundable to, or creditable against a tax liability of, the constituent entity, in respect of the distribution. (impôt d’imputation remboursable non admissible)

  domestic top-up amount

  domestic top-up amount has the same meaning as in subsection 52(1). (montant complémentaire national)

  dual-listed arrangement

  dual-listed arrangement means an arrangement entered into by the ultimate parent entities of two or more groups, under which

  • (a) all or substantially all the businesses of the groups are combined by contract alone;

  • (b) pursuant to contractual arrangements, the ultimate parent entities each make distributions (including dividends and distributions on a liquidation, if relevant) to their respective owners on the basis of a fixed ratio;

  • (c) the activities of the groups are managed as those of a single economic unit;

  • (d) the groups retain the separate legal identity they had before the arrangement was entered into;

  • (e) ownership interests of at least one of the ultimate parent entities are quoted, traded or transferred independently on a securities market that is not the same as the securities market on which the ownership interests of another of the ultimate parent entities are quoted, traded or transferred independently; and

  • (f) financial statements are prepared by one or more of the ultimate parent entities in which the assets, liabilities, income, expenses and cash flows of the groups’ entities are presented together as those of a single economic unit and those financial statements

    • (i) would be consolidated financial statements if the groups’ entities were included in a single group and the ultimate parent entity that prepared the financial statements were the ultimate parent entity of that group, and

    • (ii) are required by an applicable regulatory regime of a jurisdiction to be externally audited. (accord de double cotation)

  effective tax rate

  effective tax rate has the same meaning as in subsection 29(1). (taux effectif d’imposition)

  eligible distribution tax system

  eligible distribution tax system, of a jurisdiction, means a corporate income tax system that is applicable in the jurisdiction that

  • (a) generally imposes tax on the profits, or certain non-business expenses, of a corporation only when the corporation

    • (i) distributes those profits to its shareholders,

    • (ii) is deemed to distribute those profits to its shareholders, or

    • (iii) incurs those expenses;

  • (b) imposes tax at a rate greater than or equal to the minimum rate; and

  • (c) was in force on or before July 1, 2021. (régime admissible d’impôt sur les distributions)

  eligible employee

  eligible employee has the same meaning as in subsection 32(8). (employé admissible)

  eligible payroll costs

  eligible payroll costs has the same meaning as in subsection 32(2). (frais de personnel admissibles)

  eligible tangible asset

  eligible tangible asset has the same meaning as in subsection 32(14). (actif corporel admissible)

  eligible tangible asset amount

  eligible tangible asset amount has the same meaning as in subsection 32(9). (montant de l’actif corporel admissible)

  entity

  entity means a corporation, a partnership, a trust or any other arrangement, association, organization or body whether registered or unregistered for which separate financial accounts are prepared, but does not include a central, state or local government or its administration or agencies that carries out government functions. (entité)

  ETR adjustment provision

  ETR adjustment provision means paragraph 18(23)(c), subsection 25(6), paragraph 27(1)(b), subsection 27(4) or paragraph 37(4)(b) or (5)(b). (disposition d’ajustement du TEI)

  excess negative tax expense

  excess negative tax expense has the same meaning as in subsection 29(4). (charge d’impôt négative excédentaire)

  excess negative tax expense top-up amount

  excess negative tax expense top-up amount has the same meaning as in subsection 31(2). (montant complémentaire de la charge d’impôt négative excédentaire)

  excess profit

  excess profit has the same meaning as in subsection 30(4). (bénéfice excédentaire)

  excluded costs

  excluded costs has the same meaning as in subsection 32(3). (coûts exclus)

  excluded dividends

  excluded dividends means dividends or other distributions received or accrued by a constituent entity in respect of an ownership interest in an entity, other than

  • (a) a dividend or other distribution received or accrued in respect of

    • (i) an interest that is a short-term portfolio holding of the constituent entity on the earlier of

      • (A) the date of the distribution, and

      • (B) the date on which the constituent entity becomes entitled to the distribution, or

    • (ii) an ownership interest in an investment entity that is subject to an election under subsection 42(2); or

  • (b) a dividend or other distribution received or accrued

    • (i) to the extent that it can reasonably be considered to be interest or another amount in respect of a debt component of a financial instrument, or

    • (ii) if it is

      • (A) made by another group entity, and

      • (B) treated as an expense for the purposes of determining the financial accounting income of the other group entity. (dividendes exclus)

  excluded entity

  excluded entity has the same meaning as in subsection 13(1). (entité exclue)

  excluded equity gain or loss

  excluded equity gain or loss, of a constituent entity for a fiscal year, means the gain, profit or loss included in the financial accounting income of the constituent entity for the fiscal year arising from

  • (a) gains and losses from changes in the fair value of an ownership interest, or from the impairment of an ownership interest, except for an interest that is a portfolio holding at the end of the fiscal year;

  • (b) profit or loss in respect of an ownership interest included under the equity method of accounting; or

  • (c) gains and losses from a disposition of an ownership interest, except for a disposition of an interest that is a portfolio holding immediately before the disposition. (profit ou perte sur capitaux propres exclu)

  excluded taxes

  excluded taxes has the same meaning as in subsection 23(2). (impôts exclus)

  filing constituent entity

  filing constituent entity means

  • (a) in respect of a qualifying MNE group for a fiscal year, a constituent entity of the MNE group that is

    • (i) located in Canada and required to file a GIR with the Minister, in respect of the MNE group for the fiscal year, in accordance with subsection 60(1) or 60(2),

    • (ii) a designated local entity (as appointed under paragraph 60(3)(a)) for the fiscal year, or

    • (iii) a qualifying foreign filing entity, as defined in subsection 55(1), for the fiscal year; and

  • (b) in respect of an investment subgroup, joint venture group, minority-owned subgroup or minority-owned investment subgroup that is included in a qualifying MNE group for a fiscal year, the constituent entity that files the GIR in respect of the MNE group for the fiscal year. (entité constitutive déclarante)

  financial accounting income

  financial accounting income has the same meaning as in subsection 17(1). (résultat net comptable)

  financial accounting revenue

  financial accounting revenue has the same meaning as in subsection 33(3). (chiffre d’affaires comptable)

  fiscal year

  fiscal year, in respect of an MNE group, means

  • (a) if paragraph (d) of the definition consolidated financial statements in this subsection applies in respect of the ultimate parent entity, the calendar year; and

  • (b) in any other case, an accounting period for which the ultimate parent entity of an MNE group prepares its consolidated financial statements. (année financière)

  fiscally transparent

  fiscally transparent, in respect of an entity, means that under the laws of a jurisdiction, the income, expenditure, profit or loss of the entity is treated as if it were derived or incurred by the owner of the entity in proportion to the owner’s interest in the entity. (fiscalement transparent)

  five-year election

  five-year election means an election, in respect of a particular fiscal year, to which the following rules apply:

  • (a) the election applies to the particular fiscal year and, unless the election is revoked, each subsequent fiscal year;

  • (b) the election cannot be revoked before the fifth fiscal year following the particular fiscal year;

  • (c) if the election is revoked, no such election can subsequently be made until the fifth fiscal year following the revocation year; and

  • (d) the election or any revocation of the election, as the case may be, must be made in the GIR for the first fiscal year in respect of which the election or revocation, as the case may be, is to be effective. (choix pour cinq ans)

  flow-through entity

  flow-through entity means an entity to the extent it

  • (a) is fiscally transparent under the laws of the jurisdiction where it was created; and

  • (b) is not subject to a covered tax on its income or profit in another jurisdiction as a result of being tax resident in that jurisdiction. (entité intermédiaire)

  flow-through tax benefits

  flow-through tax benefits has the same meaning as in subsection 28(1). (avantages fiscaux intermédiaires)

  general government

  general government means the central administration, agencies whose operations are under its effective control, state and local governments and their respective administrations. (administration publique)

  GIR

  GIR means an information return that contains the information, and is disseminated, in accordance with the Tax Challenges Arising from the Digitalisation of the Economy — GloBE Information Return (Pillar Two) published by the OECD on July 13, 2023, as amended from time to time, and that is

  • (a) if required to be filed with the Minister by a constituent entity located in Canada under subsection 60(1) or 60(2) or subparagraph 60(3)(b)(i), the information return in prescribed form; and

  • (b) in any other case, a substantially similar information return that is required to be filed in a jurisdiction other than Canada. (DRG)

  GloBE Commentary

  GloBE Commentary means the commentary entitled Tax Challenges Arising from the Digitalisation of the Economy — Commentary to the Global Anti-Base Erosion Model Rules (Pillar Two), published by the OECD on March 14, 2022, as amended from time to time. (commentaires GloBE)

  GloBE income

  GloBE income, of a constituent entity for a fiscal year, means the positive amount, if any, of the constituent entity’s GloBE income or loss for the fiscal year. (revenu GloBE)

  GloBE income or loss

  GloBE income or loss has the meaning assigned in section 16. (résultat net GloBE)

  GloBE loss

  GloBE loss, of a constituent entity for a fiscal year, means the absolute value of the negative amount, if any, of the constituent entity’s GloBE income or loss for the fiscal year. (perte GloBE)

  GloBE Model Rules

  GloBE Model Rules means the model rules set out in the document entitled Tax Challenges Arising from the Digitalisation of the Economy — Global Anti-Base Erosion Model Rules (Pillar Two) published by the OECD on December 20, 2021. (règles GloBE)

  GloBE reorganization

  GloBE reorganization means a transformation or transfer of assets and liabilities such as in a merger, demerger, liquidation or similar transaction, if

  • (a) it is the case that

    • (i) if no consideration is provided for the transfer, the issuance of an equity interest as consideration for the transfer would have no economic significance because the transaction does not result in a change in the beneficial ownership of an entity, and

    • (ii) in any other case, the consideration for the transfer consists, in whole or in significant part, of

      • (A) if the transaction is a liquidation, the cancellation of equity interests of the entity that is the subject of the liquidation, and

      • (B) in any other case, equity interests issued by the transferee or an entity that is connected with the transferee;

  • (b) the transferor’s gain or loss on the transfer is not subject, in whole or in part, to an income or profits tax in any jurisdiction; and

  • (c) for the purpose of determining the transferee’s income or profits that are subject to an income or profits tax of the jurisdiction in which it is located, the transferee is required under the laws of that jurisdiction to use the transferor’s tax basis in respect of the transferred assets, adjusted to reflect any non-qualifying gain or loss in respect of the transfer. (réorganisation GloBE)

  GloBE transition year

  GloBE transition year, of an MNE group in respect of a jurisdiction, means the first fiscal year in which

  • (a) a constituent entity of, or joint venture entity in respect of, the MNE group that is located in the jurisdiction is subject to a qualified IIR or qualified UTPR; and

  • (b) subsection 33(1) or 47(2), section 45 or an equivalent provision under another qualified IIR or qualified UTPR does not apply for the jurisdiction. (année de transition GloBE)

  governmental entity

  governmental entity means an entity, if

  • (a) it is part of or wholly owned by a government (including any political subdivision or local authority of the government);

  • (b) its principal purpose is

    • (i) to fulfill a government function, or

    • (ii) to manage or invest the government’s assets through the making and holding of investments, asset management and related investment activities for the government’s assets;

  • (c) it does not carry on a trade or business;

  • (d) it is accountable to the government on its overall performance and provides annual information reporting to the government;

  • (e) its assets vest in the government upon dissolution; and

  • (f) if it distributes net earnings, the net earnings are distributed solely to the government with no portion of its net earnings inuring to the benefit of any private person. (entité gouvernementale)

  group

  group has the same meaning as in subsection 10(2). (groupe)

  group entity

  group entity, in respect of another entity or a group, means an entity that is a member of the same group. (entité du groupe)

  high-tax counterparty

  high-tax counterparty means a constituent entity of an MNE group that is located in a jurisdiction that

  • (a) is not a low-tax jurisdiction; or

  • (b) would not be a low-tax jurisdiction if the effective tax rate of the MNE group for the jurisdiction were determined without regard to any income or expense recorded by an entity in respect of an intragroup financing arrangement. (contrepartie à imposition élevée)

  hybrid entity

  hybrid entity, in relation to an owner, means an entity that is

  • (a) not fiscally transparent in the jurisdiction where it is located; and

  • (b) fiscally transparent in the jurisdiction where the owner is located. (entité hybride)

  IFRS

  IFRS means International Financial Reporting Standards. (IFRS)

  IIR

  IIR means a law of a jurisdiction that may reasonably be considered to have been enacted with the intention of implementing, in whole or in part, Articles 2.1 to 2.3 of the GloBE Model Rules. (RDIR)

  included revaluation method gain or loss

  included revaluation method gain or loss, of a constituent entity for a fiscal year, means the net gain or loss, before covered taxes, for the fiscal year in respect of all property, plant and equipment that arises under an accounting method or practice that

  • (a) periodically adjusts the carrying value of such property, plant and equipment to its fair value;

  • (b) records the changes in value in other comprehensive income; and

  • (c) does not subsequently report the gains or losses recorded in other comprehensive income through profit and loss. (profit ou perte inclus au titre de la méthode de réévaluation)

  inclusion ratio

  inclusion ratio has the same meaning as in subsection 15(3). (ratio d’inclusion)

  Inclusive Framework

  Inclusive Framework means the jurisdictions of the OECD and Group of 20 (G20) Inclusive Framework on Base Erosion and Profit Shifting. (Cadre inclusif)

  insurance investment entity

  insurance investment entity means a particular entity, other than an investment fund or real estate investment vehicle,

  • (a) that would be

    • (i) an investment fund if the definition investment fund in this subsection were read without reference to subparagraph (a)(i) and paragraphs (c) and (d) of that definition, or

    • (ii) a real estate investment vehicle if the definition real estate investment vehicle in this subsection were read without reference to subparagraph (b)(ii) of that definition;

  • (b) that is primarily designed or established to generate investment income or gains to offset, or protect against an event or outcome that gives rise to, liabilities or losses associated with insurance or annuity contracts; and

  • (c) in which each ownership interest is held by one or more entities each of which

    • (i) is a group entity in respect of the particular entity, and

    • (ii) is subject to a regulatory regime, in the jurisdiction in which it is established or managed, that is specific to entities engaged in the business of negotiating and entering into contracts of insurance or annuity or in activities ancillary to that business. (entité d’investissement d’assurance)

  intermediate parent entity

  intermediate parent entity means a constituent entity of an MNE group (other than an ultimate parent entity, partially-owned parent entity, permanent establishment, investment entity or insurance investment entity) that holds, directly or indirectly, an ownership interest in another constituent entity of the MNE group. (entité mère intermédiaire)

  international organization

  international organization means any intergovernmental or supranational organization, or an entity that acts for, is part of or is wholly owned by that organization, if

  • (a) the organization is comprised primarily of governments;

  • (b) it has in effect a headquarters agreement or substantially similar agreement, such as arrangements for privileges or immunities in respect of its offices or establishments, with the jurisdiction in which it is established; and

  • (c) law or its governing documents prevent its income inuring to the benefit of private persons. (organisation internationale)

  international shipping

  international shipping means the transportation of passengers or cargo by ship in international traffic. (transport maritime international)

  international traffic

  international traffic means any transport by ship, except when the ship is operated solely between places within a single jurisdiction. (trafic international)

  intragroup financing arrangement

  intragroup financing arrangement means any arrangement between two or more group entities of an MNE group under which a high-tax counterparty directly or indirectly provides credit to or otherwise makes an investment in a low-tax entity. (accord de financement intragroupe)

  investment entity

  investment entity, for a fiscal year, means

  • (a) an entity that is an investment fund for all or substantially all of the fiscal year;

  • (b) an entity that is a real estate investment vehicle for all or substantially all of the fiscal year;

  • (c) a particular entity, if

    • (i) for all or substantially all of the fiscal year ownership interests in the particular entity having a fair market value equal to at least 95% of the fair market value of all ownership interests in the particular entity are held directly, or indirectly through one or more other entities that are investment funds or real estate investment vehicles, by one or more entities that are investment funds or real estate investment vehicles, and

    • (ii) all or substantially all the activities of the particular entity during the fiscal year consist of holding assets or investing funds for the benefit of any of the investment funds or real estate investment vehicles referred to in subparagraph (i); or

  • (d) a particular entity, if

    • (i) for all or substantially all of the fiscal year ownership interests in the particular entity having a fair market value equal to at least 85% of the fair market value of all ownership interests in the particular entity are held directly, or indirectly through one or more other entities that are investment funds or real estate investment vehicles, by one or more entities that are investment funds or real estate investment vehicles, and

    • (ii) all or substantially all the financial accounting income of the particular entity is comprised of excluded dividends or excluded equity gains or losses. (entité d’investissement)

  investment fund

  investment fund means an entity

  • (a) that is primarily designed or established to

    • (i) pool assets (which may be financial or non-financial) from a number of investors, at least some of which are not connected, and

    • (ii) generate investment income or gains, or protect against a specific or general event or outcome;

  • (b) that invests in accordance with a defined investment policy;

  • (c) that allows investors to reduce transaction, research and analytical costs or to spread risk collectively;

  • (d) the investors in which have a right to the assets of the entity, or income earned on those assets, based on the respective contributions made by those investors;

  • (e) that is, or whose management is, subject to a regulatory regime (which may include appropriate anti-money laundering and investor protection regulations) in the jurisdiction in which the entity is established or managed; and

  • (f) that is managed by investment management professionals on behalf of its investors. (fonds de placement)

  joint venture

  joint venture, in respect of a particular MNE group (other than a group composed exclusively of excluded entities), means a particular entity

  • (a) whose financial results are reported under the equity method in the consolidated financial statements of the ultimate parent entity of the particular MNE group;

  • (b) of which at least 50% of the ownership interests are held, directly or indirectly, by the ultimate parent entity of the particular MNE group; and

  • (c) that is not

    • (i) the ultimate parent entity of an MNE group, a constituent entity of which, or joint venture in respect of which, is subject to a qualified IIR or qualified UTPR,

    • (ii) an excluded entity described in paragraph 13(1)(a),

    • (iii) an entity, if

      • (A) all ownership interests in that entity held by group entities in respect of the particular MNE group are held directly by excluded entities described in paragraph 13(1)(a), and

      • (B) one of the following conditions is met:

        • (I) the entity operates exclusively or almost exclusively to hold assets or invest funds for the benefit of its investors,

        • (II) the entity carries out activities that are ancillary to those carried out by any of those group entities, or

        • (III) all or substantially all of the financial accounting income of the entity is excluded dividends or excluded equity gains, or

    • (iv) a joint venture subsidiary of another joint venture. (coentreprise)

  joint venture entity

  joint venture entity, of a joint venture group, means the joint venture or a joint venture subsidiary of the group. (entité d’une coentreprise)

  joint venture group

  joint venture group means a joint venture and its joint venture subsidiaries, if any. (groupe d’une coentreprise)

  joint venture subsidiary

  joint venture subsidiary, of a joint venture, means an entity (other than the joint venture or an excluded entity) the assets, liabilities, income, expenses and cash flows of which would, because of ownership or control, be included in the consolidated financial statements of the joint venture if the references to “ultimate parent entity” in the definition consolidated financial statements in this subsection were read as references to the “joint venture”. (filiale d’une coentreprise)

  jurisdictional adjusted covered taxes

  jurisdictional adjusted covered taxes has the same meaning as in subsection 29(3). (impôts concernés ajustés juridictionnels)

  jurisdictional excess negative tax expense top-up amount

  jurisdictional excess negative tax expense top-up amount has the same meaning as in subsection 31(4). (montant complémentaire de la charge d’impôt négative excédentaire juridictionnel)

  jurisdictional GloBE income or loss

  jurisdictional GloBE income or loss has the same meaning as in subsection 33(4). (résultat net GloBE juridictionnel)

  jurisdictional GloBE revenue

  jurisdictional GloBE revenue has the same meaning as in subsection 33(2). (chiffre d’affaires GloBE juridictionnel)

  jurisdictional top-up amount

  jurisdictional top-up amount has the same meaning as in subsection 30(2). (montant complémentaire juridictionnel)

  local tangible asset

  local tangible asset, in respect of a constituent entity, means real or immovable property situated in the same jurisdiction as the jurisdiction where the constituent entity is located. (actif corporel local)

  local taxation year

  local taxation year of an entity means the period for which the accounts of the entity have been ordinarily made up for the purpose of computing the entity’s income for tax purposes in the jurisdiction in which the entity is located. (année d’imposition locale)

  look-back period

  look-back period, in respect of an election under subsection 18(23), means the election year and the four fiscal years immediately preceding the election year. (période antérieure concernée)

  loss year

  loss year, in respect of a jurisdiction for which the filing constituent entity of an MNE group has made an election under subsection 18(23), means a fiscal year in the look-back period for which a constituent entity of the MNE group that is located in that jurisdiction has a net asset loss and the total amount of net asset losses of all constituent entities of the MNE group that are located in that jurisdiction exceeds the total amount of their net asset gains. (année de perte)

  low-tax entity

  low-tax entity means a constituent entity of an MNE group that is located in

  • (a) a low-tax jurisdiction; or

  • (b) a jurisdiction that would be a low-tax jurisdiction if the effective tax rate of the MNE group for the jurisdiction were determined without regard to any income or expense recorded by an entity in respect of an intragroup financing arrangement. (entité à faible imposition)

  low-tax jurisdiction

  low-tax jurisdiction, in respect of an MNE group for a fiscal year, means a jurisdiction where the MNE group has net GloBE income and the effective tax rate of the MNE group for the jurisdiction for that fiscal year is lower than the minimum rate. (juridiction à faible imposition)

  main entity

  main entity, in respect of a permanent establishment, means the entity that includes the financial accounting income of the permanent establishment in its financial statements. (entité principale)

  marketable price floor

  marketable price floor, in respect of the transfer of a tax credit, means 80% of the net present value of the tax credit, where the net present value is determined based on the yield to maturity on a debt instrument with equal or similar maturity — limited to a maximum of five-year maturity — issued by the government that granted the tax credit in the same fiscal year as the tax credit is transferred or, if it is not transferred, the origination year. (prix plancher commercialisable)

  marketable transferable tax credit

  marketable transferable tax credit means all or a portion of a tax credit (other than a qualified refundable tax credit) if

  • (a) in respect of an originator,

    • (i) the tax credit, or portion of the tax credit, is transferable to an unrelated purchaser in the origination year, or within 15 months of the end of the origination year, under the laws of the jurisdiction granting the tax credit, and

    • (ii) one of the following conditions is met:

      • (A) the tax credit, or portion of the tax credit, is transferred to an unrelated purchaser within 15 months of the end of the origination year at a price that equals or exceeds the marketable price floor, or

      • (B) if the tax credit, or portion of the tax credit, is not transferred, or is transferred to a person that is not an unrelated purchaser, similar tax credits are traded between persons and unrelated purchasers within 15 months of the end of the origination year at a price that equals or exceeds the marketable price floor; and

  • (b) in respect of a particular unrelated purchaser,

    • (i) the tax credit, or portion of the tax credit, is transferable from the particular unrelated purchaser to another unrelated purchaser in the fiscal year in which the tax credit, or portion of the tax credit, is purchased by the particular unrelated purchaser under the laws of the jurisdiction granting the tax credit, and

    • (ii) the tax credit, or portion of the tax credit, is acquired by the particular unrelated purchaser at a price that equals or exceeds the marketable price floor. (crédit d’impôt transférable commercialisable)

  material competitive distortion

  material competitive distortion, in respect of consolidated financial statements, means an application of a specific principle or procedure, under the set of generally accepted accounting principles used in preparing the consolidated financial statements, that results in an aggregate variation greater than €75 million in a fiscal year as compared to the amounts that would have been determined by applying the corresponding IFRS principle or procedure.  (distorsion importante créant un avantage concurrentiel)

  minimum rate

  minimum rate means 15%. (taux minimum)

  Minister

  Minister means the Minister of National Revenue. (ministre)

  minority-owned constituent entity

  minority-owned constituent entity means a constituent entity of an MNE group if the ultimate parent entity of the MNE group holds, directly or indirectly, 30% or less of the ownership interests in the constituent entity. (entité constitutive à détention minoritaire)

  minority-owned parent entity

  minority-owned parent entity means a particular minority-owned constituent entity that holds, directly or indirectly, the controlling interest in another minority-owned constituent entity unless the controlling interest of the particular minority-owned constituent entity is held, directly or indirectly, by another minority-owned constituent entity. (entité mère à détention minoritaire)

  minority-owned subgroup

  minority-owned subgroup means 

  • (a) a minority-owned parent entity and its minority-owned subsidiaries; or

  • (b) a minority-owned constituent entity that is not a minority-owned parent entity or a minority-owned subsidiary. (sous-groupe à détention minoritaire)

  minority-owned subsidiary

  minority-owned subsidiary means a minority-owned constituent entity the controlling interest in which is held, directly or indirectly, by a minority-owned parent entity. (filiale à détention minoritaire)

  MNE group

  MNE group has the same meaning as in subsection 10(1). (groupe d’EMN)

  multi-parented MNE group

  multi-parented MNE group means two or more groups, if

  • (a) the ultimate parent entities of the groups are party to a stapled structure or dual-listed arrangement; and

  • (b) at least one entity or permanent establishment included in any of the groups — or at least one entity, or permanent establishment in respect of a main entity, that would be included in any of the groups if all the ownership interests in that entity or main entity held by group entities of the groups were held by a single group entity of one of the groups — is not located in the jurisdiction in which any other entity or permanent establishment included in any of the groups is located. (groupe d’EMN à entités mères multiples)

  mutual insurance company

  mutual insurance company means a regulated insurance company that does not have share capital and is owned exclusively by its policyholders. (compagnie d’assurance mutuelle)

  negative tax expense constituent entity

  negative tax expense constituent entity has the same meaning as in subsection 31(3). (entité constitutive avec charge d’impôt négative)

  net asset gain

  net asset gain, of a constituent entity for a fiscal year, in respect of an election under subsection 18(23), means the net gain from the disposition of local tangible assets by the constituent entity located in the jurisdiction for which the election was made, excluding the gain or loss on a transfer of assets to another group entity. (profit net sur cession d’actifs)

  net asset loss

  net asset loss, of a constituent entity for a fiscal year, in respect of an election under subsection 18(23), means the net loss from the disposition of local tangible assets by the constituent entity in the fiscal year (excluding the gain or loss on a transfer of assets to another group entity), less the total of all amounts, if any, allocated to the constituent entity under a previous election under that subsection. (perte nette sur cession d’actifs)

  net GloBE income

  net GloBE income has the same meaning as in subsection 29(2). (revenu GloBE net)

  net GloBE loss

  net GloBE loss, of an MNE group for a jurisdiction for a fiscal year, means the absolute value of the negative amount, if any, that would be determined, in the absence of section 8, by the formula

  A − B

  where

  A

  is the total of all amounts each of which is the GloBE income for the fiscal year of a standard constituent entity of the MNE group that is located in the jurisdiction; and

  B

  is the total of all amounts each of which is the GloBE loss for the fiscal year of a standard constituent entity of the MNE group that is located in the jurisdiction. (perte GloBE nette)

  net income or loss from international shipping

  net income or loss from international shipping has the same meaning as in subsection 19(2). (résultat net de transport maritime international)

  non-marketable transferable tax credit

  non-marketable transferable tax credit means all or a portion of a tax credit (other than a qualified refundable tax credit) that

  • (a) in respect of an originator, is not a marketable transferable tax credit but that is transferable in whole or in part; and

  • (b) in respect of a purchaser, is not a marketable transferable tax credit. (crédit d’impôt transférable non commercialisable)

  non-profit organization

  non-profit organization means an entity, if

  • (a) the entity is established and operated in the jurisdiction where it is located

    • (i) exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational or other similar purposes, or

    • (ii) as a professional organization, business league, chamber of commerce, labour organization, agricultural or horticultural organization, civic league or an organization operated exclusively for the promotion of social welfare;

  • (b) substantially all of the income of the entity from the activities referred to in paragraph (a) is exempt from income tax in the jurisdiction where the entity is located;

  • (c) the entity has no shareholders or members that have a proprietary or beneficial interest in its income or assets;

  • (d) the income or assets of the entity may not be distributed to, or applied for the benefit of, a private person or non-charitable entity other than

    • (i) pursuant to the conduct of the entity’s charitable activities,

    • (ii) as payment of reasonable compensation for services rendered or for the use of property or capital, or

    • (iii) as payment representing the fair market value of property that the entity has purchased;

  • (e) on termination, liquidation or dissolution of the entity, all of the entity’s assets must be distributed or revert to a non-profit organization or to the government (including any governmental entity) of the jurisdiction where it is located or any political subdivision thereof; and

  • (f) the entity does not carry on a trade or business that is not directly related to the purposes for which it was established. (organisation à but non lucratif)

  non-qualifying gain or loss

  non-qualifying gain or loss means the lesser of

  • (a) the portion of any gain or loss, arising in respect of a transfer of assets and liabilities in connection with a GloBE reorganization, that is subject to income or profits tax in the jurisdiction where the transferor is located; and

  • (b) the portion of the gain or loss that is reflected in the financial accounts. (profit ou perte non admissible)

  OECD

  OECD means the Organisation for Economic Co-operation and Development. (OCDE)

  OECD Model Tax Convention

  OECD Model Tax Convention means the Model Tax Convention on Income and on Capital: Condensed Version 2017, published by the OECD on December 18, 2017, as amended from time to time. (Modèle de Convention fiscale de l’OCDE)

  origination year

  origination year means the fiscal year in which the originator of a tax credit satisfies the eligibility criteria for the tax credit under the laws of the jurisdiction granting the tax credit. (année de création)

  originator

  originator means the person that engages in the activities that generate a tax credit. (initiateur)

  other comprehensive income

  other comprehensive income, in respect of a constituent entity, means items of income and expense that are recognized outside of the profit or loss account in the financial statements used in determining the entity’s GloBE income or loss. (autres éléments du résultat global)

  owner

  owner means an entity that directly or indirectly holds an ownership interest in another entity. (détenteur)

  ownership interest

  ownership interest means an interest that an entity or person holds in a particular entity

  • (a) in the case of a direct interest, that

    • (i) carries rights to the profits, capital or reserves of the particular entity or the particular entity’s permanent establishment, and

    • (ii) would, in the absence of any requirement to consolidate the assets, liabilities, income, expenses and cash flows of the particular entity in the consolidated financial statements, be accounted for as equity in those statements; or

  • (b) in the case of an indirect interest, through a chain of direct ownership interests. (titre de participation)

  partially-owned parent entity

  partially-owned parent entity means a constituent entity of an MNE group (other than an ultimate parent entity, permanent establishment, investment entity or insurance investment entity)

  • (a) that holds, directly or indirectly, an ownership interest in another constituent entity of the MNE group; and

  • (b) in which more than 20% of the ownership interests, determined having regard only to the ownership interests that carry rights to profits, are held, directly or indirectly, by persons or entities that are not constituent entities of the MNE group. (entité mère partiellement détenue)

  passive income

  passive income means income that is included in computing a constituent entity’s GloBE income or loss and that is

  • (a) a dividend or dividend equivalent;

  • (b) interest or an interest equivalent;

  • (c) rent;

  • (d) a royalty;

  • (e) an annuity; or

  • (f) a net gain from property of a type that produces income described in any of paragraphs (a) to (e). (revenu passif)

  patronage dividend

  patronage dividend means a distribution by a cooperative to its members. (ristourne)

  pension fund

  pension fund means

  • (a) an entity that is established and operated in a jurisdiction exclusively or almost exclusively to administer or provide retirement benefits and ancillary or incidental benefits to individuals, if

    • (i) the entity is regulated as such by that jurisdiction or one of its political subdivisions or local authorities, or

    • (ii) those benefits are secured or otherwise protected by national regulations and funded by a pool of assets held through a fiduciary arrangement or trust to secure the fulfilment of the corresponding pension obligations against a case of insolvency of the entity or the MNE group of which the entity is a member; or

  • (b) a pension services entity. (fonds de pension)

  pension services entity

  pension services entity means an entity that is established and operated exclusively or almost exclusively

  • (a) to invest funds for the benefit of entities described in paragraph (a) of the definition pension fund in this subsection; or

  • (b) to carry out activities that are ancillary to the regulated activities carried out by an entity described in that paragraph that is a member of the same group. (entité de services de fonds de pension)

  permanent establishment

  permanent establishment means a place of business, including a deemed place of business,

  • (a) that is situated in a jurisdiction and treated as a permanent establishment in accordance with an applicable tax treaty in force, provided that the jurisdiction taxes the income attributable to it in accordance with a provision similar to Article 7 of the OECD Model Tax Convention;

  • (b) if there is no applicable tax treaty in force, in respect of which a jurisdiction taxes the income attributable to that place of business under its domestic law on a net basis similar to the manner in which it taxes its own tax residents;

  • (c) if a jurisdiction has no corporate income tax system, that is situated in that jurisdiction and that would be treated as a permanent establishment in accordance with the OECD Model Tax Convention, provided that the jurisdiction would have had the right to tax the income attributable to it in accordance with Article 7 of that model convention; or

  • (d) that is not already described in paragraphs (a) to (c) and through which operations are conducted outside the jurisdiction where the entity that would be the main entity, if the place of business were a permanent establishment, is located, provided that that jurisdiction exempts the income attributable to the operations conducted through the place of business. (établissement stable)

  person

  person includes a corporation, partnership or trust. (personne)

  portfolio holding

  portfolio holding, at any time in a fiscal year, means ownership interests in an entity that are held at that time by a constituent entity, either alone or together with other group entities, and that carry rights to less than 10% of the profits, capital, reserves or voting rights of that entity. (titres de portefeuille)

  prescribed

  prescribed means

  • (a) in the case of a form, the information to be given on a form or the manner of filing a form, authorized by the Minister;

  • (b) in the case of the manner of making or filing an election, authorized by the Minister; and

  • (c) in any other case, prescribed by regulation or determined in accordance with rules prescribed by regulation. (prescrit)

  QDMTT transition year

  QDMTT transition year, of an MNE group in respect of a jurisdiction, means the first fiscal year in which

  • (a) a constituent entity of, or joint venture entity in respect of, the MNE group that is located in the jurisdiction is subject to a qualified domestic minimum top-up tax; and

  • (b) subsection 33(1), 47(2) or 53(3), section 45 or an equivalent provision under the laws of the jurisdiction does not apply for the jurisdiction. (année de transition ICMNA)

  qualified ancillary international shipping income

  qualified ancillary international shipping income has the same meaning as in subsection 19(7). (revenu de transport maritime international accessoire admissible)

  qualified debt release amount

  qualified debt release amount, for a fiscal year, of a constituent entity that is a debtor, means an amount in respect of a debt release to the extent that

  • (a) the debt release is pursuant to a statutory insolvency or bankruptcy proceeding

    • (i) that is supervised by a court or other judicial body in the jurisdiction in which the debtor is located, or

    • (ii) under which an independent insolvency administrator is appointed;

  • (b) the following conditions are met:

    • (i) the debt release arises pursuant to an arrangement with one or more creditors that are not connected with the debtor (each referred to in this definition as a “third-party creditor”),

    • (ii) it is reasonable to consider that, in the absence of the release of debts owed to one or more third-party creditors under the arrangement, the debtor would be insolvent within 12 months of the date of the release, and

    • (iii) the debtor provides an independent expert opinion attesting that the condition in subparagraph (ii) is met; or

  • (c) if neither paragraph (a) nor (b) applies,

    • (i) the amount is in respect of a debt owed to a third-party creditor,

    • (ii) the debtor’s liabilities exceed the fair market value of its assets, determined immediately before the debt release, and

    • (iii) the amount does not exceed the least of

      • (A) if, as a result of the debt release, the debtor’s assets are greater than or equal to its liabilities, the debtor’s liabilities less the fair market value of its assets, determined immediately before the debt release,

      • (B) if any amount included, as a result of the debt release, in computing net income or loss is offset by a corresponding reduction in deferred tax assets, the reduction in the debtor’s deferred tax assets resulting from the debt release, and

      • (C) the amount included, as a result of the debt release, in computing net income or loss. (montant de la libération de la dette admissible)

  qualified domestic minimum top-up tax

  qualified domestic minimum top-up tax, for a fiscal year, means a law of a jurisdiction that has the status of a qualified domestic minimum top-up tax (including transitional qualified status) for the fiscal year as determined by the Inclusive Framework and published on the OECD’s website. (impôt complémentaire minimum national admissible)

  qualified flow-through ownership interest

  qualified flow-through ownership interest has the same meaning as in subsection 28(1). (titre de participation intermédiaire admissible)

  qualified IIR

  qualified IIR, for a fiscal year, means an IIR that has qualified status (including transitional qualified status) for the fiscal year as determined by the Inclusive Framework and published on the OECD’s website. (RDIR admissible)

  qualified imputation tax

  qualified imputation tax means an amount of covered taxes, paid or accrued by a constituent entity, that is

  • (a) imposed under the laws of a jurisdiction (referred to in this definition as the “subject jurisdiction”); and

  • (b) refundable to, or creditable against the tax liability of, the beneficial owner of a dividend or similar distribution by the constituent entity (or by the main entity in respect of the constituent entity, if the constituent entity is a permanent establishment), if

    • (i) the amount is refundable or creditable under

      • (A) subsection 126(1) or (2) of the Income Tax Act, or

      • (B) a provision of the laws of another jurisdiction that is substantially similar to one of those subsections, or

    • (ii) the beneficial owner is

      • (A) subject to tax on a current basis, in respect of the dividend or similar distribution, under the laws of the subject jurisdiction at a nominal rate that is greater than or equal to the minimum rate,

      • (B) an individual who is

        • (I) resident for income tax purposes in the subject jurisdiction, and

        • (II) subject to tax, in respect of the dividend or similar distribution as ordinary income, under the laws of the subject jurisdiction,

      • (C) a governmental entity or international organization,

      • (D) an investment entity (other than a group entity in respect of the constituent entity) that is created and regulated in the subject jurisdiction,

      • (E) a non-profit organization or pension fund that is created and managed in the subject jurisdiction, or

      • (F) a life insurance company that is located in the subject jurisdiction to the extent that the dividend or similar distribution is

        • (I) received in connection with a business that is substantially similar to that of a pension fund, and

        • (II) subject to tax, under the laws of the subject jurisdiction, in a manner that is substantially similar to the manner in which a pension fund is, under the laws of the subject jurisdiction, subject to tax in respect of a dividend or similar distribution. (impôt d’imputation admissible)

  qualified refundable tax credit

  qualified refundable tax credit means a refundable tax credit (other than any amount of tax creditable or refundable pursuant to a qualified imputation tax or a disqualified refundable imputation tax) to the extent that it is designed to be payable or available as cash or cash equivalents within four years from when a constituent entity satisfies the conditions for receiving the credit under the laws of the jurisdiction granting the credit. (crédit d’impôt remboursable admissible)

  qualified UTPR

  qualified UTPR, for a fiscal year, means a UTPR that has qualified status (including transitional qualified status) for the fiscal year as determined by the Inclusive Framework and published on the OECD’s website. (RPII admissible)

  qualifying MNE group

  qualifying MNE group has the same meaning as in subsection 9(1). (groupe d’EMN admissible)

  qualifying non-profit subsidiary

  qualifying non-profit subsidiary, for a fiscal year, means an entity in respect of an MNE group if

  • (a) the entity is wholly owned by one or more entities that are non-profit organizations; and

  • (b) the revenue of the MNE group for the fiscal year, determined without reference to the revenues of any group entities that are non-profit organizations and of any group entities that would, in the absence of this definition, be described in paragraph 13(1)(b) or (c), is less than

    • (i) the revenue threshold of the MNE group for the fiscal year, and

    • (ii) 25% of the revenue of the MNE group for the fiscal year. (filiale à but non lucratif admissible)

  qualifying tier one capital

  qualifying tier one capital means an instrument issued by a constituent entity pursuant to regulatory requirements applicable to the banking or insurance sector that is convertible to equity or written down if a pre-specified trigger event occurs and that has other features that are designed to aid loss absorbency in the event of a financial crisis. (fonds propres de catégorie 1 admissibles)

  real estate investment vehicle

  real estate investment vehicle means an entity

  • (a) the taxation of which achieves a single level of taxation either in its hands or the hands of its interest holders (with at most one year of deferral); and

  • (b) that

    • (i) holds predominantly immovable property, and

    • (ii) is itself widely held. (véhicule d’investissement immobilier)

  recapture account loss carry-forward

  recapture account loss carry-forward has the same meaning as in subsection 37(3). (report des pertes du compte de récupération)

  recapture exception accrual

  recapture exception accrual means a tax expense accrued in the financial accounts of a constituent entity that is attributable to changes in associated deferred tax liabilities in respect of

  • (a) cost recovery allowance on a tangible asset;

  • (b) the cost of a licence or similar arrangement from a government for the use of immovable property or the exploitation of natural resources that entails significant investment in tangible assets;

  • (c) research and development expenses;

  • (d) decommissioning and remediation expenses;

  • (e) fair value accounting on unrealized net gains;

  • (f) foreign currency exchange net gains;

  • (g) insurance reserves and insurance policy deferred acquisition costs;

  • (h) a gain that is

    • (i) from the sale of tangible property located in the jurisdiction in which the constituent entity is located, and

    • (ii) re-invested in tangible property located in the jurisdiction; and

  • (i) an additional amount accrued as a result of accounting principle changes with respect to an item described in any of paragraphs (a) to (h). (charge d’impôt non soumise à récupération)

  regulation

  regulation means a regulation made under this Act. (règlement)

  relevant parent entity

  relevant parent entity has the same meaning as in subsection 14(3). (entité mère pertinente)

  revenue threshold

  revenue threshold has the same meaning as in subsection 9(2). (seuil de chiffre d’affaires)

  reverse hybrid entity

  reverse hybrid entity means a flow-through entity, if

  • (a) in relation to an owner that holds a direct ownership interest in the flow-through entity, the flow-through entity is not fiscally transparent; or

  • (b) in relation to an owner that holds an indirect ownership interest in the flow-through entity,

    • (i) the flow-through entity is not fiscally transparent, and

    • (ii) each entity through which that owner holds its indirect ownership interest is fiscally transparent. (entité hybride inversée)

  revocation year

  revocation year, in respect of a five-year election or an election under section 26, means the first fiscal year for which the election is no longer in effect because it has been revoked. (année de révocation)

  short-term portfolio holding

  short-term portfolio holding, of a constituent entity that receives or accrues dividends or other distributions, at any time in a fiscal year, means a portfolio holding that has been economically held by the constituent entity for less than one year at the date of the distribution. (titre de portefeuille à court terme)

  standard constituent entity

  standard constituent entity has the same meaning as in subsection 11(3). (entité constitutive type)

  stapled structure

  stapled structure means an arrangement entered into by the ultimate parent entities of two or more groups under which

  • (a) not less than 50% of the ownership interests in each ultimate parent entity are (by reason of the form of ownership, restrictions on transfer or any other terms or conditions) combined with not less than 50% of the ownership interests in each other ultimate parent entity and cannot be transferred or traded other than in that combined form;

  • (b) if the combined ownership interests of the ultimate parent entities are listed on a securities market, they are quoted at a single price; and

  • (c) financial statements are prepared by one of the ultimate parent entities in which the assets, liabilities, income, expenses and cash flows of all the entities of all the groups are presented together as those of a single economic unit, and those financial statements

    • (i) would be consolidated financial statements if the entities of all the groups were included in a single group and the ultimate parent entity that prepared the financial statements was the ultimate parent entity of that group, and

    • (ii) are required by an applicable regulatory regime of a jurisdiction to be externally audited. (structure indissociable)

  stateless constituent entity

  stateless constituent entity means a constituent entity of an MNE group that is either

  • (a) a stateless entity under paragraph 5(2)(b); or

  • (b) a stateless permanent establishment under paragraph 5(3)(d). (entité constitutive apatride)

  substance-based income exclusion amount

  substance-based income exclusion amount has the same meaning as in subsection 32(1). (montant de l’exclusion de revenus fondée sur la substance)

  substitute loss carry-forward recapture amount

  substitute loss carry-forward recapture amount, of a constituent entity that is located in a particular jurisdiction, means an amount if

  • (a) the amount would be a tax loss or a portion of a tax loss (referred to in this definition as the “consumed domestic loss”) of the constituent entity if the consumed domestic loss were not offset against another amount — in respect of the income of another entity (referred to in this definition as the “controlled foreign company”) that is located in a jurisdiction other than the particular jurisdiction and in which the constituent entity holds, directly or indirectly, an ownership interest — that is included, under the controlled foreign company tax regime of the particular jurisdiction, in computing the constituent entity’s taxable income in the particular jurisdiction; and

  • (b) the income tax laws of the particular jurisdiction allow the consumed domestic loss to be recaptured by the constituent entity in subsequent taxation years, by recharacterizing amounts of income of the constituent entity from sources in the particular jurisdiction as amounts in respect of income of the controlled foreign company that are included, under the controlled foreign company tax regime of the particular jurisdiction, in computing the constituent entity’s taxable income in the particular jurisdiction or as amounts of income from another foreign source. (montant de récupération du report de pertes de remplacement)

  substitute loss carry-forward tax credit

  substitute loss carry-forward tax credit, of a constituent entity that is located in a particular jurisdiction, means a tax credit, or any portion of a tax credit, of the constituent entity that

  • (a) arises under the income tax laws of the particular jurisdiction in respect of tax paid to the government of a jurisdiction other than the particular jurisdiction by another entity (referred to in this definition as the “controlled foreign company”) that is located in a jurisdiction other than the particular jurisdiction, in which the constituent entity holds, directly or indirectly, an ownership interest, on income (referred to in this definition as the “attributed controlled foreign company income”) of the controlled foreign company that is included under the controlled foreign company tax regime of the particular jurisdiction for the purposes of determining the constituent entity’s taxable income in the particular jurisdiction;

  • (b) is not allowed to be used in the particular taxation year in which it arises solely because the income tax laws of the particular jurisdiction require, in determining the constituent entity’s taxable income, that an amount that would be a tax loss of the constituent entity in the absence of the attributed controlled foreign company income in the particular taxation year be offset against the attributed controlled foreign company income in priority to the tax credit, or portion of the tax credit, being used to reduce or eliminate any covered taxes for which the constituent entity would otherwise be liable in respect of the attributed controlled foreign company income under the income tax laws of the particular jurisdiction; and

  • (c) is, under the income tax laws of the particular jurisdiction, allowed to be used by the constituent entity, in a taxation year following the particular taxation year, to reduce or eliminate any covered taxes for which the constituent entity would otherwise be liable under the income tax laws of the particular jurisdiction in respect of income that is included in computing the constituent entity’s GloBE income or loss. (crédit d’impôt pour report de pertes de remplacement)

  tax

  tax means a compulsory unrequited payment to general government. (impôt)

  tax transparent entity

  tax transparent entity, in relation to an owner, means a flow-through entity to the extent that the flow-through entity is fiscally transparent under the laws of the jurisdiction in which the owner is located. (entité fiscalement transparente)

  tax transparent structure

  tax transparent structure means a chain of entities through which a particular entity holds an ownership interest, if the entities are

  • (a) flow-through entities; and

  • (b) fiscally transparent in relation to the particular entity. (structure fiscalement transparente)

  tax treaty

  tax treaty means an agreement for the avoidance of double taxation with respect to taxes on income and on capital. (convention fiscale)

  top-up amount

  top-up amount has the same meaning as in subsection 30(1). (montant complémentaire)

  top-up percentage

  top-up percentage has the same meaning as in subsection 30(3). (pourcentage complémentaire)

  total deferred tax adjustment amount

  total deferred tax adjustment amount has the same meaning as in subsection 25(1). (montant total de l’ajustement pour impôts différés)

  transitional special allocation year

  transitional special allocation year, of an MNE group, means any fiscal year beginning on or before December 31, 2025 and ending on or before June 30, 2027. (année de répartition spéciale transitoire)

  ultimate parent entity

  ultimate parent entity has the same meaning as in subsection 12(1). (entité mère ultime)

  unclaimed accrual

  unclaimed accrual, of a constituent entity of an MNE group for a fiscal year, means an increase in a deferred tax liability recorded in the financial accounts of the constituent entity for the fiscal year if

  • (a) the increase is not expected to reverse on or before the last day of the fifth fiscal year following the fiscal year; and

  • (b) the filing constituent entity of the MNE group elects to not include the increase in determining the constituent entity’s total deferred tax adjustment amount for the fiscal year. (accumulation non réclamée)

  unrelated purchaser

  unrelated purchaser, in respect of the transfer of a tax credit by a person, means another person that acquires the tax credit unless

  • (a) based on all the relevant facts and circumstances, one person has control of the other or both persons are under the control of the same person or persons;

  • (b) one of the persons owns directly or indirectly,

    • (i) if the other person is a corporation, shares of the capital stock of the corporation that

      • (A) give their holder at least 50% of the votes of the shareholders of the corporation, and

      • (B) have a fair market value of at least 50% of the fair market value of all the issued and outstanding shares of the capital stock of the corporation, and

    • (ii) in any other case, at least 50% of the beneficial interest in the other person; or

  • (c) a third person owns, directly or indirectly, in respect of each of the other persons

    • (i) if one or both of those other persons are corporations, shares of the capital stock of each such corporation that

      • (A) give their holder at least 50% of the votes of the shareholders of the corporation, and

      • (B) have a fair market value of at least 50% of the fair market value of all the issued and outstanding shares of the capital stock of the corporation, and

    • (ii) if one or both of those persons are not corporations, at least 50% of the beneficial interest in each such person. (acheteur non lié)

  UTPR

  UTPR means a law of a jurisdiction that may reasonably be considered to have been enacted with the intention of implementing, in whole or in part, Articles 2.4 to 2.6 of the GloBE Model Rules. (RPII)

• Marginal note:Interpretation — permanent establishment

  (2) In applying the provisions of this Act in respect of a constituent entity that is a permanent establishment of a main entity or that is the main entity,

  • (a) a reference to a “constituent entity” is to be interpreted as a reference to the permanent establishment or the main entity, as the context requires; and

  • (b) the main entity is deemed to hold a controlling interest in the permanent establishment.

• Marginal note:Interpretation — flow-through entity

  (3) In applying the provisions of this Act in respect of a constituent entity that is a flow-through entity or that is an owner in respect of the flow-through entity, a reference to a “constituent entity” is to be interpreted as a reference to the owner or the flow-through entity, as the context requires.

• Marginal note:Interpretation — financial accounts

  (4) A reference to financial accounts or to financial statements is to be interpreted as a reference to the accounts or statements (which may in some circumstances be hypothetical) that are the basis for determining the financial accounting income of a constituent entity.

• Marginal note:Interpretation — connected

  (5) A person or entity is “connected” with another person or entity if they are “closely related” within the meaning of that term in Article 5(8) of the OECD Model Tax Convention.

• Marginal note:Interpretation — trusts

  (6) A reference to a trust includes an estate, and a reference to a trustee includes any legal representative of a trust having ownership or control of the trust property of that trust.

• Marginal note:Interpretation — subject to qualified IIR, etc.

  (7) A constituent entity of, or joint venture entity in respect of, an MNE group (referred to in this subsection as the “subject entity”) is considered to be subject to

  • (a) a qualified IIR or qualified UTPR if a constituent entity of the MNE group (or person liable on behalf of a constituent entity) would, if the subject entity had a top-up amount (or equivalent) greater than nil, be subject to tax under the qualified IIR or the qualified UTPR, as the case may be, in respect of that top-up amount (or equivalent); and

  • (b) a qualified domestic minimum top-up tax (including, for greater certainty, the one implemented in Part 3) if a constituent entity of, or joint venture entity in respect of, the MNE group (or person liable on behalf of a constituent entity or joint venture entity) would, if the subject entity had a domestic top-up amount (or equivalent) greater than nil, be subject to tax under the qualified domestic minimum top-up tax in respect of that domestic top-up amount (or equivalent).

• Marginal note:Deemed flow-through entity and tax transparent entity

  (8) A constituent entity that is not subject to covered taxes as a result of being tax resident in any jurisdiction and is not subject to a qualified domestic minimum top-up tax is deemed to be a flow-through entity and a tax transparent entity, to the extent that

  • (a) it is fiscally transparent under the laws of the jurisdiction where its owners are located;

  • (b) it does not have a place of business in the jurisdiction where it was created; and

  • (c) its income, expenditure, profit or loss is not attributable to a permanent establishment.

• Marginal note:Interpretation — election

  (9) A reference to an election or a revocation of an election for a fiscal year, or to the filing constituent entity of an MNE group electing or revoking an election for a fiscal year, is to be interpreted as a reference to an election or a revocation made in the GIR of the MNE group for the fiscal year.