Income Tax Regulations (C.R.C., c. 945)

Grain Elevator Operators

408 Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the operation of grain elevators that shall be deemed to have been earned by that corporation in a taxation year in a province in which it had a permanent establishment is 1/2 of the aggregate of

• (a) that proportion of its taxable income for the year that the number of bushels of grain received in the year in the elevators operated by the corporation in the province is of the total number of bushels of grain received in the year in all the elevators operated by the corporation; and

• (b) that proportion of its taxable income for the year that the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishment in the province is of the aggregate of all salaries and wages paid in the year by the corporation.

Bus and Truck Operators

409 Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the transportation of goods or passengers (other than by the operation of a railway, ship or airline service) that shall be deemed to have been earned by that corporation in a taxation year in a province in which it had a permanent establishment is 1/2 of the aggregate of

• (a) that proportion of its taxable income for the year that the number of kilometres driven by the corporation’s vehicles, whether owned or leased, on roads in the province in the year is of the total number of kilometres driven by those vehicles in the year on roads other than roads in provinces or countries in which the corporation had no permanent establishment; and

• (b) that proportion of its taxable income for the year that the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishment in the province is of the aggregate of all salaries and wages paid in the year by the corporation.

Ship Operators

• 410 (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the operation of ships that shall be deemed to have been earned by the corporation in a taxation year in a province in which it had a permanent establishment is the aggregate of,

  • (a) that proportion of its allocable income for the year that its port-call-tonnage in the province is of its total port-call-tonnage in all the provinces in which it had a permanent establishment; and

  • (b) if its taxable income for the year exceeds its allocable income for the year, that proportion of the excess that the aggregate of the salaries and wages paid in the year by the corporation to employees of the permanent establishment (other than a ship) in the province is of the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishments (other than ships) in Canada.

• (2) In this section,

  • (a) allocable income for the year means that proportion of the taxable income of the corporation for the year that its total port-call-tonnage in Canada is of its total port-call-tonnage in all countries; and

  • (b) port-call-tonnage in a province or country means the aggregate of the products obtained by multiplying, for each ship operated by the corporation, the number of calls made in the year by that ship at ports in that province or country by the number of tons of the registered net tonnage of that ship.

Pipeline Operators

411 Notwithstanding subsections 402(3) and (4), the amount of taxable income of a corporation whose chief business is the operation of a pipeline that shall be deemed to have been earned by that corporation in a taxation year in a province in which it had a permanent establishment is 1/2 of the aggregate of

• (a) that proportion of its taxable income for the year that the number of miles of pipeline of the corporation in the province is of the number of miles of pipeline of the corporation in all the provinces in which it had a permanent establishment; and

• (b) that proportion of its taxable income for the year that the aggregate of the salaries and wages paid in the year by the corporation to employees of its permanent establishment in the province is of the aggregate of salaries and wages paid in the year by the corporation to employees of its permanent establishments in Canada.

Divided Businesses

412 If part of the business of a corporation for a taxation year, other than a corporation described in any of sections 403, 404, 404.1, 405, 406, 407, 408, 409, 410 and 411, consisted of operations normally conducted by a corporation described in one of those sections, the corporation and the Minister may agree to determine the amount of taxable income deemed to have been earned in the year in a particular province to be the total of the amounts computed

• (a) by applying the provisions of such of those sections as would have been applicable if it had been a corporation described therein to the portion of its taxable income for the year that might reasonably be considered to have arisen from that part of the business; and

• (b) by applying the provisions of section 402 to the remaining portion of its taxable income for the year.

Non-Resident Corporations

• 413 (1) In this Part, if a corporation is not resident in Canada

  • (a) “salaries and wages paid in the year” by the corporation does not include salaries and wages paid to employees of a permanent establishment outside Canada; and

  • (b) “taxable income” of the corporation is deemed to refer to the corporation’s taxable income earned in Canada.

• (2) For the purposes of paragraph 402(3)(a), where a corporation is not resident in Canada, “total gross revenue for the year” of the corporation does not include gross revenue reasonably attributable to a permanent establishment outside Canada.

• (3) For the purpose of paragraph 404(1)(b), in the case of an authorized foreign bank, “all loans and deposits of the bank for the year” is to be read as a reference to “all loans and deposits of the bank for the year in respect of its Canadian banking business”.

413.1 [Repealed, 2013, c. 33, s. 34]

Provincial SIFT Tax Rate

• 414 (1) The following definitions apply in this section.

  general corporate income tax rate

  general corporate income tax rate, in a province for a taxation year, means

  • (a) for Quebec, 0%;

  • (b) for the Newfoundland offshore area, the highest percentage rate of tax imposed under the laws of Newfoundland and Labrador on the taxable income of a public corporation earned in the taxation year in Newfoundland and Labrador;

  • (c) for the Nova Scotia offshore area, the highest percentage rate of tax imposed under the laws of Nova Scotia on the taxable income of a public corporation earned in the taxation year in Nova Scotia; and

  • (d) for each other province, the highest percentage rate of tax imposed under the laws of the province on the taxable income of a public corporation earned in the taxation year in the province. (taux général d’imposition du revenu des sociétés)

  province

  province includes the Newfoundland offshore area and the Nova Scotia offshore area. (province)

  taxable SIFT distributions

  taxable SIFT distributions, for a taxation year, means

  • (a) in the case of a SIFT trust, its non-deductible distributions amount for the taxation year; and

  • (b) in the case of a SIFT partnership, its taxable non-portfolio earnings for the taxation year. (montant des distributions imposables)

• (2) In determining the amount of a SIFT trust’s or SIFT partnership’s taxable SIFT distributions for a taxation year earned in a province

  • (a) except as provided in paragraph (b), this Part applies in respect of the SIFT trust or SIFT partnership as though

    • (i) each reference to “corporation” (other than in the expression “subsidiary controlled corporation”) were read as a reference to “SIFT trust” or “SIFT partnership”, as the case may be,

    • (ii) each reference to “taxable income” were read as a reference to “taxable SIFT distributions”,

    • (iii) each reference to “its incorporating documents or bylaws” were read as a reference to “the agreement governing the SIFT trust” or “the agreement governing the SIFT partnership”, as the case may be, and

    • (iv) “subsidiary controlled corporation” in respect of a SIFT trust or a SIFT partnership meant a corporation more than 50% of the issued share capital of which (having full voting rights under all circumstances) belongs to the SIFT trust or SIFT partnership, as the case may be; and

  • (b) subsection 400(1), section 401, subsections 402(1) and (2) and sections 403 to 413 do not apply.

• (3) Subject to subsection (4), in applying the definition provincial SIFT tax rate in subsection 248(1) of the Act in respect of a SIFT trust or SIFT partnership for a taxation year, the prescribed amount determined in respect of the SIFT trust or SIFT partnership for the taxation year is

  • (a) if the SIFT trust or SIFT partnership has no permanent establishment in a province in the taxation year, 0.10;

  • (b) if the SIFT trust or SIFT partnership has a permanent establishment in a province in the taxation year and has no permanent establishment outside that province in the taxation year, the decimal fraction equivalent of the general corporate income tax rate in the province for the taxation year; and

  • (c) if the SIFT trust or SIFT partnership has a permanent establishment in the taxation year in a province, and has a permanent establishment outside that province in the taxation year, the amount, expressed as a decimal fraction, determined by the formula

    A + B

    where

    A

    is the total of all amounts, if any, each of which is in respect of a province in which the SIFT trust or SIFT partnership has a permanent establishment in the taxation year and is determined by the formula

    C/D × E

    where

    C

    is its taxable SIFT distributions for the taxation year earned in the province,

    D

    is its total taxable SIFT distributions for the taxation year, and

    E

    is the decimal fraction equivalent of the general corporate income tax rate in the province for the taxation year, and

    B

    is the amount determined by the formula

    (1 – F/D) × 0.1

    where

    F

    is the total of all amounts each of which is an amount determined under the description of C in the description of A in respect of a province in which the SIFT trust or SIFT partnership has a permanent establishment in the taxation year.

• (4) If a SIFT trust or a SIFT partnership has a permanent establishment in Quebec in a taxation year, paragraph (a) of the definition general corporate income tax rate in subsection (1) does not apply in determining the prescribed amount under subsection (3) in respect of the SIFT trust or the SIFT partnership for the taxation year for the purposes of applying the definition provincial SIFT tax rate in determining:

  • (a) in the case of the SIFT partnership, the amount of a dividend deemed by paragraph 96(1.11)(b) of the Act to have been received by it in the taxation year; and

  • (b) in the case of the SIFT trust, the amount of its taxable SIFT trust distributions for the taxation year.

415 [Repealed, 2009, c. 2, s. 97]

PART VNon-Resident-Owned Investment Corporations

Elections

500 Any election by a corporation to be taxed under section 133 of the Act shall be made by forwarding by registered mail to the Director — Taxation at the District Office of the Department of National Revenue, Taxation that serves the area in which the head office of the corporation is located the following documents:

• (a) a letter stating that the corporation elects to be taxed under the said section 133;

• (b) a certified copy of the resolution of the directors of the corporation authorizing the election to be made; and

• (c) a certified list showing

  • (i) the names and addresses of the registered shareholders and the number of shares of each class held by each,

  • (ii) the names and addresses of the holders of the corporation’s bonds, debentures, or other funded indebtedness, if any, and

  • (iii) the names and addresses of the beneficial owners of shares, bonds, debentures, or other funded indebtedness in cases where the registered shareholders or holders, as the case may be, are not the beneficial owners.

Elections Revoked

501 Any election to be taxed under section 133 of the Act shall be revoked by a corporation by forwarding by registered mail to the Deputy Minister of National Revenue for Taxation at Ottawa the following documents in duplicate:

• (a) a letter stating that the corporation revokes its election; and

• (b) a certified copy of the resolution of the directors of the corporation authorizing the election to be revoked.

Certificates of Changes of Ownership

502 A corporation which is taxable under section 133 of the Act shall attach to its return of income required to be filed under subsection 150(1) of the Act, a certified statement showing any changes during the taxation year in the information referred to in paragraph 500(c).

503 [Repealed, SOR/80-140, s. 1]