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

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Regulations are current to 2019-06-20 and last amended on 2019-01-01. Previous Versions

PART IVTaxable Income Earned in a Province by a Corporation (continued)

[[NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] ]

Trust and Loan Corporations

[[NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] ]
  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that shall be deemed to have been earned in a taxation year by a trust and loan corporation, trust corporation or loan corporation in a province in which it had a permanent establishment is that proportion of its taxable income for the year that the gross revenue for the year of its permanent establishment in the province is of the total gross revenue for the year of the corporation.

  • (2) In subsection (1), gross revenue for the year of its permanent establishment in the province means the aggregate of the gross revenue of the corporation for the year arising from

    • (a) loans secured by lands situated in the province;

    • (b) loans, not secured by land, to persons residing in the province;

    • (c) loans

      • (i) to persons residing in a province or country other than Canada in which the corporation has no permanent establishment, and

      • (ii) administered by a permanent establishment in the province,

      except loans secured by land situated in a province or country other than Canada in which the corporation has a permanent establishment; and

    • (d) business conducted at the permanent establishment in the province, other than revenue in respect of loans.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/80-949, s. 3
  • SOR/94-686, s. 79(F)
  • SOR/2011-195, s. 2(F)

Railway Corporations

[[NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] ]
  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that shall be deemed to have been earned by a railway corporation in a taxation year in a province in which it had a permanent establishment is, unless subsection (2) applies, 1/2 the aggregate of

    • (a) that proportion of the taxable income of the corporation for the year that the equated track miles of the corporation in the province is of the equated track miles of the corporation in Canada; and

    • (b) that proportion of the taxable income of the corporation for the year that the gross ton miles of the corporation for the year in the province is of the gross ton miles of the corporation for the year in Canada.

  • (2) Where a corporation to which subsection (1) would apply, if this subsection did not apply thereto, operates an airline service, ships or hotels or receives substantial revenues that are petroleum or natural gas royalties, or does a combination of two or more of those things, the amount of its taxable income that shall be deemed to have been earned in a taxation year in a province in which it had a permanent establishment is the aggregate of the amounts computed

    • (a) by applying the provisions of section 407 to that part of its taxable income for the year that may reasonably be considered to have arisen from the operation of the airline service;

    • (b) by applying the provisions of section 410 to that part of its taxable income for the year that may reasonably be considered to have arisen from the operation of the ships;

    • (c) by applying the provisions of section 402 to that part of its taxable income for the year that may reasonably be considered to have arisen from the operation of the hotels;

    • (d) by applying the provisions of section 402 to that part of its taxable income for the year that may reasonably be considered to have arisen from the ownership by the taxpayer of petroleum or natural gas rights or any interest therein; and

    • (e) by applying the provisions of subsection (1) to the remaining portion of its taxable income for the year.

  • (3) In this section, equated track miles in a specified place means the aggregate of

    • (a) the number of miles of first main track,

    • (b) 80 per cent of the number of miles of other main tracks, and

    • (c) 50 per cent of the number of miles of yard tracks and sidings,

    in that place.

  • (4) For the purpose of making an allocation under paragraph (2)(b), a reference in section 410 to “salaries and wages paid in the year by the corporation to employees” shall be read as a reference to salaries and wages paid by the corporation to employees employed in the operation of permanent establishments (other than ships) maintained for the shipping business.

  • (5) For the purpose of making an allocation under paragraph (2)(c),

    • (a) a reference in section 402 to “gross revenue for the year reasonably attributable to the permanent establishment in the province” shall be read as a reference to the gross revenue of the taxpayer from operating hotels therein;

    • (b) a reference in section 402 to “total gross revenue for the year” shall be read as a reference to the total gross revenue of the taxpayer for the year from operating hotels; and

    • (c) a reference in section 402 to “salaries and wages paid in the year by the corporation to employees” shall be read as a reference to salaries and wages paid to employees engaged in the operations of its hotels.

  • (6) Notwithstanding subsection 402(5), for the purpose of making an allocation under paragraph (2)(d),

    • (a) a reference in section 402 to “gross revenue for the year reasonably attributable to the permanent establishment in the province” shall be read as a reference to the gross revenue of the taxpayer from the ownership by the taxpayer of petroleum and natural gas rights in lands in the province and any interest therein;

    • (b) a reference in section 402 to “total gross revenue for the year” shall be read as a reference to the total gross revenue of the taxpayer from ownership by the taxpayer of petroleum and natural gas rights and any interest therein; and

    • (c) a reference in section 402 to “salaries and wages paid in the year by the corporation to employees” shall be read as a reference to salaries and wages paid to employees employed in connection with the corporation’s petroleum and natural gas rights and interests therein.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/80-949, s. 4
  • SOR/94-686, ss. 57(F), 79(F)
  • SOR/2011-195, s. 3(F)

Airline Corporations

  •  (1) Notwithstanding subsections 402(3) and (4), the amount of taxable income that shall be deemed to have been earned in a taxation year by an airline corporation in a province in which it had a permanent establishment is the amount that is equal to 1/4 of the aggregate of

    • (a) that proportion of its taxable income for the year that the capital cost of all the corporation’s fixed assets, except aircraft, in the province at the end of the year is of the capital cost of all its fixed assets, except aircraft, in Canada at the end of the year; and

    • (b) that proportion of its taxable income for the year that three times the number of revenue plane miles flown by its aircraft during the year in the province is of the total of all amounts, each of which is the total number of revenue plane miles flown by its aircraft during the year in a province in which the corporation had a permanent establishment.

  • (2) For the purposes of this section, “revenue plane miles flown” shall be weighted according to take-off weight of the aircraft operated.

  • (3) For the purposes of this section, take-off weight of an aircraft means

    • (a) for an aircraft in respect of which an application form for a Certificate of Airworthiness has been submitted to and accepted by the Department of Transport, the maximum permissible take-off weight, in pounds, shown on the form; and

    • (b) for any other aircraft, the weight, in pounds, that may reasonably be considered to be the equivalent of the weight referred to in paragraph (a).

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/78-326, s. 1
  • SOR/80-949, s. 5
  • SOR/94-327, s. 2
  • SOR/94-686, s. 6(F)
  • 2013, c. 34, s. 381

Grain Elevator Operators

 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.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • SOR/80-949, s. 6
  • SOR/94-686, s. 79(F)
 
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