O. Reg. 140/09: Payments in Lieu of Corporate Taxes


Published: 2009-04-06

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ontario regulation 140/09

made under the

Electricity Act, 1998

Made: February 10, 2009
Filed: April 6, 2009
Published on e-Laws: April 7, 2009
Printed in The Ontario Gazette: April 25, 2009


Amending O. Reg. 207/99

(Payments in Lieu of Corporate Taxes)

1. (1) Section 2 of Ontario Regulation 207/99 is amended by adding the following definitions:

“collection agreement” has the meaning assigned by subsection 1 (1) of the Taxation Act, 2007;

“transition time” means, in respect of a corporation, the beginning of the corporation’s taxation year that includes the beginning of 2009.

(2) Section 2 of the Regulation is amended by adding the following subsections:

(2) A corporation is an eligible corporation at a particular time in a taxation year for the purposes of subsection (3) and sections 12.1 and 12.2 if the corporation is liable to make a payment under section 89, 90 or 93 of the Act for the taxation year.

(3) A partnership is an eligible partnership at a particular time for the purposes of sections 12.1 and 12.2 if each member of the partnership is, at that time,

(a) an eligible corporation; or

(b) a partnership in which all of the partnership interests are held directly or indirectly by corporations that are eligible corporations.

2. Section 3 of the Regulation is amended by striking out “sections 4, 5 and 7 to 16.1” at the end and substituting “sections 4, 5 and 6.2 to 16.1”.

3. Section 6 of the Regulation is amended by striking out “sections 7 to 16.1” at the end and substituting “sections 6.1 to 16.1”.

4. The Regulation is amended by adding the following section immediately after section 6:

6.1 The following rules apply for the purpose of determining the amount of the payment required by subsection 90 (1.0.1) of the Act for a taxation year ending after December 31, 2008:

1. The Taxation Act, 2007 applies,

i. as if a collection agreement were not in effect, and

ii. as if each adjustment required to be made under or because of any of sections 7 to 16.1 of this Regulation were, to the extent applicable, made for the purposes of the Federal Act.

2. The amounts determined under the Federal Act or the Corporations Tax Act for the purposes of subdivision d of Division B of Part III of the

Taxation Act, 2007 are deemed to be those amounts as determined for the purposes of section 89 or 90 of the Act, as the case may be.

3. There must be added to the amount otherwise determined as “F” in subsection 48 (4) of the Taxation Act, 2007 in respect of a corporation the amount, if any, by which the amount that the corporation was, for the purposes of section 89 of the Electricity Act, 1998, entitled to deduct under section 14 of this Regulation for its taxation year immediately preceding its transition time exceeds the amount deducted under that section for that taxation year for the purposes of subsection 89 (1) of the Act.

4. There must be added to the amount otherwise determined as “T” in subsection 48 (6) of the Taxation Act, 2007 in respect of a corporation the amount, if any, by which the amount that the corporation was, for the purposes of subsection 90 (1) of the Electricity Act, 1998, entitled to deduct under section 14 of this Regulation for its taxation year immediately preceding its transition time exceeds the amount deducted under that section for that taxation year for the purposes of subsection 90 (1) of the Act.

5. The rules in section 5 apply in so far as the Federal Act and the Federal Regulations are relevant for the purposes of the Taxation Act, 2007.

6. Despite any other provision of this Regulation, a corporation’s taxable income for the taxation year is equal to the amount that is, for the purposes of section 89 of the Act, the corporation’s taxable income for the year under the Federal Act, except to the extent that there is a difference in the amounts resulting from the application of section 110 of the Taxation Act, 2007.

5. The Regulation is amended by adding the following section immediately after the heading “Modifications Applicable to Payments under Sections 89 and 90 of the Act”:

6.2 The following rules apply to a corporation for the purposes of determining the amount of payments under sections 89 and 90 of the Act for each taxation year ending after December 31, 2008:

1. The Federal Act, the Corporations Tax Act and the Taxation Act, 2007 apply to the corporation for the year as if the corporation were not exempt from tax under any of those statutes throughout the taxation year and throughout each previous taxation year for which payments were required under sections 89 and 90 of the Act.

2. Except for the purpose of applying subsection 149 (10) of the Federal Act, the corporation is considered to be exempt from tax under each of the statutes listed in paragraph 1 throughout each taxation year for which a payment is not required under sections 89 and 90 of the Act.

6. Section 12 of the Regulation is revoked and the following substituted:

12. (1) Subsection (2) applies to a corporation for a taxation year if,

(a) the taxation year ends before January 1, 2009 and the corporation is considered for the purposes of the Corporations Tax Act to have a permanent establishment for the taxation year in a province of Canada other than Ontario; or

(b) the taxation year ends after December 31, 2008 and the corporation is considered for the purposes of the Taxation Act, 2007 to have a permanent establishment for the taxation year in a province of Canada other than Ontario.

(2) For the purposes of sections 39, 57.6 and 67 of the Corporations Tax Act

and for the purposes of the definition of “Ontario allocation factor” in subsection 1 (1) of the Taxation Act, 2007, the corporation is deemed not to have a permanent establishment in a province other than Ontario if the corporation is not subject to taxation on its income under the laws of that province by reason of a tax statute of that province or a tax statute of Canada.

12.1 Section 85 and subsection 97 (2) of the Federal Act do not apply on a disposition of property unless,

(a) the transfer occurs in a taxation year of the transferor that ends after October 1, 2001; and

(b) the transferee is an eligible corporation or eligible partnership immediately before and immediately after the disposition.

12.2 (1) Subsection 100 (1) of the Federal Act does not apply for the purposes of determining the amount of a payment required by sections 89 and 90 of the Act in respect of a disposition after December 31, 2007.

(2) Despite the application of paragraph 38 (a) of the Federal Act, as it applies for the purposes of determining the amount of a payment required by sections 89 and 90 of the Act, a corporation’s taxable capital gain for a taxation year from the disposition after December 31, 2007 of an interest in a partnership to any person or partnership that is not an eligible corporation or eligible partnership is deemed to be the sum of,

(a) one-half of the portion of the corporation’s capital gain for the year from the disposition of the interest that may reasonably be regarded as attributable to increases in the value of any partnership property of the partnership, other than depreciable property, that is capital property; and

(b) the whole of the remaining portion of the capital gain.

7. Subsection 13 (2) of the Regulation is revoked and the following substituted:

(2) The criteria the subject corporation must meet are the following:

1. The subject corporation must be exempt under subsection 149 (1) of the Federal Act from the payment of tax under that Act for the applicable taxation year.

2. The subject corporation must be exempt under subsection 57 (1) of the Corporations Tax Act or subsection 27 (2) of the Taxation Act, 2007

for the applicable year.

3. The subject corporation must not be required to make a payment under section 89, 90 or 93 of the Electricity Act, 1998.

8. (1) Subsections 16.1 (1) and (2) of the Regulation are revoked and the following substituted:

(1) Subsections (2) to (7) apply in respect of a corporation and section 16 does not apply if,

(a) the corporation ceases at any time to be exempt under subsection 149 (1) of the Federal Act in circumstances in which a deemed disposition occurs under paragraph 149 (10) (b) of the Federal Act;

(b) the corporation was exempt immediately before that time under subsection 57 (1) of the Corporations Tax Act or subsection 27 (2) of the Taxation Act, 2007; and

(c) the corporation was not exempt at that time under subsection 57 (1) of the Corporations Tax Act or subsection 27 (2) of the Taxation Act, 2007.

(2) The taxation year of the corporation is deemed to end immediately before the time that the corporation ceases to be exempt under subsection 149 (1) of the Federal Act.

(2) Paragraph 1 of subsection 16.1 (5) of the Regulation is amended by striking out “and the Corporations Tax Act”.

9. (1) Subsection 17 (2) of the Regulation is revoked and the following substituted:

(2) If a corporation is required to make a payment under section 90 of the Act for a taxation year ending before January 1, 2009, it shall deliver to the Minister of Finance a return for the year in the form and containing the information required by section 75 of the Corporations Tax Act.

(2) Subsection 17 (3) of the Regulation is revoked and the following substituted:

(3) If a corporation is required to make a payment under section 90 of the Act for a taxation year ending after December 31, 2008, it shall deliver to the Minister of Finance a return for the year in the form and containing the information required by section 111 of the Taxation Act, 2007 and such other information as the Minister of Finance may require for the purposes of determining the amount payable for the year.

(4) For the purposes of applying Parts V and VI of the Corporations Tax Act, a return under subsection (3) is deemed to be a return required by section 75 of that Act.

(5) A corporation that is required to deliver a return under subsection (1), (2) or (3) shall deliver the return not more than six months after the end of the taxation year to which the return relates.

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

Made by:

Dwight Douglas Duncan

Minister of Finance

Date made: February 10, 2009.