[39] Bill 100 Royal Assent (PDF)
Bill 100 2008
An Act to amend the Corporations Tax Act and the Taxation Act, 2007
Note: This Act amends or repeals more than one Act. For the legislative history of these Acts, see the Table of Consolidated Public Statutes – Detailed Legislative History on www.e-Laws.gov.on.ca.
Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:
Corporations Tax Act
1. The Corporations Tax Act is amended by adding the following Part:
Part II.2
Ontario Tax Exemption for Commercialization
Definitions and interpretation
Definitions
57.13 (1) In this Part,
"advanced health technology business" means a business that is primarily engaged in using technology,
(a) in the development of assistive medical devices, pharmaceutical drugs, regenerative medicine, biologics, medical procedures or surgical procedures, or
(b) in human tissue engineering; ("entreprise de technologie médicale avancée")
"bioeconomy business" means a business that is primarily engaged in,
(a) the production of biofuel, biogas or bioplastics, or
(b) the development of technology or processes that enable the use of wind, water, a biomass resource, hydrogen, biofuel, biogas, landfill gas, solar energy, geothermal energy, tidal forces or thermal waste as a source of energy; ("entreprise de bioéconomie")
"biofuel" means a liquid fuel made from a biomass resource and includes the liquid fuels ethanol, methanol and biodiesel; ("biocarburant")
"biogas" means a gaseous fuel made from a biomass resource; ("biogaz")
"biomass resource" means,
(a) organic matter that is derived from a plant and available on a renewable basis, including organic matter derived from dedicated energy crops, dedicated trees, agricultural food and feed crops, or
(b) waste organic material from harvesting or processing agricultural products, including animal waste and rendered animal fat, forestry products, including wood waste, and sewage; ("ressource en biomasse")
"bioplastic" mean a plastic made from a biomass resource; ("bioplastique")
"computer program" has the meaning assigned by section 2 of the Copyright Act (Canada); ("programme d'ordinateur")
"eligible commercialization business" means an active business,
(a) that in the opinion of the Minister of Research and Innovation is,
(i) an advanced health technology business,
(ii) a bioeconomy business,
(iii) a telecommunications, computer or digital technologies production business that is primarily engaged in activities described in categories 3341, 3342, 3344 or 5112 of the North American Industry Classification System 2007 – Canada, as published by Statistics Canada, or
(iv) a business that is prescribed by or that satisfies the conditions prescribed by the Minister of Finance,
(b) that in the opinion of the Minister of Research and Innovation has as its sole purpose,
(i) the sale of property that derives more than 50 per cent of its value from eligible intellectual property,
(ii) the sale of property an essential element of which is eligible intellectual property,
(iii) the licensing of computer programs that are eligible intellectual property, or
(iv) such other purpose as may be prescribed by the Minister of Finance, and
(c) that satisfies such other conditions as may be prescribed by the Minister of Finance; ("entreprise de commercialisation admissible")
"eligible intellectual property" means, in respect of a business carried on by a qualifying corporation, property,
(a) that was developed in the course of employment or academic study at a qualifying institute by one or more individuals, each of whom is an inventor for the purposes of the Patent Act (Canada), an author for the purposes of the Copyright Act (Canada), an individual prescribed by the Minister of Finance or an individual who satisfies conditions prescribed by the Minister of Finance,
(b) that has never been legally or beneficially owned by anyone other than,
(i) the qualifying institute where the research to develop the property was conducted,
(ii) one or more individuals who created the property, each of whom was an employee or a student of the qualifying institute where the research was conducted at the time the intellectual property was created,
(iii) the qualifying corporation, or
(iv) one or more of the persons and entities referred to in subclause (i), (ii) or (iii),
(c) that was disclosed to the qualifying institute where the research was conducted in a timely manner and not later than the required time in accordance with the institute's official intellectual property disclosure policy, if the institute had such a policy, and
(d) that is,
(i) a patent issued under the Patent Act (Canada),
(ii) intellectual property in respect of which,
(A) an application for a patent was filed under the Patent Act (Canada) by a person described in subclause (b) (i), (ii), (iii) or (iv), and
(B) a patent is issued pursuant to the application no later than the last day of the qualifying corporation's 10th taxation year ending after incorporation,
(iii) the copyright in a computer program that in the opinion of the Minister of Research and Innovation constitutes a technological advancement at the time the computer program is completed and meets such conditions as may be prescribed by the Minister of Finance, or
(iv) intellectual property that is prescribed by the Minister of Finance or that satisfies such conditions as may be prescribed by the Minister of Finance; ("propriété intellectuelle admissible")
"qualifying institute" means an entity that is not required to pay tax under Part I of the Income Tax Act (Canada) by reason of section 149 of that Act and that is,
(a) a university in Ontario whose enrolment is counted for the purposes of calculating annual operating grants entitlements from the Government of Ontario,
(b) a college of applied arts and technology in Ontario whose enrolment is counted for the purposes of calculating annual operating grants entitlements from the Government of Ontario,
(c) an entity that is a non-profit organization prescribed by the Minister of Finance, that is a member of a class of non-profit organizations prescribed by the Minister of Finance or that meets the conditions prescribed by the Minister of Finance,
(d) a college or university in Canada but outside Ontario whose enrolment is counted for the purposes of calculating annual operating grants entitlements from the government of a province, other than an elementary or secondary school,
(e) a hospital research institute that meets the conditions prescribed by the Minister of Finance, or
(f) an entity that is prescribed by or that satisfies the conditions prescribed by the Minister of Finance. ("institut admissible")
Qualifying corporation
(2) A corporation is a qualifying corporation for the purposes of this Part for a taxation year if the corporation satisfies the following conditions:
1. It was incorporated in Canada after March 24, 2008 and before March 25, 2012 and was not formed as a result of an amalgamation or merger of two or more corporations.
2. It carried on one or more eligible commercialization businesses during the taxation year.
3. If its income as computed for the purposes of section 3 of the Income Tax Act (Canada) was greater than zero, all or substantially all of its gross revenue for the year was from one or more eligible commercialization businesses and all or substantially all amounts received or receivable by it on the disposition of capital property were from the disposition of capital property in the ordinary course of an eligible commercialization business.
4. If it was a member of a partnership for any period of time during the taxation year or a previous taxation year, throughout that period of time every other member of the partnership was a qualifying institute.
5. If it was a participant in a joint venture for any period of time during the taxation year or a previous taxation year, throughout that period of time every other member of the joint venture was a qualifying institute.
6. It has never been a beneficiary of a trust.
7. It has never operated all or part of a business that was previously operated by another corporation.
8. It has never operated all or part of a business that was previously operated by a person or entity that is not a corporation unless the business was operated by the person or entity for a period of not more than 90 days before the corporation was incorporated.
9. It satisfies such other conditions as may be prescribed by the Minister of Finance.
Tax
(3) A reference in this Part to tax payable and paid under Part II and II.1 does not include a reference to any interest or penalties payable under this Act.
Ontario tax exemption for commercialization
57.14 (1) A corporation that is a qualifying corporation for a taxation year is entitled to a refund under this Part for the year equal to the amount of its Ontario tax exemption for commercialization for the year if the requirements of this Part are satisfied.
Amount of the exemption
(2) Subject to subsection (3), the amount of a corporation's Ontario tax exemption for commercialization for a taxation year is equal to the sum of,
(a) the amount of tax payable and paid by the corporation under Part II for the year after claiming all deductions to which it is entitled for the year under sections 39 to 41, 43, 43.1 and 43.3 to 43.13; and
(b) the amount of tax payable and paid by the corporation under Part II.1 for the year.
Nil exemption
(3) The amount of a corporation's Ontario tax exemption for commercialization for a taxation year is nil if,
(a) the corporation has not claimed the maximum amount of all deductions and allowances to which it is entitled under this Act and the Income Tax Act (Canada) in computing its income and taxable income for the taxation year and for each of its previous taxation years;
(b) the corporation is or has been, at any time since it was incorporated, associated with another corporation within the meaning of section 256 of the Income Tax Act (Canada) if paragraphs 256 (1) (c), (d) and (e) of that Act were read without reference to "other than a specified class";
(c) the corporation is or has been, at any time since it was incorporated, related to another corporation within the meaning of section 251 of the Income Tax Act (Canada);
(d) control of the corporation is acquired directly or indirectly in any manner whatever during the period commencing March 25, 2012 and ending at the end of the corporation's 10th taxation year after it was incorporated;
(e) the Minister of Research and Innovation notifies the corporation that it is ineligible to receive a certificate of eligibility under this Part or that the Minister of Research and Innovation has revoked the certificate of eligibility issued to the corporation for the year; or
(f) during the taxation year or a previous taxation year, the corporation sold all or substantially all of the property it used in carrying on an eligible commercialization business.
Exception re associated corporations
(4) Clause (3) (b) does not apply if the corporation that was associated with the qualifying corporation was, at all times while it was associated with the qualifying corporation,
(a) a qualifying institute; or
(b) a corporation that is prescribed by the Minister of Finance or that satisfies conditions prescribed by the Minister of Finance.
Exception re related corporations
(5) Clause (3) (c) does not apply if the corporation that was related to the qualifying corporation was, at all times while it was related to the qualifying corporation,
(a) a qualifying institute; or
(b) a corporation that is prescribed by the Minister of Finance or that satisfies conditions prescribed by the Minister of Finance.
Certificate of eligibility
57.15 (1) To be eligible to apply for a refund under this Part, a qualifying corporation must apply for, be eligible to receive and receive a certificate of eligibility for the year issued by the Minister of Research and Innovation.
Application
(2) An application for a certificate of eligibility for a taxation year shall be made to the Minister of Research and Innovation after the end of the year to which it relates, in a form approved by the Minister of Research and Innovation.
Additional information or records
(3) A corporation applying for a certificate of eligibility shall provide such additional information and records as the Minister of Research and Innovation may specify in order to evaluate the application.
Criteria for issuing certificate of eligibility
(4) The Minister of Research and Innovation may issue a certificate of eligibility to the corporation for the year if he or she is satisfied that the corporation carried on an eligible commercialization business during the year.
Failure to satisfy all criteria
(5) If, after reviewing the application and all other relevant information and records, the Minister of Research and Innovation is of the opinion that the corporation has failed to satisfy the criteria set out in subsection (4), the Minister of Research and Innovation shall notify the corporation in writing of his or her decision not to issue the certificate and the reasons for the decision.
Revocation of certificate
(6) If, at any time after issuing a certificate of eligibility to a corporation, the Minister of Research and Innovation subsequently determines that the corporation failed to satisfy the criteria set out in subsection (4), the Minister of Research and Innovation may,
(a) revoke the certificate; and
(b) notify the corporation and the Minister of Revenue of the revocation of the certificate and the reasons for the revocation.
Decision not to issue or to revoke certificate is final
(7) The decision of the Minister of Research and Innovation not to issue a certificate of eligibility to a corporation for a taxation year or to revoke a certificate of eligibility previously issued to the corporation for the year is final and conclusive, and Divisions E and F of Part V do not apply in respect of the decision.
Preliminary determination
57.16 A corporation may request from the Minister of Research and Innovation at any time before the end of its first taxation year after incorporation a preliminary determination of the following matters, but no preliminary determination made under this section is binding on the Minister of Research and Innovation:
1. Whether the proposed business of the corporation would be an eligible commercialization business.
2. Whether property to be owned or used by the corporation in the proposed business is eligible intellectual property.
3. Whether a particular entity is a qualifying institute.
Application for refund
57.17 (1) If a certificate of eligibility is issued to a corporation for a taxation year, the corporation may apply to the Minister of Revenue for a refund under this Part by submitting to the Minister of Revenue on or before the end of the third taxation year ending after the year,
(a) an application in a form approved by the Minister of Revenue;
(b) the certificate of eligibility issued to the corporation by the Minister of Research and Innovation for the taxation year;
(c) proof to the satisfaction of the Minister of Revenue that all tax payable by the corporation for the year under Parts II and II.1 has been paid; and
(d) such other information and records as the Minister of Revenue may specify to enable the Minister of Revenue to determine if the corporation is a qualifying corporation for the year.
Application after assessment or reassessment
(2) Despite subsection (1), if the Minister of National Revenue assesses or reassesses a corporation, the corporation may apply to the Minister of Revenue for a refund under this Part by submitting to the Minister of Revenue the certificate, information and records required under subsection (1) within three months of the assessment or reassessment.
Notice and payment of refund
(3) If, after reviewing the application and all other relevant information and records, the Minister of Revenue is of the opinion that the corporation is a qualifying corporation for the year, has paid all tax payable for the year under Parts II and II.1 and is entitled to a refund under this Part for the year, the Minister of Revenue shall,
(a) notify the corporation in writing of the amount of the refund to which the corporation is entitled for the year; and
(b) pay to the corporation the amount of the refund, without interest.
If no refund payable
(4) If, after reviewing the application and all other relevant information and records, the Minister of Revenue is of the opinion that the corporation is not entitled to a refund under this Part for the year, the Minister of Revenue shall send a notice of determination to the corporation setting out his or her determination that the corporation is not entitled to the refund and the reasons for the determination.
Amount of the refund
(5) The Minister of Revenue,
(a) shall initially calculate the amount of any refund payable under this Part to a qualifying corporation for a taxation year by reference to the most recent assessment of tax payable by the corporation for the year under Parts II and II.1;
(b) shall not pay a refund under this Part until the Minister of Revenue is satisfied that all tax payable by the corporation for the year under Parts II and II.1 have been paid; and
(c) shall subsequently make such adjustments to the amount of the refund as may be necessary to reflect any subsequent changes in the amount of tax payable and paid by the corporation for the year under Parts II and II.1.
Revised notice of determination
(6) If the Minister of Revenue makes an adjustment to the amount of a refund paid under this Part for a taxation year or subsequently determines that the corporation was not entitled to a refund previously paid for the year, the Minister of Revenue shall send to the corporation a revised notice of determination setting out the amount of the refund, if any, to which the corporation is entitled for the year and shall,
(a) pay to the corporation any additional refund to which the corporation is entitled under this Part for the year; or
(b) demand from the corporation repayment of the refund or the excess amount of the refund to which the corporation is not entitled for the year.
Tax avoidance
(7) Despite any other provision in this Part, the Minister of Revenue may refuse to pay a refund to a corporation under this Part or may demand repayment of a refund previously paid under this Part if the Minister of Revenue has a reasonable belief,
(a) that one of the principal purposes of a disposition, deemed disposition or series of dispositions of shares of any corporation was to enable the corporation to obtain a refund under this Part to which it would not otherwise be entitled; or
(b) that as a result of a transaction or an event, or a series of transactions or events, property of a business has been transferred, or has been deemed to be transferred, either directly or indirectly, to the corporation or to another corporation, and one of the principal purposes of the transfer or deemed transfer is to enable the corporation to obtain a refund under this Part to which it would not otherwise be entitled.
Recovery of refund
57.18 (1) If, after a refund under this Part is paid to a corporation, it is subsequently determined that the corporation received a refund to which it was not entitled or received an amount greater than the amount of the refund to which it is entitled, the corporation shall,
(a) repay the amount or the excess amount, as the case may be, to the Minister of Revenue; and
(b) pay interest to the Minister of Revenue on the amount or excess amount, as the case may be, computed under this Act as if the amount or excess amount were tax payable under Part II or II.1 from the day the amount or excess amount was paid to the corporation to the day it is repaid to the Minister of Revenue.
Exception re: interest
(2) Despite clause (1) (b), interest shall not be payable by a corporation where the amount or excess amount determined under subsection (1) is the result of the corporation claiming a deduction under section 111 of the Income Tax Act (Canada), as made applicable by section 34 of this Act, in respect of a loss for a subsequent taxation year.
Collection
(3) All amounts repayable and payable to the Minister of Revenue under subsection (1) constitute a debt to the Crown and may be recovered by way of deduction or set-off or may be recovered in any court of competent jurisdiction in proceedings commenced at any time.
No time limit
(4) Section 80 does not apply with respect to any amount repayable to the Minister of Revenue under this Part, and an amount repayable to the Minister of Revenue under this Part is deemed to be taxes owing to the Crown for the purposes of clause 16 (1) (i) of the Limitations Act, 2002.
Offence
57.19 A corporation that applies for a certificate of eligibility or a refund under this Part for a taxation year when it knew or ought to have known that it is not eligible for a refund under this Part for the year is guilty of an offence and is liable on conviction to a fine of up to twice the sum of,
(a) the amount of tax payable by the corporation for the year under Part II; and
(b) the amount of tax payable by the corporation for the year under Part II.1.
Agreement for the administration of this Part
57.20 (1) With the approval of the Lieutenant Governor in Council, the Minister of Revenue may, on behalf of the Crown in right of Ontario, enter into an agreement with the Crown in right of Canada under which the Canada Revenue Agency will exercise powers and duties of the Minister of Revenue and the Minister of Research and Innovation for the purposes of this Part.
Effect of agreement
(2) If an agreement under subsection (1) is entered into, the Canada Revenue Agency, on behalf of and as agent of the Minister of Revenue and the Minister of Research and Innovation, is authorized, subject to the provisions of the agreement, to exercise the powers and perform the duties under this Part of the Minister of Revenue and the Minister of Research and Innovation to which the agreement applies.
Payment of fees under agreement
(3) All fees and other amounts payable to the Canada Revenue Agency under an agreement entered into under subsection (1) are a charge on and payable out of the Consolidated Revenue Fund.
Regulations
57.21 (1) The Lieutenant Governor in Council may make regulations defining any word or expression used in this Part that is not already expressly defined in this Act.
Same
(2) The Minister of Finance may make regulations,
(a) prescribing anything referred to in this Part as prescribed by the Minister of Finance;
(b) governing the provision of such information by corporations as may be required for the purpose of administering and enforcing this Part.
2. Section 78 of the Act is amended by adding the following subsection:
If refund payable under Part II.2
(13) In calculating any amount payable under this section in respect of a taxation year, a corporation shall not take into account the amount of any refund that may be payable to it under Part II.2 in respect of the year.
3. Part V of the Act is amended by adding the following Division:
Division G - Part II.2 Objections and Appeals
Rules for objections and appeals, Part II.2
92.2 (1) Sections 84 to 92.1 do not apply in respect of any matter relevant in determining whether a corporation is entitled to a refund under Part II.2 or the amount of any refund under that Part.
Objection
(2) A corporation may object to a determination or revised determination made by the Minister of Revenue under section 57.17 by serving on the Minister of Revenue a notice of objection in a form approved by the Minister of Revenue.
Time
(3) The notice of objection must be served not later than 90 days after the day on which the notice of determination or revised notice of determination is sent.
Issues on objection
(4) In an objection under subsection (2), the corporation may raise issues only about whether the corporation is a qualifying corporation for the purposes of Part II.2 for a taxation year.
Content of notice of objection
(5) The notice of objection shall,
(a) clearly describe each issue raised by way of objection; and
(b) fully set out the facts and reasons relied on by the corporation in respect of each issue.
Additional information
(6) If a notice of objection does not fully set out the facts and reasons relied on by the corporation in respect of an issue, the Minister of Revenue may in writing request the corporation to provide the information, and the corporation is deemed to have complied with clause (5) (b) in respect of the issue if it provides the information to the Minister of Revenue in writing within 60 days after the day the request is made by the Minister of Revenue, but if the corporation does not comply within that time, the Minister of Revenue may, at his or her discretion, consider the notice of objection to be void and the determination or revised determination of the Minister of Revenue under section 57.17 to be final and binding.
Calculating time limits
(7) For the purposes of calculating the number of days mentioned in subsections (3) and (6),
(a) a notice of determination or a revised notice of determination referred to in subsection (3) is deemed to have been sent on the date stated in the notice; and
(b) a request for information under subsection (6) is deemed to have been made on the date stated in the notice.
Service of notice of objection
(8) Service of a notice of objection under this section shall be by registered mail addressed to the Minister of Revenue or by another method that is prescribed by the Minister of Finance.
Same
(9) The Minister of Revenue may accept a notice of objection under this section even though the notice was not served in the manner required by subsection (8).
Extension of time
(10) The time within which a notice of objection is to be served may be extended by the Minister of Revenue if application for the extension is made within 180 days from the day of mailing of the notice of determination or revised notice of determination which is the subject of the objection.
Reconsideration by Minister of Revenue
(11) Upon receipt of a notice of objection, the Minister of Revenue shall, as quickly as possible, reconsider whether the corporation was a qualifying corporation for the taxation year for the purposes of Part II.2.
Notification
(12) The Minister of Revenue shall notify the corporation in writing of whether he or she is confirming the determination that the corporation is not a qualifying corporation for the taxation year for the purposes of Part II.2 or making a new determination that the corporation is a qualifying corporation for the taxation year for the purposes of Part II.2.
Decision final
(13) The decision of the Minister of Revenue under subsection (12) is final and is not subject to appeal unless the decision involves the interpretation of a provision of this Act or involves an issue solely of law.
Appeal on question of law
(14) If a corporation disagrees with the decision of the Minister of Revenue under subsection (12), the corporation and the Minister of Revenue may agree in writing as to the undisputed facts and then the Minister of Revenue may apply to the Superior Court of Justice to have the issue in dispute determined if,
(a) under subsection (4), the issue in dispute may be raised on an objection; and
(b) the issue in dispute involves the interpretation of a provision of this Act or is solely an issue of law in which no facts are in dispute, or the issue in dispute involves the proper inference to be drawn from facts that are not in dispute.
Same
(15) If the Minister of Revenue does not apply to the court under subsection (14) within six months after the date on which the Minister of Revenue and the corporation have both agreed in writing on the facts, the corporation may apply to the court to have the issue determined.
Taxation Act, 2007
4. Clause (b) of the definition of "Ontario Minister" in subsection 1 (1) of the Taxation Act, 2007 is repealed and the following substituted:
(b) the Federal Minister, in relation to any other matter except the administration and enforcement of Part V.2 and section 127.1;
5. The Act is amended by adding the following Part:
PART
V.2
ontario tax exemption for commercialization
Definitions and interpretation
Definitions
104.2 (1) In this Part,
"advanced health technology business" means a business that is primarily engaged in using technology,
(a) in the development of assistive medical devices, pharmaceutical drugs, regenerative medicine, biologics, medical procedures or surgical procedures, or
(b) in human tissue engineering; ("entreprise de technologie médicale avancée")
"bioeconomy business" means a business that is primarily engaged in,
(a) the production of biofuel, biogas or bioplastics, or
(b) the development of technology or processes that enable the use of wind, water, a biomass resource, hydrogen, biofuel, biogas, landfill gas, solar energy, geothermal energy, tidal forces or thermal waste as a source of energy; ("entreprise de bioéconomie")
"biofuel" means a liquid fuel made from a biomass resource and includes the liquid fuels ethanol, methanol and biodiesel; ("biocarburant")
"biogas" means a gaseous fuel made from a biomass resource; ("biogaz")
"biomass resource" means,
(a) organic matter that is derived from a plant and available on a renewable basis, including organic matter derived from dedicated energy crops, dedicated trees, agricultural food and feed crops, or
(b) waste organic material from harvesting or processing agricultural products, including animal waste and rendered animal fat, forestry products, including wood waste, and sewage; ("ressource en biomasse")
"bioplastic" means a plastic made from a biomass resource; ("bioplastique")
"computer program" has the meaning assigned by section 2 of the Copyright Act (Canada); ("programme d'ordinateur")
"eligible commercialization business" means an active business,
(a) that in the opinion of the Minister of Research and Innovation is,
(i) an advanced health technology business,
(ii) a bioeconomy business,
(iii) a telecommunications, computer or digital technologies production business that is primarily engaged in activities described in categories 3341, 3342, 3344 or 5112 of the North American Industry Classification System 2007 – Canada, as published by Statistics Canada, or
(iv) a business that is prescribed by or that satisfies the conditions prescribed by the Ontario Minister,
(b) that in the opinion of the Minister of Research and Innovation has as its sole purpose,
(i) the sale of property that derives more than 50 per cent of its value from eligible intellectual property,
(ii) the sale of property an essential element of which is eligible intellectual property,
(iii) the licensing of computer programs that are eligible intellectual property, or
(iv) such other purpose as may be prescribed by the Ontario Minister, and
(c) that satisfies such other conditions as may be prescribed by the Ontario Minister; ("entreprise de commercialisation admissible")
"eligible intellectual property" means, in respect of a business carried on by a qualifying corporation, property,
(a) that was developed in the course of employment or academic study at a qualifying institute by one or more individuals, each of whom is an inventor for the purposes of the Patent Act (Canada), an author for the purposes of the Copyright Act (Canada), an individual prescribed by the Ontario Minister or an individual who satisfies conditions prescribed by the Ontario Minister,
(b) that has never been legally or beneficially owned by anyone other than,
(i) the qualifying institute where the research to develop the property was conducted,
(ii) one or more individuals who created the property, each of whom was an employee or a student of the qualifying institute where the research was conducted at the time the intellectual property was created,
(iii) the qualifying corporation, or
(iv) one or more of the persons and entities referred to in subclause (i), (ii) or (iii),
(c) that was disclosed to the qualifying institute where the research was conducted in a timely manner and not later than the required time in accordance with the institute's official intellectual property disclosure policy, if the institute had such a policy, and
(d) that is,
(i) a patent issued under the Patent Act (Canada),
(ii) intellectual property in respect of which,
(A) an application for a patent was filed under the Patent Act (Canada) by a person described in subclause (b) (i), (ii), (iii) or (iv), and
(B) a patent is issued pursuant to the application no later than the last day of the qualifying corporation's 10th taxation year ending after incorporation,
(iii) the copyright in a computer program that in the opinion of the Minister of Research and Innovation constitutes a technological advancement at the time the computer program is completed and meets such conditions as may be prescribed by the Ontario Minister, or
(iv) intellectual property that is prescribed by the Ontario Minister or that satisfies such conditions as may be prescribed by the Ontario Minister; ("propriété intellectuelle admissible")
"qualifying institute" means an entity that is not required to pay tax under Part I of the Federal Act by reason of section 149 of that Act and that is,
(a) a university in Ontario whose enrolment is counted for the purposes of calculating annual operating grants entitlements from the Government of Ontario,
(b) a college of applied arts and technology in Ontario whose enrolment is counted for the purposes of calculating annual operating grants entitlements from the Government of Ontario,
(c) an entity that is a non-profit organization prescribed by the Ontario Minister, that is a member of a class of non-profit organizations prescribed by the Ontario Minister or that meets the conditions prescribed by the Ontario Minister,
(d) a college or university in Canada but outside Ontario whose enrolment is counted for the purposes of calculating annual operating grants entitlements from the government of a province, other than an elementary or secondary school,
(e) a hospital research institute that meets the conditions prescribed by the Ontario Minister, or
(f) an entity that is prescribed by or that satisfies the conditions prescribed by the Ontario Minister. ("institut admissible")
Qualifying corporation
(2) A corporation is a qualifying corporation for the purposes of this Part for a taxation year if the corporation satisfies the following conditions:
1. It was incorporated in Canada after March 24, 2008 and before March 25, 2012 and was not formed as a result of an amalgamation or merger of two or more corporations.
2. It carried on one or more eligible commercialization businesses during the taxation year.
3. If its income as computed for the purposes of section 3 of the Income Tax Act (Canada) was greater than zero, all or substantially all of its gross revenue for the year was from one or more eligible commercialization businesses and all or substantially all amounts received or receivable by it on the disposition of capital property were from the disposition of capital property in the ordinary course of an eligible commercialization business.
4. If it was a member of a partnership for any period of time during the taxation year or a previous taxation year, throughout that period of time every other member of the partnership was a qualifying institute.
5. If it was a participant in a joint venture for any period of time during the taxation year or a previous taxation year, throughout that period of time every other member of the joint venture was a qualifying institute.
6. It has never been a beneficiary of a trust.
7. It has never operated all or part of a business that was previously operated by another corporation.
8. It has never operated all or part of a business that was previously operated by a person or entity that is not a corporation unless the business was operated by the person or entity for a period of not more than 90 days before the corporation was incorporated.
9. The taxation year is one of the corporation's first 10 taxation years after it was incorporated.
10. It satisfies such other conditions as may be prescribed by the Ontario Minister.
Tax
(3) A reference in this Part to tax payable and paid under Divisions B and C of Part III does not include a reference to any interest or penalties payable under this Act.
Ontario tax exemption for commercialization
104.3 (1) A corporation that is a qualifying corporation for a taxation year is entitled to a refund under this Part for the year equal to the amount of its Ontario tax exemption for commercialization for the year if the requirements of this Part are satisfied.
Amount of the exemption
(2) Subject to subsection (3), the amount of a corporation's Ontario tax exemption for commercialization for a taxation year is equal to the sum of,
(a) the amount of tax payable and paid by the corporation under Division B of Part III for the year less the amount, if any, the corporation is entitled to claim for the year under Part IV; and
(b) the amount of tax payable and paid by the corporation under Division C of Part III for the year.
Nil exemption
(3) The amount of a corporation's Ontario tax exemption for commercialization for a taxation year is nil if,
(a) the corporation has not claimed the maximum amount of all deductions and allowances to which it is entitled under this Act and the Federal Act in computing its income and taxable income for the taxation year and for each of its previous taxation years;
(b) the corporation is or has been, at any time since it was incorporated, associated with another corporation within the meaning of section 256 of the Federal Act if paragraphs 256 (1) (c), (d) and (e) of that Act were read without reference to "other than a specified class";
(c) the corporation is or has been, at any time since it was incorporated, related to another corporation within the meaning of section 251 of the Federal Act;
(d) control of the corporation is acquired directly or indirectly in any manner whatever during the period commencing March 25, 2012 and ending at the end of the corporation's 10th taxation year after it was incorporated;
(e) the Minister of Research and Innovation notifies the corporation that it is ineligible to receive a certificate of eligibility under this Part or that the Minister of Research and Innovation has revoked the certificate of eligibility issued to the corporation for the year; or
(f) during the taxation year or a previous taxation year, the corporation sold all or substantially all of the property it used in carrying on an eligible commercialization business.
Exception re associated corporations
(4) Clause (3) (b) does not apply if the corporation that was associated with the qualifying corporation was, at all times while it was associated with the qualifying corporation,
(a) a qualifying institute; or
(b) a corporation that is prescribed by the Ontario Minister or that satisfies conditions prescribed by the Ontario Minister.
Exception re related corporations
(5) Clause (3) (c) does not apply if the corporation that was related to the qualifying corporation was, at all times while it was related to the qualifying corporation,
(a) a qualifying institute; or
(b) a corporation that is prescribed by the Ontario Minister or that satisfies conditions prescribed by the Ontario Minister.
Certificate of eligibility
104.4 (1) To be eligible to apply for a refund under this Part, a qualifying corporation must apply for, be eligible to receive and receive a certificate of eligibility for the year issued by the Minister of Research and Innovation.
Application
(2) An application for a certificate of eligibility for a taxation year shall be made to the Minister of Research and Innovation after the end of the year to which it relates, in a form approved by the Minister of Research and Innovation.
Additional information or records
(3) A corporation applying for a certificate of eligibility shall provide such additional information and records as the Minister of Research and Innovation may specify in order to evaluate the application.
Criteria for issuing certificate of eligibility
(4) The Minister of Research and Innovation may issue a certificate of eligibility to the corporation for the year if he or she is satisfied that the corporation carried on an eligible commercialization business during the year.
Failure to satisfy all criteria
(5) If, after reviewing the application and all other relevant information and records, the Minister of Research and Innovation is of the opinion that the corporation has failed to satisfy the criteria set out in subsection (4), the Minister of Research and Innovation shall notify the corporation in writing of his or her decision not to issue the certificate and the reasons for the decision.
Revocation of certificate
(6) If, at any time after issuing a certificate of eligibility to a corporation, the Minister of Research and Innovation subsequently determines that the corporation failed to satisfy the criteria set out in subsection (4), the Minister of Research and Innovation may,
(a) revoke the certificate; and
(b) notify the corporation and the Minister of Revenue of the revocation of the certificate and the reasons for the revocation.
Decision not to issue or to revoke certificate is final
(7) The decision of the Minister of Research and Innovation not to issue a certificate of eligibility to a corporation for a taxation year or to revoke a certificate of eligibility previously issued to the corporation for the year is final and conclusive, and sections 124 to 128 do not apply in respect of the decision.
Preliminary determination
104.5 If a corporation's first taxation year after incorporation ends after December 31, 2008, the corporation may request from the Minister of Research and Innovation at any time before the end of its first taxation year after incorporation a preliminary determination of the following matters, but no preliminary determination made under this section is binding on the Minister of Research and Innovation:
1. Whether the proposed business of the corporation would be an eligible commercialization business.
2. Whether property to be owned or used by the corporation in the proposed business is eligible intellectual property.
3. Whether a particular entity is a qualifying institute.
Application for refund
104.6 (1) If a certificate of eligibility is issued to a corporation for a taxation year, the corporation may apply to the Minister of Revenue for a refund under this Part by submitting to the Minister of Revenue on or before the end of the third taxation year ending after the year,
(a) an application in a form approved by the Minister of Revenue;
(b) the certificate of eligibility issued to the corporation by the Minister of Research and Innovation for the taxation year;
(c) proof to the satisfaction of the Minister of Revenue that all tax payable by the corporation for the year under Divisions B and C of Part III has been paid; and
(d) such other information and records as the Minister of Revenue may specify to enable the Minister of Revenue to determine if the corporation is a qualifying corporation for the year.
Application after assessment or reassessment
(2) Despite subsection (1), if the Federal Minister assesses or reassesses a corporation, the corporation may apply to the Minister of Revenue for a refund under this Part by submitting to the Minister of Revenue the certificate, information and records required under subsection (1) within three months of the assessment or reassessment.
Notice and payment of refund
(3) If, after reviewing the application and all other relevant information and records, the Minister of Revenue is of the opinion that the corporation is a qualifying corporation for the year, has paid all tax payable for the year under Divisions B and C of Part III and is entitled to a refund under this Part for the year, the Minister of Revenue shall,
(a) notify the corporation in writing of the amount of the refund to which the corporation is entitled for the year; and
(b) pay to the corporation the amount of the refund, without interest.
If no refund payable
(4) If, after reviewing the application and all other relevant information and records, the Minister of Revenue is of the opinion that the corporation is not entitled to a refund under this Part for the year, the Minister of Revenue shall send a notice of determination to the corporation setting out his or her determination that the corporation is not entitled to the refund and the reasons for the determination.
Amount of the refund
(5) The Minister of Revenue,
(a) shall initially calculate the amount of any refund payable under this Part to a qualifying corporation for a taxation year by reference to the most recent assessment of tax payable by the corporation for the year under Divisions B and C of Part III;
(b) shall not pay a refund under this Part until the Minister of Revenue is satisfied that all tax payable by the corporation for the year under Divisions B and C of Part III have been paid; and
(c) shall subsequently make such adjustments to the amount of the refund as may be necessary to reflect any subsequent changes in the amount of tax payable and paid by the corporation for the year under Divisions B and C of Part III.
Revised notice of determination
(6) If the Minister of Revenue makes an adjustment to the amount of a refund paid under this Part for a taxation year or subsequently determines that the corporation was not entitled to a refund previously paid for the year, the Minister shall send to the corporation a revised notice of determination setting out the amount of the refund, if any, to which the corporation is entitled for the year and shall,
(a) pay to the corporation any additional refund to which the corporation is entitled under this Part for the year; or
(b) demand from the corporation repayment of the refund or the excess amount of the refund to which the corporation is not entitled for the year.
Tax avoidance
(7) Despite any other provision in this Part, the Minister of Revenue may refuse to pay a refund to a corporation under this Part or may demand repayment of a refund previously paid under this Part if the Minister of Revenue has a reasonable belief,
(a) that one of the principal purposes of a disposition, deemed disposition or series of dispositions of shares of any corporation was to enable the corporation to obtain a refund under this Part to which it would not otherwise be entitled; or
(b) that as a result of a transaction or an event, or a series of transactions or events, property of a business has been transferred, or has been deemed to be transferred, either directly or indirectly, to the corporation or to another corporation, and one of the principal purposes of the transfer or deemed transfer is to enable the corporation to obtain a refund under this Part to which it would not otherwise be entitled.
Recovery of refund
104.7 (1) If, after a refund under this Part is paid to a corporation, it is subsequently determined that the corporation received a refund to which it was not entitled or received an amount greater than the amount of the refund to which it is entitled, the corporation shall,
(a) repay the amount or the excess amount, as the case may be, to the Minister of Revenue; and
(b) pay interest to the Minister of Revenue on the amount or excess amount, as the case may be, computed under this Act as if the amount or excess amount were tax payable under Division B or C of Part III from the day the amount or excess amount was paid to the corporation to the day it is repaid to the Minister of Revenue.
Exception re: interest
(2) Despite clause (1) (b), interest shall not be payable by a corporation where the amount or excess amount determined under subsection (1) is the result of the corporation claiming a deduction under section 111 of the Federal Act as it applies for the purposes of this Act, in respect of a loss for a subsequent taxation year.
Collection
(3) All amounts repayable and payable to the Minister of Revenue under subsection (1) constitute a debt to the Crown and may be recovered by way of deduction or set-off or may be recovered in any court of competent jurisdiction in proceedings commenced at any time.
No time limit
(4) Section 112 does not apply with respect to any amount repayable to the Minister of Revenue under this Part, and an amount repayable to the Minister of Revenue under this Part is deemed to be taxes owing to the Crown for the purposes of clause 16 (1) (i) of the Limitations Act, 2002.
Offence
104.8 A corporation that applies for a certificate of eligibility or a refund under this Part for a taxation year when it knew or ought to have known that it is not eligible for a refund under this Part for the year is guilty of an offence and is liable on conviction to a fine of up to twice the sum of,
(a) the amount of tax payable by the corporation for the year under Division B of Part III; and
(b) the amount of tax payable by the corporation for the year under Division C of Part III.
Agreement for the administration of this Part
104.9 (1) With the approval of the Lieutenant Governor in Council, the Minister of Revenue may, on behalf of the Crown in right of Ontario, enter into an agreement with the Crown in right of Canada under which the Canada Revenue Agency will exercise powers and duties of the Minister of Revenue and the Minister of Research and Innovation for the purposes of this Part.
Effect of agreement
(2) If an agreement under subsection (1) is entered into, the Canada Revenue Agency, on behalf of and as agent of the Minister of Revenue and the Minister of Research and Innovation, is authorized, subject to the provisions of the agreement, to exercise the powers and perform the duties under this Part of the Minister of Revenue and the Minister of Research and Innovation to which the agreement applies.
Payment of fees under agreement
(3) All fees and other amounts payable to the Canada Revenue Agency under an agreement entered into under subsection (1) are a charge on and payable out of the Consolidated Revenue Fund.
Regulations
104.10 (1) The Lieutenant Governor in Council may make regulations defining any word or expression used in this Part that is not already expressly defined in this Act.
Same
(2) The Ontario Minister may make regulations,
(a) prescribing anything referred to in this Part as prescribed by the Ontario Minister;
(b) governing the provision of such information by corporations as may be required for the purpose of administering and enforcing this Part.
6. Section 116 of the Act is amended by adding the following subsection:
If refund payable under Part V.2
(8) In calculating any amount payable under this section in respect of a taxation year, a corporation shall not take into account the amount of any refund that may be payable to it under Part V.2 in respect of the year.
7. Part VIII of the Act is amended by adding the following section:
Part V.2 Objections and Appeals
Rules for objections and appeals, Part V.2
127.1 (1) Sections 124 to 128 do not apply in respect of any matter relevant in determining whether a corporation is entitled to a refund under Part V.2 or the amount of any refund under that Part.
Objection
(2) A corporation may object to a determination or revised determination made by the Minister of Revenue under section 104.6 by serving on the Minister of Revenue a notice of objection in a form approved by the Minister of Revenue.
Time
(3) The notice of objection must be served not later than 90 days after the day on which the notice of determination or revised notice of determination is sent.
Issues on objection
(4) In an objection under subsection (2), the corporation may raise issues only about whether the corporation is a qualifying corporation for the purposes of Part V.2 for a taxation year.
Content of notice of objection
(5) The notice of objection shall,
(a) clearly describe each issue raised by way of objection; and
(b) fully set out the facts and reasons relied on by the corporation in respect of each issue.
Additional information
(6) If a notice of objection does not fully set out the facts and reasons relied on by the corporation in respect of an issue, the Minister of Revenue may in writing request the corporation to provide the information, and the corporation is deemed to have complied with clause (5) (b) in respect of the issue if it provides the information to the Minister of Revenue in writing within 60 days after the day the request is made by the Minister of Revenue, but if the corporation does not comply within that time, the Minister of Revenue may, at his or her discretion, consider the notice of objection to be void and the determination or revised determination of the Minister of Revenue under section 104.6 to be final and binding.
Calculating time limits
(7) For the purposes of calculating the number of days mentioned in subsections (3) and (6),
(a) a notice of determination or a revised notice of determination referred to in subsection (3) is deemed to have been sent on the date stated in the notice; and
(b) a request for information under subsection (6) is deemed to have been made on the date stated in the notice.
Service of notice of objection
(8) Service of a notice of objection under this section shall be by registered mail addressed to the Minister of Revenue or by another method that is prescribed by the Minister of Finance.
Same
(9) The Minister of Revenue may accept a notice of objection under this section even though the notice was not served in the manner required by subsection (8).
Extension of time
(10) The time within which a notice of objection is to be served may be extended by the Minister of Revenue if application for the extension is made within 180 days from the day of mailing of the notice of determination or revised notice of determination which is the subject of the objection.
Reconsideration by Minister of Revenue
(11) Upon receipt of a notice of objection, the Minister of Revenue shall, as quickly as possible, reconsider whether the corporation was a qualifying corporation for the taxation year for the purposes of Part V.2.
Notification
(12) The Minister of Revenue shall notify the corporation in writing of whether he or she is confirming the determination that the corporation is not a qualifying corporation for the taxation year for the purposes of Part V.2 or making a new determination that the corporation is a qualifying corporation for the taxation year for the purposes of Part V.2.
Decision final
(13) The decision of the Minister of Revenue under subsection (12) is final and is not subject to appeal unless the decision involves the interpretation of a provision of this Act or involves an issue solely of law.
Appeal on question of law
(14) If a corporation disagrees with the decision of the Minister of Revenue under subsection (12), the corporation and the Minister of Revenue may agree in writing as to the undisputed facts and then the Minister of Revenue may apply to the Superior Court of Justice to have the issue in dispute determined if,
(a) under subsection (4), the issue in dispute may be raised on an objection; and
(b) the issue in dispute involves the interpretation of a provision of this Act or is solely an issue of law in which no facts are in dispute, or the issue in dispute involves the proper inference to be drawn from facts that are not in dispute.
Same
(15) If the Minister of Revenue does not apply to the court under subsection (14) within six months after the date on which the Minister of Revenue and the corporation have both agreed in writing on the facts, the corporation may apply to the court to have the issue determined.
8. Clause 144 (1) (b) of the Act is amended by adding the following subclause:
(iii) attempting to obtain for the benefit of the person or another person a refund under Part V.2 to which the person or other person is not entitled;
9. Clause 144 (2) (a) of the Act, as re-enacted by the Statutes of Ontario, 2008, chapter 7, Schedule S, subsection 34 (2), is repealed and the following substituted:
(a) to a fine of not less than 50 per cent and not more than 200 per cent of the amount of the tax that was sought to be evaded or the amount that was sought in excess of the tax credit under Part IV, the Ontario child benefit under section 104, the senior homeowners' property tax grant under section 104.1 or the refund under Part V.2 to which the person or the other person is entitled; or
Commencement
10. (1) Subject to subsection (2), this Act comes into force on the day it receives Royal Assent.
Same
(2) Sections 8 and 9 come into force on January 1, 2009.
Short title
11. The short title of this Act is the Ideas for the Future Act, 2008.
EXPLANATORY NOTE
This Explanatory Note was written as a reader's aid to Bill 100 and does not form part of the law. Bill 100 has been enacted as Chapter 24 of the Statutes of Ontario, 2008.
The Bill enacts amendments to the Corporations Tax Act and the Taxation Act, 2007 to implement the Ontario tax exemption for commercialization announced in the 2008 Ontario Budget. The Ontario tax exemption for commercialization is available for the first 10 taxation years of qualifying corporations incorporated after March 24, 2008 and before March 25, 2012. The amendments to the Corporations Tax Act apply to any taxation years ending before 2009, and the amendments to the Taxation Act, 2007 apply to taxation years ending after 2008.
To qualify for the Ontario tax exemption for commercialization, a corporation must be a new corporation that is not formed as a result of an amalgamation or merger of two or more other corporations. If its income for the taxation year under the Income Tax Act (Canada) is greater than zero, all or substantially all of its gross revenue for the year must be from one or more eligible commercialization businesses and all or substantially all amounts received or receivable by it on the disposition of capital property must be from the disposition of capital property in the ordinary course of an eligible commercialization business. The amendments set out other conditions that must be satisfied and include provisions intended to prevent tax avoidance.
An eligible commercialization business is a new active business that in the opinion of the Minister of Research and Innovation is an advanced health technology business, a bioeconomy business or a telecommunications, computer or digital technologies production business. The sole purpose of an eligible commercialization business must be the sale of property that derives more than 50 per cent of its value from eligible intellectual property developed at a qualifying institute, the sale of property that has eligible intellectual property as an essential element, the licensing of computer programs that are eligible intellectual property or such other purpose as may be prescribed by the regulations.
To implement the Ontario tax exemption for commercialization, the amendments to the Corporations Tax Act and the Taxation Act, 2007 authorize the Minister of Revenue to pay a refund to a qualifying corporation equal to the amount of income tax and corporate minimum tax payable and paid by the corporation for each of its first 10 taxation years after incorporation. A refund is made only to the extent the corporation has complied with its continuing obligation under the Act to pay its corporate income tax for the year and any corporate minimum tax.
To obtain the benefit of the Ontario tax exemption for commercialization for a taxation year, a qualifying corporation must apply after the end of the year to the Minister of Research and Innovation for a certificate of eligibility. If the Minister of Research and Innovation is satisfied that the corporation carried on an eligible commercialization business during the year, the Minister of Research and Innovation is authorized to issue a certificate of eligibility for the year to the corporation. A decision by the Minister of Research and Innovation that a corporation does not qualify for a certificate of eligibility is final.
To obtain the refund for the year, the corporation must submit the certificate of eligibility to the Minister of Revenue and apply for the refund no later than the end of the third taxation year ending after the taxation year for which the refund is claimed. If the corporation is assessed or reassessed for a taxation year, the corporation may apply for the refund within three months of the assessment or reassessment. The Minister of Revenue is authorized to pay the refund, without interest, if, based on the information and material provided by the corporation, the Minister of Revenue is satisfied that the corporation is a qualifying corporation for the year and has paid its corporate income tax and any corporate minimum tax payable for the year. The amount of the refund is determined from the corporation's most recent assessment of tax for the year.
Subsequent adjustments to the amount of the refund will be made to the extent that the corporation's tax amounts are subsequently changed on reassessment or as a result of an objection or tax appeal. If the amount of a corporation's refund for a taxation year is reduced as a result of an adjustment or it is subsequently determined that the corporation did not qualify for the refund, the corporation is required to repay to the Minister of Revenue, with interest, the amount to which it is not entitled.
If the Minister of Revenue determines that a corporation is not entitled to a refund for a year, the corporation has the right to file an objection, but only with respect to the issue of whether the corporation is a qualifying corporation for the year. The corporation has a right to appeal the decision made on the objection, but only if the appeal involves an issue of law or the correct interpretation of the Act.