Income Tax Act — I-3.3 80.2
Application 80.2 (1) Subsections (2) to (13) apply if (a) in a taxation year, a taxpayer, under the terms of a contract, pays to a person (referred to in this section as the “recipient”) an amount (referred to in this section as the “specified amount”) that may reasonably be considered to be received by the recipient as a reimbursement of, or a contribution or an allowance in respect of, an amount (referred to in this section as the “original amount”) (i) that was described by paragraph 18(1)(m) and was paid or payable by the recipient, or (ii) that was, in respect of the recipient, an amount described by paragraph 12(1)(o); (b) the original amount is paid or became payable or receivable in a taxation year or fiscal period of the recipient that begins before 2007; and (c) the taxpayer is resident in Canada or carries on business in Canada when the specified amount is paid. Rules relating to time of payment (2) If the specified amount is paid in a taxation year of the taxpayer that begins before 2008, the eligible portion of the specified amount, referred to in subsection (11), is deemed to be a payment described by paragraph 18(1)(m). If, however, the specified amount is paid in a taxation year of the taxpayer that begins after 2007, the specified amount is deemed, for the purpose of applying this section to the taxpayer, to be nil. Applying paragraph 18(1)(m) (3) For the purpose of applying paragraph 18(1)(m) for the taxpayer’s taxation year in which the specified amount was paid, the amount to which that paragraph applies is to be determined for that taxation year (a) if the taxpayer was in existence at the time the original amount became receivable by a person referred to in subparagraph 12(1)(o)(i) or became payable to a person referred to in subparagraph 18(1)(m)(i), as if the specified amount were paid by the taxpayer at that time; and (b) in any other case, as if (i) the taxpayer were in existence and had a calendar taxation year at the time the original amount became receivable by a person referred to in subparagraph 12(1)(o)(i) or became payable to a person referred to in subparagraph 18(1)(m)(i), and (ii) the specified amount were paid by the taxpayer at that time. Exception for certain partnership reimbursements (4) Subsection (3) does not apply to a specified amount paid by a taxpayer if (a) the recipient is a partnership; (b) the original amount became receivable by a person referred to in subparagraph 12(1)(o)(i) or became payable to a person referred to in subparagraph 18(1)(m)(i), in a particular fiscal period of the partnership; (c) the taxpayer is a member of the partnership at the end of the particular fiscal period; and (d) the taxpayer paid the specified amount before the end of the taxation year of the taxpayer in which that particular fiscal period ends. Specified amount deemed to be paid at end of taxation year (5) A specified amount paid by the taxpayer to a partnership is deemed to have been paid on the last day of a particular taxation year of the taxpayer, and not at the time it was paid, if (a) the taxpayer paid an amount to the partnership in the particular taxation year (referred to in this subsection as the “initial payment”); (b) the initial payment was paid before September 17, 2004; (c) the initial payment is an amount to which subsection (3) did not apply because of subsection (4); (d) the taxpayer’s share of the original amount in respect of the initial payment is greater than the initial payment; (e) the specified amount is equal to or less than the difference between the taxpayer’s share of the original amount in respect of the initial payment and the initial payment; (f) the taxpayer elects in the taxpayer’s return of income for the taxpayer’s taxation year that includes the time at which the specified amount would, if this Act were read without reference to this subsection, have been paid, to have this subsection apply to the specified amount; and (g) the specified amount is paid before