Income Tax Act — I-3.3 125.7
except that (a) if a group of eligible entities normally prepares consolidated financial statements, each member of the group may determine its qualifying revenue separately, provided every member of the group determines its qualifying revenue on that basis; (b) if an eligible entity and each member of an affiliated group of eligible entities of which the eligible entity is a member jointly elect, the qualifying revenue of the group determined on a consolidated basis in accordance with relevant accounting principles is to be used for each member of the group; (c) if all of the interests in an eligible entity are owned by participants in a joint venture and all or substantially all of the qualifying revenue of the eligible entity for a qualifying period is in respect of the joint venture, then the eligible entity may use the qualifying revenues of the joint venture (determined as if the joint venture were an eligible entity) as its qualifying revenues for the qualifying period for the purposes of this section; (d) if all or substantially all of an eligible entity’s qualifying revenue — determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1) — for a qualifying period is from one or more particular persons or partnerships with which it does not deal at arm’s length and each particular person or partnership jointly elects with the eligible entity, for the purposes of this section (i) the eligible entity’s qualifying revenue for the prior reference period is deemed to be $100, and (ii) the eligible entity’s qualifying revenue for the current reference period is deemed to be the total of all amounts, each of which is determined by the formula $100(A/B)(C/D) where A is the eligible entity’s qualifying revenue (determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1)) for the current reference period attributable to a particular person or partnership, B is the total of all amounts, each of which is the eligible entity’s qualifying revenue (determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1)) for the current reference period attributable to a particular person or partnership, C is the particular person or partnership’s qualifying revenue (determined as if the definition qualifying revenue in subsection (1) were read without reference to “in Canada”) for the current reference period, and D is the particular person or partnership’s qualifying revenue (determined as if the definition qualifying revenue in subsection (1) were read without reference to “in Canada”) for the prior reference period; and (e) an eligible entity may make an election, which must apply for all qualifying periods, to determine its qualifying revenues based on (i) the cash method, within the meaning assigned by subsection 28(1) with any modifications that the circumstances require, or (ii) the accrual method, in accordance with generally accepted accounting principles. Asset sales — conditions (4.1) Subsection (4.2) applies to an eligible entity in respect of a qualifying period if (a) the eligible entity acquired assets (referred to in this subsection and subsection (4.2) as the “acquired assets”) of a person or partnership (referred to in this subsection and subsection (4.2) as the “seller”) during the qualifying period or at any time before that period; (b) immediately prior to the acquisition, the fair market value of the acquired assets constituted (i) all or substantially all of the fair market value of the property of the seller used in the course of carrying on business, or (ii) if the seller and the eligible entity deal with each other at arm’s length, all or substantially all of the property of the seller that can reasonably be regarded as being necessary for the eligible entity to be capable of carrying on a business of the seller, or part of a business of the seller, as a business; (c) the acquired assets were used by t