Income Tax Act — I-3.3 125.7
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 the seller in the course of a business carried on in Canada by the seller; (d) it is reasonable to conclude that none of the main purposes of the acquisition was to increase the amount of a deemed overpayment under subsection (2); and (e) the eligible entity elects in respect of the qualifying period and files the election in prescribed form and manner with the Minister or, if the seller is in existence during the qualifying period, the eligible entity and the seller jointly elect in respect of that period and so file with the Minister. Asset sales — application (4.2) If this subsection applies to an eligible entity in respect of a qualifying period, (a) the amount of the qualifying revenue of the seller for the prior reference period, or the current reference period, for the qualifying period that is reasonably attributable to the acquired assets (referred to in this subsection as the “assigned revenue”) is to be included in determining the qualifying revenue of the eligible entity for its prior reference period or current reference period, as the case may be, for the qualifying period; (b) the assigned revenue is to be subtracted from the qualifying revenue of the seller for its prior reference period or current reference period, as the case may be, for the qualifying period; (c) if a portion of the assigned revenue is from a person or partnership that did not deal at arm’s length with the seller and that person or partnership deals at arm’s length with the eligible entity throughout the current reference period, then that portion of the assigned revenue is deemed to not be derived from persons or partnerships not dealing at arm’s length for the purposes of paragraph (d) of the definition qualifying revenue in subsection (1); (d) if the seller meets any of the following conditions, the eligible entity is deemed to meet that condition: (i) either of the conditions in paragraph (d) of the definition qualifying entity in subsection (1), and (ii) both of the conditions in subparagraph (c)(ii), or the condition in subparagraph (c)(iii), of the definition qualifying renter in subsection (1); and (e) for the purposes of subparagraph (b)(i) of the definition prior reference period in subsection (1) and the description of C in subparagraph (c)(ii) of the definition qualifying entity in subsection (1), the eligible entity is deemed to have commenced carrying on the business in which the acquired assets are used at the earlier of (i) the date on which the eligible entity commenced carrying on that business, and (ii) the date on which the seller commenced carrying on the business in which the acquired assets were used. Deemed overpayment (5) For the purposes of this section, (a) the amount of any deemed overpayment by an eligible entity under any of subsections (2) to (2.2) in respect of a qualifying period cannot exceed the amount claimed by the eligible entity in the application referred to in paragraph (a) of the definition qualifying entity in subsection (1) — or paragraph (a) of the definition qualifying renter in subsection (1) or paragraph (a) of the definition qualifying recovery entity in subsection (1) — in respect of that qualifying period; and (b) if an eligible employee is employed in a week by two or more qualifying entities that do not deal with each other at arm’s length, the total amount of the deemed overpayment under subsection (2) or (2.2) in respect of the eligible employee for that week shall not exceed the amount that would arise if the eligible employee’s eligible remuneration for that week were paid by one qualifying entity. Anti-avoidance — qualifying revenues (6) Notwithstanding any other provision in this section, the qualifying revenue of an eligible entity for a current reference period for a qualifying period i