GreatNorthCollective/greatnorth-canada-federal-laws-text huggingface dataset:
Global Minimum Tax Act — G-3.3 3
Interpretation 3 (1) This Part, Part 2 and relevant provisions of Part 5 implement the GloBE Model Rules, the GloBE Commentary and the administrative guidance in respect of the GloBE Model Rules approved by the Inclusive Framework and published by the OECD from time to time and, unless the context otherwise requires, these Parts and provisions are to be interpreted consistently with those sources, as amended from time to time. Designation of additional interpretive guidance (2) The Governor in Council may from time to time by regulation designate additional sources in respect of which the interpretation of this Act should be consistent.
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Binding on His Majesty 4 This Act is binding on His Majesty in right of Canada or a province.
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Location of entities 5 (1) Subject to subsection 6 (1), an entity, other than a flow-through entity, is located (a) in a jurisdiction if the entity is tax resident in that jurisdiction based on its place of management or creation, or based on similar criteria; and (b) in any other case, in the jurisdiction where it was created. Location of flow-though entities (2) A flow-through entity (a) is located in the jurisdiction where it was created, if (i) the flow-through entity is the ultimate parent entity of an MNE group, or (ii) the flow-through entity (A) is an entity described in paragraph 14 (3)(c), and (B) has a direct or indirect ownership interest in at least one constituent entity of the MNE group that (I) has a top-up amount, and (II) is not located in the jurisdiction where the flow-through entity was created; and (b) in any other case, is a stateless entity. Location of permanent establishments (3) In determining the jurisdiction where a permanent establishment is located, (a) if the permanent establishment is described in paragraph (a) of the definition permanent establishment in subsection 2 (1), it is located in the jurisdiction where it is treated as a permanent establishment and is taxed under the applicable tax treaty; (b) if the permanent establishment is described in paragraph (b) of that definition, it is located in the jurisdiction where it is subject to net basis taxation based on its business presence; (c) if the permanent establishment is described in paragraph (c) of that definition, it is located in the jurisdiction where it is situated; and (d) if the permanent establishment is described in paragraph (d) of that definition, it is a stateless permanent establishment. Stateless entity — notional jurisdiction (4) A stateless entity or stateless permanent establishment is deemed to be located in a notional jurisdiction in which no other entity or permanent establishment is located. Change of location (5) If an entity’s location changes during a fiscal year, it is deemed to be located, for the fiscal year, in the jurisdiction where it was located at the beginning of that fiscal year.
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Dual-located entity — tie-breaker rule 6 (1) If a constituent entity would, in the absence of this section, be located in more than one jurisdiction for a fiscal year under subsection 5 (1), the following rules apply: (a) if the jurisdictions are party to a tax treaty that is in force and the constituent entity is deemed to be resident in only one of the jurisdictions for purposes of the treaty, the entity is located in that jurisdiction for the fiscal year; and (b) in any other case, (i) if the constituent entity has, for the fiscal year, a greater amount of covered taxes (determined without reference to any taxes under a controlled foreign company tax regime) in one of the jurisdictions than in the other jurisdictions, the constituent entity is located in that jurisdiction for the fiscal year, (ii) if subparagraph (i) does not apply and the constituent entity has a greater substance-based income exclusion amount for one of the jurisdictions than for the other jurisdictions, the constituent entity is located in that jurisdiction for the fiscal year, and (iii) if subparagraphs (i) and (ii) do not apply, the constituent entity is, for the fiscal year, (A) if it is an ultimate parent entity of an MNE group, located in the jurisdiction where it was created, and (B) in any other case, a stateless entity. Substance-based income exclusion amount (2) For the purposes of subparagraph (1)(b)(ii), a constituent entity’s substance-based income exclusion amount for a jurisdiction for a fiscal year is (a) if a substance-based income exclusion amount is calculated for the jurisdiction for the fiscal year, the amount that would be determined for that constituent entity under subsection 32 (1) if the constituent entity were the only constituent entity that is located in that jurisdiction and if the reference to “standard constituent entity” in that subsection were read as a reference to “constituent entity”; and (b) in any other case, nil. Dual-located entity — deeming rule (3) If a constituent entity that would, in the absence of subsection (1), be located in more than one jurisdiction (each referred to in this subsection as a “relevant jurisdiction”), is located in only one of those jurisdictions (referred to in this subsection as the “location jurisdiction”) because of subsection (1) and is not subject to tax under a qualified IIR in the location jurisdiction, (a) where Canada is a relevant jurisdiction (but is not the location jurisdiction) and Canada is not restricted from taxing the constituent entity under Part 2 because of an applicable tax treaty, the entity is deemed to be located in Canada for the purposes of clause 14 (1)(b)(i)(B) and subparagraph 14 (3)(a)(i); and (b) where Canada is not a relevant jurisdiction, and the constituent entity is subject to tax in a relevant jurisdiction under a qualified IIR because of a provision under the laws of that relevant jurisdiction that is equivalent in effect to paragraph (a), the entity is deemed to be located in that relevant jurisdiction for the purposes of subsection 14 (3).
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Currency conversion — GloBE calculations 7 (1) Subject to subsection (2), if an amount that is relevant to the determination of the top-up amount, or of any amount or result relevant to the determination of the top-up amount, of a constituent entity of an MNE group for a fiscal year is denominated in a currency other than the reporting currency of the consolidated financial statements of the ultimate parent entity of the MNE group and is not converted to that reporting currency in the course of preparing the consolidated financial statements, that amount is to be converted to that reporting currency using the foreign currency translation principles of the financial accounting standard that would have been used to convert the amount to the reporting currency if that conversion were undertaken in the course of preparing the consolidated financial statements. Euro-denominated thresholds (2) For the purposes of determining if any materiality or other threshold in this Act that is denominated in the currency of the European Monetary Union is satisfied or exceeded by an amount in respect of a group, entity or jurisdiction for a particular fiscal year, if the amount is denominated in another currency, the amount is to be converted from that currency to the currency of the European Monetary Union using the average of the daily rates of exchange, in respect of the two currencies for the month of December included in the fiscal year immediately preceding the particular fiscal year, as quoted by (a) the European Central Bank; (b) the Bank of Canada, if the European Central Bank does not quote a daily rate of exchange in respect of the two currencies; or (c) another source that is acceptable to the Minister, if neither the European Central Bank nor the Bank of Canada quote a daily rate of exchange in respect of the two currencies. If subsections (1) and (2) do not apply (3) Except as specifically otherwise provided, if an amount is relevant to a determination or computation that is required for the purposes of this Act in respect of an entity included in an MNE group or in respect of the MNE group for a fiscal year (a) the currency in which that amount is to be denominated for use in the determination or computation is the reporting currency of the consolidated financial statements of the ultimate parent entity of the MNE group; and (b) if that amount is not denominated in the reporting currency, it is to be converted, for use in the determination or computation, to the reporting currency using the average for the fiscal year of the daily rates of exchange quoted by the Bank of Canada or, if there is no daily rate quoted by the Bank of Canada for a particular day, a daily rate of exchange acceptable to the Minister, in respect of the two currencies.
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Negative amounts 8 Except as specifically otherwise provided, if an amount or a number is required under this Act to be determined or calculated by or in accordance with an algebraic formula and the amount or number determined or calculated would, but for this section, be a negative amount or number, it is deemed to be nil.
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ing the conclusion of the arrangement; or (b) one or more entities that are not included in any group are brought under common control with another entity, or one or more groups of entities, such that all those entities form a single group immediately following the conclusion of the arrangement. Demerger — meaning (6) For the purposes of subsection (4), a demerger is any arrangement under which the entities of a group are separated into two or more groups. Interpretation — fiscal year (7) For the purposes of paragraph (1)(a) and subsection (3), if an MNE group formed as a result of a merger does not have four actual fiscal years preceding the merger, the contiguous periods of equal length to the earliest of its actual fiscal years, the latest of which immediately precedes that earliest actual fiscal year, are deemed to be fiscal years of the MNE group.
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Definition of MNE group 10 (1) An MNE group means a group that includes at least one entity or permanent establishment that is not located in the jurisdiction in which the ultimate parent entity of the group is located. Definition of group (2) A group means (a) an ultimate parent entity and one or more other entities each of whose assets, liabilities, income, expenses and cash flows, by reason of ownership or control, either (i) are included in the consolidated financial statements of the ultimate parent entity, or (ii) would be included in the consolidated financial statements of the ultimate parent entity but for an exclusion on size or materiality grounds, or on the grounds that the entity is held for sale; or (b) an entity that (i) is not part of a group described in paragraph (a), and (ii) has one or more permanent establishments that are not located in the jurisdiction in which the entity is located.
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Definition of constituent entity 11 (1) A constituent entity , in respect of a group, means (a) an entity, other than an excluded entity, that is included in the group; or (b) a permanent establishment of a main entity that is described in paragraph (a). Permanent establishment — separate treatment (2) Except as expressly otherwise provided, a permanent establishment that is a constituent entity under paragraph (1)(b) is treated as a constituent entity separate from its main entity and any other permanent establishment of that main entity. Definition of standard constituent entity (3) A standard constituent entity , of an MNE group, means a constituent entity other than (a) an investment entity; (b) an insurance investment entity; or (c) a minority-owned constituent entity.
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Definition of ultimate parent entity 12 (1) An ultimate parent entity means (a) an entity (i) that has, directly or indirectly, a controlling interest in any other entity, and (ii) in which no other entity has, directly or indirectly, a controlling interest; or (b) the main entity of a group that is described in paragraph 10 (2)(b). Exclusion — sovereign wealth funds (2) For the purposes of subsection (1), any governmental entity that satisfies the condition in subparagraph (b)(ii) of the definition governmental entity in subsection 2 (1) is deemed not to have, directly or indirectly, a controlling interest in any other entity.
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Definition of excluded entity 13 (1) An excluded entity , for a fiscal year, means (a) an entity (referred to in this subsection as a “primary excluded entity”) that is throughout the fiscal year (i) a governmental entity, (ii) an international organization, (iii) a non-profit organization, (iv) a pension fund, (v) an investment fund that is an ultimate parent entity, (vi) a real estate investment vehicle that is an ultimate parent entity, or (vii) a qualifying non-profit subsidiary; (b) an entity if (i) throughout the fiscal year ownership interests in the entity having a fair market value equal to at least 95% of the fair market value of all ownership interests in the entity are held directly, or indirectly through one or more excluded entities, by one or more primary excluded entities (other than a pension fund that is a pension services entity), and (ii) all or substantially all the activities of the entity during the fiscal year consist of (A) holding assets for the benefit of the one or more primary excluded entities, (B) investing funds for the benefit of the one or more primary excluded entities, (C) activities that are ancillary to those carried out by the one or more primary excluded entities, or (D) any combination of clauses (A) to (C); or (c) an entity if (i) throughout the fiscal year ownership interests in the entity having a fair market value equal to at least 85% of the fair market value of all ownership interests in the entity are held directly, or indirectly through one or more excluded entities, by one or more primary excluded entities (other than a pension fund that is a pension services entity), and (ii) all or substantially all of the entity’s financial accounting income for the fiscal year consists of excluded dividends or excluded equity gains or losses. Excluded entity — constituent entity election (2) For the purposes of subsection (1), if the relevant filing constituent entity elects in respect of a particular entity that would, in the absence of this subsection, be an excluded entity under paragraph (1)(b) or (c) for a fiscal year (a) the particular entity is deemed not to be an excluded entity for the fiscal year; and (b) the election is a five-year election.
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Top-up tax liability 14 (1) A person must pay a tax in respect of an MNE group for a fiscal year in the amount determined under subsection 15 (1) if (a) the MNE group is a qualifying MNE group for the fiscal year; (b) one of the following conditions is met: (i) the person is (A) a relevant parent entity of the MNE group for the fiscal year, and (B) located in Canada, (ii) the person would, under the relevant assumptions, include in its income for the purposes of Part I of the Income Tax Act income for the fiscal year of a relevant parent entity that is (A) located in Canada, and (B) not a person; and (c) the relevant parent entity referred to in subparagraph (b)(i) or (ii) has a direct or indirect ownership interest at any time in the fiscal year in one or more constituent entities of the MNE group that (i) is not located in Canada, and (ii) has a top-up amount for the fiscal year. Relevant assumptions (2) For the purposes of subparagraph (1)(b)(ii), the relevant assumptions are that (a) the relevant parent entity referred to in that subparagraph has income for the fiscal year that would be included in computing its income for the purposes of Part I of the Income Tax Act if it were a person resident in Canada; and (b) the person referred to in that subparagraph is resident in Canada for the purposes of the Income Tax Act . Definition of relevant parent entity (3) A relevant parent entity , of an MNE group for a fiscal year, means an entity that meets the following conditions: (a) the entity is located in (i) Canada, or (ii) another jurisdiction where it is subject to tax under a qualified IIR (referred to in this subsection as a “Pillar Two jurisdiction”); (b) the entity is neither (i) an excluded entity for the purposes of this Act, nor (ii) excluded from the application of the qualified IIR of the jurisdiction where it is located because of a provision in the law of that jurisdiction equivalent to subsection 13 (1); and (c) the entity is any of the following: (i) the ultimate parent entity of the MNE group for the year, (ii) a particular intermediate parent entity of the MNE group for the year, if (A) the ultimate parent entity of the MNE group is not located in Canada or a Pillar Two jurisdiction, and (B) no other intermediate parent entity of the MNE group that is located in Canada or a Pillar Two jurisdiction has, directly or indirectly, a controlling interest in the particular intermediate parent entity, (iii) a partially-owned parent entity of the MNE group for the year that is not wholly owned, directly or indirectly, by another partially-owned parent entity of the MNE group that is located in Canada or a Pillar Two jurisdiction.
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Definition of GloBE income or loss 16 GloBE income or loss , of a constituent entity for a fiscal year, means the constituent entity’s financial accounting income for the year, adjusted according to the rules in this Division and Divisions 5 and 7.
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 the particular group entity is not a flow-through entity, other than a reverse hybrid entity or an ultimate parent entity, and (iv) the particular group entity holds its ownership interest in the particular flow-through entity (A) directly, or (B) indirectly, through one or more entities (each referred to in this clause as an “intermediate owner”), if (I) each intermediate owner is fiscally transparent in relation to the particular group entity, (II) where the particular group entity is not a flow-through entity or is a flow-through entity that is an ultimate parent entity, there is no intermediate owner that both 1 is not a flow-through entity, and 2 would meet the conditions in this subparagraph and subparagraph (ii) if the references in those subparagraphs to the “particular group entity” were read as references to that intermediate owner, and (III) where the particular group entity is a reverse hybrid entity, there is no intermediate owner that would meet the conditions in this subparagraph and subparagraphs (ii) and (iii) if the references in those subparagraphs to the “particular group entity” were read as references to that intermediate owner; (c) despite paragraph (b), if an amount of the net income or loss of the particular flow-through entity would, in the absence of this paragraph, be included under paragraph (b) in the financial accounting income of a particular group entity (referred to in this paragraph as the “lower-tier entity”) that is a reverse hybrid entity, and would also be included in the financial accounting income of another group entity (referred to in this paragraph as the “upper-tier entity”), that is not a flow-through entity or that is a flow-through entity that is an ultimate parent entity, in relation to an ownership interest the upper-tier entity holds in the particular flow-through entity through the lower-tier entity, the amount is (i) included in the financial accounting income of the upper-tier entity, and (ii) not included in the financial accounting income of the lower-tier entity; and (d) any amount of the net income or loss of the particular flow-through entity that is not excluded in computing its financial accounting income because of paragraph (a) or (b), or subsection (3), is included in the financial accounting income of the particular flow-through entity. Flow-through entity — ownership interests (7) For the purpose of determining an entity’s financial accounting income under subsection (6), a reference to an ownership interest refers only to an ownership interest that carries rights to profit.
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ments — losses (26) Despite subsection 17 (3), if a constituent entity that is a permanent establishment would, in the absence of this subsection, have a GloBE loss (referred to in this subsection as the “loss amount”) for a fiscal year (a) that loss amount is to be treated as an expense of the main entity in respect of the permanent establishment (and not of the permanent establishment) in computing its GloBE income or loss for the fiscal year, to the extent that the loss amount (i) is treated as an expense for the purposes of the computation of tax in the jurisdiction in which the main entity is located, and (ii) is not set off against an item of income that is subject to tax under the laws of both the jurisdiction of the permanent establishment and of the main entity; and (b) if the permanent establishment would, in the absence of this subsection, have GloBE income (referred to in this paragraph as the “income amount”) for a subsequent fiscal year, that income amount is treated as GloBE income of the main entity (and not of the permanent establishment) to the extent of the lesser of (i) the income amount of the permanent establishment for the subsequent fiscal year, and (ii) the amount, if any, by which the loss amount described in paragraph (a) exceeds the total of all amounts, each of which is, in respect of that loss amount, an amount that was treated as GloBE income of the main entity (and not of the permanent establishment) in a prior fiscal year under this paragraph.