Income Tax Act — I-3.3 204.82
Recovery of credit 204.82 (1) Where, at any time that is both in a taxation year included in the start-up period of a corporation that was registered under this Part and before its venture capital business is first discontinued, (a) 80% of the amount, if any, by which the total consideration received by it for Class A shares issued by it before that time exceeds the total of all amounts paid by it before that time to its shareholders as a return of capital on such shares exceeds (b) the total of all amounts each of which is the cost to the corporation of an eligible investment or reserve of the corporation at that time, the corporation shall pay a tax under this Part for the year equal to the amount determined by the formula (A × 20%) - B where A is the greatest amount by which the amount determined under paragraph 204.82(1)(a) exceeds the amount determined under paragraph 204.82(1)(b) for the year, and B is the total of all taxes payable under this subsection by the corporation for preceding taxation years. Liability for tax (2) Each corporation that has been registered under this Part shall, in respect of each month that ends before its venture capital business is first discontinued and in a particular taxation year of the corporation that begins after the end of the corporation’s start-up period (or, where the corporation has no start-up period, that begins after the time the corporation first issues a Class A share), pay a tax under this Part equal to the amount obtained when the greatest investment shortfall at any time that is in the month and in the particular year (in this section and sections 204.81 and 204.83 referred to as the “monthly deficiency”) is multiplied by 1/60 of the prescribed rate of interest in effect during the month. Determination of investment shortfall (2.1) Subject to subsection 204.82(2.2), a corporation’s investment shortfall at any time in a particular taxation year is the amount determined by the formula A - B - C where A is 60% of the lesser of (a) the amount, if any, by which the amount of the shareholders’ equity in the corporation at the end of the preceding taxation year exceeds the specified adjustment in respect of the shareholders’ equity in the corporation at the end of that year, and (b) the amount, if any, by which the amount of the shareholders’ equity in the corporation at the end of the particular taxation year exceeds the specified adjustment in respect of the shareholders’ equity in the corporation at the end of the particular year; B is the greater of (a) the total of all amounts each of which is the adjusted cost to the corporation of an eligible investment of the corporation at that time, and (b) 50% of the total of all amounts each of which is (i) the adjusted cost to the corporation of an eligible investment of the corporation at the beginning of the particular year, or (ii) the adjusted cost to the corporation of an eligible investment of the corporation at the end of the particular year; and C is 60% of the amount, if any, by which (a) the total of all amounts each of which is a tax or penalty under subsection (3) or (4), or a prescribed tax or penalty, paid before that time by the corporation (other than the portion, if any, of that tax or penalty the liability for which resulted in a reduction in the amount of the shareholders’ equity at the end of any preceding taxation year) exceeds (b) the total of all amounts each of which is a refund before that time of any portion of the total described in paragraph (a). Investment shortfall (2.2) For the purpose of this subsection and for the purpose of computing a corporation’s investment shortfall under subsection (2.1) at any time in a taxation year (in this subsection referred to as the “relevant year”), (a) unrealized gains and losses in respect of its eligible investments shall not be taken into account in computing the amount of the shareholders’ equity in the corporation; (b) where (i) the relevant year ends after 1998, a