Income Tax Act — I-3.3 149
agraphs (1)(d) to (d.6)) have at the particular time one or more rights in equity or otherwise, either immediately or in the future and either absolutely or contingently to, or to acquire, shares or capital of the entity, and (c) the exercise of the rights referred to in paragraph (b) would result in the entity not being a person described in any of paragraphs (1)(d.1) to (d.6) at the particular time, the entity is deemed not to be, at the particular time, a person described in any of paragraphs (1)(d) to (d.6). Election (1.11) Subsection (1) does not apply in respect of a person’s taxable income for a particular taxation year that begins after 1998 where (a) paragraph (1)(d) did not apply in respect of the person’s taxable income for the person’s last taxation year that began before 1999; (b) paragraph (1)(d.2), (d.3) or (d.4) would, but for this subsection, have applied in respect of the person’s taxable income for the person’s first taxation year that began after 1998; (c) there has been no change in the direct or indirect control of the person during the period that (i) began at the beginning of the person’s first taxation year that began after 1998, and (ii) ends at the end of the particular year; (d) the person elects in writing before 2002 that this subsection apply; and (e) the person has not notified the Minister in writing before the particular year that the election has been revoked. Deemed election (1.12) If at any time there is an amalgamation (within the meaning assigned by subsection 87(1)) of a corporation (in this subsection referred to as the “parent”) and one or more other corporations (each of which in this subsection is referred to as the “subsidiary”) each of which is a subsidiary wholly-owned corporation of the parent, and immediately before that time the parent is a person to which subsection (1) does not apply by reason of the application of subsection (1.11), the new corporation is deemed, for the purposes of subsection (1.11), to be the same corporation as, and a continuation of, the parent. Income test (1.2) For the purposes of paragraphs (1)(d.5) and (d.6), income of a corporation, a commission or an association from activities carried on outside the geographical boundaries of a municipality or of a municipal or public body does not include income from activities carried on (a) under an agreement that meets the following conditions: (i) the agreement is in writing between (A) the corporation, commission or association, and (B) a person who is His Majesty in right of Canada or of a province, a municipality, a municipal or public body or a corporation to which any of paragraphs (1)(d) to (d.6) applies and that is controlled by His Majesty in right of Canada or of a province, by a municipality in Canada or by a municipal or public body in Canada, (ii) the agreement is applicable within the geographical boundaries of (A) if the person is His Majesty in right of Canada or a corporation controlled by His Majesty in right of Canada, Canada, (B) if the person is His Majesty in right of a province or a corporation controlled by His Majesty in right of a province, the province, (C) if the person is a municipality in Canada or a corporation controlled by a municipality in Canada, the municipality, and (D) if the person is a municipal or public body or a corporation controlled by such a body, the area described in subsection (11) in respect of the person, (iii) the income earned from the activities carried on under the agreement is paid from the party described in clause (i)(B) to the party described in clause (i)(A), and (iv) the activities under the agreement are activities normally carried out by a local government; or (b) in a province as (i) a producer of electrical energy or natural gas, or (ii) a distributor of electrical energy, heat, natural gas or water, where the activities are regulated under the laws of the province. Votes or de facto control (1.3) Paragraphs (1)(d) to (d.6) do not apply in respec