Income Tax Act — I-3.3 130.1
Deduction from tax 130.1 (1) In computing the income for a taxation year of a corporation that was, throughout the year, a mortgage investment corporation, (a) there may be deducted the total of (i) all taxable dividends, other than capital gains dividends, paid by the corporation during the year or within 90 days after the end of the year to the extent that those dividends were not deductible by the corporation in computing its income for the preceding year, and (ii) 1/2 of all capital gains dividends paid by the corporation during the period commencing 91 days after the commencement of the year and ending 90 days after the end of the year; and (b) no deduction may be made under section 112 in respect of taxable dividends received by it from other corporations. Dividend equated to bond interest (2) For the purposes of this Act, any amount received from a mortgage investment corporation by a shareholder of the corporation as or on account of a taxable dividend, other than a capital gains dividend, shall be deemed to have been received by the shareholder as interest payable on a bond issued by the corporation after 1971. Application of s. (2) (3) Subsection 130.1(2) applies where the taxable dividend (other than a capital gains dividend) described in that subsection was paid during a taxation year throughout which the paying corporation was a mortgage investment corporation or within 90 days thereafter. Election re capital gains dividend (4) Where at any particular time during the period that begins 91 days after the beginning of a taxation year of a corporation that was, throughout the year, a mortgage investment corporation and ends 90 days after the end of the year, a dividend is paid by the corporation to shareholders of the corporation, if the corporation so elects in respect of the full amount of the dividend in prescribed manner and at or before the earlier of the particular time and the first day on which any part of the dividend was paid, (a) the dividend shall be deemed to be a capital gains dividend to the extent that it does not exceed the amount, if any, by which (i) twice the taxed capital gains of the corporation for the year exceeds (ii) the total of all dividends, and parts of dividends, paid by the corporation during the period and before the particular time that are deemed by this paragraph to be capital gains dividends; and (b) notwithstanding any other provision of this Act, if an amount is received by a taxpayer in a taxation year as, on account of, in lieu of payment of or in satisfaction of, the dividend, the amount (i) shall not be included in computing the taxpayer’s income for the year as income from a share of the capital stock of the corporation, and (ii) is deemed to be a capital gain of the taxpayer from the disposition of capital property in the year. Application of ss. 131(1.1) to (1.4) (4.1) Where at any particular time a mortgage investment corporation paid a dividend to its shareholders and subsection 130.1(4) would have applied to the dividend except that the corporation did not make an election under that subsection on or before the day on or before which it was required by that subsection to be made, subsections 131(1.1) to 131(1.4) apply with such modifications as the circumstances require. (4.2) to (4.5) [Repealed, 2013, c. 34, s. 276] Public corporation (5) Notwithstanding any other provision of this Act, a mortgage investment corporation shall be deemed to be a public corporation. Meaning of mortgage investment corporation (6) For the purposes of this section, a corporation is a mortgage investment corporation throughout a taxation year if, throughout the year, (a) it was a Canadian corporation; (b) its only undertaking was the investing of funds of the corporation and it did not manage or develop any real or immovable property; (c) none of the property of the corporation consisted of (i) debts owing to the corporation that were secured on real or immovable property situated outside Ca