Income Tax Act — I-3.3 125
of this section a percentage to one or more of them for the year, the business limit for the year of each of the corporations is (a) if the total of the percentages assigned in the agreement does not exceed 100%, $500,000 multiplied by the percentage assigned to that corporation in the agreement; and (b) in any other case, nil. Reduction — business limit (3.1) The business limit for the year of a corporation under subsection (2), (3) or (4) is reduced by the total of all amounts each of which is the portion, if any, of the business limit that the corporation assigns to another corporation under subsection (3.2). Assignment (3.2) For the purpose of this section, a Canadian-controlled private corporation (in this subsection referred to as the first corporation ) may assign all or any portion of its business limit under subsection (2), (3) or (4) for a taxation year of the first corporation to another Canadian-controlled private corporation (in this subsection referred to as the second corporation ) for a taxation year of the second corporation if (a) the second corporation has an amount of income, for its taxation year, referred to in subparagraph (a)(i) of the definition specified corporate income in subsection (7) from the provision of services or property directly to the first corporation; (b) the first corporation’s taxation year ends in the second corporation’s taxation year; (c) the amount assigned does not exceed the amount determined by the formula A − B where A is the amount of income referred to in paragraph (a), and B is the portion of the amount described in A that is deductible by the first corporation in respect of the amount of income referred to in clause (1)(a)(i)(A) or (B) for the year; and (d) a prescribed form is filed with the Minister by (i) the first corporation in its return of income for its taxation year, and (ii) the second corporation in its return of income for its taxation year. Failure to file agreement (4) If any of the Canadian-controlled private corporations that are associated with each other in a taxation year has failed to file with the Minister an agreement as contemplated by subsection (3) within 30 days after notice in writing by the Minister has been forwarded to any of them that such an agreement is required for the purpose of any assessment of tax under this Part, the Minister shall, for the purpose of this section, allocate an amount to one or more of them for the taxation year. The total amount so allocated must equal the least of the amounts that would, if none of the corporations were associated with any other corporation during the year and if this Act were read without reference to subsections (5) and (5.1), be the business limits of the corporations for the year. Special rules for business limit (5) Notwithstanding subsections (2), (3) and (4), (a) where a Canadian-controlled private corporation (in this paragraph referred to as the “first corporation”) has more than one taxation year ending in the same calendar year and it is associated in 2 or more of those taxation years with another Canadian-controlled private corporation that has a taxation year ending in that calendar year, the business limit of the first corporation for each taxation year ending in the calendar year in which it is associated with the other corporation that ends after the first such taxation year ending in that calendar year is, subject to the application of paragraph 125(5)(b), an amount equal to the lesser of (i) its business limit determined under subsection 125(3) or 125(4) for the first such taxation year ending in the calendar year, and (ii) its business limit determined under subsection 125(3) or 125(4) for the particular taxation year ending in the calendar year; and (b) where a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, its business limit for the year is that proportion of its business limit for the year determined without reference to this paragraph tha