5.1 (1) In this section, “taxpayer” means a corporation or a partnership whose members include one or more corporations; (“contribuable”) “transferee” means, in respect of a taxation year, (a) a corporation that has a permanent establishment in one or more provinces other than Ontario, or (b) a partnership, one or more of whose members is a corporation described in clause (a); (“bénéficiaire du transfert”) “transferor” means, in respect of a taxation year, (a) a corporation that has a permanent establishment in one or more provinces other than Ontario, (b) an individual who is ordinarily resident in a province other than Ontario on the last day of the taxation year, including a trust that is deemed under subsection 104 (2) of the Income Tax Act
(Canada) to be an individual in respect of the trust property, or (c) a partnership, one or more of whose members is a corporation described in clause (a) or an individual described in clause (b). (“auteur du transfert”)  1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2). Inter-provincial anti-avoidance, disposition of property (2) Despite any other provision of this Act except subsections (4) and (8), if a taxpayer disposes of property to a transferee, and clauses (3) (a) to (d) apply in respect of the disposition, the amount of the taxpayer’s deemed proceeds of disposition of the property for the purposes of this Act is the total of, (a) the amount that is deemed to be the taxpayer’s proceeds of disposition of the property as determined under this Act without reference to this section; and (b) the total of all amounts, each of which is in respect of a province in which the transferee has a permanent establishment, determined by multiplying, (i) the amount by which the cost amount of the property to the transferee under the laws of a province other than Ontario exceeds the amount referred to in clause (a), by, (ii) the percentage of the transferee’s taxable income, for the taxation year in which the transferee disposed of the property, (A) if the transferee is a corporation, that is deemed to be earned in that other province under regulations made under the Income Tax Act
(Canada), or that would be deemed to be earned in that other province if the transferee had had taxable income for that year, or (B) if the transferee is a partnership, that the partnership would be deemed to have earned in that other province under regulations made under the Income Tax Act (Canada) if the partnership were a corporation, its taxation year were its fiscal period, it had had income for the fiscal period and its taxable income for the year were its income for that fiscal period.  1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2). Application of subs. (2) (3) Subsection (2) applies in respect of a disposition of property if, (a) the transferee does not deal at arm’s length with the taxpayer at or immediately after the time of the disposition; (b) the amount of the taxpayer’s proceeds of disposition of the property, as determined under this Act without reference to this section, would be deemed to be an amount that is less than the transferee’s cost amount of the property immediately after the disposition, as determined under the laws of a province other than Ontario in which the transferee or, if the transferee is a partnership, one or more of its members, has a permanent establishment; (c) the property, or other property the fair market value of which is derived primarily from the property or other property acquired by any person other than the taxpayer in substitution for the property, is subsequently disposed of to another person or partnership; and (d) it is reasonable to believe that a purpose of the disposition of the property to the transferee prior to the subsequent disposition of the property by the transferee to another person was to reduce the total amount of income tax payable to one or more provinces in respect of the two dispositions to an amount that would be less than the amount of provincial income tax that would have been payable if the taxpayer’s proceeds of disposition of the property had equalled the transferee’s proceeds of disposition of the property on the subsequent disposition.  1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2). Exceptions (4) Subsection (2) does not apply in respect of a disposition if, (a) the cost amount of the property to the transferee is greater than the taxpayer’s proceeds of disposition of the property, as otherwise determined, by reason only of the operation of paragraph 88 (1) (c) or 98 (3) (b) of the Income Tax Act (Canada) or a comparable provision of the laws of another province in which the transferee, or if the transferee is a partnership, one or more of its members, has a permanent establishment; (b) in the case where the taxpayer is a corporation, the percentage of the taxpayer’s taxable income, for the taxation year in which the taxpayer disposes of the property, that is not deemed, or would not be deemed if the taxpayer had had taxable income for that year, to be earned outside Ontario for the purposes of section 39, is less than or equal to, (i) if the transferee is a corporation, the percentage of the transferee’s taxable income for the taxation year in which the transferee disposed of the property, that is not deemed, or would not be deemed if the transferee had had taxable income for that year, to be earned outside Ontario for the purposes of section 39, or (ii) if the transferee is a partnership, the percentage of the transferee’s income, for the fiscal period in which the transferee disposed of the property, that would not be deemed to be earned outside Ontario for the purposes of section 39, if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period; or (c) in the case where the taxpayer is a partnership, the percentage of the taxpayer’s income, for the fiscal period in which the taxpayer disposed of the property, that would not be deemed to be earned outside Ontario for the purposes of section 39, if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period, is less than or equal to the percentage of the transferee’s taxable income, for the taxation year in which the transferee disposed of the property, that is not deemed, or would not be deemed if the transferee had had taxable income for that year, to be earned outside Ontario for the purposes of section 39.  1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2). Inter-provincial anti-avoidance, acquisition of property (5) Despite any other provision of this Act except subsections (7) and (8), if a taxpayer acquires property from a transferor and clauses (6) (a) to (d) apply, the taxpayer’s cost amount of the property for the purposes of this Act shall be the amount by which, (a) the taxpayer’s cost amount of the property as otherwise determined under this Act without reference to this section, exceeds, (b) the total of all amounts, each of which is in respect of a province in which the transferor has a permanent establishment, determined by multiplying, (i) the amount by which the amount determined under clause (a) exceeds the proceeds of disposition of the property to the transferor as determined under the laws of a province other than Ontario, by, (ii) the percentage of the transferor’s taxable income for the taxation year in which the disposition occurred that is deemed to be earned in that other province under regulations made under the Income Tax Act (Canada), or that would be deemed to be earned in that other province if the transferor had had taxable income for that year.  1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2). Application of subs. (5) (6) Subsection (5) applies in respect of an acquisition of property if, (a) the transferor does not deal at arm’s length with the taxpayer at or immediately after the time of the acquisition; (b) the cost amount of the property to the taxpayer, as otherwise determined under this Act, is greater than the amount of the transferor’s deemed proceeds of disposition of the property as determined under the laws of a province other than Ontario in which the transferor or, if the transferor is a partnership, one or more of its members, has a permanent establishment; (c) the property, or other property the fair market value of which is derived primarily from the property or other property acquired by any person other than the taxpayer in substitution for the property, is subsequently disposed of to another person or partnership; and (d) it is reasonable to believe that a purpose of the disposition of the property to the taxpayer prior to the disposition of the property by the taxpayer to another person was to reduce the total amount of income tax payable to one or more provinces in respect of the two dispositions to an amount that would be less than the amount of provincial income tax that would have been payable if the taxpayer’s cost amount of the property for the purposes of this Act had equalled the greater of, (i) the transferor’s cost amount of the property under the Income Tax Act (Canada) immediately before the disposition to the taxpayer, and (ii) the transferor’s cost amount of the property under the laws of another province immediately before the disposition to the taxpayer.  1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2). Exceptions (7) Subsection (5) does not apply in respect of an acquisition of a property if, (a) the cost amount of the property to the taxpayer is greater than the transferor’s proceeds of disposition of the property, as otherwise determined, by reason only of the operation of paragraph 88 (1) (c) or 98 (3) (b) of the Income Tax Act (Canada), as applicable for the purposes of this Act; (b) in the case where the taxpayer is a corporation, the percentage of the taxpayer’s taxable income, for the taxation year in which the taxpayer acquires the property, that is not deemed, or would not be deemed if the taxpayer had had taxable income for that year, to be earned outside Ontario for the purposes of section 39, is less than or equal to, (i) if the transferor is a corporation, the percentage of the transferor’s taxable income, for the taxation year in which the transferor disposed of the property, that is not deemed, or would not be deemed if the transferor had had income for that year, to be earned outside Ontario for the purposes of section 39, or (ii) if the transferor is a partnership, the percentage of the transferor’s income, for the fiscal period in which the transferor disposed of the property, that would not be deemed to be earned outside Ontario under the rules prescribed for the purposes of section 39, if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period; or (c) in the case where the taxpayer is a partnership, the percentage of the taxpayer’s income, for the fiscal period in which the taxpayer acquired the property, that would not be deemed to be earned outside Ontario under the rules prescribed for the purposes of section 39 if the partnership were a corporation, the fiscal period were its taxation year and it had had income for the fiscal period, is less than or equal to the percentage of the transferor’s taxable income, for the taxation year in which the transferor disposed of the property, that is not deemed, or would not be deemed if the transferor had had taxable income for that year, to be earned outside Ontario for the purposes of section 39 or, if the transferor is an individual, is deemed, or would be deemed if the transferor had had taxable income for that year, to be earned in Ontario under rules prescribed in the regulations made under the Income Tax Act (Canada).  1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2). Section not applicable (8) This section does not apply to a disposition or an acquisition of property if, (a) the property is, (i) depreciable property that was included in Class 3 of Schedule II to the regulations made under the Income Tax Act (Canada) and was acquired after November 12, 1981 and before October 25, 1985 by the transferor, (ii) depreciable property referred to in subclause (i) that was acquired from a related corporation, and the difference between the cost amount of the property for the purposes of this Act and the cost amount of the property for the purposes of the Income Tax Act (Canada) can be primarily attributed to the fact that subsection 1100 (2) of the regulations made under that Act that applied for the purposes of that Act after November 12, 1981 did not apply for the purposes of this Act before October 25, 1985, or (iii) a foreign resource property; (b) the rules or conditions prescribed by the regulations have been satisfied; or (c) an election is made under subsection 29.1 (4) or 31.1 (4) in respect of the disposition, or could have been made if those subsections had been enacted and in force.  1997, c. 43, Sched. A, s. 4 (1); 2004, c. 16, s. 2 (2). Section Amendments with date in force (d/m/y) 1997, c. 43, Sched. A, s. 4 (1, 2) - 20/12/1996 2004, c. 16, s. 2 (2)
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