5 (1) In this section and in subsection 80 (3), “avoidance transaction” means any transaction, (a) that, but for this section, would result directly or indirectly in a tax benefit, unless the transaction may reasonably be considered to have been undertaken or arranged in good faith primarily for purposes other than to obtain the tax benefit, or (b) that is part of a series of transactions which would result directly or indirectly in a tax benefit but for this section, unless the transaction may reasonably be considered to have been undertaken or arranged in good faith primarily for purposes other than to obtain the tax benefit; (“opération d’évitement”) “tax benefit” means a reduction, avoidance or deferral of tax or other amount payable by a corporation under this Act or under the Income Tax Act (Canada) or an increase in a refund of tax or other amount under this Act or under the Income Tax Act
(Canada) and includes, (a) a reduction, avoidance or deferral of tax or other amount that would be payable under the Act or the Income Tax Act (Canada) but for a Tax Treaty, Agreement or Convention between Canada and another country, and (b) an increase in a refund of tax or other amount under the Act or the Income Tax Act (Canada) as a result of a Tax Treaty, Agreement or Convention between Canada and another country; (“avantage fiscal”) “tax consequences”, to a corporation, means the amount of, (a) the corporation’s income, taxable income, taxable income earned in a jurisdiction other than Ontario, taxable income earned in Canada or taxable income earned in Canada in a jurisdiction other than Ontario, (a.1) the corporation’s net income, net loss, adjusted net income, adjusted net loss, pre-1994 loss or eligible losses for a taxation year, for the purposes of Part II.1, (b) the corporation’s paid-up capital, taxable paid-up capital, taxable paid-up capital that is deemed to be used by the corporation in a jurisdiction outside Ontario, paid-up capital employed in Canada, taxable paid-up capital employed in Canada or taxable paid-up capital employed in Canada that is deemed to be used by the corporation in a jurisdiction outside Ontario, (c) any gross premium referred to in Part IV that is payable to the corporation or its agent or agents, (c.1) any contribution made to a funded benefit plan within the meaning of section 74.2, any benefit paid to or for the benefit of a member of an unfunded benefit plan within the meaning of section 74.2 and any administration fee paid by a person in respect of a benefit plan, (d) any amount, other than an amount referred to in clause (a), (a.1), (b), (c) or (c.1), payable by or refundable to the corporation under this Act or that is relevant for the purposes of determining any other amount referred to in this subsection; (“attribut fiscal”) “transaction” includes an arrangement or event. (“opération”)  R.S.O. 1990, c. C.40, s. 5 (1); 1994, c. 14, s. 2 (1); 1996, c. 1, Sched. B, s. 4 (1); 2004, c. 16, s. 2 (2); 2005, c. 31, Sched. 5, s. 2 (1). Application (1.1) This section applies to, (a) transactions entered into after September 12, 1988 in respect of which the tax consequences to a person have been determined through a notice of assessment, reassessment, additional assessment or determination under subsection 152 (1.11) of the Income Tax Act (Canada) that involves the application of section 245 of that Act; and (b) transactions entered into on or after December 20, 1990.  2005, c. 31, Sched. 5, s. 2 (2). Determination of tax consequences (2) If a transaction is an avoidance transaction, the tax consequences to a corporation shall be determined in a manner that is reasonable in the circumstances in order to deny the tax benefit under this Act that would otherwise result directly or indirectly from the transaction, or from a series of transactions that includes the transaction.  R.S.O. 1990, c. C.40, s. 5 (2); 2004, c. 16, s. 2 (2). Application of subs. (2) (3) Subsection (2) applies to a transaction if it is reasonable to consider that, (a) the transaction would, if this Act were read without reference to this section, result directly or indirectly in a misuse of the provisions of one or more of, (i) this Act, (ii) the regulations made under this Act, (iii) a Tax Treaty, Agreement or Convention between Canada and another country, or (iv) any Act or regulation of any jurisdiction that is relevant in computing tax or any amount payable by or refundable to a corporation under this Act or in determining any amount relevant for the purposes of that computation; or (b) the transaction would result directly or indirectly in an abuse having regard to the provisions described in clause (a), other than this section, read as a whole.  2005, c. 31, Sched. 5, s. 2 (3). Nature of determination (4) Without restricting the generality of subsection (2) and despite any other Act or regulation of any jurisdiction, in any determination under subsection (2) of the tax consequences to a corporation of a transaction, (a) any deduction, exemption or exclusion in computing an amount referred to in clause (a), (a.1), (b), (c), (c.1) or (d) of the definition of “tax consequences” in subsection (1) may be allowed or disallowed in whole or in part; (b) any deduction, exemption or exclusion referred to in clause (a) and any income, loss or other amount used in the determination of any amount payable or refundable under this Act may be allocated to any person; (c) the nature of any payment or other amount may be recharacterized; and (d) the tax effects that would otherwise result from the application of other provisions of this Act may be ignored.  R.S.O. 1990, c. C.40, s. 5 (4); 1994, c. 14, s. 2 (2); 1996, c. 1, Sched. B, s. 4 (2); 2004, c. 16, s. 2 (2); 2005, c. 31, Sched. 5, s. 2 (4-6). Application of subs. (4) (4.1) Subsection (4) applies to any benefit provided under a Tax Treaty, Agreement or Convention between Canada and another country that applies for the purposes of this Act despite the following: 1. A provision of the Tax Treaty, Agreement or Convention. 2. A provision of any Act of Canada that gives the force of law to the Tax Treaty, Agreement or Convention and relates to the application of the Tax Treaty, Agreement or Convention.  2005, c. 31, Sched. 5, s. 2 (7). Consequential adjustments (5) If a notice of assessment, reassessment or additional assessment involving the application of subsection (2) with respect to a transaction has been sent to a corporation, or a notice of determination under subsection 80 (3) has been sent to the corporation, any other corporation is entitled, within 180 days after the day of mailing of the notice, to request in writing that the Minister make an assessment, reassessment or additional assessment applying subsection (2), or make a determination under subsection 80 (3), with respect to the transaction.  R.S.O. 1990, c. C.40, s. 5 (5); 2004, c. 16, s. 2 (2). Duty of the Minister (6) On receipt of a request by a corporation under subsection (5), the Minister shall consider the request and make an assessment or a determination under subsection 80 (3) with respect to the corporation, despite the expiry of any time limit under subsection 80 (11), except that an assessment or determination may be made under this subsection only to the extent that it may be reasonably regarded as relating to a transaction referred to in subsection (5).  R.S.O. 1990, c. C.40, s. 5 (6); 2004, c. 16, s. 2 (2). Notice of assessment, etc. (7) The tax consequences to any corporation after the application of this section shall be determined only through a notice of assessment, reassessment or additional assessment, or through a notice of determination under subsection 80 (3), involving the application of this section.  R.S.O. 1990, c. C.40, s. 5 (7); 2004, c. 16, s. 2 (2). Interpretation, corporation (8) In the application of this section, (a) a reference to “corporation” in this section shall be deemed to include a reference to a person subject to tax under subsection 2 (2.1) and to an administrator of a benefit plan referred to in section 74.2; and (b) the amount of tax payable under this Act by an administrator of a benefit plan referred to in section 74.2 shall be deemed to include the amount of tax required to be collected and paid over to the Minister by the administrator under section 74.2.  1996, c. 1, Sched. B, s. 4 (3); 2004, c. 16, s. 2 (2). Section Amendments with date in force (d/m/y) 1994, c. 14, s. 2 (1-3) - 01/01/1994; 1996, c. 1, Sched. B, s. 4 (1-3) - 01/07/1993 2004, c. 16, s. 2 (2)
- 01/01/2004 2005, c. 31, Sched. 5, s. 2 (1-4, 7) - 31/12/1991; 2005, c. 31, Sched. 5, s. 2 (5) - 31/07/1993; 2005, c. 31, Sched. 5, s. 2 (6) - 01/01/1994 Inter-provincial tax avoidance