62.1 (1) In this Division, “long-term debt” has the meaning assigned by subsection 181 (1) of the Income Tax Act (Canada); (“passif à long terme”) “related financial institution” means, in respect of a corporation that is a financial institution, a financial institution that is related to the corporation; (“institution financière liée”) “related insurance corporation” means, in respect of a corporation that is a financial institution, an insurance corporation that is related to the corporation; (“compagnie d’assurance liée”) “reserves” means, in respect of a financial institution for a taxation year, the amount, as it stood at the end of the day on which the paid-up capital of the financial institution is required to be measured under this Part, of all of the corporation’s reserves, provisions and allowances, including any provision in respect of deferred taxes or future tax liabilities, but excluding allowances in respect of depreciation or depletion. (“réserves”)  1997, c. 43, Sched. A, s. 33; 2001, c. 23, s. 42 (1); 2004, c. 16, s. 2 (2). Paid-up capital (2) The paid-up capital for a taxation year of a financial institution, other than an authorized foreign bank, is the paid-up capital of the financial institution as it stood at the end of the day on which the paid-up capital is required to be measured under this Part and is the amount, if any, by which the total of, (a) the amount of its long-term debt; (b) the amount of its capital stock or, in the case of a financial institution incorporated without share capital, the amount of its members’ contributions; (c) the amount of its retained earnings; (d) the amount of its contributed surplus and the amount of any other surpluses, subject to subsection (3); (d.1) for taxation years commencing after September 30, 2006, the amount of its accumulated other comprehensive income; and (e) the amount of its reserves for the taxation year, except to the extent that they were deducted in computing its income under Part II for the taxation year, exceeds the total of, (f) the amount of its deferred tax debit balance or future tax assets; (g) the amount of any deficit deducted in computing its shareholders’ equity; (h) any amount deducted under subsection 130.1 (1) or 137 (2) of the Income Tax Act (Canada), as made applicable by sections 47 and 51 of this Act, in computing its income under Part II for the year, to the extent that the amount can reasonably be regarded as being included in an amount determined in respect of the financial institution for the taxation year under any of clauses (a) to (e); and (i) any amount, except to the extent that it has been deducted by the financial institution in computing its income under Part II for the taxation year or any prior taxation year, deductible by the financial institution, (i) under subsection 37 (1) of the Income Tax Act (Canada), as made applicable for the purposes of this Act by subsection 11 (1), in respect of scientific research and experimental development, or (ii) under clause 11 (10) (a) on account of the Ontario New Technology Tax Incentive, as determined under the regulations.  1997, c. 43, Sched. A, s. 33; 2001, c. 23, s. 42 (2, 3); 2004, c. 16, s. 2 (2); 2007, c. 7, Sched. 6, s. 9. Paid-up capital of authorized foreign bank (2.1) The paid-up capital for a taxation year of an authorized foreign bank is the amount determined under paragraph 181.3 (3) (e) of the Income Tax Act (Canada) in respect of the authorized foreign bank for the taxation year.  2001, c. 23, s. 42 (4); 2004, c. 16, s. 2 (2). Interpretation (3) Subsections 62 (4), (5) and (7) do not apply for the purposes of clause (2) (d).  1997, c. 43, Sched. A, s. 33; 2004, c. 16, s. 2 (2). Taxable paid-up capital (4) The taxable paid-up capital for a taxation year of a financial institution, other than an authorized foreign bank, is the amount, if any, by which the financial institution’s paid-up capital for the year exceeds its investment allowance for the year in respect of all investments, each of which is an investment in a share of the capital stock or long-term debt of, (a) a related financial institution that has a permanent establishment in Ontario and is not exempt from tax under this Part; or (b) a related insurance corporation that has a permanent establishment in Ontario.  1997, c. 43, Sched. A, s. 33; 1999, c. 9, s. 86 (1); 2001, c. 23, s. 42 (5); 2004, c. 16, s. 2 (2). Taxable paid-up capital of authorized foreign bank (4.1) The taxable paid-up capital for a taxation year of an authorized foreign bank is the amount by which its paid-up capital for the taxation year, as determined under subsection (2.1), exceeds its investment allowance for the taxation year in respect of all amounts each of which is the amount at the end of the taxation year, before the application of risk weights, that the bank would be required to report under the OSFI risk-weighting guidelines, if those guidelines applied and a report is required at that time, of an eligible investment used or held by the bank in the taxation year in the course of carrying on its Canadian banking business.  2001, c. 23, s. 42 (6); 2004, c. 16, s. 2 (2). Eligible investment of authorized foreign bank (4.2) For the purpose of subsection (4.1), an eligible investment of an authorized foreign bank is a share of the capital stock or long-term debt of a financial institution or insurance corporation, (a) that is related to the bank at the end of the taxation year; (b) that has a permanent establishment in Ontario; and (c) that is not exempt from tax under this Part.  2001, c. 23, s. 42 (6); 2004, c. 16, s. 2 (2). Investment allowance (5) The investment allowance for a taxation year of a financial institution, other than an authorized foreign bank, in respect of an investment in a share of the capital stock or long-term debt of a related financial institution or related insurance corporation that has a permanent establishment in Ontario is the amount determined in accordance with the following formula, A = B × C/D where, “A” is the investment allowance of the financial institution for the year in respect of the investment; “B” is the carrying value of the investment to the financial institution as at the end of the day on which the adjusted taxable paid-up capital of the financial institution is required to be measured under this Part; “C” is the percentage of the related financial institution’s taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in its last taxation year ending in the financial institution’s taxation year in a jurisdiction other than Ontario, or the percentage of the related insurance corporation’s taxable income that is not deemed under the rules prescribed by the regulations to have been earned by it in its last taxation year ending in the financial institution’s taxation year in a jurisdiction other than Ontario; and “D” is the percentage of the financial institution’s taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in the taxation year in a jurisdiction other than Ontario. 1997, c. 43, Sched. A, s. 33; 1999, c. 9, s. 86 (2); 2001, c. 23, s. 42 (7); 2004, c. 16, s. 2 (2). Investment allowance, authorized foreign bank (5.0.1) The investment allowance for a taxation year of an authorized foreign bank in respect of an eligible investment, as described in subsection (4.2), is the amount calculated using the formula, A × B/C in which, “A” is the amount of the eligible investment as determined under subsection (4.1), “B”   is the percentage of the related financial institution’s taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in its last taxation year ending in the authorized foreign bank’s taxation year in a jurisdiction other than Ontario, or the percentage of the related insurance corporation’s taxable income that is not deemed under the rules prescribed by the regulation to have been earned by it in its last taxation year ending in the authorized foreign bank’s taxation year in a jurisdiction other than Ontario, and “C” is the percentage of the authorized foreign bank’s taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in the taxation year in a jurisdiction other than Ontario. 2001, c. 23, s. 42 (8); 2004, c. 16, s. 2 (2). Exception (5.1) Despite subsections (4) and (5), the taxable paid-up capital for a taxation year of a financial institution, other than an authorized foreign bank, is the amount, if any, by which its paid-up capital for the year exceeds its investment allowance for the year in respect of all investments, each of which is an investment in a share of the capital stock or long-term debt of a related financial institution that has a permanent establishment in Canada and that is not exempt from tax under this Part, or a related insurance corporation that has a permanent establishment in Canada, (a) if the financial institution is not controlled, directly or indirectly, at any time in the taxation year by, (i) another financial institution, other than a corporation prescribed by the regulations as a financial institution for the purposes of clause 58 (2) (g), (ii) an insurance corporation, or (iii) a corporation that would be considered to be a financial institution if it carried on business in Canada and had been incorporated in Canada; and (b) if the financial institution is not deemed by the rules prescribed by the regulations to use any of its taxable paid-up capital in the taxation year in a jurisdiction other than Ontario.  1999, c. 9, s. 86 (3); 2001, c. 23, s. 42 (9, 10); 2004, c. 16, s. 2 (2). Same (5.2) If subsection (5.1) applies in determining the taxable paid-up capital of a financial institution for a taxation year, the investment allowance of the financial institution for the taxation year in respect of an investment in a share of the capital stock or long-term debt of a related financial institution or related insurance corporation that has a permanent establishment in Canada is the carrying value of the investment to the financial institution as at the end of the day on which the adjusted taxable paid-up capital of the financial institution is required to be measured under this Part for the taxation year.  1999, c. 9, s. 86 (3); 2004, c. 16, s. 2 (2). Adjusted taxable paid-up capital (6) The adjusted taxable paid-up capital of a financial institution for a taxation year is the amount determined in accordance with the following formula: A = C + P – D where, “A” is the financial institution’s adjusted taxable paid-up capital for the taxation year; “C” is the financial institution’s taxable paid-up capital for the taxation year; “P” is the amount determined by multiplying the specified percentage by the amount of the financial institution’s Canadian tangible property for the taxation year; and “D” is the financial institution’s capital deduction for the taxation year. 1997, c. 43, Sched. A, s. 33; 2004, c. 16, s. 2 (2). Canadian tangible property (7) The Canadian tangible property of a financial institution for a taxation year is one-third of the total of all amounts determined under paragraphs 181.3 (1) (a) and (b) of the Income Tax Act (Canada) in respect of the institution for the taxation year, measured at the end of the day on which the institution’s adjusted taxable paid-up capital is required to be measured for the taxation year.  1997, c. 43, Sched. A, s. 33; 2004, c. 16, s. 2 (2). Specified percentage (8) The specified percentage, in respect of a corporation’s Canadian tangible property for a taxation year, means the fraction, expressed as a percentage, where the numerator is 100 per cent and the denominator is the percentage of the financial institution’s taxable paid-up capital that is not deemed under the rules prescribed by the regulations to be used by it in the taxation year in a jurisdiction other than Canada.  1997, c. 43, Sched. A, s. 33; 2004, c. 16, s. 2 (2). Determining values and amounts (9) The carrying value of an asset as of a particular date or any other amount for the purposes of this Division shall be determined in the same manner as it would be required to be determined for the purposes of Part I.3 of the Income Tax Act
(Canada).  1997, c. 43, Sched. A, s. 33; 2004, c. 16, s. 2 (2). Capital deduction (10) The capital deduction of a financial institution for a taxation year is the amount determined under the following rules: 1. If the financial institution is related at any time in the taxation year to another corporation that, i. is a financial institution, ii. has a permanent establishment in Canada, and iii. is not exempt by virtue of subsection 71 (1) from tax under this Part, the financial institution’s capital deduction for the taxation year is the amount calculated using the formula, A/B × [($2 million × C/D) + E] in which, “A”   is the amount that is the financial institution’s taxable capital employed in Canada for the taxation year for the purposes of Part I.3 of the Income Tax Act (Canada), “B”   is the total of the amount of “A” for the taxation year and all amounts each of which is the amount that is the taxable capital employed in Canada for the purposes of Part I.3 of the Income Tax Act (Canada) of a related financial institution for its last taxation year ending before the end of the financial institution’s taxation year, if the related financial institution has a permanent establishment in Canada and is not exempt by virtue of subsection 71 (1) from tax under this Part, “C”   is the number of days in the taxation year before October 1, 2001, “D”   is the number of days in the taxation year, and “E” is the amount determined under subsection (10.1). 2. In any other case, the financial institution’s capital deduction for the taxation year is the amount calculated using the formula, ($2 million × C/D) + E in which “C”, “D” and “E” have the same meanings as in paragraph 1. 2004, c. 31, Sched. 9, s. 30. Determination of “E” (10.1) The amount of “E” in subsection (10) for a taxation year is the total of, (a) $5 million multiplied by the ratio of the number of days in the taxation year that are after September 30, 2001 and before January 1, 2005 to the total number of days in the taxation year; (b) $7.5 million multiplied by the ratio of the number of days in the taxation year that are after December 31, 2004 and before January 1, 2006 to the total number of days in the taxation year; (c) $10 million multiplied by the ratio of the number of days in the taxation year that are after December 31, 2005 and before January 1, 2007 to the total number of days in the taxation year; (d) $12.5 million multiplied by the ratio of the number of days in the taxation year that are after December 31, 2006 and before January 1, 2008 to the total number of days in the taxation year; and (e) $15 million multiplied by the ratio of the number of days in the taxation year that are after December 31, 2007 to the total number of days in the taxation year.  2004, c. 31, Sched. 9, s. 30. Limitation (11) Subsection 181 (4) of the Income Tax Act (Canada) applies with necessary modifications for the purposes of this Division in determining any amount required to determine a financial institution’s adjusted taxable paid-up capital for a taxation year.  1997, c. 43, Sched. A, s. 33; 2004, c. 16, s. 2 (2). Section Amendments with date in force (d/m/y) 1997, c. 43, Sched. A, s. 33 - 07/05/1997; 1998, c. 34, s. 49 - 07/05/1997; 1999, c. 9, s. 86 (1, 2) - 14/12/1999; 1999, c. 9, s. 86 (3) - 07/05/1997 2001, c. 8, s. 26
- no effect - see 2001, c. 23, s. 42 (11, 12) - 01/10/2001; 2001, c. 23, s. 42 (1, 3) - 05/12/2001; 2001, c. 23, s. 42 (2, 4-9) - 28/06/1999; 2001, c. 23, s. 42 (10)
- 07/05/1997; 2001, c. 23, s. 42 (11, 12) - 01/10/2001 2004, c. 16, s. 2 (2)
- 01/01/2004; 2004, c. 31, Sched. 9, s. 30 - 16/12/2004 2007, c. 7, Sched. 6, s. 9 - 17/05/2007 Division C — Computation of Taxable Paid-Up Capital Employed in Canada of Non-Resident