Disposition of patient capital investment
 18. (1) For the purposes of clause (a) of the definition of “C” in subsection 74 (1) the Act, each of the following events constitutes a disposition of a patient capital investment:  1. A change in the terms or conditions of the investment that causes it to cease to be a patient capital investment. 2. The repayment of more than 5 per cent of the principal amount of the patient capital investment in any of the first five years after the investment was issued. 3. The redemption, acquisition or cancellation of the patient capital investment by the qualifying small business corporation or by a person related to the qualifying small business corporation. 4. The substitution of a property that is not a patient capital investment for the patient capital investment. 5. The sale or transfer of the patient capital investment, i. within one year after the date of its issue if the sale or transfer is to a person who is not associated with the corporation that made the patient capital investment, or ii. within five years after the date of its issue if the investment does not continue to be a patient capital investment immediately after the sale or transfer.  O. Reg. 37/09, s. 18 (1). (2) Despite subsection (1), the following events do not constitute a disposition of a patient capital investment: 1. The acquisition by the holder of the patient capital investment of a property that is a patient capital investment in the same qualifying small business corporation or qualifying small business, as the case may be, in substitution for the patient capital investment in the corporation or business, if the new patient capital investment is the only consideration received or receivable in respect of the substitution. 2. A repayment, redemption, acquisition or cancellation of the patient capital investment after and as a reasonably expected consequence of the qualifying small business corporation or qualifying small business, as the case may be, i. becoming bankrupt, or ii. committing a default under the agreement or instrument under which the patient capital investment was issued, if the default occurred at least four months before the repayment, redemption, acquisition or cancellation, was a consequence of the inability of the corporation or small business to pay its liabilities as they came due and has not been remedied. 3. A repayment, redemption, cancellation, acquisition, substitution, sale or transfer of the patient capital investment that is carried out at the request of the qualifying small business corporation or qualifying small business in which the investment was made, if the holder of the patient capital investment has not directly or indirectly required the corporation or business to make the request. 4. An event described in subsection (1) that occurs more than five years after the date of issue of the patient capital investment or that occurs at a time when the holder of the investment is a person other than, i. the financial institution that was entitled to include an amount in respect of the investment in the calculation of “E” in subsection 72 (1) of the Act or deduct an amount under subsection 66.1 (2) of the Corporations Tax Act in respect of the investment, or ii. a corporation related to that financial institution.  O. Reg. 37/09, s. 18 (2). (3) If a financial institution that was entitled to include an amount in the calculation of “E” in subsection 72 (1) of the Act or deduct an amount under subsection 66.1 (2) of the Corporations Tax Act in respect of a patient capital investment made by another corporation ceases to be related to that other corporation, the patient capital investment held by the other corporation when the financial institution and the corporation cease to be related is deemed to have been disposed of immediately before the financial institution and the corporation ceased to be related unless, (a) the financial institution and corporation cease to be related more than one year after the date of issue of the patient capital investment and the investment continues to be a patient capital investment immediately after they ceased to be related; or (b) there has been a previous disposition of the patient capital investment for the purposes of subsection 66 (1) of the Act or section 66.1 of the Corporations Tax Act
in respect of which an amount has been included in the calculation of the amount under clause (a) of the definition of “C” in subsection 74 (1) of the Act or under clause 66.1 (4) (c) of the Corporations Tax Act
in the calculation of the small business investment tax credit account of the financial institution that included an amount in respect of the investment in the calculation of “E” in subsection 72 (1) of the Act or deducted an amount under subsection 66.1 (2) of the Corporations Tax Act
in respect of the investment.  O. Reg. 37/09, s. 18 (3). (4) The amount determined under subsection (5) shall be included in the amount determined under clause (a) of the definition of “C” in subsection 74 (1) of the Act in determining the amount of a financial institution’s small business investment tax credit account in respect of the disposition of a patient capital investment if, (a) the financial institution was entitled to include an amount in respect of the investment in the calculation of “E” in subsection 72 (1) of the Act or deduct an amount under subsection 66.1 (2) of the Corporations Tax Act in respect of the investment; and (b) there has not been a previous disposition of the patient capital investment for the purposes of subsection 66 (1) of the Act or section 66.1 of the Corporations Tax Act
in respect of which an amount has been included in the calculation of the amount under clause (a) of the definition of “C” in subsection 74 (1) of the Act or under clause 66.1 (4) (c) of the Corporations Tax Act
in the calculation of the small business investment tax credit account of the financial institution that included an amount in respect of the investment in the calculation of “E” in subsection 72 (1) of the Act or deducted an amount under subsection 66.1 (2) of the Corporations Tax Act
in respect of the investment.  O. Reg. 37/09, s. 18 (4). (5) The amount referred to in subsection (4) in respect of the disposition of a patient capital investment is the amount calculated using the formula, A × B/C in which, “A” is the lesser of the fair market value of the investment at the time of its disposition and the amount of consideration for which the investment was originally issued, “B” is the tax credit amount in respect of the investment at the time the investment was made, and “C” is the amount of consideration for which the investment was originally issued. O. Reg. 37/09, s. 18 (5).