51 (1) The following rules apply for the purposes of this subdivision:  1. A new corporation formed as a result of an amalgamation or merger that occurs at the new corporation’s transition time is deemed to be the same corporation as, and a continuation of, each of its predecessor corporations, i. that is not exempt from tax under Part I of the Federal Act for its last taxation year ending immediately before the new corporation’s transition time, and ii. that has a permanent establishment in Ontario immediately before the new corporation’s transition time. 2. Except as provided in paragraph 1, a new corporation that is formed as a result of an amalgamation or merger at or after the new corporation’s transition time is deemed to be a different corporation from each of its predecessor corporations. 3. If a new corporation is formed as a result of an amalgamation or merger of two or more corporations that is an eligible amalgamation in respect of at least one of the predecessor corporations (referred to as an “eligible predecessor corporation”), i. the new corporation shall, after the eligible amalgamation, be deemed to be a specified corporation, ii. the sum of all amounts each of which is an amount determined under subsection (2) in respect of an eligible predecessor corporation shall be added immediately after the eligible amalgamation to the amount of the new corporation’s total federal balance, iii. the sum of all amounts each of which is an amount determined under subsection (3) in respect of an eligible predecessor corporation shall be added immediately after the eligible amalgamation to the amount of the new corporation’s total Ontario balance, iv. there shall be added in computing the new corporation’s unused credit balance for a taxation year the sum of all amounts each of which is the amount that would have been the unused credit balance of an eligible predecessor corporation for the taxation year beginning at the time of the eligible amalgamation if the eligible predecessor corporation had had a taxation year beginning at that time, and v. there shall be added in computing the new corporation’s federal SR & ED transitional balance the sum of all amounts each of which is the amount that would have been the federal SR & ED transitional balance of an eligible predecessor corporation at the time of the eligible amalgamation if the eligible predecessor corporation had had a taxation year beginning at that time. 3.1 If a new corporation is formed as a result of an amalgamation or merger to which paragraph 3 does not apply, and the amalgamation or merger would be an eligible amalgamation in respect of at least one of the predecessor corporations (referred to as an “eligible predecessor corporation”) if clauses (e) to (g) of the definition of “eligible amalgamation” in subsection 46 (1) were not taken into account, i. the new corporation is deemed to be a specified corporation, and ii. there shall be added in computing the new corporation’s federal SR & ED transitional balance the sum of all amounts each of which is the amount that would have been the federal SR & ED transitional balance of an eligible predecessor corporation at the time of the amalgamation or merger if the eligible predecessor corporation had had a taxation year beginning at that time. 4. If property of a subsidiary corporation is distributed in the course of an eligible post-2008 winding-up to its parent corporation, i. the parent corporation is deemed, after the completion time of the winding-up, to be a specified corporation, ii. the subsidiary corporation is deemed not to have any taxation year that begins after the completion time of the winding-up, iii. the amount determined under subsection (4)
shall be added in computing the amount of the parent corporation’s total federal balance and the amount determined under subsection (5) shall be added in computing the amount of the parent corporation’s total Ontario balance after the completion time of the winding-up, iv. in determining the parent corporation’s unused credit balance after the completion time of the winding-up, there shall be included the amount that would have been the subsidiary corporation’s unused credit balance for the taxation year immediately following the year that includes the completion time if the subsidiary corporation had continued in existence and subparagraph ii were not taken into account, and v. there shall be added in determining the parent corporation’s federal SR & ED transitional balance after the completion time of the winding-up the amount that would be the subsidiary corporation’s federal SR & ED transitional balance immediately after the completion time if the subsidiary corporation had continued to exist. 4.1 If property of a subsidiary corporation is distributed in the course of a winding-up to which paragraph 4 does not apply, and the winding-up would be an eligible post-2008 winding-up if clause (e) of the definition of “eligible post-2008 winding-up” in subsection 46 (1) were not taken into account, i. the parent corporation is deemed, after the completion time of the winding-up, to be a specified corporation, and ii. there shall be added in computing the parent corporation’s federal SR & ED transitional balance after the completion time of the winding-up the amount that would be the subsidiary corporation’s federal SR & ED transitional balance immediately after the completion time if the subsidiary corporation had continued to exist. 5. If property of a subsidiary corporation is distributed in the course of an eligible pre-2009 winding-up to its parent corporation in circumstances to which clause (b) of the definition of “eligible pre-2009 winding-up” in subsection 46 (1) applies, i. the parent corporation is deemed, after the completion time of the winding-up, to be a specified corporation if the subsidiary corporation had a permanent establishment in Ontario at any time in the taxation year of the subsidiary corporation ending at the completion time, and ii. the amount determined under subsection (6) shall be added immediately after the completion time in computing the amount of the parent corporation’s total federal balance, and the amount determined under subsection (7) shall be added immediately after the completion time in computing the amount of the parent corporation’s total Ontario balance.  2007, c. 11, Sched. A, s. 51 (1); 2008, c. 7, Sched. S, s. 12 (1). Amount to be added to total federal balance, eligible amalgamation (2) For the purposes of subparagraph 3 ii of subsection (1), the amount is calculated using the formula, A × (1 – B/C) in which, “A” is the total federal balance of the eligible predecessor corporation, determined immediately before the eligible amalgamation, “B” is the number of days in the eligible predecessor corporation’s reference period that are before the eligible amalgamation, and “C” is the total number of days in the eligible predecessor corporation’s reference period. 2007, c. 11, Sched. A, s. 51 (2). Amount to be added to total Ontario balance, eligible amalgamation (3) For the purposes of subparagraph 3 iii of subsection (1), the amount is calculated using the formula, D × (1 – B/C) in which, “D” is the total Ontario balance of the eligible predecessor corporation, determined immediately before the eligible amalgamation, and “B” and “C” have the meanings assigned by subsection (2). 2007, c. 11, Sched. A, s. 51 (3). Amount to be added to total federal balance, eligible post-2008 winding-up (4) For the purposes of subparagraph 4 iii of subsection (1), the amount to be added to the parent corporation’s total federal balance is calculated using the formula, E × F/G × H/I in which, “E” is the subsidiary corporation’s total federal balance at the completion time of the winding-up, “F” is the number of days in the subsidiary corporation’s reference period that are after the end of the subsidiary corporation’s taxation year ending at the completion time, “G” is the total number of days in the subsidiary corporation’s reference period, “H”   is the total number of days in the parent corporation’s reference period, and “I” is the number of days in the parent corporation’s reference period that are after the beginning of the parent corporation’s taxation year that includes the time that is immediately after the completion time. 2007, c. 11, Sched. A, s. 51 (4). Amount to be added to total Ontario balance, eligible post-2008 winding-up (5) For the purposes of subparagraph 4 iii of subsection (1), the amount to be added to the parent corporation’s total Ontario balance is calculated using the formula, J × F/G × H/I in which, “J” is the subsidiary corporation’s total Ontario balance at the completion time of the winding-up, and “F”, “G”, “H” and “I” have the meanings assigned by subsection (4). 2007, c. 11, Sched. A, s. 51 (5). Amount to be added to total federal balance, eligible pre-2009 winding-up (6) For the purposes of subparagraph 5 ii of subsection (1), the amount to be added to the parent corporation’s total federal balance is the subsidiary corporation’s total federal balance immediately after the completion time, determined, (a) as if the subsidiary corporation continued to exist; (b) as if the subsidiary corporation’s next taxation year ending after that time ended no earlier than January 1, 2009; and (c) as if any property that is deemed under paragraph 88 (1) (a.2) of the Federal Act not to have been disposed of had been retained until the completion time.  2007, c. 11, Sched. A, s. 51 (6); 2008, c. 7, Sched. S, s. 12 (2). Amount to be added to total Ontario balance, eligible pre-2009 winding-up (7) For the purposes of subparagraph 5 ii of subsection (1), the amount to be added to the parent corporation’s total Ontario balance is the subsidiary corporation’s total Ontario balance immediately after the completion time, determined, (a) as if the subsidiary corporation continued to exist; (b) as if the subsidiary corporation’s next taxation year ending after that time ended no earlier than January 1, 2009; and (c) as if any property that is deemed under paragraph 88 (1) (a.2) of the Federal Act not to have been disposed of had been retained until the completion time.  2007, c. 11, Sched. A, s. 51 (7); 2008, c. 7, Sched. S, s. 12 (3). Section Amendments with date in force (d/m/y) 2008, c. 7, Sched. S, s. 12 (1-3) - 01/01/2008 Treatment of specified pre-2009 transfers