5.1 (1) In this section, “taxpayer” means an individual or a partnership whose members include one or more individuals; (“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”)  1997, c. 43, Sched. B, s. 2 (1); 2004, c. 16, s. 3. Inter-provincial anti-avoidance (2) Despite any other provision of this Act except subsection (4), 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 is the total of, (a) the amount that is deemed to be the taxpayer’s proceeds of disposition of the property as determined under the Federal Act; 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 Federal Act, 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 Federal Act 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. B, s. 2 (1); 2004, c. 16, s. 3. 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 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. B, s. 2 (1); 2004, c. 16, s. 3. 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 98 (3) (b) of the Federal Act 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; or (b) the property is prescribed property or the prescribed rules or conditions have been satisfied.  1997, c. 43, Sched. B, s. 2 (1); 2004, c. 16, s. 3. Anti-avoidance of provincial tax (5) If a trust, other than a mutual fund trust, is resident in a province other than Ontario and designates or elects an amount under the Federal Act in respect of a beneficiary under the trust who is an individual resident in Ontario, the trust shall be deemed not to have designated or elected an amount under that Act for the purposes of this Act unless the designated or elected amount in each province in which the trust is resident is the same as the amount designated or elected for the purposes of the Federal Act.  1997, c. 43, Sched. B, s. 2 (3); 2004, c. 16, s. 3. Section Amendments with date in force (d/m/y) 1997, c. 43, Sched. B, s. 2 (1) - 20/12/1996; 1997, c. 43, Sched. B, s. 2 (3) - 26/11/1997 2004, c. 16, s. 3
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