Modifications Applicable to Payments under Sections 89 and 90 of the Act
 16.1 (1) Subsections (2) to (8) apply in respect of a corporation and section 16 does not apply if, (a) the corporation ceases at any time to be exempt under subsection 149 (1) of the Federal Act in circumstances in which a deemed disposition occurs under paragraph 149 (10) (b) of the Federal Act; (b) the corporation was exempt immediately before that time under subsection 57 (1) of the Corporations Tax Act or subsection 27 (2) of the Taxation Act, 2007; and (c) the corporation was not exempt at that time under subsection 57 (1) of the Corporations Tax Act or subsection 27 (2) of the Taxation Act, 2007.  O. Reg. 140/09, s. 8 (1); O. Reg. 112/16, s. 4 (1). (2) The taxation year of the corporation is deemed to end immediately before the time that the corporation ceases to be exempt under subsection 149 (1) of the Federal Act.  O. Reg. 140/09, s. 8 (1). (3) Subject to subsections (4) and (5), the corporation shall pay the amount determined under sections 89 and 90 of the Act calculated by reference to the deemed disposition under paragraph 149 (10) (b) of the Federal Act (as that paragraph applies for the purposes of determining the amount payable under sections 89 and 90 of the Act).  O. Reg. 122/02, s. 3. (4) The corporation is not required to pay an amount under subsection (3) in respect of a deemed disposition of shares of a subsidiary corporation, (a) if the corporation owns at least 90 per cent of the issued and outstanding shares of the subsidiary corporation; and (b) if the subsidiary corporation is required to pay the amount determined under sections 89 and 90 of the Act calculated by reference to the deemed disposition under paragraph 149 (10) (b) of the Federal Act (as that paragraph applies for the purposes of determining the amount payable under sections 89 and 90 of the Act).  O. Reg. 122/02, s. 3. (5) The corporation is not required to pay the amount described in subsection (3) if both of the following conditions are satisfied: 1. The corporation ceases to be exempt from the payment of tax under the Federal Act as a result of a lawful distribution to the public of shares of the corporation or a related corporation pursuant to a prospectus, registration statement or similar document filed with and, if required by law, accepted for filing by a public authority in Canada under the laws of Canada or of a province.  The distribution must be the first distribution to the public of shares of the corporation or related corporation. 2. With the consent of the Minister, the corporation pays to the Financial Corporation an amount that, in the Minister’s opinion, reasonably approximates the additional amounts, if any, that would be payable by the corporation under sections 89 and 90 of the Act if the corporation were required, but for this subsection, to pay the amount described in subsection (3).  O. Reg. 122/02, s. 3; O. Reg. 140/09, s. 8 (2). (6) An amount paid to the Financial Corporation under paragraph 2 of subsection (5) cannot be varied on objection or appeal under the Corporations Tax Act.  O. Reg. 122/02, s. 3. (7) The Minister is not permitted, on a reassessment, to vary an amount paid to the Financial Corporation under paragraph 2 of subsection (5) unless, in the Minister’s opinion, the corporation, a related corporation or a person acting on behalf of the corporation or related corporation makes a misrepresentation to the Minister that is attributable to neglect, carelessness or wilful default or commits a fraud in giving information under the Act in respect of the determination of the amount paid under that paragraph.  O. Reg. 122/02, s. 3. (8) For the period after December 31, 2015 and before January 1, 2019, and despite the application of paragraph 38 (a) of the Federal Act, as it applies for the purposes of determining the amount of a payment required by sections 89 and 90 of the Act, a corporation’s taxable capital gain for a taxation year from a deemed disposition of a property under paragraph 149 (10) (b) of the Federal Act, as it applies for the purposes of subsection (3), is deemed to be zero.  O. Reg. 112/16, s. 4 (2).