Disposition of Patient Capital Investment
 10. (1) For the purposes of clause 66.1 (4) (c) of the Act, each of the following events in relation to a patient capital investment constitutes a disposition of that investment, unless a disposition of the investment has previously occurred and, as a result of the previous disposition, an amount in respect of the investment has been included under clause 66.1 (4) (c) of the Act in the calculation of the small business investment tax credit account of the financial institution that deducted a tax credit in respect of the investment under subsection 66.1 (2) of the Act: 1. A change in the terms or conditions of the investment which 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 investment in any of the first five years after the investment was issued. 3. The redemption, acquisition or cancellation of the 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 investment. 5. The sale or transfer of the investment, i. within one year after its date of issue if the sale or transfer is to a person who is not associated with the corporation that made the investment, or ii. within five years after its date of issue if the investment does not continue to be a patient capital investment immediately after the sale or transfer.  O. Reg. 299/98, s. 10. (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 qualifying small business corporation or qualifying small business, as the case may be, in substitution for the patient capital investment in the same 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 that occurs subsequent to, and can reasonably be considered to be a 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 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 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 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 claim a tax credit under section 66.1 of the Act in respect of the investment, or ii. a corporation related to the financial institution.  O. Reg. 299/98, s. 10. (3) If a financial institution that was entitled to claim and did claim a tax credit under section 66.1 of the 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 shall be deemed to have been disposed of immediately before the financial institution and the corporation cease 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 section 66.1 of the Act and an amount in respect of the previous disposition of the investment has been included under clause 66.1 (4) (c) of the Act in the calculation of the small business investment tax credit account of the financial institution that claimed the tax credit under subsection 66.1 (2) of the Act in respect of the investment.  O. Reg. 299/98, s. 10. (4) An amount shall be included under clause 66.1 (4) (c) 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 the financial institution was entitled to make and made a deduction under subsection 66.1 (2) of the Act in respect of the investment.  O. Reg. 299/98, s. 10. (5) The amount referred to in subsection (4) in respect of the disposition of a patient capital investment is the amount determined using the formula, A = B × C/D in which, “A” is the amount determined in respect of the disposition of the investment, “B” is the amount equal to 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, “C” is the tax credit amount in respect of the investment at the time the investment was made, and “D” is the amount of consideration for which the investment was originally issued. O. Reg. 299/98, s. 10. PART II   INVESTMENTS THROUGH A SMALL BUSINESS INVESTMENT FUND Interpretation