CORPORATE MINIMUM TAX

CONTENTS PART I INTERPRETATION 0.1 Definitions and interpretation 0.2 Reorganization gain PART II PRESCRIBED AMOUNTS FOR THE PURPOSES OF SUBSECTION 57.4 (1) OF THE ACT 1. Adjusted net income, mark-to-market property 2. Adjusted net income, reorganization gain PART III PRIOR PERIOD AMOUNTS 3. Definitions 4. Specified deferred gain 5. Recapture of specified deferred gain 6. Eligible amalgamation and eligible winding-up Part I interpretation Definitions and interpretation 0.1 (1) In this Regulation, “eligible amalgamation” means an amalgamation of two or more corporations to which section 87 of the Federal Act applies; “eligible event” means, in respect of a corporation, (a) a disposition of property by the corporation before March 22, 2007 where, (i) the property is an eligible property for the purposes of subsection 85 (1) of the Federal Act and a joint election in respect of the disposition is made, (A) under subsection 85 (1) of the Federal Act, and (B) under section 57.9 of the Act, (ii) the property is an eligible property for the purposes of subsection 85 (1) of the Federal Act that is described in paragraph 85 (2) (a) of that Act and a joint election in respect of the disposition is made, (A) under subsection 85 (2) of the Federal Act, and (B) under section 57.9 of the Act, (iii) the property is a share of the capital stock of a taxable Canadian corporation and, (A) section 85.1 of the Federal Act applies in respect of the disposition, and (B) a joint election in respect of the disposition is made under section 57.9 of the Act, or (iv) the property is property referred to in subsection 97 (2) of the Federal Act and a joint election in respect of the disposition is made under that subsection of the Federal Act and under section 57.9 of the Act, (b) a disposition of property by the corporation before March 22, 2007 where the disposition occurs in circumstances to which subsection 142.7 (3) of the Federal Act applies and a joint election in respect of the disposition is made under subsection 57.9.1 (2) of the Act, (c) a disposition of property by the corporation before March 22, 2007 where the proceeds of disposition of the property are determined under subsection 13 (4) or 14 (6) of the Federal Act or under section 44 of that Act and an election in respect of the disposition is made under subsection 57.10 (1) of the Act, (d) the receipt by the corporation of a property referred to in paragraph 88 (1) (a) of the Federal Act in connection with an eligible winding-up that was completed before March 22, 2007, or (e) the receipt by the corporation of property as a consequence of an eligible amalgamation before March 22, 2007; “eligible winding-up” means the winding-up of a corporation in circumstances in which subsection 88 (1) of the Federal Act applies; “exempt event” means a disposition or other event that is not an eligible event under clause (a), (c), (d) or (e) of the definition of “eligible event” in this subsection only because it occurred after March 21, 2007; “fair value” means, in respect of property of a corporation, the amount determined in accordance with generally accepted accounting principles that is the fair value of the property to the corporation, expressed in Canadian currency; “Federal Act” means the Income Tax Act (Canada). O. Reg. 38/09, s. 1. (2) A disposition that is deemed to be made for the purposes of the Federal Act is a disposition for the purposes of this Regulation. O. Reg. 38/09, s. 1. (3) An eligible winding-up of a corporation is considered to be completed for the purposes of this Regulation at the time the corporation is dissolved. O. Reg. 38/09, s. 1. (4) For the purposes of this Regulation and subject to any necessary modifications, unless the context requires otherwise, (a) references in this Part to corporations shall include partnerships; and (b) references to taxation years of corporations shall include fiscal periods of partnerships. O. Reg. 38/09, s. 1. Reorganization gain 0.2 For the purposes of this Regulation, the reorganization gain of a corporation for a taxation year in respect of an eligible event or an exempt event, as the case may be, of the corporation means the amount, if any, by which “A” exceeds “B” where, “A” is the sum of, (a) the corporation’s net income, if any, for the year for the purposes of Part II.1 of the Act, and (b) the amount, if any, that would be the corporation’s net loss for the year for the purposes of Part II.1 of the Act if any decrease in the amount of the net loss for the year from the eligible event or exempt event, as the case may be, were not taken into account, and “B” is the sum of, (a) the amount, if any, that would be the corporation’s net income for the year for the purposes of Part II.1 of the Act if any increase in the amount of the net income for the year from the eligible event or exempt event, as the case may be, were not taken into account, and (b) the corporation’s net loss, if any, for the year for the purposes of Part II.1 of the Act. O. Reg. 38/09, s. 1. Part II Prescribed amounts for The purposes of subsection 57.4 (1) of the Act Adjusted net income, mark-to-market property 1. (1) In this Part, “excluded mark-to-market property” means, in respect of a corporation, property held by the corporation, (a) in respect of which mark-to-market changes from the beginning to the end of a taxation year of the corporation would be reflected in the calculation of the corporation’s income for the year under Part II of the Act if the property were held by the corporation throughout the taxation year, or (b) that is denominated in a foreign currency and in respect of which any change in the value of that currency relative to Canadian currency from the beginning to the end of a taxation year of the corporation would be reflected in the calculation of the corporation’s income for the year under Part II of the Act if the property were held by the corporation throughout the taxation year; “mark-to-market changes” means, with respect to a specified mark-to-market property or excluded mark-to-market property held by a corporation, changes in the fair value of the property that occur after the corporation acquires the property and before the corporation disposes of the property; “specified mark-to-market property” means, in respect of a corporation, property, other than excluded mark-to-market property, held by the corporation, (a) in respect of which, under generally accepted accounting principles, any mark-to-market changes from the beginning to the end of a taxation year of the corporation would be reflected in the calculation of the corporation’s net income for the taxation year for the purposes of Part II.1 of the Act if the property were held by the corporation throughout the taxation year, or (b) that is denominated in a foreign currency and in respect of which, under generally accepted accounting principles, any change in the value of that currency relative to Canadian currency from the beginning to the end of a taxation year of the corporation would be reflected in the calculation of the corporation’s net income for the taxation year for the purposes of Part II.1 of the Act if the property were held by the corporation throughout the taxation year. O. Reg. 509/07, s. 1 (1); O. Reg. 38/09, s. 3 (1, 2). (2) Subject to subsection (3), this section applies to corporations only in respect of taxation years beginning after June 30, 2004. O. Reg. 509/07, s. 1 (2). (3) This section only applies to a corporation in respect of a taxation year beginning after June 30, 2004 and ending before March 23, 2007 if the corporation makes an election in the form approved by the Minister before February 26, 2008 to have this section apply to it for all of its taxation years beginning after June 30, 2004 and ending before March 23, 2007. O. Reg. 509/07, s. 1 (3); O. Reg. 38/09, s. 3 (3). (4) The following amounts are prescribed for the purposes of subsection 57.4 (1) of the Act as amounts required to be included in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year: 1. The corporation’s accounting loss difference for the year. 2. The corporation’s net capital gain difference for the year. 3. The corporation’s net specified income for the year. O. Reg. 509/07, s. 1 (4); O. Reg. 38/09, s. 3 (4). (5) The following amounts are prescribed for the purposes of subsection 57.4 (1) of the Act as amounts required to be included in calculating the total amount to be deducted in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year: 1. The corporation’s accounting gain difference for the year. 2. The corporation’s net capital loss difference for the year. 3. The corporation’s net specified loss for the year. O. Reg. 509/07, s. 1 (5); O. Reg. 38/09, s. 3 (5). (5.1) For the purposes of determining the adjusted net income or adjusted net loss of a corporation for a taxation year during which the corporation is a partner in a partnership, this section applies in determining the adjusted net income or adjusted net loss of the partnership for fiscal periods ending in the taxation year of the corporation only if, (a) the taxation year ends after March 22, 2007; or (b) the taxation year begins after June 30, 2004 and ends before March 23, 2007 and the corporation made an election in accordance with subsection (3) to have this section apply to all of the corporation’s taxation years beginning after June 30, 2004. O. Reg. 38/09, s. 3 (6). (6) A corporation’s accounting gain difference for a taxation year is the amount, if any, by which “A” exceeds “B” where, “A” is the sum of, (a) the corporation’s net income, if any, for the year for the purposes of Part II.1 of the Act, and (b) the amount, if any, that would be the corporation’s net loss for the year for the purposes of Part II.1 of the Act if the mark-to-market changes in each specified mark-to-market property held by the corporation in the year were not taken into account, and “B” is the sum of, (a) the amount, if any, that would be the corporation’s net income for the year for the purposes of Part II.1 of the Act if the mark-to-market changes in each specified mark-to-market property held by the corporation in the year were not taken into account, and (b) the corporation’s net loss, if any, for the year for the purposes of Part II.1 of the Act. O. Reg. 509/07, s. 1 (6). (7) A corporation’s accounting loss difference for a taxation year is the amount, if any, by which the amount determined as “B” in subsection (6) for the year exceeds the amount determined as “A” in that subsection for the year. O. Reg. 509/07, s. 1 (7). (8) A corporation’s net capital gain difference for a taxation year is the amount, if any, by which “C” exceeds “D” where, “C” is the sum of all amounts each of which is the corporation’s capital gain, if any, for the year from the disposition by the corporation of a specified mark-to-market property as determined for the purposes of Subdivision B of Division B of Part II of the Act, in the year or in a preceding taxation year, (a) ending after March 22, 2007, or (b) beginning after June 30, 2004 and ending before March 23, 2007 if an election has been filed pursuant to subsection (3), and “D” is the sum of all amounts each of which is the corporation’s capital loss or business investment loss, if any, for the year from the disposition of a specified mark-to-market property, as determined for the purposes of Subdivision B of Division B of Part II of the Act. O. Reg. 509/07, s. 1 (8). (9) A corporation’s net capital loss difference for a taxation year is the amount, if any, by which the amount determined as “D” in subsection (8) for the year exceeds the amount determined as “C” in that subsection for the year. O. Reg. 509/07, s. 1 (9). (10) A corporation’s net specified income for a taxation year is the amount, if any, by which “E” exceeds “F” where, “E” is the sum of, (a) the corporation’s income for the year, if any, as determined for the purposes of Part II of the Act, and (b) the amount, if any, that would be the corporation’s total loss for the year from business and property for the purposes of Part II of the Act if any increase or decrease in the amount of the loss attributable to the disposition of a specified mark-to-market property that was not a capital property were not included, and “F” is the sum of, (a) the amount, if any, that would be the corporation’s income for the year for the purposes of Part II of the Act if any increase or decrease in the amount of the income attributable to the disposition of a specified mark-to-market property that was a not a capital property were not included, and (b) the amount, if any, of the corporation’s total loss for the year from business and property for the purposes of Part II of the Act. O. Reg. 509/07, s. 1 (10). (11) A corporation’s net specified loss for a taxation year is the amount, if any, by which the amount determined as “F” in subsection (10) for the year exceeds the amount determined as “E” in that subsection for the year. O. Reg. 509/07, s. 1 (11). (12) Revoked: O. Reg. 38/09, s. 3 (7). Adjusted net income, reorganization gain 2. (1) Each reorganization gain of a corporation for a taxation year in respect of an exempt event is prescribed for the purposes of subsection 57.4 (1) of the Act as an amount required to be included in calculating the total amount to be deducted in determining the corporation’s adjusted net income for the purposes of Part II.1 of the Act for the taxation year, but only if the corporation, (a) has a permanent establishment in Ontario during the year; (b) satisfies clause 57.2 (1) (a), (b) or (c) of the Act for the year; and (c) is not exempt from tax under Part II.1 of the Act for the year by reason of section 57.11 of the Act. O. Reg. 38/09, s. 4. (2) For the purposes of determining the adjusted net income or adjusted net loss of a corporation for a taxation year in which the corporation is a partner in a partnership, (a) the partnership shall not, in determining the partnership’s adjusted net income or adjusted net loss for a fiscal period ending in the taxation year of the corporation, deduct an amount in respect of a reorganization gain of the partnership for a fiscal period in respect of an exempt event unless the corporation satisfies clauses (1) (a), (b) and (c) for the taxation year; and (b) the partnership is not required to satisfy the conditions described in clauses (1) (a), (b) and (c). O. Reg. 38/09, s. 4. Part III prior period amounts Definitions 3. In this Part, “carrying value” means, in respect of property at a particular time, the value at which the owner of the property carries the property in the owner’s books and records for accounting purposes, as determined at that time in accordance with generally accepted accounting principles; “Ontario Act” means the Corporations Tax Act. O. Reg. 38/09, s. 5. Specified deferred gain 4. (1) The sum of all amounts each of which is a specified deferred gain of a corporation for a taxation year ending after December 31, 1993 from an eligible event in the year, as determined in accordance with this section, is prescribed for the purposes of subsection 57.4 (1) of the Act as an amount required to be included in calculating the total amount to be deducted in determining the corporation’s adjusted net income for the purposes of Part II.1 of the Act for the year. O. Reg. 38/09, s. 5. (2) If the eligible event is a disposition referred to in clause (a) of the definition of “eligible event” in subsection 0.1 (1), the specified deferred gain from the eligible event is the lesser of “A” and “B” where, “A” is the sum of, (a) the amount of the corporation’s reorganization gain for the year in respect of the eligible event, and (b) all amounts, if any, included in computing the corporation’s adjusted net income for the year under section 5 as a result of the eligible event, and “B” is the sum of all amounts each of which is the carrying value to the corporation, immediately after the eligible event, of the shares or partnership interest, as the case may be, received by the corporation as consideration for the disposition. O. Reg. 38/09, s. 5. (3) If the eligible event is a disposition referred to in clause (b) of the definition of “eligible event” in subsection 0.1 (1), the specified deferred gain from the eligible event is the sum of, (a) the amount of the corporation’s reorganization gain in respect of the eligible event; and (b) all amounts, if any, included in computing the corporation’s adjusted net income for the year under section 5 as a result of the eligible event. O. Reg. 38/09, s. 5. (4) If the eligible event is a disposition referred to in clause (c) of the definition of “eligible event” in subsection 0.1 (1), the specified deferred gain from the eligible event is the lesser of “A” and “C” where, “A” has the same meaning as in subsection (2), and “C” is the amount determined under subsection (5) or (6), whichever applies in respect of the disposition. O. Reg. 38/09, s. 5. (5) If the disposition does not involve the replacement of eligible capital property, “C” in subsection (4) is the amount, if any, by which “D” exceeds “E” where, “D” is the sum of, (a) the amount that would be included in the corporation’s income for the year under subsection 13 (1) of the Federal Act, as it applies for the purposes of the Ontario Act, in respect of the disposition if subsection 13 (4) of the Federal Act did not apply to the disposition and the year had ended immediately after the disposition, and (b) the amount that would be the corporation’s capital gain from the disposition for the year, as determined for the purposes of Subdivision B of Division B of Part II of the Act, if subparagraphs 40 (1) (a) (ii) and (iii) of the Federal Act and section 44 of that Act did not apply in respect of the disposition, and “E” is the amount that would be determined to be “D” if subsection 13 (4) of the Federal Act or section 44 of that Act, whichever is applicable, as it applies for the purposes of the Ontario Act, applied in respect of the disposition and paragraph 44 (1) (e) of the Federal Act were read without reference to subparagraphs (ii) and (iii) of that paragraph. O. Reg. 38/09, s. 5. (6) If subsection (5) does not apply in respect of the disposition, “C” in subsection (4) is the amount, if any, by which “F”, “G” or “H”, whichever applies to the taxation year, exceeds “I” where, “F” applies if the taxation year ends before February 28, 2000, and is 4/3 of the amount that would be included in the corporation’s income under subsection 14 (1) of the Federal Act, as it applies for the purposes of the Ontario Act, in respect of the disposition if subsection 14 (6) of the Federal Act did not apply and the year had ended immediately after the disposition, “G” applies if the taxation year ends after February 27, 2000 but before October 18, 2000, and is the sum of, (a) 4/3 of the amount that would be included in the corporation’s income under paragraph 14 (1) (a) of the Federal Act, as it applies for the purposes of the Ontario Act, in respect of the disposition if subsection 14 (6) of the Federal Act did not apply and the taxation year had ended immediately after the disposition, and (b) 1.5 times the amount that would be included in the corporation’s income under paragraph 14 (1) (b) of the Federal Act, as it applies for the purposes of the Ontario Act, in respect of the disposition if subsection 14 (6) of the Federal Act did not apply and the taxation year had ended immediately after the disposition, “H” applies if the taxation year ends after October 17, 2000, and is the sum of, (a) 4/3 of the amount that would be included in the corporation’s income under paragraph 14 (1) (a) of the Federal Act, as it applies for the purposes of the Ontario Act, in respect of the disposition if subsection 14 (6) of the Federal Act did not apply and the taxation year had ended immediately after the disposition, and (b) 2 times the amount that would be included in the corporation’s income under paragraph 14 (1) (b) of the Federal Act, as it applies for the purposes of the Ontario Act, in respect of the disposition if subsection 14 (6) of the Federal Act did not apply and the taxation year had ended immediately after the disposition, and “I” is the amount that would be determined as “F”, “G” or “H”, whichever applies for the taxation year, if subsection 14 (6) of the Federal Act had applied in respect of the disposition. O. Reg. 38/09, s. 5. (7) If the eligible event is the receipt of property referred to in clause (d) of the definition of “eligible event” in subsection 0.1 (1), the specified deferred gain from the eligible event is the lesser of “J” and “K” where, “J” is the amount of the corporation’s reorganization gain in respect of the eligible event, and “K” is the amount, if any, by which the fair market value of the shares of the other corporation cancelled on the winding-up exceeds the sum of all amounts described in subparagraph 88 (1) (a) (iii) of the Federal Act, as it applies for the purpose of the Ontario Act, in respect of the cancellation of those shares. O. Reg. 38/09, s. 5. (8) If the eligible event is a receipt of property referred to in clause (e) of the definition of “eligible event” in subsection 0.1 (1), the specified deferred gain from the eligible event is the lesser of “J” and “L” where, “J” has the same meaning as in subsection (7), and “L” is the amount by which the fair market value of all property received by the new corporation from the predecessor corporations on the amalgamation exceeds the total cost amount under the Federal Act, as that Act applies for the purposes of the Ontario Act, of the new corporation’s property immediately after the amalgamation. O. Reg. 38/09, s. 5. Recapture of specified deferred gain 5. (1) In this section, “excluded disposition” means, (a) an exchange to which subsection 51 (1) of the Federal Act applies, (b) a disposition on an eligible amalgamation or eligible winding-up, (c) a disposition in respect of which proceeds of disposition are determined under paragraph 47 (1) (a) of the Federal Act, or (d) any other disposition of property in respect of which proceeds of disposition for the purposes of the Federal Act are determined under a specific provision of the Federal Act which permits or requires proceeds of disposition to be less than the amount that would be determined without reference to the specific provision, but not a disposition, (i) that is or is part of an eligible event in respect of the corporation that disposes of the property, or (ii) in respect of which proceeds of disposition are reduced because of paragraph (j) of the definition of “proceeds of disposition” in section 54 of the Federal Act. O. Reg. 38/09, s. 5. (2) Subsection (3) applies if, (a) a specified deferred gain was included under subsection 4 (1) in calculating the total amount deducted in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year in respect of an eligible event referred to in clause (a) of the definition of “eligible event” in subsection 0.1 (1) which was or included the disposition of a particular property; (b) before March 22, 2007, the corporation subsequently disposed of all or part of the shares or partnership interest, as the case may be, received as consideration on the disposition of the particular property; (c) the subsequent disposition is not an excluded disposition; and (d) the corporation continuously held the shares or partnership interest or the part of the partnership interest or shares that were disposed of on the subsequent disposition from the time of the eligible event until the subsequent disposition. O. Reg. 38/09, s. 5. (3) For the purposes of subsection 57.4 (1) of the Act, if the conditions set out in clauses (2) (a), (b), (c) and (d) are satisfied, the corporation must include in determining its adjusted net income for the purposes of Part II.1 of the Act for the taxation year in which the subsequent disposition occurs the amount, if any, in respect of the eligible event calculated using the formula, (A – B) × C/D in which, “A” is the amount of the specified deferred gain in respect of the eligible event that was previously included under subsection 4 (1) in the total amount deducted in determining a corporation’s adjusted net income for a taxation year for the purposes of Part II.1 of the Act, “B” is, (a) if the subsequent disposition involves the disposition of one or more shares, the lesser of, (i) the total amount deemed under subsection 84 (3) of the Federal Act to be received by the corporation in respect of the disposition of the shares, and (ii) the total amount deductible by the corporation under subsection 112 (1) or (2) of the Federal Act or subsection 138 (6) of that Act in respect of the total amount described in subclause (i), or (b) if no shares are disposed of on the subsequent disposition, zero, “C” is the carrying value to the corporation, immediately after the eligible event, of the shares or partnership interest or the part of the shares or partnership interest that were disposed of on the subsequent disposition, and “D” is the carrying value to the corporation, immediately after the eligible event, of all the shares or partnership interest received on the eligible event as consideration for the disposition of the particular property. O. Reg. 38/09, s. 5. (4) Subsection (5) applies if, (a) a specified deferred gain was included under subsection 4 (1) in calculating the total amount deducted in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year in respect of an eligible event referred to in clause (c) of the definition of “eligible event” in subsection 0.1 (1) which was or included the disposition of a particular property; (b) before March 22, 2007, the corporation subsequently disposed of all or part of the property acquired in replacement of the particular property; (c) the subsequent disposition is not an excluded disposition; and (d) the corporation continuously held the replacement property that was disposed of on the subsequent disposition until the subsequent disposition. O. Reg. 38/09, s. 5. (5) For the purposes of subsection 57.4 (1) of the Act, if the conditions set out in clauses (4) (a), (b), (c) and (d) are satisfied, the corporation must include in determining its adjusted net income for the purposes of Part II.1 of the Act for the taxation year in which the subsequent disposition occurs the amount in respect of the eligible event calculated using the formula, E × F/G in which, “E” is the amount of the specified deferred gain in respect of the eligible event that was previously included under subsection 4 (1) in the total amount deducted in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act, “F” is the fair market value, as of the time of the eligible event or the time it was first acquired by the corporation after the eligible event, as the case may be, of the replacement property that is disposed of on the subsequent disposition, and “G” is the fair market value, as of the time of the eligible event or the time it was first acquired after the eligible event, as the case may be, of all property acquired in replacement of the particular property. O. Reg. 38/09, s. 5. (6) Subsection (7) applies if, (a) a specified deferred gain was included under subsection 4 (1) in calculating the total amount deducted in determining a particular corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year in respect of an eligible event referred to in clause (a) or (b) of the definition of “eligible event” in subsection 0.1 (1) which was or included the disposition of a particular property; (b) before March 22, 2007, another corporation (in this subsection and subsection (7) referred to as the “recipient corporation”) disposed of the particular property; (c) the particular corporation and the recipient corporation did not deal with each other at arm’s length immediately before or immediately after the eligible event; (d) the subsequent disposition by the recipient corporation is not an excluded disposition; and (e) the recipient corporation continuously held the particular property from the time of the eligible event until the subsequent disposition. O. Reg. 38/09, s. 5. (7) For the purposes of subsection 57.4 (1) of the Act, if the conditions set out in clauses (6) (a), (b), (c), (d) and (e) are satisfied, the recipient corporation must include in determining its adjusted net income for the purposes of Part II.1 of the Act for the taxation year in which the subsequent disposition occurs the amount, if any, by which “H” exceeds “I” where, “H” is the amount of the specified deferred gain in respect of the disposition by the particular corporation of the particular property that was previously included under subsection 4 (1) in the total amount deducted in determining the particular corporation’s adjusted net income for the purposes of Part II.1 of the Act, and “I” is, (a) if the particular property is shares, the lesser of, (i) the total amount deemed under subsection 84 (3) of the Federal Act to be received by the recipient corporation in respect of the subsequent disposition of the shares, and (ii) the total amount deductible by the recipient corporation under subsection 112 (1) or (2) of the Federal Act or subsection 138 (6) of that Act in respect of the total amount described in subclause (i), or (b) if the particular property does not consist of shares, zero. O. Reg. 38/09, s. 5. (8) Subsection (9) applies if, (a) a specified deferred gain was included under subsection 4 (1) in calculating the total amount deducted in determining a corporation’s adjusted net income for the purposes of Part II.1 of the Act for a taxation year in respect of an eligible event referred to in clause (d) or (e) of the definition of “eligible event” in subsection 0.1 (1); (b) before March 22, 2007, the corporation disposed of a property acquired on the eligible event; (c) the disposition referred to in clause (b) is not an excluded disposition; and (d) the corporation continuously held the property from the time of the eligible event until the disposition. O. Reg. 38/09, s. 5. (9) For the purposes of subsection 57.4 (1) of the Act, if the conditions set out in clauses (8) (a), (b), (c) and (d) are satisfied, the corporation must include in determining its adjusted net income for the purposes of Part II.1 of the Act for the taxation year in which the disposition occurs the amount, if any, calculated using the formula, (J × K/L) – M in which, “J” is the amount of the specified deferred gain in respect of the eligible event that was previously included under subsection 4 (1) in the total amount deducted in determining the particular corporation’s adjusted net income for the purposes of Part II.1 of the Act, “K” is the amount, if any, by which the carrying value of the property immediately after the eligible event exceeds the carrying value of the property immediately before the eligible event, “L” is the sum of all amounts each of which is the amount, if any, by which the carrying value, immediately after the eligible event, of a property acquired on the eligible event exceeds its carrying value immediately before the eligible event, and “M” is, (a) if the property is shares, the lesser of, (i) the total amount deemed under subsection 84 (3) of the Federal Act to be received by the corporation in respect of the disposition of the shares, and (ii) the total amount deductible by the corporation under subsection 112 (1) or (2) of the Federal Act or subsection 138 (6) of that Act in respect of the total amount described in subclause (i), or (b) if the property does not consist of shares, zero. O. Reg. 38/09, s. 5. (10) If property of a particular corporation becomes the property of another corporation (referred to in this subsection as the “recipient”) as a result of an eligible winding-up of the particular corporation or an eligible amalgamation of the particular corporation with one or more other corporations, the recipient shall be deemed for the purposes of subsections (2), (3), (4), (5), (6), (7), (8) and (9) to be the same corporation as, and a continuation of, the particular corporation. O. Reg. 38/09, s. 5. Eligible amalgamation and eligible winding-up 6. (1) In this section, “designated corporation” means, with respect to a particular corporation, (a) a corporation that amalgamated with one or more other corporations to form the particular corporation, if the amalgamation is an eligible amalgamation, (b) a corporation that winds up into the particular corporation in circumstances to which subsection 88 (1) of the Federal Act applies, or (c) a corporation that is a designated corporation with respect to a corporation that is itself a designated corporation with respect to the particular corporation. O. Reg. 38/09, s. 5. (2) If there has been an eligible amalgamation after December 31, 1993 and before March 22, 2007 of one or more designated corporations, the new corporation formed as a result of the eligible amalgamation must include in determining its adjusted net income for the purposes of Part II.1 of the Act for its first taxation year the lesser of, (a) the sum of all amounts, if any, each of which is an investment loss of a particular designated corporation in respect of the new corporation, (i) from an investment in shares or debt issued by another corporation that is also a designated corporation with respect to the new corporation, and (ii) for a taxation year in which the particular designated corporation at any time controlled the other corporation that issued the shares or debt; and (b) the amount that would be the other corporation’s eligible losses under subsection 57.5 (5) of the Act for its taxation year beginning at the time of the amalgamation if, (i) the other corporation had continued to exist after the eligible amalgamation, (ii) subsection 57.5 (5) of the Act were read without reference to clause (b) of that subsection, and (iii) subsection 57.5 (7) of the Act did not apply. O. Reg. 38/09, s. 5. (3) The investment loss of a corporation for a taxation year from one or more of its investments in shares or debt issued by another corporation means the amount, if any, by which “A” exceeds “B” where, “A” is the sum of, (a) the corporation’s net loss, if any, for the year for the purposes of Part II.1 of the Act, and (b) the amount, if any, that would be the corporation’s net income for the year for the purposes of Part II.1 of the Act if the corporation’s net income for the year were not affected by any reduction of that net income attributable to a reduction in the fair value of those investments, and “B” is the sum of, (a) the amount, if any, that would be the corporation’s net loss for the year for the purposes of Part II.1 of the Act if the corporation’s net loss for the year were not affected by any increase of that net loss attributable to a reduction in the fair value of those investments, and (b) the corporation’s net income for the year for the purposes of Part II.1 of the Act. O. Reg. 38/09, s. 5. (4) If an eligible winding-up of a designated corporation (in this subsection called the “subsidiary”) is completed after December 31, 1993 and before March 22, 2007, the particular corporation into which the subsidiary is wound up must include in determining its adjusted net income for the purposes of Part II.1 of the Act for its first taxation year referred to in subsection 88 (1) of the Federal Act that commences after the commencement of the winding-up the lesser of, (a) the sum of, (i) the investment loss of the particular corporation from one or more of its investments in shares or debt issued by the subsidiary for the particular corporation’s first taxation year commencing after the commencement of the winding-up or for a previous taxation year, and (ii) all amounts each of which is the investment loss of another corporation that is a designated corporation in respect of the particular corporation from one or more of that designated corporation’s investments in shares or debt issued by the subsidiary for a taxation year ending before the particular corporation’s first taxation year commencing after the winding-up; and (b) the amount that would be the subsidiary’s eligible losses under subsection 57.5 (5) of the Act for its first taxation year beginning after the commencement of the eligible winding-up if, (i) the subsidiary had continued to exist after the eligible winding-up, (ii) subsection 57.5 (5) of the Act were read without reference to clause (b) of that subsection, and (iii) subsection 57.5 (7) of the Act did not apply. O. Reg. 38/09, s. 5. (5) For the purposes of subsections (2), (3) and (4), shares and debt issued by a designated corporation are deemed to be debt and shares issued by the particular corporation formed as a result of an eligible amalgamation of the designated corporation with one or more other designated corporations, and the particular corporation shall be deemed to be the same corporation as, and a continuation of, the designated corporation for the purposes of determining an investment loss from shares or debt issued by the particular corporation. O. Reg. 38/09, s. 5. (6) References in this section to provisions of the Act are references to those provisions as they read, (a) for the purposes of clause (2) (b), immediately after the eligible amalgamation; and (b) for the purposes of clause (4) (b), immediately after the completion of the eligible winding-up. O. Reg. 38/09, s. 5.