A-29.011.Marginal note:Exception(2.01)Despite subsection (2), no overpayment on account of a qualifying entity’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen with respect to a qualifying entity that is a publicly traded company or a subsidiary of such a company if, in the qualifying period, it paid taxable dividends to an individual who is a holder of common shares of the company or of the subsidiary of the company.Marginal note:COVID-19 — rent subsidy(2.1)For a qualifying renter for a qualifying period referred to in any of paragraphs (c.5) to (d) of the definitionqualifying periodin subsection (1), an overpayment on account of the qualifying renter’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen during the qualifying period in an amount determined by the formulaA + BwhereAis the amount determined by the formulaC × DwhereCis the qualifying renter’s rent subsidy percentage for the qualifying period, andDis the lesser of(a)the total of all amounts, each of which is the qualifying renter’s qualifying rent expense for a qualifying property for the qualifying period, and(b)the amount determined by the formulaE × E.1whereEis(i)100%, unless the qualifying renter is affiliated at any time in the qualifying period with one or more eligible entities that claims an amount under this subsection in respect of the qualifying period,(ii)a percentage assigned to the qualifying renter under an agreement, if(A)the agreement is entered into by the qualifying renter and each eligible entity that(I)is affiliated with the qualifying renter in the qualifying period, and(II)claims an amount under this subsection in respect of the qualifying period,(B)the agreement is filed in prescribed form and manner with the Minister in respect of the qualifying period by the qualifying renter and each eligible entity referred to in clause (A) with their application for the qualifying period,(C)the agreement assigns, for the purposes of this subsection, a percentage in respect of each eligible entity referred to in clause (B) for the qualifying period, and(D)the total of all the percentages assigned under the agreement does not exceed 100%, and(iii)in any other case, nil, andE.1is(i)$300,000 for the eighth qualifying period to the twenty-first qualifying period, and(ii)$1,000,000 for the twenty-second qualifying period and subsequent qualifying periods; andBis the total of all amounts, each of which is an amount in respect of a qualifying property for the qualifying period, determined by the formulaF × GwhereFis(i)nil, unless the rent subsidy percentage of the qualifying renter for the qualifying period is greater than 0%, and(ii)in any other case, the rent top-up percentage of the qualifying renter in respect of the qualifying property for the qualifying period, andGis the qualifying rent expense of the qualifying renter in respect of the qualifying property for the qualifying period.Marginal note:Canada recovery hiring program(2.2)For a qualifying recovery entity for a qualifying period, an overpayment on account of the qualifying entity’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen during the qualifying period in an amount determined by the formulaA × (B − C)whereAis the recovery wage subsidy rate for the qualifying period;Bis the qualifying recovery entity’s total current period remuneration for the qualifying period; andCis the qualifying recovery entity’s total base period remuneration.Marginal note:When assistance received(3)For the purposes of this Act other than this section, and for greater certainty, an amount that an eligible entity is deemed under any of subsections (2) to (2.2) to have overpaid is assistance received by it from a government immediately before the end of the qualifying period to which it relates.Marginal note:Computation of revenue(4)For the purposes of the definitionqualifying revenuein subsection (1), the qualifying revenue of an eligible entity is to be determined in accordance with its normal accounting practices, except that(a)if a group of eligible entities normally prepares consolidated financial statements, each member of the group may determine its qualifying revenue separately, provided every member of the group determines its qualifying revenue on that basis;(b)if an eligible entity and each member of an affiliated group of eligible entities of which the eligible entity is a member jointly elect, the qualifying revenue of the group determined on a consolidated basis in accordance with relevant accounting principles is to be used for each member of the group;(c)if all of the interests in an eligible entity are owned by participants in a joint venture and all or substantially all of the qualifying revenue of the eligible entity for a qualifying period is in respect of the joint venture, then the eligible entity may use the qualifying revenues of the joint venture (determined as if the joint venture were an eligible entity) as its qualifying revenues for the qualifying period for the purposes of this section;(d)if all or substantially all of an eligible entity’s qualifying revenue — determined without reference to paragraph (d) of the definitionqualifying revenuein subsection (1) — for a qualifying period is from one or more particular persons or partnerships with which it does not deal at arm’s length and each particular person or partnership jointly elects with the eligible entity, for the purposes of this section(i)the eligible entity’s qualifying revenue for the prior reference period is deemed to be $100, and(ii)the eligible entity’s qualifying revenue for the current reference period is deemed to be the total of all amounts, each of which is determined by the formula$100(A/B)(C/D)whereAis the eligible entity’s qualifying revenue (determined without reference to paragraph (d) of the definitionqualifying revenuein subsection (1)) for the current reference period attributable to a particular person or partnership,Bis the total of all amounts, each of which is the eligible entity’s qualifying revenue (determined without reference to paragraph (d) of the definitionqualifying revenuein subsection (1)) for the current reference period attributable to a particular person or partnership,Cis the particular person or partnership’s qualifying revenue (determined as if the definitionqualifying revenuein subsection (1) were read without reference to “in Canada”) for the current reference period, andDis the particular person or partnership’s qualifying revenue (determined as if the definitionqualifying revenuein subsection (1) were read without reference to “in Canada”) for the prior reference period; and(e)an eligible entity may make an election, which must apply for all qualifying periods, to determine its qualifying revenues based on(i)the cash method, within the meaning assigned by subsection 28(1) with any modifications that the circumstances require, or(ii)the accrual method, in accordance with generally accepted accounting principles.Marginal note:Asset sales — conditions(4.1)Subsection (4.2) applies to an eligible entity in respect of a qualifying period if(a)the eligible entity acquired assets (referred to in this subsection and subsection (4.2) as the “acquired assets”) of a person or partnership (referred to in this subsection and subsection (4.2) as the “seller”) during the qualifying period or at any time before that period;(b)immediately prior to the acquisition, the fair market value of the acquired assets constituted(i)all or substantially all of the fair market value of the property of the seller used in the course of carrying on business, or(ii)if the seller and the eligible entity deal with each other at arm’s length, all or substantially all of the property of the seller that can reasonably be regarded as being necessary for the eligible entity to be capable of carrying on a business of the seller, or part of a business of the seller, as a business;(c)the acquired assets were used by the seller in the course of a business carried on in Canada by the seller;(d)it is reasonable to conclude that none of the main purposes of the acquisition was to increase the amount of a deemed overpayment under subsection (2); and(e)the eligible entity elects in respect of the qualifying period and files the election in prescribed form and manner with the Minister or, if the seller is in existence during the qualifying period, the eligible entity and the seller jointly elect in respect of that period and so file with the Minister.Marginal note:Asset sales — application(4.2)If this subsection applies to an eligible entity in respect of a qualifying period,(a)the amount of the qualifying revenue of the seller for the prior reference period, or the current reference period, for the qualifying period that is reasonably attributable to the acquired assets (referred to in this subsection as the “assigned revenue”) is to be included in determining the qualifying revenue of the eligible entity for its prior reference period or current reference period, as the case may be, for the qualifying period;(b)the assigned revenue is to be subtracted from the qualifying revenue of the seller for its prior reference period or current reference period, as the case may be, for the qualifying period;(c)if a portion of the assigned revenue is from a person or partnership that did not deal at arm’s length with the seller and that person or partnership deals at arm’s length with the eligible entity throughout the current reference period, then that portion of the assigned revenue is deemed to not be derived from persons or partnerships not dealing at arm’s length for the purposes of paragraph (d) of the definitionqualifying revenuein subsection (1);(d)if the seller meets any of the following conditions, the eligible entity is deemed to meet that condition:(i)either of the conditions in paragraph (d) of the definitionqualifying entityin subsection (1), and(ii)both of the conditions in subparagraph (c)(ii), or the condition in subparagraph (c)(iii), of the definitionqualifying renterin subsection (1); and(e)for the purposes of subparagraph (b)(i) of the definitionprior reference periodin subsection (1) and the description of C in subparagraph (c)(ii) of the definitionqualifying entityin subsection (1), the eligible entity is deemed to have commenced carrying on the business in which the acquired assets are used at the earlier of(i)the date on which the eligible entity commenced carrying on that business, and(ii)the date on which the seller commenced carrying on the business in which the acquired assets were used.Marginal note:Deemed overpayment(5)For the purposes of this section,(a)the amount of any deemed overpayment by an eligible entity under any of subsections (2) to (2.2) in respect of a qualifying period cannot exceed the amount claimed by the eligible entity in the application referred to in paragraph (a) of the definitionqualifying entityin subsection (1) — or paragraph (a) of the definitionqualifying renterin subsection (1) or paragraph (a) of the definitionqualifying recovery entityin subsection (1) — in respect of that qualifying period; and(b)if an eligible employee is employed in a week by two or more qualifying entities that do not deal with each other at arm’s length, the total amount of the deemed overpayment under subsection (2) or (2.2) in respect of the eligible employee for that week shall not exceed the amount that would arise if the eligible employee’s eligible remuneration for that week were paid by one qualifying entity.Marginal note:Anti-avoidance — qualifying revenues(6)Notwithstanding any other provision in this section, the qualifying revenue of an eligible entity for a current reference period for a qualifying period is deemed to be equal to the qualifying revenue of the eligible entity for the relevant prior reference period, if(a)the eligible entity, or a person or partnership not dealing at arm’s length with the eligible entity, enters into a transaction or participates in an event (or a series of transactions or events) or takes an action (or fails to take an action) — other than, for greater certainty, a decision under subparagraph (a)(ii) or (b)(ii) of the definitionqualifying revenuein subsection (1) or the decision to use one of the methods of computing qualifying revenues under subsection (4) — that has the effect of(i)reducing the qualifying revenues (determined without reference to this subsection) of the eligible entity for the current reference period, or(ii)increasing the qualifying rent expenses of the eligible entity for the qualifying period; and(b)it is reasonable to conclude that one of the main purposes of the transaction, event, series or action in paragraph (a) is to(i)cause an eligible entity to qualify for the deemed overpayment under subsection (2) in respect of that qualifying period,(ii)in respect of the fifth qualifying period and subsequent qualifying periods, increase the amount of a deemed overpayment under subsection (2), or(iii)increase the amount of a deemed overpayment under subsection (2.1).Marginal note:Anti-avoidance — recovery wage subsidy(6.1)Notwithstanding any other provision in this section, the total current period remuneration of an eligible entity for a qualifying period is deemed to be equal to the total base period remuneration of the eligible entity, if(a)the eligible entity, or a person or partnership not dealing at arm’s length with the eligible entity, enters into a transaction or participates in an event (or a series of transactions or events) or takes an action (or fails to take an action) that has the effect of increasing the difference between the total current period remuneration and the total base period remuneration of the eligible entity for the qualifying period; and(b)it is reasonable to conclude that one of the main purposes of the transaction, event, series or action in paragraph (a) is to increase the amount of a deemed overpayment under subsection (2.2).Marginal note:Partnerships(7)A partnership is deemed(a)for the purposes of subsections (2) to (2.2) and subsections 152(3.4) and 160.1(1), to be a taxpayer; and(b)for the purposes of subsections (2) to (2.2), to have a liability under this Part for a taxation year in which a qualifying period ends.Marginal note:Prescribed amounts(8)The following may be prescribed for the purposes of:(a)the definitionbase percentagein subsection (1),(i)the percentages in subparagraphs (a)(i), (b)(i), (c)(i), (d)(i), (e)(i), (f)(i), (g)(i), (h)(i), (i)(i) and (j)(i), and(ii)the factors in subparagraphs (a)(ii), (b)(ii), (c)(ii), (d)(ii), (e)(ii), (f)(ii), (g)(ii), (h)(ii), (i)(ii) and (j)(ii); and(b)the definitionrent subsidy percentagein subsection (1), the factors and percentages in paragraphs (a) and (a.1) of that definition;(b.1)the definitionrecovery wage subsidy ratein subsection (1), the percentages in that definition; and(c)the definitionqualifying rent expensein subsection (1), specific, or classes of, expenses that are included or excluded as qualifying rent expenses under paragraph (a) or (b) of that definition.Marginal note:Deeming rules — revenue decline tests(9)If, absent the application of this subsection,(a)an eligible entity meets the conditions in paragraph (c) of the definitionqualifying entityin subsection (1) in respect of a particular qualifying period described in any of paragraphs (a) to (c) of the definitionqualifying periodin subsection (1), then the eligible entity is deemed to meet the conditions of that paragraph in respect of the immediately following qualifying period; or(b)a lower revenue reduction percentage is determined in respect of an eligible entity for a particular qualifying period described in any of paragraphs (c.2) to (d) of the definitionqualifying periodin subsection (1) than for the immediately preceding qualifying period, then the revenue reduction percentage in respect of the eligible entity for the particular qualifying period is deemed to be equal to its revenue reduction percentage for the immediately preceding qualifying period.Marginal note:Special case(9.1)For the purposes of paragraph (9)(b), if the particular qualifying period is the eleventh qualifying period, then the immediately preceding qualifying period is deemed to be the ninth qualifying period.Marginal note:Greater of wage and recovery subsidies(9.2)For a qualifying period,(a)if the amount of any deemed overpayment under subsection (2) is equal to or greater than the amount of any deemed overpayment under subsection (2.2), the amount of any deemed overpayment under subsection (2.2) is deemed to be nil; and(b)if the amount of any deemed overpayment under subsection (2.2) is greater than the amount of any deemed overpayment under subsection (2), the amount of any deemed overpayment under subsection (2) is deemed to be nil.Marginal note:Amending or revoking elections(10)An eligible entity may amend or revoke an election made under this section on or before the date that the application is due for the first qualifying period in respect of which the election is made.Marginal note:Affiliated entities(11)For the purposes of the description of E in subsection (2.1), if two eligible entities are affiliated with the same eligible entity, they are deemed to be affiliated with each other.Marginal note:Deeming rule — qualifying rent expense(12)For the purposes of the definitionqualifying rent expensein subsection (1), an amount is deemed to have been paid by an eligible entity on the date it first became due under an agreement, and not at a later date, if the individual referred to in paragraph (b) of the definitionqualifying renterin subsection (1) attests that the eligible entity intends to pay the amount due under the agreement no later than 60 days after the day on which the Minister makes the first refund under subsection 164(1.6) in respect of the amount deemed to have been paid (referred to in subsection (13) as the “payment deadline”).Marginal note:Deeming rule — qualifying rent expense(13)Subsection (12) is deemed not to have produced its effect if the amount due referred to in subsection (12) is not actually paid on or before the payment deadline.Marginal note:Executive compensation(14)The amount of a refund made by the Minister to an eligible entity in respect of a deemed overpayment under subsection (2) on a particular date under subsection 164(1.6), in respect of any of the seventeenth qualifying period to the twenty-third qualifying period, is deemed to be an amount that has been refunded to the eligible entity on that particular date (for the taxation year in which the refund was made) in excess of the amount to which the eligible entity was entitled as a refund under this Act to the extent of the lesser of the amount of the refund and the amount determined by the formulaA − BwhereAis the executive compensation repayment amount of the eligible entity; andBis the total of all amounts deemed to be an excess refund to the eligible entity under this subsection in respect of refunds made after the particular date.Marginal note:Executive compensation(14.1)The amount of a refund made by the Minister to an eligible entity in respect of a deemed overpayment under subsection (2) on a particular date under subsection 164(1.6), in respect of any of the twenty-fourth qualifying period and any subsequent qualifying period, is deemed to be an amount that has been refunded to the eligible entity on that particular date (for the taxation year in which the refund was made) in excess of the amount to which the eligible entity was entitled as a refund under this Act to the extent of the lesser of the amount of the refund and the amount determined by the formulaA − BwhereAis the greater of(a)the executive compensation repayment amount of the eligible entity, and(b)with respect to a qualifying entity that is a publicly traded company or a subsidiary of such a company, the amount of taxable dividends paid by the company or its subsidiary to an individual who is a holder of common shares of the company or of the subsidiary of the company; andBis the total of all amounts deemed to be an excess refund to the eligible entity under this subsection in respect of refunds made after the particular date.Marginal note:Foreign currency — executive remuneration(15)For the purposes of paragraphs 261(2)(b) and (5)(c), amounts referred to in the definitionexecutive remunerationin subsection (1) are deemed to arise on the last day of the eligible entity’s fiscal period to which the amount relates and not at any other time.Marginal note:Extension of time by Minister(16)For the purposes of determining whether an eligible entity is a qualifying entity, a qualifying recovery entity or a qualifying renter, the Minister may, at any time, extend the time for filing an application under this section.
(a)begins on January 1, 2020 and ends on March 15, 2020; or(b)if the eligible entity elects,(i)begins on March 1, 2019 and ends on May 31, 2019, in respect of any of the first qualifying period to the third qualifying period,(ii)begins on March 1, 2019 and ends on June 30, 2019, in respect of the fourth qualifying period, unless the eligible entity elects to use the period that begins on March 1, 2019 and ends on May 31, 2019 for that qualifying period,(iii)begins on July 1, 2019 and ends on December 31, 2019, in respect of any of the fifth qualifying period to the thirteenth qualifying period,(iii.1)begins on March 1, 2019 and ends on June 30, 2019, in respect of any of the fourteenth qualifying period to the seventeenth qualifying period, unless the eligible entity elects to use the period that begins on July 1, 2019 and ends on December 31, 2019 for that qualifying period,(iii.2)begins on July 1, 2019 and ends on December 31, 2019, in respect of the eighteenth qualifying period and any subsequent qualifying period, or(iv)if the eligible employee was on leave for any reason mentioned in subsection 12(3) of theEmployment Insurance Actor section 2 of theAct respecting parental insurance, CQLR, c