Section 123.6 — Income Tax Act: Definition

The following definition applies in this section. bank or life insurer group member means a corporation that is a bank; a life insurance corporation that carries on business in Canada; or a financial institution (as defined in subsection 190(1)) that is related to any corporation described in paragraph (a) or (b). ( membre d’un groupe de banques ou d’assureurs-vie ) There shall be added to the tax otherwise payable under this Part for a taxation year, by a corporation that is a bank or life insurer group member at any time during the taxation year, an amount determined by the formula 0.015 (A − B) where A is the corporation’s taxable income for the taxation year (or the corporation’s taxable income earned in Canada if the corporation is non-resident in the taxation year); and B is if the corporation is not related to another bank or life insurer group member at the end of the taxation year of the corporation, where the corporation’s taxation year is not less than 51 weeks, $100 million, and in any other case, the amount determined by the formula $100 million × (C ÷ 365) where C is the number of days in the taxation year, and in any other case, subject to subsection (5), nil. For the purposes of this section, a corporation that is described in paragraph (a) or (b) of the definition bank or life insurer group member in subsection (1) at any time during a taxation year and that was related to another bank or life insurer group member at the end of the year (in this section, the corporation and each such bank or life insurer group member are referred to together as the “related group”) may file with the Minister, with the corporation’s return of income, an agreement in prescribed form on behalf of the related group under which an amount that does not exceed $100 million is allocated among the related group for all taxation years of members of the related group ending in the same calendar year. The Minister may request a corporation that is a member of a related group at any time during a taxation year to file with the Minister an agreement referred to in subsection (3) and, if the corporation does not file the agreement within 30 days after receiving the request, the Minister may allocate the amount referred to in subsection (3) among the related group for the taxation years of the bank or life insurer group members ending in the same calendar year. For the purposes of this section, the least amount allocated for a taxation year to each bank or life insurer group member under an agreement described in subsection (3) or by the Minister under subsection (4) is the amount determined for B in subsection (2) for the taxation year of that member, but, if no such allocation is made, the amount determined for B in subsection (2) of each bank or life insurer group member for that year is nil. If an amount has been deducted in computing the income of a corporation, the amount is deemed not to have been deducted in computing the corporation’s taxable income, or taxable income earned in Canada, as the case may be, for the purpose of computing the tax payable by the corporation under subsection (2), if the deduction is in respect of an amount that can reasonably be considered to have been paid or payable (in this subsection referred to as “the payment”), directly or indirectly, to a person or partnership that was not dealing at arm’s length with the corporation; the person or partnership was not a bank or life insurer group member;

and it can reasonably be considered that one of the purposes of the payment was to reduce the tax payable by the corporation under subsection (2).