Section 34.3 — Income Tax Act: Definitions

The definitions in this subsection and in subsection 34.2(1) apply in this section. actual stub period accrual , of a corporation in respect of a qualifying partnership for a taxation year, means the positive or negative amount determined by the formula (A – B) × C/D – E where A is the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the qualifying partnership for the last fiscal period of the partnership that began in the base year (other than any amount for which a deduction was available under section 112 or 113); B is the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss of the qualifying partnership for the last fiscal period of the partnership that began in the base year (to the extent that the total of all allowable capital losses included under this description in respect of all qualifying partnerships for the taxation year does not exceed the corporation’s share of all taxable capital gains of all qualifying partnerships for the taxation year); C is the number of days that are in both the base year and the fiscal period; D is the number of days in the fiscal period; and E is the amount of the qualified resource expense in respect of the qualifying partnership that was designated by the corporation for the base year under subsection 34.2(6) in its return of income for the base year filed with the Minister on or before its filing-due date for the base year. ( montant comptabilisé réel pour la période tampon ) base year , of a corporation in respect of a qualifying partnership for a taxation year, means the preceding taxation year of the corporation in which began a fiscal period of the partnership that ends in the corporation’s taxation year. ( année de base ) income shortfall adjustment , of a corporation in respect of a qualifying partnership for a taxation year, means the positive or negative amount determined by the formula (A – B) × C × D where A is the amount that is the lesser of the actual stub period accrual in respect of the qualifying partnership, and the amount that would be the corporation’s adjusted stub period accrual for the base year in respect of the qualifying partnership if the value of F in paragraph (a) of the definition adjusted stub period accrual in subsection 34.2(1) were nil; B is the amount included under subsection 34.2(2) in computing the corporation’s income for the base year in respect of the qualifying partnership; C is the number of days in the period that begins on the day after the day on which the base year ends, and ends on the day on which the taxation year ends; and D is the average daily rate of interest determined by reference to the rate of interest prescribed under paragraph 4301(a) of the Income Tax Regulations for the period referred to in the description of C. ( rajustement pour revenu insuffisant ) qualifying partnership , in respect of a corporation for a particular taxation year, means a partnership a fiscal period of which began in a preceding taxation year and ends in the particular taxation year;

and in respect of which the corporation was required to calculate an adjusted stub period accrual for the preceding taxation year. ( société de personnes admissible ) Subsection (3) applies to a corporation for a taxation year if the corporation has designated an amount for the purpose of the description of F in paragraph (a) of the definition adjusted stub period accrual in subsection 34.2(1) in calculating its adjusted stub period accrual for the base year in respect of a qualifying partnership for the taxation year; and where the corporation has qualifying transitional income, the taxation year is after the first taxation year of the corporation to which subsection 34.2(17) applies. If this subsection applies to a corporation for a taxation year, the corporation shall include in computing its income for the taxation year the amount determined by the formula A + 0.50 × (A – B) where A is the amount that is the total of all amounts each of which is the corporation’s income shortfall adjustment in respect of a qualifying partnership for the year; and B is the amount that is the lesser of A and the total of all amounts each of which is 25% of the positive amount, if any, that would be the income shortfall adjustment in respect of a qualifying partnership for the year if the value of the description of B in the definition income shortfall adjustment in subsection (1) were nil.