Notice to the reader: This publication was archived and kept for historical purposes. Use caution when you refer to it, since it reflects the law in force at the time it was released and may no longer apply.
Information Notice
6031
Published: April 2009
Content last reviewed: November 2010
ISBN:
978-1-4249-9039-9 (Print), 978-1-4249-9041-2 (PDF), 978-1-4249-9040-5 (HTML)
Publication Archived
About this Notice
This notice is to inform public electricity utilities that the Minister of Finance has amended O. Regulations 162/01 and 207/99 to implement measures announced in the 2007 Ontario Budget and make consequential adjustments to the regulations as a result of the applicability of the Taxation Act, 2007 for taxation years ending after December 31, 2008.
The 2007 Ontario Budget proposed to introduce several measures to maintain a level playing field between public and private electricity utilities and their shareholders. These measures addressed transfers of property, deductions, loss
utilization and interest on loans from municipalities.
Amendments of O. Regulation 162/01 and 207/99
Amendments have been made to:
- allow public electricity utilities to defer payments in lieu of federal and Ontario corporate taxes (PILs) on rollovers under section 85 and subsection 97(2) of the Income Tax Act (Canada). The rules allow for a rollover only on the transfer of property within the PILs regime (e.g., rollover transfer of property from one public electricity utility to another public electricity utility). This measure applies to rollovers that occur in a taxation year of the transferor that ends after October 1, 2001.
- deny capital gain treatment on the disposition of partnership interests where the disposition is to entities outside the PILs regime, and where the gain is not attributable to increases in the value of any nondepreciable capital property of the partnership. This measure is effective for dispositions after December 31, 2007.
- prevent municipal electricity utilities (MEUs) from using losses and deductions from other businesses against revenue from core electricity businesses. This means that losses from a particular business are only used to offset income from that particular business by carrying forward the losses to subsequent taxation years. This measure is effective for taxation years ending after December 31, 2007.
No amendments have been made to limit the deductibility of interest paid by MEUs to their tax-exempt shareholders. The imposition of limits will be revisited in the future.
Effective April 3, 2008, the Canada Revenue Agency began administering corporate taxes on behalf of Ontario. However the Ministry of Finance continues to administer PILs. The PILs regulations have been amended accordingly.
