Vol. 144, No. 6 — March 17, 2010

Registration

SI/2010-17 March 17, 2010

FINANCIAL ADMINISTRATION ACT

Oak Ridges Moraine Land Exchange Income Tax Remission Order

P.C. 2010-218 February 23, 2010

Her Excellency the Governor General in Council, considering that it is in the public interest to do so, on the recommendation of the Minister of Finance, pursuant to section 23 (see footnote a) of the Financial Administration Act (see footnote b), hereby makes the annexed Oak Ridges Moraine Land Exchange Income Tax Remission Order.

OAK RIDGES MORAINE LAND EXCHANGE INCOME TAX REMISSION ORDER

INTERPRETATION

Definitions

1. (1) The following definitions apply in this Order.

“Act”
« Loi »

“Act” means the Income Tax Act.

“Agreement”
« accord »

“Agreement” means the agreement entered into on July 5, 2004 between the Province of Ontario, as represented by the Minister of Municipal Affairs and Housing, and certain parties including transferor corporations and members.

“Drynoch Partnership”
« société de personnes Drynoch »

“Drynoch Partnership” means the Village of Drynoch Partnership formed under the laws of Ontario.

“eligible amount”
« montant admissible »

“eligible amount”, in respect of an eligible person, means an amount equal to the amount determined under subsection 2(1) for the eligible person.

“eligible person”
« personne admissible »

“eligible person” means a transferor corporation or a member.

“member”
« associé »

“member” means a person that is listed in any of Parts 1, 2 and 3 of Schedule 1 and that on August 14, 2007 was, or was a beneficiary of a bare trust that was, a partner of one or both of the Drynoch Partnership and the transferor partnership.

“North Pickering Land”
« terrains du nord de Pickering »

“North Pickering Land”, in respect of a transferor corporation or the transferor partnership, means any interest in land that the transferor corporation or the transferor partnership, as the case may be, acquired on August 14, 2007 under the Agreement.

“Oak Ridges Moraine Land”
« terrains de la moraine d’Oak Ridges »

“Oak Ridges Moraine Land”, in respect of a transferor corporation or the transferor partnership, means any interest in land that the transferor corporation or the transferor partnership, as the case may be, disposed of on August 14, 2007 under the Agreement.

“payment year”
« année de paiement »

“payment year” , in respect of an eligible person, means the eligible person’s specified taxation year and each of the eligible person’s nine taxation years following that specified taxation year.

“specified taxation year”
« année d’imposition déterminée »

“specified taxation year” , in respect of an eligible person, means the eligible person’s taxation year that

(a) in the case of a transferor corporation, includes August 14, 2007; and

(b) in the case of a member, includes December 31, 2007.

“transferor corporation”
« société cédante »

“transferor corporation” means a corporation listed in Schedule 2.

“transferor partnership”
« société de personnes cédante »

“transferor partnership” means the MacLeod Landing Partnership formed under the laws of Ontario.

Application of rules under Act

(2) For greater certainty,

(a) for the purpose of this Order a disposition includes a deemed disposition under the Act; and

(b) if under the Act the transferor partnership or the Drynoch Partnership is continued or ceases to exist, or is deemed to be continued or to cease to exist, for the purpose of this Order the transferor partnership or the Drynoch Partnership, as the case may be, is continued or ceases to exist, or is deemed to be continued or to cease to exist.

Application of meanings in Act

(3) Unless the context otherwise requires, words and expressions used in this Order have the same meaning as in the Act.

Transferor corporation that is member

(4) For the purposes of this Order, if a transferor corporation is also a member, the transferor corporation is deemed to be a separate and distinct eligible person from the member.

REMISSION

Income tax remitted

2. (1) Subject to sections 3 to 5, remission is granted to each eligible person for their specified taxation year of the amount, if any, by which

(a) the income tax payable under Part I of the Act by the eligible person for their specified taxation year

exceeds

(b) the income tax that would have been payable under Part I of the Act by the eligible person for their specified taxation year, if the transferor corporation’s or the transferor partnership’s, as the case may be, proceeds from the disposition of their Oak Ridges Moraine Land had been equal to the cost amount to the transferor corporation or the transferor partnership, as the case may be, of their Oak Ridges Moraine Land immediately before the disposition.

Income tax remitted

(2) If at a particular time an eligible person does not meet one or more of the conditions set out in section 4 (other than the condition set out in paragraph 4(a)), but has paid an amount before the particular time that was required to be paid under section 5 before the particular time, remission is granted to the eligible person of the tax payable under Part I of the Act in respect of the eligible person’s specified taxation year to the extent of the amount so paid by the eligible person.

Penalty and interest remitted

(3) Remission is granted to an eligible person of the amount of any interest or penalty payable under the Act on any amount remitted under this section.

CONDITIONS

Inventory requirement

3. No remission is granted to an eligible person under section 2 unless,

(a) if the eligible person is a transferor corporation, that transferor corporation’s Oak Ridges Moraine Land was described, immediately before its disposition on August 14, 2007, in an inventory of that transferor corporation; and

(b) if the eligible person is a member, the transferor partnership’s Oak Ridges Moraine Land was described, immediately before its disposition on August 14, 2007, in an inventory of the transferor partnership.

Application, payments and acknowledgements

4. A remission referred to in subsection 2(1) is granted to an eligible person on the condition that

(a) the eligible person applies to the Minister in writing for remission under this Order at a time (in this section referred to as the “application time”) that is before the last day of the sixth month that follows the month in which this Order is published in the Canada Gazette, Part II;

(b) the eligible person pays to the Receiver General for Canada, on or before the date provided under section 5 for its payment, each amount, if any, that the eligible person is required to pay under that section; and

(c) the eligible person provides to the Minister,

(i) with the application described in paragraph (a), an acknowledgement in writing specifying the amount, if any, that the eligible person is required to pay under section 5 as of the application time,

(ii) on or before each day that is the eligible person’s filing-due date for a particular payment year that ends after the application time, an acknowledgement in writing specifying the amount, if any, that remains to be paid under section 5 for the payment years that follow the particular payment year; and

(iii) with the application described in paragraph (a) and any acknowledgement referred to in subparagraph (i), an acknowledgement in writing that, if the eligible person does not meet the conditions set out in this section at a particular time that is after the application time, it owes at the particular time, under the Act, an amount equal to the total of

(A) the particular amount, if any, by which the eligible amount exceeds the total of all amounts paid by the eligible person under section 5 before the particular time, and

(B) the total of the interest and penalties payable under the Act in respect of the particular amount.

Disposition of North Pickering Land by a Transferor Corporation

5. (1) If, in a payment year, a transferor corporation disposes of North Pickering Land, the transferor corporation must pay the amount determined by the formula

A × (B/C)

where

A is the eligible amount of the transferor corporation;

B  is the fair market value, on August 14, 2007, of the North Pickering Land disposed of by the transferor corporation in the payment year; and

C is the fair market value, on August 14, 2007, of all of the North Pickering Land of the transferor corporation.

Disposition of North Pickering Land by the Transferor Partnership

(2) If, in a fiscal period of the transferor partnership that ends in a payment year of a member, the transferor partnership disposes of North Pickering Land, the member must pay the amount determined by the formula

A × (B/C) × (D/E)

where

A is the eligible amount of the member;

B is the fair market value, at the end of August 14, 2007, of the North Pickering Land disposed of by the transferor partnership in the fiscal period;

C is the fair market value, on August 14, 2007, of all of the North Pickering Land of the transferor partnership;

D is the lesser of E and the proportion (expressed as a percentage) of the interests in the transferor partnership that may reasonably be considered to be held by the member directly, or indirectly through the Drynoch partnership or a bare trustee, at the end of the payment year; and

E is the proportion (expressed as a percentage) of the interests in the transferor partnership that may reasonably be considered to have been held by the member directly, or indirectly through the Drynoch partnership or a bare trustee, on August 14, 2007.

Disposition of partnership interest

(3) A member must pay, in addition to any amount payable by the member under subsection (2), in respect of a particular payment year the total of,

(a) if the member disposes, at any time in the particular payment year, of all or part of the member’s direct interest in a particular partnership that is the transferor partnership or the Drynoch Partnership, the positive amount, if any, determined by the formula

(A – B) × [(C - D)/E]

where

A is the eligible amount of the member;

B is the total of all amounts each of which is an amount payable by the member

(i) under this subsection for a previous payment year, or

(ii) under subsection (2) for a previous payment year or the particular payment year;

C is the lesser of the proportion (expressed as a percentage) of the interests in the particular partnership that may reasonably be considered to have been held directly by the member on August 14, 2007 and the proportion (expressed as a percentage) of the interests in the particular partnership that may reasonably be considered to be held directly by the member at the beginning of the particular payment year;

D is the lesser of E and the proportion (expressed as a percentage) of the interests in the particular partnership that may reasonably be considered to be held directly by the member at the end of the particular payment year, and

E is the proportion (expressed as a percentage) of the interest in the particular partnership that may reasonably be considered to have been held directly by the member on August 14, 2007, and

(b) if the member is mentioned in Part 1 or 3 of Schedule 1 and the particular payment year includes the end of a fiscal period of the Drynoch partnership during which the Drynoch partnership disposes of all or part of its interests in the transferor partnership, the positive amount, if any, determined by the formula

(A - B) × [(C - D)/E]

where

A is the eligible amount of the member;

B is the total of all amounts each of which is an amount payable by the member

(i) under paragraph (a) for the particular payment year,

(ii) under this subsection for a previous payment year, or

(iii) under subsection (2) for a previous payment year or the particular payment year;

C is the lesser of

(i) the proportion (expressed as a percentage) of the interests in the transferor partnership that may reasonably be considered to have been held by the Drynoch Partnership on August 14, 2007, and

(ii) the proportion (expressed as a percentage) of the interests in the transferor partnership that may reasonably be considered to have been held by the Drynoch Partnership at the end of its fiscal period that ends in the member’s taxation year that immediately precedes the particular payment year;

D is the lesser of C and the proportion (expressed as a percentage) of the interests in the transferor partnership that may reasonably be considered to have been held by the Drynoch Partnership at the end of its fiscal period that ends in the particular payment year; and

E is the proportion (expressed as a percentage) of the interests in the transferor partnership that was held by the Drynoch Partnership at the end of August 14, 2007.

Timing of payment

(4) An amount payable by an eligible person under any of subsections (1) to (3) in respect of a payment year must be paid on or before the filing-due date for the later of

(a) the eligible person’s first taxation year that ends on or after the day on which this Order is published in the Canada Gazette, Part II; and

(b) the eligible person’s taxation year that corresponds to the payment year.

Final payment

(5) Each eligible person must pay on or before the eligible person’s filing-due date for the tenth taxation year following their specified taxation year, the amount determined by the formula

A - B

where

A is the eligible amount of the eligible person; and

B is the total of all amounts each of which is an amount payable under any of subsections (1) to (3) by the eligible person.

Maximum

(6) The total of all amounts, each of which is an amount payable by an eligible person under this section, may not exceed the amount obtained by subtracting one dollar from the eligible amount of the eligible person.

SCHEDULE 1
(Subsection 1(1))

MEMBERS

PART 1

MEMBERS OF THE DRYNOCH PARTNERSHIP ONLY

1. Drynoch Estates Ltd.

2. Grey, Gordon

3. Grey, Patricia

PART 2

MEMBERS OF THE TRANSFEROR PARTNERSHIP ONLY

1. Piper Management Ltd.

2. Isle of Palms Development Inc. (bare trustee for Lauralex Holdings Inc.)

3. Lauralex Holdings Inc.

PART 3

MEMBERS OF BOTH PARTNERSHIPS

1. Arctic Wolf Holdings Inc. (bare trustee for D.R.S. & Associates Ltd., Diligent Investors Ltd., Star of the South Estates Ltd. and Della Shore Investments Ltd.)

2. Ayrfield Holdings Limited (bare trustee for Muzzo Brothers Group Inc.)

3. D.R.S. & Associates Ltd.

4. Della Shore Investments Ltd.

5. Diligent Investors Ltd.

6. Isle of Palms Development Inc. (bare trustee for Strada Holdings Inc. and Ayrfield Holdings Limited)

7. Muzzo Brothers Group Inc.

8. Star of the South Estates Ltd.

9. Strada Holdings Inc.

SCHEDULE 2
(Subsection 1(1))

TRANSFEROR CORPORATIONS

 1. 718357 Ontario Limited

 2. 1133373 Ontario Inc.

 3. 1160963 Ontario Inc.

 4. 1350557 Ontario Limited

 5. Affiliated Realty Corporation Limited (bare trustee for 1160963 Ontario Inc.)

 6. Betovan Construction Limited

 7. Chestermere Investments Limited

 8. Della Shore Investments Ltd.

 9. Hunley Homes Ltd. (bare trustee for Della Shore Investments Ltd. and Mardis Group Inc.)

10. Lebovic Enterprises Limited

11. Mardis Group Inc.

12. Zavala Developments Inc. (bare trustee for the transferor partnership)

EXPLANATORY NOTE

(This note is not part of the Order.)

In July 2004, certain landowners (the “Landowners”) of the Richmond Hill Land portion of the Oak Ridges Moraine agreed with the Province of Ontario (the “Province”) to exchange environmentally-sensitive lands for lands owned by the Province in North Pickering, Ontario.

The Remission Order provides for the remission to each eligible person of taxes payable by the person under the Income Tax Act arising as a result of the exchange, while imposing conditions for the remission, one of which is the payment of certain amounts. The amounts become payable to the Receiver General for Canada progressively on the disposition of all or a part of the North Pickering lands and any amount still owing whether or not the lands have been disposed of is payable at the end of the 10th taxation year following the taxation year affected by the exchange.

The cost of this Remission Order is estimated to be between $5.2 million and $9.1 million. It is difficult to make a more precise estimate because of variables such as the different tax rates applicable to each eligible person, the timing of payments required to be made under the Remission Order and interest rate assumptions.

Footnote a
S.C. 1999, c. 31, s. 102

Footnote b
R.S., c. F-11

NOTICE:
The format of the electronic version of this issue of the Canada Gazette was modified in order to be compatible with extensible hypertext markup language (XHTML 1.0 Strict).