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B.C. Reg. 97/2013
O.C. 130/2013
Deposited March 1, 2013
effective April 1, 2013
This consolidation is current to June 21, 2022.
Link to consolidated regulation (PDF)
Link to Point in Time

Provincial Sales Tax Act

Provincial Sales Tax Exemption and Refund Regulation

[Last amended October 12, 2021 by B.C. Reg. 262/2021]

Part 9 — Related Party Asset Transfers

Division 1 — Definitions and Interpretation

Definitions and interpretation

148   (1) In this Part, "related corporation" means a corporation that is related to another corporation within the meaning of subsection (2).

(2) For the purposes of this Part, a corporation is related to another corporation if

(a) one of them is a wholly owned subsidiary of the other, or

(b) both of them are wholly owned subsidiaries of the same corporation.

(3) For the purposes of this subsection and subsection (2), a corporation is a wholly owned subsidiary of another corporation if at least 95% of the outstanding shares of each class of the share capital of the first corporation are beneficially owned by one or both of the following:

(a) that other corporation;

(b) a wholly owned subsidiary, or wholly owned subsidiaries, of that other corporation.

(4) Subject to subsection (5), for the purposes of

(a) section 151 [tangible personal property transferred to new corporation — wholly owned and controlled],

(b) section 152 [tangible personal property transferred to new corporation — not wholly owned and controlled],

(c) section 154 [software transferred to new corporation — wholly owned and controlled], and

(d) section 155 [software transferred to new corporation — not wholly owned and controlled],

a person wholly owns and controls a corporation if

(e) the person beneficially owns shares in the corporation, and

(f) at least 95% of the outstanding shares of each class of the share capital of the corporation are beneficially owned by that person or by that person and that person's spouse.

(5) For the purposes of sections 151, 152, 154 and 155, a person referred to in subsection (4) of this section continues to wholly own and control a corporation despite transferring,

(a) without consideration, shares in the corporation to a trustee of a trust whose only beneficiaries are one or more of the following:

(i) the person;

(ii) the person's spouse;

(iii) the person's children, or

(b) with or without consideration, shares in the corporation to a trustee of a trust whose only beneficiaries are the person's spouse or the person and the person's spouse.

Division 2 — Tangible Personal Property Transferred between Related Parties

Tangible personal property transferred between related corporations

149   (1) In this section:

"previous owner", in relation to tangible personal property, means the related corporation referred to in subsection (2) (a), (b) or (c), as applicable;

"transfer date" means the following:

(a) in respect of tangible personal property referred to in subsection (2) (a), the date on which the tangible personal property is purchased by the corporation referred to in that subsection;

(b) in respect of tangible personal property referred to in subsection (2) (b), the date on which the tangible personal property was acquired by the corporation referred to in that subsection;

(c) in respect of tangible personal property referred to in subsection (2) (c), the date on which the tangible personal property is received as a gift by the corporation referred to in that subsection.

(2) Subject to subsections (3), (12) and (14) to (16),

(a) a corporation is exempt from tax imposed under any of the following provisions of the Act in respect of tangible personal property if the corporation purchases the tangible personal property from a related corporation:

(i) Division 2 [Purchases of Tangible Personal Property] of Part 3;

(ii) section 60 [tax if conveyance purchased in British Columbia for interjurisdictional use];

(iii) section 66 [adjustment of tax in respect of conveyance];

(iv) section 101 [tax on reusable containers],

(b) a corporation is exempt from tax imposed under any of the following provisions of the Act in respect of tangible personal property if the corporation acquired the tangible personal property from a related corporation:

(i) Division 4 [Tangible Personal Property Brought into British Columbia] of Part 3;

(ii) Division 5 [Property Brought into British Columbia from Outside Canada] of Part 3;

(iii) section 63 [tax if conveyance brought into and used in British Columbia];

(iv) section 64 [tax if change in use of conveyance acquired for resale];

(v) section 66 [adjustment of tax in respect of conveyance], and

(c) a corporation is exempt from tax imposed under section 100 [tax on gift of vehicle, boat or aircraft given in British Columbia] of the Act in respect of a vehicle, boat or aircraft if the corporation receives the vehicle, boat or aircraft as a gift from a related corporation.

(3) The exemptions under subsection (2) (a), (b) and (c) do not apply to a corporation in respect of tangible personal property unless one or more of the following requirements are met:

(a) subject to subsections (4) to (7), a related corporation of either the corporation or the previous owner of the tangible personal property

(i) paid tax under the Act, the Consumption Tax Rebate and Transition Act or the Social Service Tax Act in respect of the tangible personal property and has not obtained and is not entitled to obtain, under those Acts, a refund of that tax, or

(ii) paid tax, in respect of the tangible personal property, under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, and has not obtained and is not entitled to obtain, under Part IX of that Act, a refund of or a credit or rebate for that tax;

(b) the previous owner of the tangible personal property, before July 1, 1948, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property;

(c) subject to subsection (8),

(i) the previous owner of the tangible personal property, on or after July 1, 1948 but before July 1, 2010, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property, and

(ii) the previous owner of the tangible personal property was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the tangible personal property;

(d) subject to subsection (9),

(i) the previous owner of the tangible personal property, on or after July 1, 2010 but before April 1, 2013, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property, and

(ii) the previous owner of the tangible personal property would not have been subject to, or would have been exempt from, tax under the Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the tangible personal property, if the Act and the regulations made under it, as they read on April 1, 2013, had been in force during the period referred to in subparagraph (i);

(e) subject to subsection (10),

(i) the previous owner of the tangible personal property, on or after April 1, 2013, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property, and

(ii) the previous owner of the tangible personal property was not subject to, or was exempt from, tax under the Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the tangible personal property;

(f) subject to subsection (11),

(i) the previous owner of the tangible personal property, before April 1, 2013, acquired the tangible personal property outside British Columbia, and

(ii) the previous owner of the tangible personal property would have been exempt under this Division from tax imposed under the Act in respect of the tangible personal property if

(A) the Act and the regulations made under it, as they read on April 1, 2013, had been in force on the date on which the tangible personal property was acquired, and

(B) the previous owner had purchased the tangible personal property at a sale in British Columbia;

(g) subject to subsection (11),

(i) the previous owner of the tangible personal property, on or after April 1, 2013, acquired the tangible personal property outside British Columbia, and

(ii) the previous owner of the tangible personal property would have been exempt under this Division from tax imposed under the Act in respect of the tangible personal property if the previous owner had, on the date on which the tangible personal property was acquired, purchased the tangible personal property at a sale in British Columbia.

(4) For the purposes of subsection (3) (a) (i),

(a) tax under the Act does not include tax under the following provisions of the Act:

(i) Division 3 [Leases of Tangible Personal Property] of Part 3;

(ii) section 62 [tax if leased conveyance used in British Columbia];

(iii) Division 7 [Multijurisdictional Vehicles] of Part 3;

(iv) Division 11 [Energy Products] of Part 3;

(v) section 102 [tax on leased property occasionally supplied with operator], and

(b) tax under the Social Service Tax Act does not include tax under the following provisions of that Act:

(i) Division 2 [Tax in relation to Leases] of Part 2;

(ii) Division 3 [Tax in relation to Multijurisdictional Vehicles] of Part 2;

(iii) Division 9 [Environmental Levies] of Part 2.

(5) The requirement set out in subsection (3) (a) is not met if the related corporation referred to in that subsection

(a) paid tax under the Act or the Social Service Tax Act in respect of a portion of the consideration for the tangible personal property,

(b) paid tax under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, in respect of a portion of the consideration for the tangible personal property, and

(c) obtained or is entitled to obtain, under Part IX of the Excise Tax Act, a refund, credit or rebate in respect of the tax referred to in paragraph (b) of this subsection.

(6) The requirement set out in subsection (3) (a) (i) is not met if

(a) the related corporation referred to in subsection (3) (a) paid tax in respect of the tangible personal property only under Division 6 [Conveyances Used Interjurisdictionally] of Part 3 of the Act, and

(b) the previous owner of the tangible personal property did not, at any time, use the tangible personal property in British Columbia.

(7) If the related corporation referred to in subsection (3) (a) paid tax in respect of the tangible personal property only under one or both of

(a) section 51 [tangible personal property brought into British Columbia for temporary use] of the Act, and

(b) section 12 [calculation of tax if use in British Columbia temporary] of the Social Service Tax Act,

the requirement set out in subsection (3) (a) (i) is met only if, by operation of section 51 (6) of the Act, no tax would have been payable under section 51 of the Act by that related corporation in respect of that tangible personal property, if section 51 had applied to that related corporation in respect of that tangible personal property immediately before the transfer date.

(8) The requirement set out in subsection (3) (c) is not met if the previous owner of the tangible personal property was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the tangible personal property because

(a) the previous owner purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property for resale or lease,

(b) the tangible personal property was used or was to be used for a particular purpose, or

(c) the tangible personal property was to be delivered or transported outside British Columbia, or was, in whole or in part, for use outside British Columbia.

(9) The requirement set out in subsection (3) (d) is not met if the previous owner of the tangible personal property would not have been subject to, or would have been exempt from, tax under the Act in respect of the tangible personal property because

(a) the previous owner purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property for resale or lease,

(b) the tangible personal property was to be used for a particular purpose, or

(c) the tangible personal property was to be delivered or transported outside British Columbia, or was, in whole or in part, for use outside British Columbia.

(10) The requirement set out in subsection (3) (e) is not met if the previous owner of the tangible personal property was not subject to, or was exempt from, tax under the Act in respect of the tangible personal property because

(a) the previous owner purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property for resale or lease,

(b) the tangible personal property was to be used for a particular purpose, or

(c) the tangible personal property was to be delivered or transported outside British Columbia, or was, in whole or in part, for use outside British Columbia.

(11) The requirements set out in subsection (3) (f) and (g) are not met if the previous owner of the tangible personal property

(a) did not, at any time, use the tangible personal property in British Columbia, and

(b) acquired the tangible personal property from a person who used the tangible personal property in British Columbia as a taxable conveyance, as defined in section 59 [definitions — conveyances used interjurisdictionally] of the Act.

(12) The exemptions under subsection (2) (a), (b) and (c) do not apply to a corporation in respect of tangible personal property unless

(a) the corporation and the previous owner of the tangible personal property remain related corporations for a period of at least 8 months after the transfer date, or

(b) all of the following requirements are met:

(i) the corporation and the previous owner of the tangible personal property were related corporations for a period of at least 8 months before the transfer date;

(ii) on or after the transfer date, the previous owner is dissolved or wound up under the Bank Act (Canada), the Business Corporations Act, the Canada Business Corporations Act or the Winding-up and Restructuring Act (Canada);

(iii) the corporation and the previous owner remain related corporations until such time as the previous owner is dissolved or wound up.

(13) Subsections (14) and (15) apply to a corporation referred to in subsection (2) (a), (b) or (c) in respect of tangible personal property referred to in that subsection if

(a) the related corporation referred to in subsection (3) (a) of this section paid tax in respect of the tangible personal property only under section 60, 63, 64 or 66 of the Act, or

(b) the previous owner of the tangible personal property was exempt under this Division from all or a portion of tax imposed under section 60, 63 or 64 of the Act in respect of the tangible personal property.

(14) For the purposes of the exemptions under subsection (2) (a), (b) and (c), a corporation to whom this subsection applies is exempt from tax imposed under Division 2, 4 or 5 or section 60, 63, 64 or 100 of Part 3 of the Act, as applicable, in respect of the tangible personal property in an amount that is equal to the lesser of

(a) the sum of the following:

(i) the amount of tax the previous owner paid in respect of the tangible personal property under sections 60, 63, 64 and 66 of the Act and for which the previous owner has not obtained and is not entitled to obtain a refund under the Act;

(ii) if the previous owner was exempt under this Division from all or a portion of tax imposed under section 60, 63 or 64 of the Act in respect of the tangible personal property, the amount determined under this paragraph or section 151 (12) (a) [tangible personal property transferred to new corporation — wholly owned and controlled] of this regulation, as applicable, for the purpose of the previous owner's exemption from tax, and

(b) the amount of tax that, but for subsection (2) (a), (b) or (c) of this section, would be payable by the corporation under Division 2, 4 or 5 or section 60, 63, 64 or 100 of Part 3 of the Act, as applicable, in respect of the tangible personal property.

(15) Subject to subsection (16), for the purposes of the exemptions under subsection (2) (a) and (b), a corporation to whom this subsection applies is exempt from tax imposed under section 66 of the Act in respect of the tangible personal property in an amount that is equal to the lesser of

(a) the difference between the amount determined under subsection (14) (a) of this section and the amount determined under subsection (14) (b), and

(b) the amount of tax that, but for subsection (2) (a) or (b) of this section, would be payable by the corporation under section 66 of the Act in respect of the tangible personal property.

(16) The exemptions under subsection (2) (a) and (b) of this section from tax imposed under section 66 of the Act do not apply to a corporation referred to in subsection (15) of this section in respect of tangible personal property unless the amount determined under subsection (14) (a) exceeds the amount determined under subsection (14) (b).

Tangible personal property leased from related corporation

150   (1) Subject to subsections (2) and (9), a corporation is exempt from tax imposed under Division 3 [Leases of Tangible Personal Property] or section 62 [tax if leased conveyance used in British Columbia] of Part 3 of the Act, as applicable, in respect of tangible personal property if the corporation, referred to in this section as the "lessee", leases the tangible personal property from a related corporation, referred to in this section as the "lessor".

(2) The exemption under subsection (1) does not apply to a corporation in respect of tangible personal property unless one or more of the following requirements are met:

(a) subject to subsections (3) to (5), a related corporation of either the lessee or the lessor

(i) paid tax under the Act, the Consumption Tax Rebate and Transition Act or the Social Service Tax Act in respect of the tangible personal property and has not obtained and is not entitled to obtain, under those Acts, a refund of that tax, or

(ii) paid tax, in respect of the tangible personal property, under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, and has not obtained and is not entitled to obtain, under Part IX of that Act, a refund of or a credit or rebate for that tax;

(b) the lessor, before July 1, 1948, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property;

(c) subject to subsection (6),

(i) the lessor, on or after July 1, 1948 but before July 1, 2010, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property, and

(ii) the lessor was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the tangible personal property;

(d) subject to subsection (7),

(i) the lessor, on or after July 1, 2010 but before April 1, 2013, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property, and

(ii) the lessor would not have been subject to, or would have been exempt from, tax under the Act in respect of the tangible personal property, if the Act and the regulations made under it, as they read on April 1, 2013, had been in force during the period referred to in subparagraph (i);

(e) subject to subsection (8),

(i) the lessor, on or after April 1, 2013, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property, and

(ii) the lessor was not subject to, or was exempt from, tax under the Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the tangible personal property.

(3) For the purposes of subsection (2) (a) (i),

(a) tax under the Act does not include tax under the following provisions of the Act:

(i) Division 3 [Leases of Tangible Personal Property] of Part 3;

(ii) Division 6 [Conveyances Used Interjurisdictionally] of Part 3;

(iii) Division 7 [Multijurisdictional Vehicles] of Part 3;

(iv) Division 11 [Energy Products] of Part 3;

(v) section 102 [tax on leased property occasionally supplied with operator], and

(b) tax under the Social Service Tax Act does not include tax under the following provisions of that Act:

(i) Division 2 [Tax in relation to Leases] of Part 2;

(ii) Division 3 [Tax in relation to Multijurisdictional Vehicles] of Part 2;

(iii) Division 9 [Environmental Levies] of Part 2.

(4) The requirement set out in subsection (2) (a) is not met if the related corporation referred to in that subsection

(a) paid tax under the Act or the Social Service Tax Act in respect of a portion of the consideration for the tangible personal property,

(b) paid tax under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, in respect of a portion of the consideration for the tangible personal property, and

(c) obtained or is entitled to obtain, under Part IX of the Excise Tax Act, a refund, credit or rebate in respect of the tax referred to in paragraph (b) of this subsection.

(5) If the related corporation referred to in subsection (2) (a) paid tax in respect of the tangible personal property only under one or both of

(a) section 51 [tax if tangible personal property brought into British Columbia for temporary use] of the Act, and

(b) section 12 [calculation of tax if use in British Columbia temporary] of the Social Service Tax Act,

the requirement set out in subsection (2) (a) (i) of this section is met only if, by operation of section 51 (6) of the Act, no tax would have been payable under section 51 of the Act by that related corporation in respect of that tangible personal property, if section 51 had applied to that related corporation in respect of that tangible personal property immediately before the date on which that tangible personal property is leased by the lessee.

(6) The requirement set out in subsection (2) (c) is not met if the lessor was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the tangible personal property because

(a) the lessor purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property for resale or lease,

(b) the tangible personal property was used or was to be used for a particular purpose, or

(c) the tangible personal property was to be delivered or transported outside British Columbia, or was, in whole or in part, for use outside British Columbia.

(7) The requirement set out in subsection (2) (d) is not met if the lessor of the tangible personal property would not have been subject to, or would have been exempt from, tax under the Act in respect of the tangible personal property because

(a) the lessor purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property for resale or lease,

(b) the tangible personal property was to be used for a particular purpose, or

(c) the tangible personal property was to be delivered or transported outside British Columbia, or was, in whole or in part, for use outside British Columbia.

(8) The requirement set out in subsection (2) (e) is not met if the lessor of the tangible personal property was not subject to, or was exempt from, tax under the Act in respect of the tangible personal property because

(a) the lessor purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property for resale or lease,

(b) the tangible personal property was to be used for a particular purpose, or

(c) the tangible personal property was to be delivered or transported outside British Columbia, or was, in whole or in part, for use outside British Columbia.

(9) The exemptions under subsection (1) do not apply to a corporation in respect of tangible personal property unless the lessee and the lessor continue to be related corporations at the time that, but for the exemption under subsection (1), tax would be payable under Division 3 [Leases of Tangible Personal Property] or section 62 [tax if leased conveyance used in British Columbia] of Part 3 of the Act, as applicable, in respect of the tangible personal property.

Tangible personal property transferred to new corporation — wholly owned and controlled

151   (1) In this section:

"previous owner", in relation to tangible personal property, means the person referred to in subsection (2) (a) or (b), as applicable, from whom the corporation referred to in that subsection purchases or acquired, as applicable, the tangible personal property;

"transfer date" means the following:

(a) in respect of tangible personal property referred to in subsection (2) (a), the date on which the tangible personal property is purchased by the corporation referred to in that subsection;

(b) in respect of tangible personal property referred to in subsection (2) (b), the date on which the tangible personal property was acquired by the corporation referred to in that subsection.

(2) Subject to subsections (3), (10) and (12) to (14),

(a) a corporation is exempt from tax imposed under any of the following provisions of the Act in respect of tangible personal property if the corporation, at any time on or before the date on which the corporation starts to carry on business, purchases the tangible personal property from a person that wholly owns and controls it:

(i) Division 2 [Purchases of Tangible Personal Property] of Part 3;

(ii) section 60 [tax if conveyance purchased in British Columbia for interjurisdictional use];

(iii) section 66 [adjustment of tax in respect of conveyance];

(iv) section 101 [tax on reusable containers], and

(b) a corporation is exempt from tax imposed under any of the following provisions of the Act in respect of tangible personal property if the corporation, at any time on or before the date on which the corporation started to carry on business, acquired the tangible personal property from a person that wholly owned and controlled it:

(i) Division 4 [Tangible Personal Property Brought into British Columbia] of Part 3 of the Act;

(ii) Division 5 [Property Brought into British Columbia from Outside Canada] of Part 3;

(iii) section 63 [tax if conveyance brought into and used in British Columbia];

(iv) section 64 [tax if change in use of conveyance acquired for resale];

(v) section 66 [adjustment of tax in respect of conveyance].

(3) The exemptions under subsection (2) (a) and (b) do not apply to a corporation in respect of tangible personal property unless one or more of the following requirements are met:

(a) subject to subsections (4) to (6), the previous owner of the tangible personal property

(i) paid tax under the Act, the Consumption Tax Rebate and Transition Act or the Social Service Tax Act in respect of the tangible personal property and has not obtained and is not entitled to obtain, under those Acts, a refund of that tax, or

(ii) paid tax, in respect of the tangible personal property, under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, and has not obtained and is not entitled to obtain, under Part IX of that Act, a refund of or a credit or rebate for that tax;

(b) the previous owner of the tangible personal property, before July 1, 1948, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property;

(c) subject to subsection (7),

(i) the previous owner of the tangible personal property, on or after July 1, 1948 but before July 1, 2010, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property, and

(ii) the previous owner of the tangible personal property was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the tangible personal property;

(d) subject to subsection (8),

(i) the previous owner of the tangible personal property, on or after July 1, 2010 but before April 1, 2013, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property, and

(ii) the previous owner of the tangible personal property would not have been subject to, or would have been exempt from, tax under the Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the tangible personal property, if the Act and the regulations made under it, as they read on April 1, 2013, had been in force during the period referred to in subparagraph (i);

(e) subject to subsection (9),

(i) the previous owner of the tangible personal property, on or after April 1, 2013, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property, and

(ii) the previous owner of the tangible personal property was not subject to, or was exempt from, tax under the Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the tangible personal property.

(4) For the purposes of subsection (3) (a) (i),

(a) tax under the Act does not include tax under the following provisions of the Act:

(i) Division 3 [Leases of Tangible Personal Property] of Part 3;

(ii) section 62 [tax if leased conveyance used in British Columbia];

(iii) Division 7 [Multijurisdictional Vehicles] of Part 3;

(iv) Division 11 [Energy Products] of Part 3;

(v) section 102 [tax on leased property occasionally supplied with operator], and

(b) tax under the Social Service Tax Act does not include tax under the following provisions of that Act:

(i) Division 2 [Tax in relation to Leases] of Part 2;

(ii) Division 3 [Tax in relation to Multijurisdictional Vehicles] of Part 2;

(iii) Division 9 [Environmental Levies] of Part 2.

(5) The requirement set out in subsection (3) (a) is not met if the previous owner of the tangible personal property

(a) paid tax under the Act or the Social Service Tax Act in respect of a portion of the consideration for the tangible personal property,

(b) paid tax under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, in respect of a portion of the consideration for the tangible personal property, and

(c) obtained or is entitled to obtain, under Part IX of the Excise Tax Act, a refund, credit or rebate in respect of the tax referred to in paragraph (b) of this subsection.

(6) If the previous owner of the tangible personal property paid tax in respect of the tangible personal property only under one or both of

(a) section 51 [tax if tangible personal property brought into British Columbia for temporary use] of the Act, and

(b) section 12 [calculation of tax if use in British Columbia temporary] of the Social Service Tax Act,

the requirement set out in subsection (3) (a) (i) of this section is met only if, by operation of section 51 (6) of the Act, no tax would have been payable under section 51 of the Act by that previous owner in respect of that tangible personal property, if section 51 had applied to that previous owner in respect of that tangible personal property immediately before the transfer date.

(7) The requirement set out in subsection (3) (c) is not met if the previous owner of the tangible personal property was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the tangible personal property because

(a) the previous owner purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property for resale or lease,

(b) the tangible personal property was used or was to be used for a particular purpose, or

(c) the tangible personal property was to be delivered or transported outside British Columbia, or was, in whole or in part, for use outside British Columbia.

(8) The requirement set out in subsection (3) (d) is not met if the previous owner of the tangible personal property would not have been subject to, or would have been exempt from, tax under the Act in respect of the tangible personal property because

(a) the previous owner purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property for resale or lease,

(b) the tangible personal property was to be used for a particular purpose, or

(c) the tangible personal property was to be delivered or transported outside British Columbia, or was, in whole or in part, for use outside British Columbia.

(9) The requirement set out in subsection (3) (e) is not met if the previous owner of the tangible personal property was not subject to, or was exempt from, tax under the Act in respect of the tangible personal property because

(a) the previous owner purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the tangible personal property for resale or lease,

(b) the tangible personal property was to be used for a particular purpose, or

(c) the tangible personal property was to be delivered or transported outside British Columbia, or was, in whole or in part, for use outside British Columbia.

(10) The exemptions under subsection (2) (a) and (b) do not apply to a corporation in respect of the tangible personal property unless the previous owner of the tangible personal property continues to wholly own and control the corporation for a period of at least 8 months after the transfer date.

(11) Subsections (12) and (13) apply to a corporation referred to in subsection (2) (a) or (b) if the previous owner of the tangible personal property referred to in that subsection

(a) paid tax in respect of the tangible personal property only under section 60, 63, 64 or 66 of the Act, or

(b) was exempt under this Division from all or a portion of tax imposed under section 60, 63 or 64 of the Act in respect of the tangible personal property.

(12) For the purposes of the exemptions under subsection (2) (a) and (b), a corporation to whom this subsection applies is exempt from tax imposed under Division 2, 4 or 5 or section 60, 63, 64 or 100 of Part 3 of the Act, as applicable, in respect of the tangible personal property in an amount that is equal to the lesser of

(a) the sum of the following:

(i) the amount of tax the previous owner paid in respect of the tangible personal property under sections 60, 63, 64 and 66 of the Act and for which the previous owner has not obtained and is not entitled to obtain a refund under the Act;

(ii) if the previous owner was exempt under this Division from all or a portion of tax imposed under section 60, 63 or 64 of the Act in respect of the tangible personal property, the amount determined under this paragraph or section 149 (14) (a) [tangible personal property transferred between related corporations] of this regulation, as applicable, for the purpose of the previous owner's exemption from tax, and

(b) the amount of tax that, but for subsection (2) (a) or (b) of this section, would be payable by the corporation under Division 2, 4 or 5 or section 60, 63, 64 or 100 of Part 3 of the Act, as applicable, in respect of the tangible personal property.

(13) Subject to subsection (14), for the purposes of the exemptions under subsection (2) (a) and (b), a corporation to whom this subsection applies is exempt from tax imposed under section 66 of the Act in respect of the tangible personal property in an amount that is equal to the lesser of

(a) the difference between the amount determined under subsection (12) (a) of this section and the amount determined under subsection (12) (b), and

(b) the amount of tax that, but for subsection (2) (a) or (b) of this section, would be payable by the corporation under section 66 of the Act in respect of the tangible personal property.

(14) The exemptions under subsection (2) (a) and (b) of this section from tax imposed under section 66 of the Act do not apply to a corporation referred to in subsection (13) of this section in respect of tangible personal property unless the amount determined under subsection (12) (a) exceeds the amount determined under subsection (12) (b).

Tangible personal property transferred to new corporation — not wholly owned and controlled

152   (1) In this section:

"previous owner", in relation to tangible personal property, means the person referred to in subsection (2) (a) or (b), as applicable, from whom the corporation referred to in that subsection purchases or acquired, as applicable, the tangible personal property;

"transfer date" means the following:

(a) in respect of tangible personal property referred to in subsection (2) (a), the date on which the tangible personal property is purchased by the corporation referred to in that subsection;

(b) in respect of tangible personal property referred to in subsection (2) (b), the date on which the tangible personal property was acquired by the corporation referred to in that subsection.

(2) Subject to subsections (3), (5) and (6),

(a) a corporation is exempt from tax imposed under any of the following provisions of the Act in respect of tangible personal property if the corporation, at any time on or before the date on which the corporation starts to carry on business, purchases the tangible personal property from a person that does not wholly own and control it:

(i) Division 2 [Purchases of Tangible Personal Property] of Part 3;

(ii) section 60 [tax if conveyance purchased in British Columbia for interjurisdictional use];

(iii) section 66 [adjustment of tax in respect of conveyance];

(iv) section 101 [tax on reusable containers], and

(b) a corporation is exempt from tax imposed under any of the following provisions of the Act in respect of tangible personal property if the corporation, at any time on or before the date on which the corporation started to carry on business, acquired the tangible personal property from a person that did not wholly own and control it:

(i) Division 4 [Tangible Personal Property Brought into British Columbia] of Part 3;

(ii) Division 5 [Property Brought into British Columbia from Outside Canada] of Part 3;

(iii) section 63 [tax if conveyance brought into and used in British Columbia];

(iv) section 64 [tax if change in use of conveyance acquired for resale];

(v) section 66 [adjustment of tax in respect of conveyance].

(3) Subject to section 151 (4) to (9) [tangible personal property transferred to new corporation — wholly owned and controlled] and subsection (4) of this section, the exemptions under subsection (2) (a) and (b) of this section do not apply to a corporation in respect of tangible personal property unless one or more of the requirements set out in section 151 (3) (a) to (e) are met.

(4) For the purposes of subsection (3),

(a) a reference in section 151 (3) to subsection (2) (a) and (b) of that section is to be read as a reference to subsection (2) (a) and (b) of this section,

(b) a reference in section 151 (3) and (5) to (9) to previous owner is to be read as a reference to previous owner as defined in subsection (1) of this section,

(c) a reference in section 151 (3) and (5) to (9) to tangible personal property is to be read as a reference to tangible personal property under this section,

(d) for the purposes of section 151 (3) (a) (i), tax under the Act does not include tax under section 60, 63, 64 or 66 of the Act,

(e) the requirement set out in section 151 (3) (d) is not met if the previous owner of the tangible personal property would have been exempt under this Division from all or a portion of tax imposed under section 60, 63, 64 or 66 of the Act in respect of the tangible personal property, and

(f) the requirement set out in section 151 (3) (e) is not met if the previous owner of the tangible personal property was exempt under this Division from all or a portion of tax imposed under section 60, 63, 64 or 66 of the Act in respect of the tangible personal property.

(5) The exemptions under subsection (2) (a) and (b) do not apply to a corporation in respect of tangible personal property unless all of the following requirements are met:

(a) the consideration for the purchase or acquisition of the tangible personal property by the corporation is the issue or transfer of shares in that corporation to the previous owner of the tangible personal property;

(b) the date on which the shares are issued or transferred to the previous owner is not more than 30 days after the transfer date;

(c) the previous owner beneficially owns and holds legal title to all of the shares so acquired for a period of at least 8 months after the transfer date.

(6) For the purposes of the exemptions under subsection (2) (a) and (b),

(a) if the fair market value of the shares referred to in subsection (5) (a) is equal to or greater than the fair market value of the tangible personal property, the corporation is exempt from tax imposed under Divisions 2, 4 and 5 and sections 60, 63, 64, 66 and 101 of Part 3 of the Act in respect of the tangible personal property, and

(b) if the fair market value of the shares referred to in subsection (5) (a) is less than the fair market value of the tangible personal property, the corporation is exempt from tax imposed under Divisions 2, 4, and 5 and sections 60, 63, 64, 66 and 101 of Part 3 of the Act in respect of the tangible personal property to the extent necessary to reduce the tax payable under the applicable Division or section to an amount that is equal to the amount of tax that would be payable under the applicable Division or section if the purchase price of the tangible personal property were equal to the difference between the fair market value of the tangible personal property and the fair market value of the shares issued or transferred.

Division 3 — Software Transferred between Related Parties

Software transferred between related corporations

153   (1) In this section:

"previous owner", in relation to Part 4 software, means the related corporation referred to in subsection (2) (a) or (b), as applicable;

"transfer date" means the following:

(a) in respect of Part 4 software referred to in subsection (2) (a), the date on which the Part 4 software is purchased by the corporation referred to in that subsection;

(b) in respect of Part 4 software referred to in subsection (2) (b), the date on which the Part 4 software was purchased by the corporation referred to in that subsection.

(2) Subject to subsections (3), (8) and (10) to (12),

(a) if section 105 [tax on software] or 107 (1) (b) (i) [tax on purchase of software for business use on devices in and outside British Columbia] of the Act applies to a corporation in relation to Part 4 software, the corporation is exempt from tax imposed under sections 105, 107 and 108 of the Act in relation to the Part 4 software, if the corporation purchases the Part 4 software from a related corporation, and

(b) if section 106 [tax on use of software on device in British Columbia] or 107 (1) (b) (ii) [tax on business use of software on devices in and outside British Columbia] of the Act applies to a corporation in relation to Part 4 software, the corporation is exempt from tax imposed under sections 106 to 108 of the Act in relation to the Part 4 software, if the corporation purchased the Part 4 software from a related corporation.

(3) The exemptions under subsection (2) (a) and (b) do not apply to a corporation in respect of Part 4 software unless one or more of the following requirements are met:

(a) subject to subsection (4), a related corporation of either the corporation or the previous owner of the Part 4 software

(i) paid tax under the Social Service Tax Act, other than Division 2 of Part 2 of that Act, in respect of the Part 4 software and has not obtained and is not entitled to obtain, under that Act, a refund of that tax;

(ii) paid tax, in respect of the Part 4 software, under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, and has not obtained and is not entitled to obtain, under Part IX of that Act, a refund of or a credit or rebate for that tax, or

(iii) paid tax under Part 4 of the Act in respect of the Part 4 software and has not obtained and is not entitled to obtain, under the Act, a refund of that tax;

(b) subject to subsection (5),

(i) the previous owner of the Part 4 software, before July 1, 2010, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the Part 4 software, and

(ii) the previous owner was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the Part 4 software;

(c) subject to subsection (6),

(i) the

(A) previous owner of the Part 4 software, on or after July 1, 2010 but before April 1, 2013, purchased the Part 4 software in British Columbia for use on or with an electronic device ordinarily situated in British Columbia, or

(B) previous owner of the Part 4 software purchased the Part 4 software and, on or after July 1, 2010 but before April 1, 2013, the Part 4 software was used on or with an electronic device ordinarily situated in British Columbia, and

(ii) the previous owner would have been exempt from tax imposed under section 105, 106 or 107 of the Act in respect of the purchase or use of the Part 4 software if the Act and the regulations made under it, as they read on April 1, 2013, had been in force during the period referred to in subparagraph (i);

(d) subject to subsection (7),

(i) the

(A) previous owner of the Part 4 software, after April 1, 2013, purchased in British Columbia the Part 4 software for use on or with an electronic device ordinarily situated in British Columbia, or

(B) previous owner of the Part 4 software purchased the Part 4 software and, after April 1, 2013, the Part 4 software was used on or with an electronic device ordinarily situated in British Columbia, and

(ii) the previous owner was exempt from tax imposed under section 105, 106 or 107 of the Act in respect of the purchase or use of the Part 4 software.

(4) The requirement set out in subsection (3) (a) is not met if the related corporation referred to in that subsection

(a) paid tax under the Act or the Social Service Tax Act in respect of a portion of the consideration for the Part 4 software,

(b) paid tax under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, in respect of a portion of the consideration for the Part 4 software, and

(c) obtained or is entitled to obtain, under Part IX of the Excise Tax Act, a refund, credit or rebate in respect of the tax referred to in paragraph (b) of this subsection.

(5) The requirement set out in subsection (3) (b) is not met if the previous owner of the Part 4 software was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the Part 4 software because

(a) the previous owner purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the Part 4 software for resale, or

(b) the Part 4 software was used or was to be used for a particular purpose.

(6) The requirement set out in subsection (3) (c) is not met if the previous owner of the Part 4 software would have been exempt,

(a) under section 113 of the Act, or

(b) because the Part 4 software was to be used for a particular purpose,

from tax imposed under the Act in respect of the Part 4 software.

(7) The requirement set out in subsection (3) (d) is not met if the previous owner of the Part 4 software was exempt,

(a) under section 113 of the Act, or

(b) because the Part 4 software was to be used for a particular purpose,

from tax imposed under the Act in respect of the Part 4 software.

(8) The exemptions under subsection (2) (a) and (b) do not apply to a corporation in respect of Part 4 software unless

(a) the corporation and the previous owner of the Part 4 software remain related corporations for a period of at least 8 months after the transfer date, or

(b) all of the following requirements are met:

(i) the corporation and the previous owner were related corporations for a period of at least 8 months before the transfer date;

(ii) on or after the transfer date, the previous owner is dissolved or wound up under the Bank Act (Canada), the Business Corporations Act, the Canada Business Corporations Act or the Winding-up and Restructuring Act (Canada);

(iii) the corporation and the previous owner remain related corporations until such time as the seller is dissolved or wound up.

(9) Subsections (10) and (11) apply to a corporation referred to in subsection (2) (a) or (b) in respect of Part 4 software referred to in that subsection if

(a) the related corporation referred to in subsection (3) (a) of this section paid tax in respect of the Part 4 software only under section 107 or 108 of the Act, or

(b) the previous owner of the Part 4 software was exempt under this Division from all or a portion of tax imposed under section 107 of the Act in respect of the Part 4 software.

(10) For the purposes of the exemptions under subsection (2) (a) and (b), a corporation to whom this subsection applies is exempt from tax imposed under section 105, 106 or 107 of the Act, as applicable, in respect of the Part 4 software in an amount that is equal to the lesser of

(a) the sum of the following:

(i) the amount of tax the previous owner paid in respect of the Part 4 software under sections 107 and 108 of the Act and for which the previous owner has not obtained and is not entitled to obtain a refund under the Act;

(ii) if the previous owner was exempt under this Division from all or a portion of tax imposed under section 107 of the Act in respect of the Part 4 software, the amount determined under this paragraph or section 154 (10) (a) [software transferred to new corporation — wholly owned and controlled] of this regulation, as applicable, for the purpose of the previous owner's exemption from tax, and

(b) the amount of tax that, but for subsection (2) (a) or (b) of this section, would be payable by the corporation under section 105, 106 or 107 of the Act, as applicable, in respect of the Part 4 software.

(11) Subject to subsection (12), for the purposes of the exemptions under subsection (2) (a) and (b), a corporation to whom this subsection applies is exempt from tax imposed under section 108 of the Act in respect of the Part 4 software in an amount that is equal to the lesser of

(a) the difference between the amount determined under subsection (10) (a) of this section and the amount determined under subsection (10) (b), and

(b) the amount of tax that, but for subsection (2) (a) or (b) of this section, would be payable by the corporation under section 108 of the Act in respect of the Part 4 software.

(12) The exemptions under subsection (2) (a) and (b) of this section from tax imposed under section 108 of the Act do not apply to a corporation referred to in subsection (11) of this section in respect of Part 4 software unless the amount determined under subsection (10) (a) exceeds the amount determined under subsection (10) (b).

Software transferred to new corporation — wholly owned and controlled

154   (1) In this section:

"previous owner", in relation to Part 4 software, means the person referred to in subsection (2) (a) or (b), as applicable, from whom the corporation referred to in that subsection purchases the Part 4 software;

"transfer date" means the following:

(a) in respect of Part 4 software referred to in subsection (2) (a), the date on which the Part 4 software is purchased by the corporation referred to in that subsection;

(b) in respect of Part 4 software referred to in subsection (2) (b), the date on which the Part 4 software was purchased by the corporation referred to in that subsection.

(2) Subject to subsections (3), (8) and (10) to (12),

(a) if section 105 [tax on software] or 107 (1) (b) (i) [tax on business use of software on devices in and outside British Columbia] of the Act applies to a corporation in relation to Part 4 software, the corporation is exempt from tax imposed under sections 105, 107 and 108 of the Act in relation to the Part 4 software if the corporation, at any time on or before the date on which the corporation starts to carry on business, purchases the Part 4 software from a person that wholly owns and controls it, and

(b) if section 106 [tax on business use of software on device in British Columbia] or 107 (1) (b) (ii) of the Act applies to a corporation in relation to Part 4 software, the corporation is exempt from tax imposed under sections 106 to 108 of the Act in relation to the Part 4 software if the corporation, at any time on or before the date on which the corporation started to carry on business, purchased the Part 4 software from a person that wholly owned and controlled it.

(3) The exemptions under subsection (2) (a) and (b) do not apply to a corporation in respect of Part 4 software unless one or more of the following requirements are met:

(a) subject to subsection (4), the previous owner of the Part 4 software

(i) paid tax under the Social Service Tax Act, other than Division 2 of Part 2 of that Act, in respect of the Part 4 software and has not obtained and is not entitled to obtain, under that Act, a refund of that tax,

(ii) paid tax, in respect of the Part 4 software, under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, and has not obtained and is not entitled to obtain, under Part IX of that Act, a refund of or a credit or rebate for that tax, or

(iii) paid tax under Part 4 of the Act in respect of the Part 4 software and has not obtained and is not entitled to obtain, under the Act, a refund of that tax;

(b) subject to subsection (5),

(i) the previous owner of the Part 4 software, before July 1, 2010, acquired in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the Part 4 software, and

(ii) the previous owner was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the acquiring in British Columbia, bringing or sending into British Columbia or receiving of delivery in British Columbia of the Part 4 software;

(c) subject to subsection (6),

(i) the

(A) previous owner of the Part 4 software, on or after July 1, 2010 but before April 1, 2013, purchased the Part 4 software in British Columbia for use on or with an electronic device ordinarily situated in British Columbia, or

(B) previous owner of the Part 4 software purchased the Part 4 software and, on or after July 1, 2010 but before April 1, 2013, the Part 4 software was used on or with an electronic device ordinarily situated in British Columbia, and

(ii) the previous owner would have been exempt from tax imposed under section 105, 106 or 107 of the Act in respect of the purchase or use of the Part 4 software if the Act and the regulations made under it, as they read on April 1, 2013, had been in force during the period referred to in subparagraph (i);

(d) subject to subsection (7),

(i) the

(A) previous owner of the Part 4 software, after April 1, 2013, purchased in British Columbia the Part 4 software for use on or with an electronic device ordinarily situated in British Columbia, or

(B) previous owner of the Part 4 software purchased the Part 4 software and, after April 1, 2013, the Part 4 software was used on or with an electronic device ordinarily situated in British Columbia, and

(ii) the previous owner was exempt from tax imposed under section 105, 106 or 107 of the Act in respect of the purchase or use of the Part 4 software.

(4) The requirement set out in subsection (3) (a) is not met if the previous owner of the Part 4 software

(a) paid tax under the Act or the Social Service Tax Act in respect of a portion of the consideration for the Part 4 software,

(b) paid tax under section 165 (2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act, in respect of British Columbia as a participating province under Part IX of that Act, in respect of a portion of the consideration for the Part 4 software, and

(c) obtained or is entitled to obtain, under Part IX of the Excise Tax Act, a refund, credit or rebate in respect of the tax referred to in paragraph (b) of this subsection.

(5) The requirement set out in subsection (3) (b) is not met if the previous owner of the Part 4 software was not subject to, or was exempt from, tax under the Social Service Tax Act in respect of the Part 4 software because

(a) the previous owner purchased in British Columbia, brought or sent into British Columbia or received delivery of in British Columbia the Part 4 software for resale, or

(b) the Part 4 software was used or was to be used for a particular purpose.

(6) The requirement set out in subsection (3) (c) is not met if the previous owner of the Part 4 software would have been exempt,

(a) under section 113 of the Act, or

(b) because the Part 4 software was to be used for a particular purpose,

from tax imposed under the Act in respect of the Part 4 software.

(7) The requirement set out in subsection (3) (d) is not met if the previous owner of the Part 4 software was exempt,

(a) under section 113 of the Act, or

(b) because the Part 4 software was to be used for a particular purpose,

from tax imposed under the Act in respect of the Part 4 software.

(8) The exemptions under subsection (2) (a) and (b) do not apply to a corporation in respect of the Part 4 software unless the previous owner of the Part 4 software continues to wholly own and control the corporation for a period of at least 8 months after the transfer date.

(9) Subsections (10) and (11) apply to a corporation referred to in subsection (2) (a) or (b) if the previous owner of the Part 4 software referred to in that subsection

(a) paid tax in respect of the Part 4 software only under section 107 or 108 of the Act, or

(b) was exempt under this Division from all or a portion of tax imposed under section 107 of the Act in respect of the Part 4 software.

(10) For the purposes of the exemptions under subsection (2) (a) and (b), a corporation to whom this subsection applies is exempt from tax imposed under section 105, 106 or 107 of the Act, as applicable, in respect of the Part 4 software in an amount that is equal to the lesser of

(a) the sum of the following:

(i) the amount of tax the previous owner paid in respect of the Part 4 software under sections 107 and 108 of the Act and for which the previous owner has not obtained and is not entitled to obtain a refund under the Act;

(ii) if the previous owner was exempt under this Division from all or a portion of tax imposed under section 107 of the Act in respect of the Part 4 software, the amount determined under this paragraph or section 153 (10) (a) [software transferred between related corporations] of this regulation, as applicable, for the purpose of the previous owner's exemption from tax, and

(b) the amount of tax that, but for subsection (2) (a) or (b) of this section, would be payable by the corporation under section 105, 106 or 107 of the Act, as applicable, in respect of the Part 4 software.

(11) Subject to subsection (12), for the purposes of the exemptions under subsection (2) (a) and (b), a corporation to whom this subsection applies is exempt from tax imposed under section 108 of the Act in respect of the Part 4 software in an amount that is equal to the lesser of

(a) the difference between the amount determined under subsection (10) (a) of this section and the amount determined under subsection (10) (b), and

(b) the amount of tax that, but for subsection (2) (a) or (b) of this section, would be payable by the corporation under section 108 of the Act in respect of the Part 4 software.

(12) The exemptions under subsection (2) (a) and (b) of this section from tax imposed under section 108 of the Act do not apply to a corporation referred to in subsection (11) of this section in respect of Part 4 software unless the amount determined under subsection (10) (a) exceeds the amount determined under subsection (10) (b).

Software transferred to new corporation — not wholly owned and controlled

155   (1) In this section:

"previous owner", in relation to Part 4 software, means the person referred to in subsection (2) (a) or (b), as applicable, from whom the corporation referred to in that subsection purchases the Part 4 software;

"transfer date" means the following:

(a) in respect of Part 4 software referred to in subsection (2) (a), the date on which the Part 4 software is purchased by the corporation referred to in that subsection;

(b) in respect of Part 4 software referred to in subsection (2) (b), the date on which the Part 4 software was purchased by the corporation referred to in that subsection.

(2) Subject to subsections (3), (5) and (6),

(a) if section 105 [tax on software] or 107 (1) (b) (i) [tax on business use of software on devices in and outside British Columbia] of the Act applies to a corporation in relation to Part 4 software, the corporation is exempt from tax imposed under sections 105, 107 and 108 of the Act in relation to the Part 4 software if the corporation, at any time on or before the date on which the corporation starts to carry on business, purchases the Part 4 software from a person that does not wholly own and control it, and

(b) if section 106 [tax on business use of software on device in British Columbia] or 107 (1) (b) (ii) of the Act applies to a corporation in relation to Part 4 software, the corporation is exempt from tax imposed under sections 106 to 108 of the Act in relation to the Part 4 software if the corporation, at any time on or before the date on which the corporation started to carry on business, purchased the Part 4 software from a person that did not wholly own and control it.

(3) Subject to section 154 (4) to (7) [software transferred to new corporation — wholly owned and controlled] and subsection (4) of this section, the exemptions under subsection (2) (a) and (b) of this section do not apply to a corporation in respect of Part 4 software unless one or more of the requirements set out in section 154 (3) (a) to (d) are met.

(4) For the purposes of subsection (3),

(a) a reference in section 154 (3) to subsection (2) (a) and (b) of that section is to be read as a reference to subsection (2) (a) and (b) of this section,

(b) a reference in section 154 (3) to (7) to previous owner is to be read as a reference to previous owner as defined in subsection (1) of this section,

(c) a reference in section 154 (3) to (7) to Part 4 software is to be read as a reference to Part 4 software under this section,

(d) for the purposes of section 154 (3) (a) (iii), tax under Part 4 of the Act does not include tax under section 107 or 108 of the Act,

(e) the requirement set out in section 154 (3) (c) is not met if the previous owner of the Part 4 software would have been exempt under this Division from all or a portion of tax imposed under section 107 or 108 of the Act in respect of the Part 4 software, and

(f) the requirement set out in section 154 (3) (d) is not met if the previous owner of the Part 4 software was exempt under this Division from all or a portion of tax imposed under section 107 or 108 of the Act in respect of the Part 4 software.

(5) The exemptions under subsection (2) (a) or (b) do not apply to a corporation in respect of Part 4 software unless all of the following requirements are met:

(a) the consideration for the purchase or acquisition of the Part 4 software by the corporation is the issue or transfer of shares in that corporation to the previous owner of the Part 4 software;

(b) the date on which the shares are issued or transferred to the previous owner is not more than 30 days after the transfer date;

(c) the previous owner beneficially owns and holds legal title to all of the shares so acquired for a period of at least 8 months after the transfer date.

(6) For the purposes of the exemptions under subsection (2) (a) and (b),

(a) if the fair market value of the shares referred to in subsection (5) (a) is equal to or greater than the fair market value of the Part 4 software, the corporation is exempt from tax imposed under sections 105 to 108 of the Act in respect of the Part 4 software, and

(b) if the fair market value of the shares referred to in subsection (5) (a) is less than the fair market value of the Part 4 software, the corporation is exempt from tax imposed under sections 105 to 108 of the Act in respect of the Part 4 software to the extent necessary to reduce the tax payable under those sections to an amount that is equal to the amount of tax that would be payable under those sections if the purchase price of the Part 4 software were equal to the difference between the fair market value of the Part 4 software and the fair market value of the shares issued or transferred.

Contents | Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 5.1 | Part 6 | Part 7 | Part 8 | Part 9 | Schedule 1 | Schedule 2 | Schedule 3 | Schedule 4 | Schedule 5 | Schedule 6