Section 176F | Flow-through tax benefits: subtraction method

Where this section applies, to determine the extent to which flow-through tax benefits provided to an investor in an accounting period under a tax equity partnership arrangement are qualifying, take the following steps—^F1F2F3

Step 1Determine the amount of capital investment provided by the investor to the arrangement at its commencement.

Step 2Subtract the following from that amount—

the amounts, if any, of tax credits made available to be used by the investor under the arrangement since the commencement of the arrangement, other than tax credits—

that were made available in the accounting period, and

that are not qualifying refundable tax credits or marketable transferable tax credits;

the value of the amounts, if any, of tax deductible losses made available to be used by the investor under the arrangement since its commencement, other than losses made available in the accounting period;

the amounts, if any, of distributions made to the investor since the arrangement’s commencement;

the amounts, if any, received by the investor for the sale of any part of its investment in the arrangement.

Step 3If the result of Step 2 is nil or less, no flow-through tax benefits provided under the arrangement in the accounting period are qualifying.If the result of that step is more than nil, proceed to Step 4.

Step 4Subtract the flow-through tax benefits provided to the investor in the accounting period under the arrangement from the result of Step 2.

Step 5If the result of Step 4 is nil or greater, all of the flow-through tax benefits provided under the arrangement in the accounting period are qualifying.Otherwise, the amount of those benefits that is qualifying is the amount of those benefits that when subtracted from the result of Step 2 would give a result of nil.