A particular Ontario tax on life insurance corporations ("SAT") is determined as a fixed percentage of the amount by which the corporation's taxable paid-up capital exceeds the total of the corporation's Ontario corporate income tax and corporate minimum tax payable for the year. By virtue of being added to the corporation's corporate minimum tax credit carry forward, this tax may then be deducted to reduce future years' income taxes.
The SAT is a capital tax and not an income tax, notwithstanding its potential creditability against income taxes payable, and therefore the incurring of the tax leads to a corresponding deduction in the computation of income.
As a consequence of this deductibility, when the SAT credit is applied to reduce Ontario corporate income taxes payable in a subsequent taxation year, we would consider it to be an amount received as a reimbursement of an amount that was deducted as an outlay or expense in a prior year, and the amount of the credit applied would be taxable under 12(1)(x)(iv).