Must be a bank, insurer or securities dealer
10. If a financial institution is not of a prescribed class at any time in a particular fiscal year, it does not meet the requirements of paragraph (a) of the definition of qualifying institution and is not a qualifying institution for that particular fiscal year. …
Mortgage broker as example of non-qualifying institution
Example 4
Insurance Broker D is an insurance broker during its fiscal year ending December 31, 2019. In that year, it is not a bank or an authorized foreign bank within the meaning of section 2 of the Bank Act. Insurance Broker D is not licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada an insurance business during its fiscal year ending December 31, 2019. Further, Insurance Broker D is not a trader or a dealer in, or a broker or salesperson of, securities in that fiscal year (insurance policies are not securities). As a result, Insurance Broker D is not a financial institution of a prescribed class and is not a qualifying institution for its fiscal year ending December 31, 2019.
Overview of adjusted tax credit amount test
11. Subparagraph (b)(i) of the definition of qualifying institution in subsection 141.02(1) requires a financial institution to have two fiscal years immediately preceding the particular fiscal year and for each of these preceding fiscal years to have an adjusted tax credit amount equal to or exceeding the prescribed amount for the prescribed class of financial institution for that particular fiscal year. As a result, if a financial institution (other than certain new corporations formed as the result of a merger or amalgamation) did not exist for two years prior to the particular fiscal year, the financial institution would not be a qualifying institution for that particular fiscal year. …
12. The adjusted tax credit amount of a financial institution for a fiscal year is computed by multiplying the tax credit amount of the financial institution for the fiscal year by the fraction 365/number of days in the fiscal year. ...
19. If a financial institution does not have an adjusted tax credit amount ... equal to or exceeding the prescribed amount [of $500,000] for the prescribed class of the financial institution for each of the two fiscal years immediately preceding the fiscal year for which qualifying institution status is being determined, the financial institution does not meet the conditions in subparagraph (b)(i) of the definition of qualifying institution and is not a qualifying institution.
Overview of tax credit rate test
24. If a financial institution does not have a tax credit rate equal to or exceeding the prescribed percentage for the prescribed class of the financial institution [of 12% (banks), 10% (insurers) and 15% (securities dealers)] for each of the two fiscal years immediately preceding the particular fiscal year, the financial institution does not meet the conditions in subparagraph (b)(ii) of the definition of qualifying institution and is not a qualifying institution.