Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Act current to 2017-07-03 and last amended on 2017-07-01. Previous Versions

Marginal note:Deduction of Part I.3 tax
  •  (1) There may be deducted in computing the tax payable under this Part for a taxation year by a corporation (other than a corporation that was throughout the year a financial institution, within the meaning assigned by section 190) an amount equal to such part as the corporation claims of its unused Part I.3 tax credits for any of its 7 immediately preceding taxation years ending before 1992, to the extent that that amount does not exceed the amount, if any, by which

    • (a) its Canadian surtax payable for the year

    exceeds

    • (b) the amount that would, but for subsection 181.1(4), be its tax payable under Part I.3 for the year.

  • Marginal note:Idem

    (1.1) There may be deducted in computing the tax payable under this Part for a taxation year by a corporation that was a financial institution (within the meaning assigned by section 190) throughout the year an amount equal to such part as the corporation claims of its unused Part I.3 tax credits for any of its 7 immediately preceding taxation years ending before 1992, to the extent that that amount does not exceed the lesser of

    • (a) the amount, if any, by which its Canadian surtax payable for the year exceeds the amount that would, but for subsection 181.1(4), be its tax payable under Part I.3 for the year, and

    • (b) the amount, if any, by which its tax payable under this Part (determined without reference to this section) for the year exceeds the amount that would, but for subsections 181.1(4) and 190.1(3), be the total of its taxes payable under Parts I.3 and VI for the year.

  • Marginal note:Special rules

    (2) For the purposes of this section,

    • (a) no amount may be claimed under subsection 125.3(1) in computing a corporation’s tax payable under this Part for a particular taxation year in respect of its unused Part I.3 tax credit for another taxation year until its unused Part I.3 tax credits for taxation years preceding the other year that may be claimed for the particular year have been claimed; and

    • (b) an amount in respect of a corporation’s unused Part I.3 tax credit for a taxation year may be claimed under subsection 125.3(1) in computing its tax payable under this Part for another taxation year only to the extent that it exceeds the total of all amounts each of which is the amount claimed in respect of that unused Part I.3 tax credit in computing its tax payable under this Part for a taxation year preceding that other year.

  • Marginal note:Acquisition of control

    (3) Where, at any time, control of a corporation has been acquired by a person or group of persons, no amount in respect of its unused Part I.3 tax credit for a taxation year ending before that time is deductible by the corporation for a taxation year ending after that time and no amount in respect of its unused Part I.3 tax credit for a taxation year ending after that time is deductible by the corporation for a taxation year ending before that time, except that

    • (a) where a business was carried on by the corporation in a taxation year ending before that time, its unused Part I.3 tax credit for that year is deductible by the corporation for a particular taxation year ending after that time only if that business was carried on by the corporation for profit or with a reasonable expectation of profit throughout the particular year and only to the extent of that proportion of the corporation’s Canadian surtax payable for the particular year that

      • (i) the amount, if any, by which

        • (A) the total of its income for the particular year from that business and, where properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, its income for the particular year from any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services

        exceeds

        • (B) the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or (d) for the particular year by the corporation in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of that business or the other business,

      is of the greater of

      • (ii) the amount determined under subparagraph 125.3(3)(a)(i), and

      • (iii) the corporation’s taxable income for the particular year; and

    • (b) where a business was carried on by the corporation throughout a taxation year ending after that time, its unused Part I.3 tax credit for that year is deductible by the corporation for a particular taxation year ending before that time only if that business was carried on by the corporation for profit or with a reasonable expectation of profit in the particular year and only to the extent of that proportion of the corporation’s Canadian surtax payable for the particular year that

      • (i) the amount, if any, by which

        • (A) the total of its income for the particular year from that business and, where properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, its income for the particular year from any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services

        exceeds

        • (B) the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or (d) for the particular year by the corporation in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of that business or the other business,

      is of the greater of

      • (ii) the amount determined under subparagraph 125.3(3)(b)(i), and

      • (iii) the corporation’s taxable income for the particular year.

  • Marginal note:Definitions

    (4) For the purposes of this section,

    Canadian surtax payable

    surtaxe canadienne payable

    Canadian surtax payable of a corporation for a taxation year means

    • (a) in the case of a corporation that is non-resident throughout the year, the lesser of

      • (i) the amount determined under section 123.2 in respect of the corporation for the year, and

      • (ii) its tax payable under this Part for the year, and

    • (b) in any other case, the lesser of

      • (i) the prescribed proportion of the amount determined under section 123.2 in respect of the corporation for the year, and

      • (ii) its tax payable under this Part for the year; (surtaxe canadienne payable)

    unused Part I.3 tax credit

    crédit d’impôt de la partie I.3 inutilisé

    unused Part I.3 tax credit of a corporation for a taxation year means

    • (a) where the year ended before 1992, the amount, if any, by which its tax payable under Part I.3 for the year exceeds the amount deductible under subsection 125.3(1) in computing its tax payable under this Part for the year, and

    • (b) where the year ends after 1991, the amount, if any, by which the corporation’s tax payable under Part I.3 for the year (determined without reference to subsection 181.1(4)) exceeds its Canadian surtax payable under this Part for the year. (crédit d’impôt de la partie I.3 inutilisé)

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 125.3;
  • 1994, c. 7, Sch. VIII, s. 66, c. 21, s. 59;
  • 2013, c. 34, s. 266.

Canadian Film or Video Production Tax Credit

Marginal note:Definitions
  •  (1) The definitions in this subsection apply in this section.

    assistance

    montant d’aide

    assistance means an amount, other than a prescribed amount or an amount deemed under subsection (3) to have been paid, that would be included under paragraph 12(1)(x) in computing a taxpayer’s income for any taxation year if that paragraph were read without reference to

    • (a) subparagraphs 12(1)(x)(v) to (viii), if the amount were received

      • (i) from a person or partnership described in subparagraph 12(1)(x)(ii), or

      • (ii) in circumstances where clause 12(1)(x)(i)(C) applies; and

    • (b) subparagraphs 12(1)(x)(v) to (vii), in any other case. (montant d’aide)

    Canadian film or video production

    production cinématographique ou magnétoscopique canadienne

    Canadian film or video production has the meaning assigned by regulation. (production cinématographique ou magnétoscopique canadienne)

    Canadian film or video production certificate

    certificat de production cinématographique ou magnétoscopique canadienne

    Canadian film or video production certificate means a certificate issued in respect of a production by the Minister of Canadian Heritage certifying that the production is a Canadian film or video production in respect of which that Minister is satisfied that, except where the production is a treaty co-production (as defined in subsection 1106(3) of the Income Tax Regulations), an acceptable share of revenues from the exploitation of the production in non-Canadian markets is, under the terms of any agreement, retained by

    • (a) a qualified corporation that owns or owned an interest in, or for civil law a right in, the production;

    • (b) a prescribed taxable Canadian corporation related to the qualified corporation; or

    • (c) any combination of corporations described in paragraph (a) or (b). (certificat de production cinématographique ou magnétoscopique canadienne)

    investor

    investor[Repealed, 2014, c. 39, s. 41]

    labour expenditure

    dépense de main-d’oeuvre

    labour expenditure, of a corporation for a taxation year in respect of a Canadian film or video production, means, in the case of a corporation that is not a qualified corporation for the taxation year, nil, and in the case of a corporation that is a qualified corporation for the taxation year, subject to subsection (2), the total of the following amounts to the extent that they are reasonable in the circumstances and included in the cost to, or in the case of depreciable property the capital cost to, the corporation, or any other person or partnership, of the production:

    • (a) the salary or wages directly attributable to the production that are incurred after 1994 and in the taxation year, or the preceding taxation year, by the corporation for the stages of production of the property, from the production commencement time to the end of the post-production stage, and paid by it in the taxation year or within 60 days after the end of the taxation year (other than amounts incurred in that preceding taxation year that were paid within 60 days after the end of that preceding taxation year),

    • (b) that portion of the remuneration (other than salary or wages and other than remuneration that relates to services rendered in the preceding taxation year and that was paid within 60 days after the end of that preceding taxation year) that is directly attributable to the production of property, that relates to services rendered after 1994 and in the taxation year, or that preceding taxation year, to the corporation for the stages of production, from the production commencement time to the end of the post-production stage, and that is paid by it in the taxation year or within 60 days after the end of the taxation year to

      • (i) an individual who is not an employee of the corporation, to the extent that the amount paid

        • (A) is attributable to services personally rendered by the individual for the production of the property, or

        • (B) is attributable to and does not exceed the salary or wages of the individual’s employees for personally rendering services for the production of the property,

      • (ii) another taxable Canadian corporation, to the extent that the amount paid is attributable to and does not exceed the salary or wages of the other corporation’s employees for personally rendering services for the production of the property,

      • (iii) another taxable Canadian corporation all the issued and outstanding shares of the capital stock of which (except directors’ qualifying shares) belong to an individual and the activities of which consist principally of the provision of the individual’s services, to the extent that the amount paid is attributable to services rendered personally by the individual for the production of the property, or

      • (iv) a partnership that is carrying on business in Canada, to the extent that the amount paid

        • (A) is attributable to services personally rendered by an individual who is a member of the partnership for the production of the property, or

        • (B) is attributable to and does not exceed the salary or wages of the partnership’s employees for personally rendering services for the production of the property, and

    • (c) where

      • (i) the corporation is a subsidiary wholly-owned corporation of another taxable Canadian corporation (in this section referred to as the “parent”), and

      • (ii) the corporation and the parent have agreed that this paragraph apply in respect of the production,

      the reimbursement made by the corporation in the year, or within 60 days after the end of the year, of an expenditure that was incurred by the parent in a particular taxation year of the parent in respect of that production and that would be included in the labour expenditure of the corporation in respect of the property for the particular taxation year because of paragraph (a) or (b) if

      • (iii) the corporation had had such a particular taxation year, and

      • (iv) the expenditure were incurred by the corporation for the same purpose as it was by the parent and were paid at the same time and to the same person or partnership as it was by the parent. (dépense de main-d’oeuvre)

    production commencement time

    début de la production

    production commencement time, in respect of a Canadian film or video production, means the earlier of

    • (a) the time at which principal photography of the production begins, and

    • (b) the latest of

      • (i) the time at which a qualified corporation that has an interest in, or for civil law a right in, the production, or the parent of the corporation, first makes an expenditure for salary or wages or other remuneration for activities, of scriptwriters, that are directly attributable to the development by the corporation of script material of the production,

      • (ii) the time at which the corporation or the parent of the corporation acquires a property, on which the production is based, that is a published literary work, screenplay, play, personal history or all or part of the script material of the production, and

      • (iii) two years before the date on which principal photography of the production begins. (début de la production)

    qualified corporation

    société admissible

    qualified corporation for a taxation year means a corporation that is throughout the year a prescribed taxable Canadian corporation the activities of which in the year are primarily the carrying on through a permanent establishment (as defined by regulation) in Canada of a business that is a Canadian film or video production business. (société admissible)

    qualified labour expenditure

    dépense de main-d’oeuvre admissible

    qualified labour expenditure, of a corporation for a taxation year in respect of a Canadian film or video production, means the lesser of

    • (a) the amount, if any, by which

      • (i) the total of

        • (A) the labour expenditure of the corporation for the year in respect of the production, and

        • (B) the amount by which the total of all amounts each of which is the labour expenditure of the corporation for a preceding taxation year in respect of the production exceeds the total of all amounts each of which is a qualified labour expenditure of the corporation in respect of the production for a preceding taxation year before the end of which the principal filming or taping of the production began

      exceeds

      • (ii) where the corporation is a parent, the total of all amounts each of which is an amount that is the subject of an agreement in respect of the production referred to in paragraph (c) of the definition labour expenditure between the corporation and its wholly-owned corporation, and

    • (b) the amount determined by the formula

      A - B

      where

      A
      is 60% of the amount by which
      • (i) the total of all amounts each of which is an expenditure by the corporation in respect of the production that is included in the cost to, or in the case of depreciable property the capital cost to, the corporation or any other person or partnership of the production at the end of the taxation year,

      exceeds

      • (ii) the total of all amounts each of which is an amount of assistance in respect of that cost that, at the time of the filing of its return of income for the year, the corporation or any other person or partnership has received, is entitled to receive or can reasonably be expected to receive, that has not been repaid before that time pursuant to a legal obligation to do so (and that does not otherwise reduce that cost), and

      B
      is the total of all amounts each of which is the qualified labour expenditure of the corporation in respect of the production for a preceding taxation year before the end of which the principal filming or taping of the production began.

    salary or wages

    traitement ou salaire

    salary or wages does not include an amount

    • (a) described in section 7;

    • (b) determined by reference to profits or revenues; or

    • (c) paid to a person in respect of services rendered by the person at a time when the person was non-resident, unless the person was at that time a Canadian citizen. (traitement ou salaire)

    script material

    texte

    script material, in respect of a production, means written material describing the story on which the production is based and, for greater certainty, includes a draft script, an original story, a screen story, a narration, a television production concept, an outline or a scene-by-scene schematic, synopsis or treatment. (texte)

  • Marginal note:Rules governing labour expenditure of a corporation

    (2) For the purposes of the definitions labour expenditure and qualified labour expenditure in subsection (1),

    • (a) remuneration does not include remuneration

      • (i) determined by reference to profits or revenues, or

      • (ii) in respect of services rendered by a person at a time when the person was non-resident, unless the person was at that time a Canadian citizen;

    • (b) services referred to in paragraph (b) of that definition that relate to the post-production stage of the production include only the services that are rendered at that stage by a person who performs the duties of animation cameraman, assistant colourist, assistant mixer, assistant sound-effects technician, boom operator, colourist, computer graphics designer, cutter, developing technician, director of post production, dubbing technician, encoding technician, inspection technician — clean up, mixer, optical effects technician, picture editor, printing technician, projectionist, recording technician, senior editor, sound editor, sound-effects technician, special effects editor, subtitle technician, timer, video-film recorder operator, videotape operator or by a person who performs a prescribed duty;

    • (c) that definition does not apply to an amount to which section 37 applies; and

    • (d) an expenditure incurred in respect of a film or video production by a qualified corporation (in this paragraph referred to as the “co-producer”) in respect of goods supplied or services rendered by another qualified corporation to the co-producer in respect of the production is not a labour expenditure to the co-producer or, for the purpose of applying this section to the co-producer, a cost or capital cost of the production.

  • Marginal note:Tax credit

    (3) Where

    • (a) a qualified corporation for a taxation year files with its return of income for the year

      • (i) a Canadian film or video production certificate issued in respect of a Canadian film or video production of the corporation,

      • (ii) a prescribed form containing prescribed information, and

      • (iii) each other document prescribed in respect of the production, and

    • (b) the principal filming or taping of the production began before the end of the year,

    the corporation is deemed to have paid on its balance-due day for the year an amount on account of its tax payable under this Part for the year equal to 25% of its qualified labour expenditure for the year in respect of the production.

  • Marginal note:Exception

    (4) This section does not apply to a Canadian film or video production if the production — or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law a right in, the production — is a tax shelter investment for the purpose of section 143.2.

  • Marginal note:When assistance received

    (5) For the purposes of this Act other than this section, and for greater certainty, the amount that a corporation is deemed under subsection 125.4(3) to have paid for a taxation year is assistance received by the corporation from a government immediately before the end of the year.

  • Marginal note:Revocation of certificate

    (6) If an omission or incorrect statement was made for the purpose of obtaining a Canadian film or video production certificate in respect of a production, or if the production is not a Canadian film or video production,

    • (a) the Minister of Canadian Heritage may

      • (i) revoke the certificate, or

      • (ii) if the certificate was issued in respect of productions included in an episodic television series, revoke the certificate in respect of one or more episodes in the series;

    • (b) for greater certainty, for the purposes of this section, the expenditures and cost of production in respect of productions included in an episodic television series that relate to an episode in the series in respect of which a certificate has been revoked are not attributable to a Canadian film or video production; and

    • (c) for the purpose of subparagraph (3)(a)(i), a certificate that has been revoked is deemed never to have been issued.

  • Marginal note:Guidelines

    (7) The Minister of Canadian Heritage shall issue guidelines respecting the circumstances under which the conditions in the definition Canadian film or video production certificate in subsection (1) are satisfied. For greater certainty, those guidelines are not statutory instruments as defined in the Statutory Instruments Act.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1996, c. 21, s. 28;
  • 1997, c. 25, s. 34;
  • 1999, c. 22, s. 46;
  • 2001, c. 17, s. 115;
  • 2014, c. 39, s. 41.
 
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