Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))
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Act current to 2024-11-26 and last amended on 2024-07-01. Previous Versions
PART IIncome Tax (continued)
DIVISION EComputation of Tax (continued)
SUBDIVISION CRules Applicable to all Taxpayers (continued)
126.1 [Repealed, 2013, c. 34, s. 268]
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- 1994, c. 8, s. 14
- 2013, c. 34, s. 268
Marginal note:Logging tax deduction
127 (1) There may be deducted from the tax otherwise payable by a taxpayer under this Part for a taxation year an amount equal to the lesser of
(a) 2/3 of any logging tax paid by the taxpayer to the government of a province in respect of income for the year from logging operations in the province, and
(b) 6 2/3% of the taxpayer’s income for the year from logging operations in the province referred to in paragraph 127(1)(a),
except that in no case shall the total of amounts in respect of all provinces that would otherwise be deductible under this subsection from the tax otherwise payable under this Part for the year by the taxpayer exceed 6 2/3% of the amount that would be the taxpayer’s taxable income for the year or taxable income earned in Canada for the year, as the case may be, if this Part were read without reference to paragraphs 60(b), 60(c) to 60(c.2), 60(i) and 60(v) and sections 62, 63 and 64.
Marginal note:Definitions
(2) In subsection 127(1),
- income for the year from logging operations in the province
income for the year from logging operations in the province has the meaning assigned by regulation; (revenu pour l’année tiré des opérations forestières dans la province)
- logging tax
logging tax means a tax imposed by the legislature of a province that is declared by regulation to be a tax of general application on income from logging operations. (impôt sur les opérations forestières)
Marginal note:Contributions to registered parties and candidates
(3) There may be deducted from the tax otherwise payable by a taxpayer under this Part for a taxation year in respect of the total of all amounts each of which is the eligible amount of a monetary contribution that is referred to in the Canada Elections Act and that is made by the taxpayer in the year to a registered party, a registered association or a candidate, as those terms are defined in that Act,
(a) when that total does not exceed $400, 75% of that total,
(b) when that total exceeds $400 and does not exceed $750, $300 plus 50% of the amount by which that total exceeds $400, and
(c) when that total exceeds $750, the lesser of
(i) $650, and
(ii) $475 plus 33 1/3% of the amount by which the total exceeds $750,
if payment of each monetary contribution that is included in that total is evidenced by filing with the Minister a receipt, signed by the agent authorized under that Act to accept that monetary contribution, that contains prescribed information.
Marginal note:Issue of receipts
(3.1) A receipt referred to in subsection (3) must be issued only in respect of the monetary contribution that it provides evidence for and only to the contributor who made it.
Marginal note:Authorization required for receipts from registered associations
(3.2) No agent of a registered association of a registered party shall issue a receipt referred to in subsection (3) unless the leader of the registered party has, in writing, notified the financial agent, as referred to in the Canada Elections Act, of the registered association that its agents are authorized to issue those receipts.
Marginal note:Prohibition — issuance of receipts
(3.3) If the Commissioner of Canada Elections makes an application under subsection 521.1(2) of the Canada Elections Act in respect of a registered party, no registered agent of the party — including, for greater certainty, a registered agent appointed by a provincial division of the party — and no electoral district agent of a registered association of the party shall issue a receipt referred to in subsection (3) unless the Commissioner withdraws the application or the court makes an order under subsection 521.1(6) of that Act or dismisses the application.
(4) [Repealed, 2003, c. 19, s. 73]
Marginal note:Monetary contributions — form and content
(4.1) For the purpose of subsections (3) and (3.1), a monetary contribution made by a taxpayer may be in the form of cash or of a negotiable instrument issued by the taxpayer. However, it does not include
(a) a monetary contribution that a taxpayer who is an agent authorized under the Canada Elections Act to accept monetary contributions makes in that capacity; or
(b) a monetary contribution in respect of which a taxpayer has received or is entitled to receive a financial benefit of any kind (other than a prescribed financial benefit or a deduction under subsection (3)) from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan or deduction from tax or an allowance or otherwise.
(4.2) [Repealed, 2006, c. 9, s. 64]
Marginal note:Investment tax credit
(5) There may be deducted from the tax otherwise payable by a taxpayer under this Part for a taxation year an amount not exceeding the lesser of
(a) the total of
(i) the taxpayer’s investment tax credit at the end of the year in respect of property acquired before the end of the year, of the taxpayer’s apprenticeship expenditure for the year or a preceding taxation year, of the taxpayer’s flow-through mining expenditure for the year or a preceding taxation year, of the taxpayer’s flow-through critical mineral mining expenditure for the year or a preceding taxation year, of the taxpayer’s pre-production mining expenditure for the year or a preceding taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the year or at the end of a preceding taxation year, and
(ii) the lesser of
(A) the taxpayer’s investment tax credit at the end of the year in respect of property acquired in a subsequent taxation year, of the taxpayer’s apprenticeship expenditure for a subsequent taxation year, of the taxpayer’s flow-through mining expenditure for a subsequent taxation year, of the taxpayer’s flow-through critical mineral mining expenditure for a subsequent taxation year, of the taxpayer’s pre-production mining expenditure for a subsequent taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the subsequent taxation year to the extent that an investment tax credit was not deductible under this subsection for the subsequent taxation year, and
(B) the amount, if any, by which the taxpayer’s tax otherwise payable under this Part for the year exceeds the amount, if any, determined under subparagraph 127(5)(a)(i), and
(b) where Division E.1 applies to the taxpayer for the year, the amount, if any, by which
(i) the taxpayer’s tax otherwise payable under this Part for the year
exceeds
(ii) the taxpayer’s minimum amount for the year determined under section 127.51.
Marginal note:Investment tax credit of cooperative corporation
(6) Where at any particular time in a taxation year a taxpayer that is a cooperative corporation within the meaning assigned by subsection 136(2) has, as required by subsection 135(3), deducted or withheld an amount from a payment made by it to any person pursuant to an allocation in proportion to patronage, the taxpayer may deduct from the amount otherwise required by that subsection to be remitted to the Receiver General, an amount, not exceeding the amount, if any, by which
(a) its investment tax credit at the end of the immediately preceding taxation year in respect of property acquired and expenditures made before the end of that preceding taxation year
exceeds the total of
(b) the amount deducted under subsection 127(5) from its tax otherwise payable under this Part for the immediately preceding taxation year in respect of property acquired and expenditures made before the end of that preceding taxation year, and
(c) the total of all amounts each of which is the amount deducted by virtue of this subsection from any amount otherwise required to be remitted by subsection 135(3) in respect of payments made by it before the particular time and in the taxation year,
and the amount, if any, so deducted from the amount otherwise required to be remitted by subsection 135(3)
(d) shall be deducted in computing the taxpayer’s investment tax credit at the end of the taxation year, and
(e) shall be deemed to have been remitted by the taxpayer to the Receiver General on account of tax under this Part of the person to whom that payment was made.
Marginal note:Investment tax credit of certain trusts
(7) If, in a particular taxation year of a taxpayer who is a beneficiary under a trust that is a graduated rate estate or that is deemed to be in existence by section 143, an amount is determined in respect of the trust under paragraph (a), (a.1), (a.4), (b) or (e.1) of the definition investment tax credit in subsection (9) for its taxation year that ends in that particular taxation year, the trust may, in its return of income for its taxation year that ends in that particular taxation year, designate the portion of that amount that can, having regard to all the circumstances including the terms and conditions of the trust, reasonably be considered to be attributable to the taxpayer and was not designated by the trust in respect of any other beneficiary of the trust, and that portion is to be added in computing the investment tax credit of the taxpayer at the end of that particular taxation year and is to be deducted in computing the investment tax credit of the trust at the end of its taxation year that ends in that particular taxation year.
Marginal note:Investment tax credit of partnership
(8) Subject to subsection (28), where, in a particular taxation year of a taxpayer who is a member of a partnership, an amount would be determined in respect of the partnership, for its taxation year that ends in the particular taxation year, under paragraph (a), (a.1), (a.4), (b) or (e.1) of the definition investment tax credit in subsection (9), if
(a) except for the purpose of subsection 127(13), the partnership were a person and its fiscal period were its taxation year, and
(b) in the case of a taxpayer who is a specified member of the partnership in the taxation year of the partnership, that definition were read without reference to paragraph (a.1) thereof, and paragraph (e.1) of that definition were read without reference to subparagraphs (ii) to (iv) thereof,
the portion of that amount that can reasonably be considered to be the taxpayer’s share thereof shall be added in computing the investment tax credit of the taxpayer at the end of the particular year.
Marginal note:Investment tax credit of limited partner
(8.1) Notwithstanding subsection (8), if a taxpayer is a limited partner of a partnership at the end of a fiscal period of the partnership, the amount, if any, determined under subsection (8) to be added in computing the taxpayer’s investment tax credit at the end of the taxpayer’s taxation year in which that fiscal period ends shall not exceed the lesser of
(a) the portion of the amount that would, if this section were read without reference to this subsection, be determined under subsection (8) to be the amount to be added in computing the taxpayer’s investment tax credit at the end of the taxpayer’s taxation year in which that fiscal period ends as is considered to have arisen because of the expenditure by the partnership of an amount equal to the taxpayer’s expenditure base (as determined under subsection (8.2) in respect of the partnership) at the end of that fiscal period, and
(b) the taxpayer’s at-risk amount in respect of the partnership, less the total of all amounts required by a clean economy allocation provision (as defined in subsection 127.47(1)) to be added in computing a clean economy tax credit (as defined in subsection 127.47(1)) of the taxpayer at the end of that fiscal period.
Marginal note:Expenditure base
(8.2) For the purposes of subsection 127(8.1), a taxpayer’s expenditure base in respect of a partnership at the end of a taxation year of the partnership is the lesser of
(a) the amount, if any, by which the total of
(i) the taxpayer’s at-risk amount in respect of the partnership at the time the taxpayer last became a limited partner of the partnership,
(ii) all amounts described in subparagraph 53(1)(e)(iv) contributed by the taxpayer after the time the taxpayer last became a limited partner of the partnership and before the end of the year that may reasonably be considered to have increased the taxpayer’s at-risk amount in respect of the partnership at the end of the taxation year in which the contribution was made, and
(iii) the amount, if any, by which
(A) the total of all amounts each of which is the taxpayer’s share of any income of the partnership as determined under paragraph 96(1)(f) for the year, or a preceding year ending after the time the taxpayer last became a limited partner of the partnership,
exceeds
(B) the total of all amounts each of which is the taxpayer’s share of any loss of the partnership as determined under paragraph 96(1)(g) for one of those years
exceeds the total of
(iv) all amounts received by the taxpayer after the time the taxpayer last became a limited partner of the partnership and before the end of the year as, on account or in lieu of payment of, or in satisfaction of, a distribution of the taxpayer’s share of partnership profits or partnership capital, and
(v) the total of all amounts each of which is the amount of an expenditure of the partnership referred to in paragraph 127(8.1)(a) in respect of the taxpayer for a preceding year, and
(b) that proportion of the lesser of
(i) the total of all amounts each of which is, if the partnership were a person and its fiscal period were its taxation year,
(A) an amount a specified percentage of which would be determined in respect of the partnership under paragraph (a), (b) or (e.1) of the definition investment tax credit in subsection 127(9) for the year,
(A.1) an amount that would be the apprenticeship expenditure of the partnership if the reference to “$2,000” in paragraph (a) of the definition apprenticeship expenditure in subsection (9) were read as a reference to “$20,000” and paragraph (b) of that definition were read without reference to “10% of”, or
(A.2) [Repealed, 2017, c. 20, s. 23]
(B) the amount that would be the SR&ED qualified expenditure pool of the partnership at the end of the year, and
(ii) the total of all amounts each of which is the amount determined under paragraph 127(8.2)(a) in respect of each of the limited partners of the partnership at the end of the year
that
(iii) the amount determined in respect of the taxpayer under paragraph 127(8.2)(a) for the year
is of
(iv) the amount determined under subparagraph 127(8.2)(b)(ii).
Marginal note:Investment tax credit — allocation of unallocated partnership ITCs
(8.3) For the purpose of subsection (8), and subject to subsection (8.4), if a taxpayer is a member of a partnership (other than a specified member) throughout a fiscal period of the partnership, there shall be added to the amount that can reasonably be considered to be that member’s share of the amount determined under subsection (8) the amount, if any, that is such portion of the amount determined under subsection (8.31) in respect of that fiscal period as is reasonable in the circumstances (having regard to the investment in the partnership, including debt obligations of the partnership, of each of those members of the partnership who was a member of the partnership throughout the fiscal period of the partnership and who was not a specified member of the partnership during the fiscal period of the partnership).
Marginal note:Amount of unallocated partnership ITC
(8.31) For the purpose of subsection (8.3), the amount determined under this subsection in respect of a fiscal period of a partnership is the amount, if any, by which
(a) the total of all amounts each of which is an amount that would, if the partnership were a person and its fiscal period were its taxation year, be determined in respect of the partnership under paragraph (a), (a.1), (a.4), (b) or (e.1) of the definition investment tax credit in subsection (9) for a taxation year that is the fiscal period,
exceeds
(b) the total of
(i) the total of all amounts each of which is the amount determined under subsection (8) in respect of the fiscal period to be the share of the total determined under paragraph (a) of a partner of the partnership (other than a member of the partnership who was at any time in the fiscal period of the partnership a specified member of the partnership), and
(ii) the total of all amounts each of which is the amount determined under subsection (8), with reference to subsection (8.1), in respect of the fiscal period to be the share of the total determined under paragraph (a) of a partner of the partnership who was at any time in the fiscal period of the partnership a specified member of the partnership.
(iii) [Repealed, 2007, c. 35, s. 43]
Marginal note:Idem
(8.4) Notwithstanding subsection 127(8), where, pursuant to subsections 127(8) and 127(8.3) an amount would, but for this subsection, be required to be added in computing the investment tax credit of a taxpayer for a taxation year, where the taxpayer so elects in prescribed form and manner in the taxpayer’s return of income (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) under this Part for the year, such portion of the amount as is elected by the taxpayer shall, for the purposes of this section, be deemed not to have been required by subsection 127(8) to have been added in computing the taxpayer’s investment tax credit at the end of the year.
Marginal note:Definitions
(8.5) In subsections 127(8.1) to 127(8.4), the words at-risk amount of a taxpayer and limited partner of a partnership have the meanings assigned to those words by subsections 96(2.2) and 96(2.4), respectively.
Marginal note:Idem
(9) In this section,
- annual investment tax credit limit
annual investment tax credit limit[Repealed, 1994, c. 8, s. 15]
- apprenticeship expenditure
apprenticeship expenditure of a taxpayer for a taxation year in respect of an eligible apprentice is the lesser of
(a) $2,000, and
(b) 10% of the eligible salary and wages payable by the taxpayer in the taxation year to the eligible apprentice in respect of the eligible apprentice’s employment, in the taxation year and on or after May 2, 2006, by the taxpayer in a business carried on in Canada by the taxpayer in the taxation year; (dépense d’apprentissage)
- approved project
approved project means a project with a total capital cost of depreciable property, determined without reference to subsection 13(7.1) or 13(7.4), of not less than $25,000 that has, on application in writing before July, 1988, been approved by such member of the Queen’s Privy Council for Canada as is designated by the Governor in Council for the purposes of this definition in relation to projects in the appropriate province or region of a province; (ouvrage approuvé)
- approved project property
approved project property[Repealed, 1996, c. 21, s. 30]
- Cape Breton
Cape Breton means Cape Breton Island and that portion of the Province of Nova Scotia within the following described boundary:
beginning at a point on the southwesterly shore of Chedabucto Bay near Red Head, said point being S70 degrees E (Nova Scotia grid meridian) from Geodetic Station Sand, thence in a southwesterly direction to a point on the northwesterly boundary of highway 344, said point being southwesterly 240 [FEET] from the intersection of King Brook with said highway boundary, thence northwesterly to Crown post 6678, thence continuing northwesterly to Crown post 6679, thence continuing northwesterly to Crown post 6680, thence continuing northwesterly to Crown post 6681, thence continuing northwesterly to Crown post 6632, thence continuing northwesterly to Crown post 6602, thence northerly to Crown post 8575; thence northerly to Crown post 6599, thence continuing northerly to Crown post 6600, thence northwesterly to the southwest angle of the Town of Mulgrave, thence along the westerly boundary of the Town of Mulgrave and a prolongation thereof northerly to the Antigonish-Guysborough county line, thence along said county line northeasterly to the southwesterly shore of the Strait of Canso, thence following the southwesterly shore of the Strait of Canso and the northwesterly shore of Chedabucto Bay southeasterly to the place of beginning; (Cap-Breton)
- certified property
certified property of a taxpayer means any property (other than an approved project property) described in paragraph (a) or (b) of the definition qualified property in this subsection
(a) that was acquired by the taxpayer
(i) after October 28, 1980 and
(A) before 1987, or
(B) before 1988 where the property is
(I) a building under construction before 1987, or
(II) machinery and equipment ordered in writing by the taxpayer before 1987,
(ii) after 1986 and before 1989, other than a property included in subparagraph (i),
(iii) after 1988 and before 1995,
(iv) after 1994 and before 1996 where
(A) the property is acquired by the taxpayer for use in a project that was substantially advanced by or on behalf of the taxpayer, as evidenced in writing, before February 22, 1994, and
(B) construction of the project by or on behalf of the taxpayer begins before 1995, or
(v) after 1994 where the property
(A) is acquired by the taxpayer under a written agreement of purchase and sale entered into by the taxpayer before February 22, 1994,
(B) was under construction by or on behalf of the taxpayer on February 22, 1994, or
(C) is machinery or equipment that will be a fixed and integral part of property under construction by or on behalf of the taxpayer on February 22, 1994,
and that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer, and
(b) that is part of a facility as defined for the purposes of the Regional Development Incentives Act, chapter R-3 of the Revised Statutes of Canada, 1970, and was acquired primarily for use by the taxpayer in a prescribed area; (bien certifié)
- child care space amount
child care space amount[Repealed, 2017, c. 20, s. 23]
- contract payment
contract payment means
(a) an amount paid or payable to a taxpayer, by a taxable supplier in respect of the amount, for scientific research and experimental development to the extent that it is performed
(i) for or on behalf of a person or partnership entitled to a deduction in respect of the amount because of subparagraph 37(1)(a)(i.01) or (i.1), and
(ii) at a time when the taxpayer is dealing at arm’s length with the person or partnership, or
(b) an amount in respect of an expenditure of a current nature (within the meaning assigned by paragraph 37(8)(d)) of a taxpayer, other than a prescribed amount, payable by a Canadian government or municipality or other Canadian public authority or by a person exempt, because of section 149, from tax under this Part on all or part of the person’s taxable income for scientific research and experimental development to be performed for it or on its behalf; (paiement contractuel)
- critical mineral
critical mineral means
(a) copper,
(b) nickel,
(c) lithium,
(d) cobalt,
(e) graphite,
(f) a rare earth element,
(g) scandium,
(h) titanium,
(i) gallium,
(j) vanadium,
(k) tellurium,
(l) magnesium,
(m) zinc,
(n) a platinum group metal, or
(o) uranium; (minéral critique)
- eligible apprentice
eligible apprentice means an individual who is employed in Canada in a trade prescribed in respect of a province or in respect of Canada, during the first twenty-four months of the individual’s apprenticeship contract registered with the province or Canada, as the case may be, under an apprenticeship program designed to certify or license individuals in the trade; (apprenti admissible)
- eligible child care space expenditure
eligible child care space expenditure[Repealed, 2017, c. 20, s. 23]
- eligible salary and wages
eligible salary and wages payable by a taxpayer to an eligible apprentice means the amount, if any, that is the salary and wages payable by the taxpayer to the eligible apprentice in respect of the first 24 months of the apprenticeship (other than a qualified expenditure incurred by the taxpayer in a taxation year, remuneration that is based on profits, bonuses, amounts described in section 6 or 7, and amounts deemed to be incurred by subsection 78(4)); (traitement et salaire admissibles)
- eligible taxpayer
eligible taxpayer means
(a) a corporation other than a non-qualifying corporation,
(b) an individual other than a trust,
(c) a trust all the beneficiaries of which are eligible taxpayers, and
(d) a partnership all the members of which are eligible taxpayers,
and for the purpose of this definition, a beneficiary of a trust is a person or partnership that is beneficially interested in the trust; (contribuable admissible)
- first term shared-use-equipment
first term shared-use-equipment, of a taxpayer, means depreciable property of the taxpayer (other than prescribed depreciable property of a taxpayer) acquired before 2014 that is used by the taxpayer, during its operating time in the period (in this subsection and subsection (11.1) referred to as the “first period”) beginning at the time the property was acquired by the taxpayer and ending at the end of the taxpayer’s first taxation year ending at least 12 months after that time, primarily for the prosecution of scientific research and experimental development in Canada, but does not include general purpose office equipment or furniture; (matériel à vocations multiples de première période)
- flow-through critical mineral mining expenditure
flow-through critical mineral mining expenditure of a taxpayer for a taxation year means an expense deemed by subsection 66(12.61) (or by subsection 66(18) as a consequence of the application of subsection 66(12.61) to the partnership, referred to in paragraph (c) of this definition, of which the taxpayer is a member) to be incurred by the taxpayer in the year
(a) that is a Canadian exploration expense incurred by a corporation after April 7, 2022 in conducting mining exploration activity from or above the surface of the earth primarily targeting critical minerals,
(b) that
(i) is an expense described in paragraph (f) of the definition Canadian exploration expense in subsection 66.1(6), and
(ii) is not an expense in respect of
(A) trenching, if one of the purposes of the trenching is to carry out preliminary sampling (other than specified sampling),
(B) digging test pits (other than for the purpose of carrying out specified sampling), and
(C) preliminary sampling (other than specified sampling),
(c) that is an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after April 7, 2022 and on or before March 31, 2027,
(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after April 7, 2022 and on or before March 31, 2027,
(e) that, in respect of an agreement described in paragraph (c), a qualified professional engineer or professional geoscientist certifies in prescribed form and manner that the expense is to be incurred in accordance with an exploration plan that primarily targets critical minerals if the qualified professional engineer or professional geoscientist
(i) completed the certification within the 12-month period immediately preceding the time when the agreement is made, and
(ii) acted reasonably, in their professional capacity, in completing the certification, and
(f) that is not an expense that the taxpayer has included under paragraph (a.2) of the definition investment tax credit in the computation of its investment tax credit in respect of which the taxpayer has, at any time, sought a deduction under subsection (5); (dépense minière de minéral critique déterminée)
- flow-through mining expenditure
flow-through mining expenditure of a taxpayer for a taxation year means an expense deemed by subsection 66(12.61) (or by subsection 66(18) as a consequence of the application of subsection 66(12.61) to the partnership, referred to in paragraph (c) of this definition, of which the taxpayer is a member) to be incurred by the taxpayer in the year
(a) that is a Canadian exploration expense incurred by a corporation after March 2024 and before 2026 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2026) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition mineral resource in subsection 248(1),
(b) that
(i) is an expense described in paragraph (f) of the definition Canadian exploration expense in subsection 66.1(6), and
(ii) is not an expense in respect of
(A) trenching, if one of the purposes of the trenching is to carry out preliminary sampling (other than specified sampling),
(B) digging test pits (other than digging test pits for the purpose of carrying out specified sampling), and
(C) preliminary sampling (other than specified sampling),
(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2024 and before April 2025,
(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2024 and before April 2025, and
(e) that is not an expense that the taxpayer has included under paragraph (a.21) of the definition investment tax credit in the computation of its investment tax credit in respect of which the taxpayer has, at any time, sought a deduction under subsection (5); (dépense minière déterminée)
- Gaspé Peninsula
Gaspé Peninsula means that portion of the Gaspé region of the Province of Quebec that extends to the western border of Kamouraska County and includes the Magdalen Islands; (péninsule de Gaspé)
- government assistance
government assistance means assistance from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance, other than as an excluded loan (as defined in subsection 12(11)) or as a deduction under subsection (5) or (6) or a deemed payment on account of tax payable under subsection 127.44(2), 127.45(2), 127.48(2) or 127.49(2); (aide gouvernementale)
- investment tax credit
investment tax credit of a taxpayer at the end of a taxation year means the amount, if any, by which the total of
(a) the total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of qualified property or qualified resource property acquired by the taxpayer in the year,
(a.1) 15% of the amount by which the taxpayer’s SR&ED qualified expenditure pool at the end of the year exceeds the total of all amounts each of which is the super-allowance benefit amount for the year in respect of the taxpayer in respect of a province,
(a.2) where the taxpayer is an individual (other than a trust), 15% of the taxpayer’s flow-through mining expenditures for the year,
(a.21) where the taxpayer is an individual (other than a trust), 30% of the taxpayer’s flow-through critical mineral mining expenditures for the year,
(a.3) if the taxpayer is a taxable Canadian corporation, the total of
(i) the specified percentage of the portion of the taxpayer’s pre-production mining expenditure described in subparagraph (a)(i) of the definition pre-production mining expenditure, and
(ii) the specified percentage of the portion of the taxpayer’s pre-production mining expenditure described in subparagraph (a)(ii) of the definition pre-production mining expenditure,
(a.4) the total of all amounts each of which is an apprenticeship expenditure of the taxpayer for the taxation year in respect of an eligible apprentice,
(a.5) [Repealed, 2017, c. 20, s. 23]
(b) the total of amounts required by subsection 127(7) or 127(8) to be added in computing the taxpayer’s investment tax credit at the end of the year,
(c) the total of all amounts each of which is an amount determined under any of paragraphs (a) to (b) in respect of the taxpayer for any of the 10 taxation years immediately preceding or the 3 taxation years immediately following the year,
(d) [Repealed, 2006, c. 4, s. 75]
(e) the total of all amounts each of which is an amount required by subsection 127(10.1) to be added in computing the taxpayer’s investment tax credit at the end of the year or at the end of any of the 10 taxation years immediately preceding or the 3 taxation years immediately following the year,
(e.1) the total of all amounts each of which is the specified percentage of that part of a repayment made by the taxpayer in the year or in any of the 10 taxation years immediately preceding or the 3 taxation years immediately following the year that can reasonably be considered to be a repayment of government assistance, non-government assistance or a contract payment that reduced
(i) the capital cost to the taxpayer of a property under paragraph 127(11.1)(b),
(ii) the amount of a qualified expenditure incurred by the taxpayer under paragraph 127(11.1)(c) for taxation years that began before 1996,
(iii) the prescribed proxy amount of the taxpayer under paragraph 127(11.1)(f) for taxation years that began before 1996,
(iv) a qualified expenditure incurred by the taxpayer under any of subsections 127(18) to 127(20),
(v) the amount of a pre-production mining expenditure of the taxpayer under paragraph (11.1)(c.3), or
(vi) the amount of eligible salary and wages payable by the taxpayer to an eligible apprentice under paragraph (11.1)(c.4), to the extent that that reduction had the effect of reducing the amount of an apprenticeship expenditure of the taxpayer, and
(vii) [Repealed, 2017, c. 20, s. 23]
(e.2) the total of all amounts each of which is the specified percentage of 1/4 of that part of a repayment made by the taxpayer in the year or in any of the 10 taxation years immediately preceding or the 3 taxation years immediately following the year that can reasonably be considered to be a repayment of government assistance, non-government assistance or a contract payment that reduced
(i) the amount of a qualified expenditure incurred by the taxpayer under paragraph 127(11.1)(e) for taxation years that began before 1996, or
(ii) a qualified expenditure incurred by the taxpayer under any of subsections 127(18) to 127(20),
in respect of first term shared-use-equipment or second term shared-use-equipment, and, for that purpose, a repayment made by the taxpayer in any taxation year preceding the first taxation year that ends coincidentally with the first period or the second period in respect of first term shared-use-equipment or second term shared-use-equipment, respectively, is deemed to have been incurred by the taxpayer in that first taxation year,
exceeds the total of
(f) the total of all amounts each of which is an amount deducted under subsection 127(5) from the tax otherwise payable under this Part by the taxpayer for a preceding taxation year in respect of property acquired, or an expenditure incurred, in the year or in any of the 10 taxation years immediately preceding or the 2 taxation years immediately following the year, or in respect of the taxpayer’s SR&ED qualified expenditure pool at the end of such a year,
(g) the total of all amounts each of which is an amount required by subsection 127(6) to be deducted in computing the taxpayer’s investment tax credit
(i) at the end of the year, or
(ii) [Repealed, 1996, c. 21, s. 30]
(iii) at the end of any of the 9 taxation years immediately preceding or the 3 taxation years immediately following the year,
(h) the total of all amounts each of which is an amount required by subsection 127(7) to be deducted in computing the taxpayer’s investment tax credit
(i) at the end of the year, or
(ii) [Repealed, 1996, c. 21, s. 30]
(iii) at the end of any of the 10 taxation years immediately preceding or the 3 taxation years immediately following the year,
(i) the total of all amounts each of which is an amount claimed under subparagraph 192(2)(a)(ii) by the taxpayer for the year or a preceding taxation year in respect of property acquired, or an expenditure made, in the year or the 10 taxation years immediately preceding the year,
(j) if the taxpayer is subject to a loss restriction event at any time before the end of the year, the amount determined under subsection (9.1) in respect of the taxpayer, and
(k) if the taxpayer is subject to a loss restriction event at any time after the end of the year, the amount determined under subsection (9.2) in respect of the taxpayer,
except that no amount shall be included in the total determined under any of paragraphs (a) to (e.2) in respect of an outlay, expense or expenditure that would, if this Act were read without reference to subsections 127(26) and 78(4), be made or incurred by the taxpayer in the course of earning income in a particular taxation year, and no amount shall be added under paragraph (b) in computing the taxpayer’s investment tax credit at the end of a particular taxation year in respect of an outlay, expense or expenditure made or incurred by a trust or a partnership in the course of earning income, if
(l) any of the income is exempt income or is exempt from tax under this Part,
(m) the taxpayer does not file with the Minister a prescribed form containing prescribed information in respect of the amount on or before the day that is one year after the taxpayer’s filing-due date for the particular year; (crédit d’impôt à l’investissement)
- non-government assistance
non-government assistance means an amount (other than an amount received directly from a government, municipality or other public authority) that would be included in income under paragraph 12(1)(x) if that paragraph were read without reference to subparagraphs 12(1)(x)(v) to (vii); (aide non gouvernementale)
- non-qualifying corporation
non-qualifying corporation at any time means
(a) a corporation that is, at that time, not a Canadian-controlled private corporation,
(b) a corporation that would be liable to pay tax under Part I.3 for the taxation year of the corporation that includes that time if that Part were read without reference to subsection 181.1(4) and if the amount determined under subsection 181.2(3) in respect of the corporation for the year were determined without reference to amounts described in any of paragraphs 181.2(3)(a), 181.2(3)(b), 181.2(3)(d) and 181.2(3)(f) to the extent that the amounts so described were used to acquire property that would be qualified small-business property if the corporation were not a non-qualifying corporation, or
(c) a corporation that at that time is related for the purposes of section 181.5 to a corporation described in paragraph (b); (société non admissible)
- phase
phase, of a project, means a discrete expansion in the extraction, processing or production capacity of the project of a taxpayer beyond a capacity level that was attained before March 29, 2012 and which expansion in capacity was the taxpayer’s demonstrated intention immediately before that date; (phase)
- pre-production mining expenditure
pre-production mining expenditure, of a taxable Canadian corporation for a taxation year, means the total of all amounts each of which is an expenditure incurred after 2002 by the taxable Canadian corporation in the taxation year that
(a) is a Canadian exploration expense and would be
(i) described in paragraph (f) of the definition Canadian exploration expense in subsection 66.1(6) if the expression mineral resource in that paragraph were defined to mean a mineral deposit from which the principal mineral to be extracted is diamond, a base or precious metal deposit, or a mineral deposit from which the principal mineral to be extracted is an industrial mineral that, when refined, results in a base or precious metal, or
(ii) described in paragraph (g), (g.3) or (g.4) and not in paragraph (f), of the definition Canadian exploration expense in subsection 66.1(6) if the expression “mineral resource” in paragraph (g) of that definition were defined to mean a mineral deposit from which the principal mineral to be extracted is diamond, a base or precious metal deposit, or a mineral deposit from which the principal mineral to be extracted is an industrial mineral that, when refined, results in a base or precious metal, and
(b) is not an expense that
(i) was renounced under subsection 66(12.6) to the taxable Canadian corporation except if the corporation is, on the effective date of the renunciation,
(A) a corporation that would be a principal business corporation, as defined in subsection 66(15), if that definition were read without reference to its paragraphs (a), (a.1), (f), (h) and (i), and
(B) the sole shareholder of the corporation that renounced the expenditure, or
(ii) is a member’s share of an expense incurred by a partnership unless the expense was deemed by subsection 66(18) to have been made or incurred at the end of the fiscal period of the partnership by the member and throughout the fiscal period of the partnership in which the expense was incurred
(A) each member of the partnership would (otherwise than because of being a member of the partnership) be a “principal-business corporation” as defined in subsection 66(15) of the Act, if that definition were read without reference to its paragraphs (a), (a.1), (f), (h) and (i), and
(B) the corporation is a member of the partnership at the time the expenditure is incurred and would not be a specified member of the partnership if the definition specified member in subsection 248(1) were read without reference to its subparagraph (b)(ii), (dépense minière préparatoire)
- qualified Canadian exploration expenditure
qualified Canadian exploration expenditure[Repealed, 1996, c. 21, s. 30]
- qualified construction equipment
qualified construction equipment[Repealed, 1996, c. 21, s. 30]
- qualified expenditure
qualified expenditure incurred by a taxpayer in a taxation year means
(a) an amount that is an expenditure incurred in the year by the taxpayer in respect of scientific research and experimental development and is
(i) an expenditure described in subparagraph 37(1)(a)(i), or
(ii) 80% of an expenditure described in any of subparagraphs 37(1)(a)(i.01) to (iii), or
(iii) and (iv) [Repealed, 2012, c. 31, s. 27]
(b) a prescribed proxy amount of the taxpayer for the year,
but does not include
(c) a prescribed expenditure incurred in the year by the taxpayer,
(d) where the taxpayer is a corporation, an expenditure specified by the taxpayer for the year for the purpose of clause 194(2)(a)(ii)(A),
(e) [Repealed, 1998, c. 19, s. 33]
(f) an expenditure (other than an expenditure that is salary or wages of an employee of the taxpayer) incurred by the taxpayer in respect of scientific research and experimental development to the extent that it is performed by another person or partnership at a time when the taxpayer and the person or partnership to which the expenditure is paid or payable do not deal with each other at arm’s length,
(g) an expenditure described in paragraph 37(1)(a) that is paid or payable by the taxpayer to or for the benefit of a person or partnership that is not a taxable supplier in respect of the expenditure, other than an expenditure in respect of scientific research and experimental development directly undertaken by the taxpayer, and
(h) an amount that would otherwise be a qualified expenditure incurred by the taxpayer in the year to the extent of any reduction in respect of the amount that is required under any of subsections 127(18) to 127(20) to be applied; (dépense admissible)
- qualified professional engineer or professional geoscientist
qualified professional engineer or professional geoscientist means an individual who
(a) is an engineer or geoscientist with a university degree, or equivalent accreditation, in an area of geoscience, or engineering, relating to mineral exploration or mining,
(b) has at least five years of experience in mineral exploration, mine development or operation, or mineral project assessment, or any combination of those, that is relevant to their professional degree or area of practice,
(c) has experience relevant to the subject matter of the exploration plan and the certification described in paragraph (e) of the definition flow-through critical mineral mining expenditure, and
(d) is registered and in good standing with a professional association that has the authority or recognition by law of a jurisdiction in Canada to regulate the profession of engineering or geoscience in
(i) the jurisdiction where the property that is the subject of the exploration plan is located, or
(ii) if there is no professional association in the jurisdiction described in subparagraph (i), a jurisdiction in Canada where a professional association regulates the profession of engineering or geoscience; (ingénieur ou géoscientifique professionnel qualifié)
- qualified property
qualified property, of a taxpayer, means property (other than a qualified resource property) that is
(a) a prescribed building to the extent that it is acquired by the taxpayer after June 23, 1975,
(b) prescribed machinery and equipment acquired by the taxpayer after June 23, 1975, or
(b.1) prescribed energy generation and conservation property acquired by the taxpayer after March 28, 2012,
that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer and that is
(c) to be used by the taxpayer in Canada primarily for the purpose of
(i) manufacturing or processing goods for sale or lease,
(ii) farming or fishing,
(iii) logging,
(iv) storing grain, or
(v) harvesting peat,
(vi) to (xiii) [Repealed, 2012, c. 31, s. 27]
(c.1) property (other than property described in paragraph (b.1)) to be used by the taxpayer in Canada primarily for the purpose of producing or processing electrical energy or steam in a prescribed area, if
(i) all or substantially all of the energy or steam
(A) is used by the taxpayer for the purpose of gaining or producing income from a business (other than the business of selling the product of the particular property), or
(B) is sold directly (or indirectly by way of sale to a provincially regulated power utility operating in the prescribed area) to a person related to the taxpayer, and
(ii) the energy or steam is used by the taxpayer or the person related to the taxpayer primarily for the purpose of manufacturing or processing goods in the prescribed area for sale or lease, or
(d) to be leased by the taxpayer to a lessee (other than a person exempt from tax under this Part because of section 149) who can reasonably be expected to use the property in Canada primarily for any of the purposes referred to in paragraph (c), but this paragraph does not apply to property that is prescribed for the purposes of paragraph (b) or (b.1) unless
(i) the property is leased in the ordinary course of carrying on a business in Canada by a corporation whose principal business is leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services, or any combination thereof,
(ii) the property is manufactured and leased in the ordinary course of carrying on business in Canada by a corporation whose principal business is manufacturing property that it sells or leases,
(iii) the property is leased in the ordinary course of carrying on business in Canada by a corporation whose principal business is selling or servicing property of that type, or
(iv) the property is a fishing vessel, including the furniture, fittings and equipment attached to it, leased by an individual (other than a trust) to a corporation, controlled by the individual, that carries on a fishing business in connection with one or more commercial fishing licences issued by the Government of Canada to the individual, and, for the purpose of this definition, Canada includes the offshore region prescribed for the purpose of the definition specified percentage; (bien admissible)
- qualified resource property
qualified resource property, of a taxpayer, means property that is a prescribed building or prescribed machinery and equipment, that is acquired by the taxpayer after March 28, 2012, that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer and that is
(a) to be used by the taxpayer in Canada primarily for the purpose of
(i) operating an oil or gas well or extracting petroleum or natural gas from a natural accumulation of petroleum or natural gas,
(ii) extracting minerals from a mineral resource,
(iii) processing
(A) ore (other than iron ore or tar sands ore) from a mineral resource to any stage that is not beyond the prime metal stage or its equivalent,
(B) iron ore from a mineral resource to any stage that is not beyond the pellet stage or its equivalent, or
(C) tar sands ore from a mineral resource to any stage that is not beyond the crude oil stage or its equivalent,
(iv) producing industrial minerals,
(v) processing heavy crude oil recovered from a natural reservoir in Canada to a stage that is not beyond the crude oil stage or its equivalent,
(vi) Canadian field processing,
(vii) exploring or drilling for petroleum or natural gas, or
(viii) prospecting or exploring for or developing a mineral resource, or
(b) to be leased by the taxpayer to a lessee (other than a person exempt from tax under this Part because of section 149) who can reasonably be expected to use the property in Canada primarily for any of the purposes referred to in paragraph (a), but this paragraph does not apply to prescribed machinery and equipment unless
(i) the property is leased in the ordinary course of carrying on a business in Canada by a corporation whose principal business is any of, or a combination of, leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services,
(ii) the property is manufactured and leased in the ordinary course of carrying on business in Canada by a corporation whose principal business is manufacturing property that it sells or leases, or
(iii) the property is leased in the ordinary course of carrying on business in Canada by a corporation the principal business of which is selling or servicing property of that type,
and, for the purpose of this definition, “Canada” includes the offshore region prescribed for the purpose of the definition specified percentage; (bien minier admissible)
- qualified small-business property
qualified small-business property[Repealed, 1996, c. 21, s. 30]
- qualified transportation equipment
qualified transportation equipment[Repealed, 1996, c. 21, s. 30]
- second term shared-use-equipment
second term shared-use-equipment of a taxpayer means property of the taxpayer that was first term shared-use-equipment of the taxpayer and that is used by the taxpayer, during its operating time in the period (in this subsection and subsection 127(11.1) referred to as the “second period”) beginning at the time the property was acquired by the taxpayer and ending at the end of the taxpayer’s first taxation year ending at least 24 months after that time, primarily for the prosecution of scientific research and experimental development in Canada; (matériel à vocations multiples de deuxième période)
- specified child care start-up expenditure
specified child care start-up expenditure[Repealed, 2017, c. 20, s. 23]
- specified percentage
specified percentage means
(a) in respect of a qualified property
(i) acquired before April, 1977, 5%,
(ii) acquired after March 31, 1977 and before November 17, 1978 primarily for use in
(A) the Province of Nova Scotia, New Brunswick, Prince Edward Island or Newfoundland or the Gaspé Peninsula, 10%,
(B) a prescribed designated region, 7 1/2%, and
(C) any other area in Canada, 5%,
(iii) acquired primarily for use in the Province of Nova Scotia, New Brunswick, Prince Edward Island or Newfoundland or the Gaspé Peninsula,
(A) after November 16, 1978 and before 1989, 20%,
(B) after 1988 and before 1995, 15%,
(C) after 1994, 15% where the property
(I) is acquired by the taxpayer under a written agreement of purchase and sale entered into by the taxpayer before February 22, 1994,
(II) was under construction by or on behalf of the taxpayer on February 22, 1994, or
(III) is machinery or equipment that will be a fixed and integral part of property under construction by or on behalf of the taxpayer on February 22, 1994, and
(D) after 1994, 10% where the property is not property to which clause (C) applies,
(iv) acquired after November 16, 1978 and before February 26, 1986 primarily for use in a prescribed offshore region, 7%,
(v) acquired primarily for use in a prescribed offshore region and
(A) after February 25, 1986 and before 1989, 20%,
(B) after 1988 and before 1995, 15%,
(C) after 1994, 15% where the property
(I) is acquired by the taxpayer under a written agreement of purchase and sale entered into by the taxpayer before February 22, 1994,
(II) was under construction by or on behalf of the taxpayer on February 22, 1994, or
(III) is machinery or equipment that will be a fixed and integral part of property under construction by or on behalf of the taxpayer on February 22, 1994, and
(D) after 1994, 10% where the property is not property to which clause (C) applies,
(vi) acquired primarily for use in a prescribed designated region and
(A) after November 16, 1978 and before 1987, 10%,
(B) in 1987, 7%,
(C) in 1988, 3%, and
(D) after 1988, 0%, and
(vii) acquired primarily for use in Canada (other than a property described in subparagraph (iii), (iv), (v) or (vi)), and
(A) after November 16, 1978 and before 1987, 7%,
(B) in 1987, 5%,
(C) in 1988, 3%, and
(D) after 1988, 0%,
(a.1) in respect of a qualified resource property acquired by a taxpayer primarily for use in Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, the Gaspé Peninsula or the prescribed offshore region, and that is acquired
(i) after March 28, 2012 and before 2014, 10%,
(ii) after 2013 and before 2017, 10% if the property
(A) is acquired by the taxpayer under a written agreement of purchase and sale entered into by the taxpayer before March 29, 2012, or
(B) is acquired as part of a phase of a project and
(I) the construction of the phase was started by, or on behalf of, the taxpayer before March 29, 2012 (and for this purpose construction does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), or
(II) the engineering and design work for the construction of the phase, as evidenced in writing, was started by, or on behalf of, the taxpayer before March 29, 2012 (and for this purpose engineering and design work does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), and
(iii) in any other case,
(A) in 2014 and 2015, 5%, and
(B) after 2015, 0%,
(b) in respect of qualified transportation equipment acquired
(i) before 1987, 7%,
(ii) in 1987, 5%, and
(iii) in 1988, 3%,
(c) in respect of qualified construction equipment acquired
(i) before 1987, 7%,
(ii) in 1987, 5%, and
(iii) in 1988, 3%,
(d) in respect of certified property
(i) included in subparagraph (a)(i) of the definition certified property in this subsection, 50%,
(ii) included in subparagraph (a)(ii) of that definition, 40%, and
(iii) in any other case, 30%,
(e) in respect of a qualified expenditure
(i) made after March 31, 1977 and before November 17, 1978 in respect of scientific research and experimental development to be carried out in
(A) the Province of Nova Scotia, New Brunswick, Prince Edward Island or Newfoundland or the Gaspé Peninsula, 10%,
(B) a prescribed designated region, 7 1/2%, and
(C) any other area in Canada, 5%,
(ii) made by a taxpayer after November 16, 1978 and before the taxpayer’s taxation year that includes November 1, 1983 or made by the taxpayer in the taxpayer’s taxation year that includes November 1, 1983 or a subsequent taxation year if the taxpayer deducted an amount under section 37.1 in computing the taxpayer’s income for the year,
(A) where the expenditure was made by a Canadian-controlled private corporation in a taxation year of the corporation in which it is or would, if it had sufficient taxable income for the year, be entitled to a deduction under section 125 in computing its tax payable under this Part for the year, 25%, and
(B) where clause (A) is not applicable and the qualified expenditure was in respect of scientific research and experimental development to be carried out in
(I) the Province of Nova Scotia, New Brunswick, Prince Edward Island or Newfoundland or the Gaspé Peninsula, 20%, and
(II) any other area in Canada, 10%,
(iii) made by a taxpayer in the taxpayer’s taxation year that ends after October 31, 1983 and before January 1, 1985, other than a qualified expenditure in respect of which subparagraph (ii) is applicable,
(A) where the expenditure was made by a Canadian-controlled private corporation in a taxation year of the corporation in which it is or would, if it had sufficient taxable income for the year, be entitled to a deduction under section 125 in computing its tax payable under this Part for the year, 35%, and
(B) where clause (A) is not applicable and the qualified expenditure was in respect of scientific research and experimental development to be carried out in
(I) the Province of Nova Scotia, New Brunswick, Prince Edward Island or Newfoundland or the Gaspé Peninsula, 30%, and
(II) any other area in Canada, 20%,
(iv) made by a taxpayer
(A) after the taxpayer’s 1984 taxation year and before 1995, or
(B) after 1994 under a written agreement entered into by the taxpayer before February 22, 1994,
(other than a qualified expenditure in respect of which subparagraph (ii) applies) in respect of scientific research and experimental development to be carried out in
(C) the Province of Newfoundland, Prince Edward Island, Nova Scotia or New Brunswick or the Gaspé Peninsula, 30%, and
(D) in any other area in Canada, 20%, and
(v) made by a taxpayer after 1994, 20% where the amount is not an amount to which clause (B) applies,
(f) in respect of the repayment of government assistance, non-government assistance or a contract payment that reduced
(i) the capital cost to the taxpayer of a property under paragraph 127(11.1)(b),
(ii) the amount of a qualified expenditure incurred by the taxpayer under paragraph 127(11.1)(c) or 127(11.1)(e) for taxation years that began before 1996, or
(iii) the prescribed proxy amount of the taxpayer under paragraph 127(11.1)(f) for taxation years that began before 1996,
the specified percentage that applied in respect of the property, the expenditure or the prescribed proxy amount, as the case may be,
(f.1) in respect of the repayment of government assistance, non-government assistance or a contract payment that reduced
(i) a qualified expenditure of a taxpayer under any of subsections (18) to (20), for the qualified expenditure incurred
(A) before 2015, 20%, and
(B) after 2014, 15%,
(ii) the amount of eligible salary and wages payable (by the taxpayer) to an eligible apprentice under paragraph (11.1)(c.4), 10%,
(iii) [Repealed, 2017, c. 20, s. 23]
(g) in respect of an approved project property acquired
(i) before 1989, 60%, and
(ii) after 1988, 45%,
(h) in respect of the qualified Canadian exploration expenditure of a taxpayer for a taxation year, 25%,
(i) in respect of qualified small-business property, 10%,
(j) in respect of a pre-production mining expenditure of the taxpayer that is described in subparagraph (a)(i) of the definition pre-production mining expenditure and that is incurred
(i) before 2013, 10%,
(ii) in 2013, 5%, and
(iii) after 2013, 0%, and
(k) in respect of a pre-production mining expenditure of the taxpayer that is described in subparagraph (a)(ii) of the definition pre-production mining expenditure and that is incurred
(i) before 2014, 10%,
(ii) after 2013 and before 2016, 10% if the expenditure is incurred
(A) under a written agreement entered into by the taxpayer before March 29, 2012, or
(B) as part of the development of a new mine and
(I) the construction of the mine was started by, or on behalf of, the taxpayer before March 29, 2012 (and for this purpose construction does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), or
(II) the engineering and design work for the construction of the mine, as evidenced in writing, was started by, or on behalf of, the taxpayer before March 29, 2012 (and for this purpose engineering and design work does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), and
(iii) in any other case,
(A) in 2014, 7%,
(B) in 2015, 5% if the expense is described in paragraph (a)(ii) of the definition pre-production mining expenditure because of paragraph (g.4) of the definition Canadian exploration expense in subsection 66.1(6), and 4% otherwise, and
(C) after 2015, 0%; (pourcentage déterminé)
- specified property
specified property[Repealed, 2017, c. 20, s. 23]
- specified sampling
specified sampling means the collecting and testing of samples in respect of a mineral resource except that specified sampling does not include
(a) the collecting or testing of a sample that, at the time the sample is collected, weighs more than 15 tonnes, and
(b) the collecting or testing of a sample collected at any time in a calendar year in respect of any one mineral resource if the total weight of all such samples collected (by any person or partnership or any combination of persons and partnerships) in the period in the calendar year that is before that time (other than samples each of which weighs less than one tonne) exceeds 1,000 tonnes; (échantillonnage déterminé)
- SR&ED qualified expenditure pool
SR&ED qualified expenditure pool of a taxpayer at the end of a taxation year means the amount determined by the formula
A + B - C
where
- A
- is the total of all amounts each of which is a qualified expenditure incurred by the taxpayer in the year,
- B
- is the total of all amounts each of which is an amount determined under paragraph 127(13)(e) for the year in respect of the taxpayer, and in respect of which the taxpayer files with the Minister a prescribed form containing prescribed information by the day that is 12 months after the taxpayer’s filing-due date for the year, and
- C
- is the total of all amounts each of which is an amount determined under paragraph 127(13)(d) for the year in respect of the taxpayer; (compte de dépenses admissibles de recherche et de développement)
- super-allowance benefit amount
super-allowance benefit amount for a particular taxation year in respect of a corporation in respect of a province means the amount determined by the formula
(A - B) × C
where
- A
- is the total of all amounts each of which is an amount that is or may become deductible by the corporation, in computing income or taxable income relevant in calculating an income tax payable by the corporation under a law of the province for any taxation year, in respect of an expenditure on scientific research and experimental development incurred in the particular year,
- B
- is the amount by which the amount of the expenditure exceeds the total of all amounts that would be required by subsections (18) to (20) to reduce the corporation’s qualified expenditures otherwise determined under this section if the definitions government assistance and non-government assistance did not apply to assistance provided under that law, and
- C
- is
(a) where the corporation’s expenditure limit for the particular year is nil, the maximum rate of the province’s income tax that applies for that year to active business income earned in the province by a corporation, and
(b) in any other case, the rate of the province’s income tax for that year that would apply to the corporation if
(i) it were not associated with any other corporation in the year,
(ii) its taxable income for the year were less than $200,000, and
(iii) its taxable income for the year were earned in the province in respect of an active business carried on in the province; (avantage relatif à la superdéduction)
- taxable supplier
taxable supplier in respect of an amount means
(a) a person resident in Canada or a Canadian partnership, or
(b) a non-resident person, or a partnership that is not a Canadian partnership,
(i) by which the amount was payable, or
(ii) by or for whom the amount was receivable
in the course of carrying on a business through a permanent establishment (as defined by regulation) in Canada. (fournisseur imposable)
Marginal note:Transitional application of investment tax credit definition
(9.01) For the purpose of applying each of paragraphs (c) to (f), (h) and (i) of the definition investment tax credit in subsection (9) in respect of a taxpayer, the reference to “10” in that paragraph is to be read as a reference to the number that is the lesser of
(a) 20, and
(b) the number that is the total of 10 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 1997 exceeds 11.
Marginal note:Transitional application of investment tax credit definition
(9.02) For the purpose of applying paragraph (g) of the definition investment tax credit in subsection (9) in respect of a taxpayer, the reference to “9” in that paragraph is to be read as a reference to the number that is the lesser of
(a) 19, and
(b) the number that is the total of 9 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 1997 exceeds 11.
Marginal note:Loss restriction event before end of year
(9.1) If a taxpayer is subject to a loss restriction event at any time (in this subsection referred to as “that time”) before the end of a taxation year of the taxpayer, the amount determined for the purposes of paragraph (j) of the definition investment tax credit in subsection (9) with respect to the taxpayer is the amount, if any, by which
(a) the amount, if any, by which
(i) the total of all amounts added in computing its investment tax credit at the end of the year in respect of a property acquired, or an expenditure made, before that time
exceeds
(ii) the total of all amounts each of which is an amount
(A) deducted in computing its investment tax credit at the end of the year under paragraph (f) or (g) of the definition investment tax credit in subsection 127(9), or
(B) deducted in computing its investment tax credit at the end of the taxation year immediately preceding the year under paragraph (i) of that definition,
to the extent that the amount may reasonably be considered to have been so deducted in respect of a property or expenditure in respect of which an amount is included in subparagraph 127(9.1)(a)(i)
exceeds the total of
(c) the amount, if any, by which its refundable Part VII tax on hand at the end of the year exceeds the total of all amounts each of which is an amount designated under subsection 192(4) in respect of a share issued by it
(i) in the period commencing one month before that time and ending at that time, or
(ii) after that time,
and before the end of the year, and
(d) that proportion of the amount that, but for subsections 127(3) and 127(5) and sections 126, 127.2 and 127.3, would be its tax payable under this Part for the year that,
(i) if throughout the year the taxpayer carried on a particular business in the course of which a property was acquired, or an expenditure was made, before that time in respect of which an amount is included in computing its investment tax credit at the end of the year, the amount, if any, by which the total of all amounts each of which is
(A) its income for the year from the particular business, or
(B) its income for the year from any other business substantially all the income of which was derived from the sale, leasing, rental or development of properties or the rendering of services similar to the properties sold, leased, rented or developed, or the services rendered, as the case may be, by the taxpayer in carrying on the particular business before that time
exceeds
(C) the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or (d) for the year by the taxpayer in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of the particular business or the other business,
is of the greater of
(ii) the amount determined under subparagraph 127(9.1)(d)(i), and
(iii) its taxable income for the year.
Marginal note:Loss restriction event after end of year
(9.2) If a taxpayer is subject to a loss restriction event at any time (in this subsection referred to as “that time”) after the end of a taxation year of the taxpayer, the amount determined for the purposes of paragraph (k) of the definition investment tax credit in subsection (9) is the amount, if any, by which
(a) the total of all amounts each of which is an amount included in computing its investment tax credit at the end of the year in respect of a property acquired, or an expenditure made, after that time
exceeds the total of
(c) its refundable Part VII tax on hand at the end of the year, and
(d) that proportion of the amount that, but for subsections 127(3) and 127(5) and sections 126, 127.2 and 127.3, would be its tax payable under this Part for the year that,
(i) if the taxpayer acquired a property or made an expenditure, in the course of carrying on a particular business throughout the portion of a taxation year that is after that time, in respect of which an amount is included in computing its investment tax credit at the end of the year, the amount, if any, by which the total of all amounts each of which is
(A) its income for the year from the particular business, or
(B) if the taxpayer carried on a particular business in the year, its income for the year from any other business substantially all the income of which was derived from the sale, leasing, rental or development of properties or the rendering of services similar to the properties sold, leased, rented or developed, or the services rendered, as the case may be, by the taxpayer in carrying on the particular business before that time
exceeds
(C) the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or (d) for the year by the taxpayer in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of the particular business or the other business
is of the greater of
(ii) the amount determined under subparagraph 127(9.2)(d)(i), and
(iii) its taxable income for the year.
Marginal note:Ascertainment of certain property
(10) The Minister may
(a) obtain the advice of the appropriate minister for the purposes of the Regional Development Incentives Act, chapter R-3 of the Revised Statutes of Canada, 1970, as to whether any property is property as described in paragraph (b) of the definition certified property in subsection 127(9);
(b) obtain a certificate from the appropriate minister for the purposes of the Regional Development Incentives Act certifying that any property specified therein is property as described in paragraph (b) of that definition; or
(c) provide advice to the member of the Queen’s Privy Council for Canada appointed to be the Minister for the purposes of the Atlantic Canada Opportunities Agency Act as to whether any property qualifies for certification under the definition approved project property in subsection 127(9).
Marginal note:Additions to investment tax credit
(10.1) For the purposes of paragraph (e) of the definition investment tax credit in subsection (9), if a corporation was throughout a taxation year a Canadian-controlled private corporation, there shall be added in computing the corporation’s investment tax credit at the end of the year the amount that is 20% of the least of
(a) such amount as the corporation claims;
(b) the amount by which the corporation’s SR&ED qualified expenditure pool at the end of the year exceeds the total of all amounts each of which is the super-allowance benefit amount for the year in respect of the corporation in respect of a province; and
(c) the corporation’s expenditure limit for the year.
Marginal note:Expenditure limit
(10.2) For the purpose of subsection (10.1), a particular corporation’s expenditure limit for a particular taxation year is the amount determined by the formula
$3 million × ($40 million – A)/$40 million
where
- A
- is
(a) nil, if the following amount is less than or equal to $10 million:
(i) if the particular corporation is not associated with any other corporation in the particular taxation year, the amount that is its taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) for its immediately preceding taxation year, and
(ii) if the particular corporation is associated with one or more other corporations in the particular taxation year, the amount that is the total of all amounts, each of which is the taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) of the particular corporation for its, or of one of the other corporations for its, last taxation year that ended in the last calendar year that ended before the end of the particular taxation year, and
(b) in any other case, the lesser of $40 million and the amount by which the amount determined under subparagraph (a)(i) or (ii), as the case may be, exceeds $10 million.
Marginal note:Expenditure limits — associated CCPCs
(10.21) Notwithstanding subsection (10.2), the expenditure limit for a taxation year of a corporation that is associated in the taxation year with one or more other Canadian-controlled private corporations is, except as otherwise provided in this section, nil.
Marginal note:Deemed non-association of corporations
(10.22) If a particular Canadian-controlled private corporation is associated with another corporation in circumstances where those corporations would not be associated if the Act were read without reference to paragraph 256(1.2)(a), the particular corporation has issued shares to one or more persons who have been issued shares by the other corporation and there is at least one shareholder of the particular corporation who is not a shareholder of the other corporation or one shareholder of the other corporation who is not a shareholder of the particular corporation, the particular corporation is deemed not to be associated with the other corporation for the purpose of determining the particular corporation’s expenditure limit under subsection (10.2).
Marginal note:Application of subsection (10.22)
(10.23) Subsection (10.22) applies to the particular corporation and the other corporation referred to in that subsection only if the Minister is satisfied that
(a) the particular corporation and the other corporation are not otherwise associated under this Act; and
(b) the existence of one or more shareholders of the particular corporation who is not a shareholder of the other corporation, or the existence of one or more shareholders of the other corporation who is not a shareholder of the particular corporation, is not for the purpose of satisfying the requirements of subsection (10.22) or 127.1(2.2).
Marginal note:Associated corporations
(10.3) If all of the Canadian-controlled private corporations that are associated with each other in a taxation year file with the Minister in prescribed form an agreement whereby, for the purpose of subsection 127(10.1), they allocate an amount to one or more of them for the year and the amount so allocated or the total of the amounts so allocated, as the case may be, does not exceed the amount determined for the year by the formula in subsection 127(10.2), the expenditure limit for the year of each of the corporations is the amount so allocated to it.
Marginal note:Failure to file agreement
(10.4) If any of the Canadian-controlled private corporations that are associated with each other in a taxation year fails to file with the Minister an agreement as contemplated by subsection 127(10.3) within 30 days after notice in writing by the Minister is forwarded to any of them that such an agreement is required for the purposes of this Part, the Minister shall, for the purpose of subsection 127(10.1), allocate an amount to one or more of them for the year, which amount or the total of which amounts, as the case may be, shall equal the amount determined for the year by the formula in subsection 127(10.2), and in any such case the expenditure limit for the year of each of the corporations is the amount so allocated to it.
Marginal note:Expenditure limit determination in certain cases
(10.6) Notwithstanding any other provision of this section,
(a) where a Canadian-controlled private corporation (in this paragraph referred to as the “first corporation”) has more than one taxation year ending in the same calendar year and it is associated in two or more of those taxation years with another Canadian-controlled private corporation that has a taxation year ending in that calendar year, the expenditure limit of the first corporation for each taxation year in which it is associated with the other corporation ending in that calendar year is, subject to the application of paragraph 127(10.6)(b), an amount equal to its expenditure limit for the first such taxation year determined without reference to paragraph 127(10.6)(b); and
(b) where a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, its expenditure limit for the year is that proportion of its expenditure limit for the year determined without reference to this paragraph that the number of days in the year is of 365.
(c) [Repealed, 2019, c. 29, s. 24]
Marginal note:Further additions to investment tax credit
(10.7) Where a taxpayer has in a particular taxation year repaid an amount of government assistance, non-government assistance or a contract payment that was applied to reduce
(a) the amount of a qualified expenditure incurred by the taxpayer under paragraph 127(11.1)(c) for a preceding taxation year that began before 1996,
(b) the prescribed proxy amount of the taxpayer under paragraph 127(11.1)(f) for a preceding taxation year that began before 1996, or
(c) a qualified expenditure incurred by the taxpayer under any of subsections 127(18) to 127(20) for a preceding taxation year,
there shall be added to the amount otherwise determined under subsection 127(10.1) in respect of the taxpayer for the particular year the amount, if any, by which
(d) the amount that would have been determined under subsection 127(10.1) in respect of the taxpayer for that preceding year if subsections 127(11.1) and 127(18) to 127(20) had not applied in respect of the government assistance, non-government assistance or contract payment, as the case may be, to the extent of the amount so repaid,
exceeds
(e) the amount determined under subsection 127(10.1) in respect of the taxpayer for that preceding year.
Marginal note:Further additions to investment tax credit
(10.8) For the purposes of paragraph (e.1) of the definition investment tax credit in subsection 127(9), subsection 127(10.7) and paragraph 37(1)(c), an amount of government assistance, non-government assistance or a contract payment that
(a) was applied to reduce
(i) the capital cost to a taxpayer of a property under paragraph 127(11.1)(b),
(ii) the amount of a qualified expenditure incurred by a taxpayer under paragraph 127(11.1)(c) for taxation years that began before 1996,
(iii) the prescribed proxy amount of a taxpayer under paragraph 127(11.1)(f) for taxation years that began before 1996, or
(iv) a qualified expenditure incurred by a taxpayer under any of subsections 127(18) to 127(20),
(b) was not received by the taxpayer, and
(c) ceased in a taxation year to be an amount that the taxpayer can reasonably be expected to receive,
is deemed to be the amount of a repayment by the taxpayer in the year of the government assistance, non-government assistance or contract payment, as the case may be.
Marginal note:Interpretation
(11) For the purposes of the definitions qualified property and qualified resource property in subsection (9),
(a) manufacturing or processing does not include any of the activities
(i) referred to in any of paragraphs (a) to (e) and (g) to (i) of the definition manufacturing or processing in subsection 125.1(3),
(ii) that would be referred to in paragraph (f) of that definition if that paragraph were read without reference to the expression “located in Canada”,
(iii) that would be referred to in paragraph (j) of that definition if that paragraph were read without reference to the expression “in Canada”, or
(iv) that would be referred to in paragraph (k) of that definition if the definition Canadian field processing in subsection 248(1) were read without reference to the expression “in Canada”; and
(b) for greater certainty, the purposes referred to in paragraph (c) of the definition qualified property and paragraph (a) of the definition qualified resource property in subsection (9) do not include
(i) storing (other than the storing of grain), shipping, selling or leasing finished goods,
(ii) purchasing raw materials,
(iii) administration, including clerical and personnel activities,
(iv) purchase and resale operations,
(v) data processing, or
(vi) providing facilities for employees, including cafeterias, clinics and recreational facilities.
Marginal note:Investment tax credit
(11.1) For the purposes of the definition investment tax credit in subsection 127(9),
(a) the capital cost to a taxpayer of a property shall be computed as if no amount were added thereto by virtue of section 21;
(b) the capital cost to a taxpayer of a property shall be deemed to be the capital cost to the taxpayer of the property, determined without reference to subsections 13(7.1) and 13(7.4), less the amount of any government assistance or non-government assistance that can reasonably be considered to be in respect of, or for the acquisition of, the property and that, at the time of the filing of the taxpayer’s return of income under this Part for the taxation year in which the property was acquired, the taxpayer has received, is entitled to receive or can reasonably be expected to receive;
(c) [Repealed, 1996, c. 21, s. 30]
(c.1) the amount of a taxpayer’s qualified Canadian exploration expenditure for a taxation year shall be deemed to be the amount of the taxpayer’s qualified Canadian exploration expenditure for the year as otherwise determined less the amount of any government assistance, non-government assistance or contract payment (other than assistance under the Petroleum Incentives Program Act or the Petroleum Incentives Program Act, Chapter P-4.1 of the Statutes of Alberta, 1981) in respect of expenditures included in determining the taxpayer’s qualified Canadian exploration expenditure for the year that, at the time of the filing of the taxpayer’s return of income for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive;
(c.2) the amount of a taxpayer’s flow-through mining expenditure for a taxation year is deemed to be the amount of the taxpayer’s flow-through mining expenditure for the year as otherwise determined less the amount of any government assistance or non-government assistance in respect of expenses included in determining the taxpayer’s flow-through mining expenditure for the year that, at the time of the filing of the taxpayer’s return of income for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive;
(c.21) the amount of a taxpayer’s flow-through critical mineral mining expenditure for a taxation year is deemed to be the amount of the taxpayer’s flow-through critical mineral mining expenditure for the year as otherwise determined less the amount of any government assistance or non-government assistance in respect of expenses included in determining the taxpayer’s flow-through critical mineral mining expenditure for the year that, at the time of the filing of the taxpayer’s return of income for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive;
(c.3) the amount of a taxpayer’s pre-production mining expenditure for a taxation year is deemed to be the amount of the taxpayer’s pre-production mining expenditure for the year as otherwise determined less the amount of any government assistance or non-government assistance in respect of expenses included in determining the taxpayer’s pre-production mining expenditure for the year that, at the time of the filing of the taxpayer’s return of income for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive;
(c.4) the amount of a taxpayer’s eligible salary and wages for a taxation year is deemed to be the amount of the taxpayer’s eligible salary and wages for the year otherwise determined less the amount of any government assistance or non-government assistance in respect of the eligible salary and wages for the year that, at the time of the filing of the taxpayer’s return of income for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive; and
(c.5) [Repealed, 2017, c. 20, s. 23]
(d) where at a particular time a taxpayer who is a beneficiary of a trust or a member of a partnership has received, is entitled to receive or can reasonably be expected to receive government assistance, non-government assistance or a contract payment, the amount thereof that may reasonably be considered to be in respect of, or for the acquisition of, depreciable property of the trust or partnership or in respect of an expenditure by the trust or partnership shall be deemed to have been received at that time by the trust or partnership, as the case may be, as government assistance, non-government assistance or as a contract payment in respect of the property or the expenditure, as the case may be.
(e) and (f) [Repealed, 1996, c. 21, s. 30]
Marginal note:Time of acquisition
(11.2) In applying subsections (5), (7) and (8), paragraphs (a) and (a.1) of the definition investment tax credit in subsection (9) and section 127.1, qualified property and qualified resource property are deemed not to have been acquired by a taxpayer before the property is considered to have become available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and (28)(d).
Marginal note:Decertification of approved project property
(11.3) For the purposes of the definition approved project property in subsection 127(9), a property that has been certified by the Minister of Regional Industrial Expansion, the Minister of Industry, Science and Technology or the member of the Queen’s Privy Council for Canada appointed to be the Minister for the purposes of the Atlantic Canada Opportunities Agency Act may have its certification revoked by the latter Minister where
(a) an incorrect statement was made in the furnishing of information for the purpose of obtaining the certificate, or
(b) the taxpayer does not conform to the plan described in that definition,
and a certificate that has been so revoked shall be void from the time of its issue.
Marginal note:Special rule for eligible salary and wages — apprentices
(11.4) For the purpose of the definition eligible salary and wages in subsection (9), the eligible salary and wages payable by a taxpayer in a taxation year to an eligible apprentice in respect of the eligible apprentice’s employment in the taxation year is, if the eligible apprentice is employed by any other taxpayer who is related to the taxpayer (including a partnership that has a member that is related to the taxpayer) in the calendar year that includes the end of the taxpayer’s taxation year, deemed to be nil unless the taxpayer is designated in prescribed form by all of those related taxpayers to be the only employer of the eligible apprentice for the purpose of the taxpayer applying that definition to the salary and wages payable by the taxpayer to the eligible apprentice in that taxation year, in which case
(a) the eligible salary and wages payable by the taxpayer in the taxation year to the eligible apprentice in respect of the eligible apprentice’s employment in the taxation year shall be the amount determined without reference to this subsection; and
(b) the eligible salary and wages payable to the eligible apprentice by each of the other related taxpayers in their respective taxation years that end in the calendar year is deemed to be nil.
Marginal note:Adjustments to qualified expenditures
(11.5) For the purposes of the definition qualified expenditure in subsection (9), the amount of an expenditure (other than a prescribed proxy amount) incurred by a taxpayer in a taxation year is deemed to be the amount of the expenditure determined under subsection (11.6).
Marginal note:Non-arm’s length costs
(11.6) For the purpose of subsection 127(11.5), where
(a) a taxpayer would, if this Act were read without reference to subsection 127(26), incur at any time an expenditure as consideration for a person or partnership (referred to in this subsection as the “supplier”) rendering a service (other than a service rendered by a person as an employee of the taxpayer) or providing a property to the taxpayer, and
(b) at that time the taxpayer does not deal at arm’s length with the supplier,
the amount of the expenditure incurred by the taxpayer for the service or property and the cost to the taxpayer of the property are deemed to be
(c) in the case of a service rendered to the taxpayer, the lesser of
(i) the amount of the expenditure otherwise incurred by the taxpayer for the service, and
(ii) the adjusted service cost to the supplier of rendering the service, and
(d) in the case of a property sold to the taxpayer, the lesser of
(i) the cost to the taxpayer of the property otherwise determined, and
(ii) the adjusted selling cost to the supplier of the property.
Marginal note:Definitions
(11.7) The definitions in this subsection apply in this subsection and subsection 127(11.6).
- adjusted service cost
adjusted service cost to a person or partnership (referred to in this definition as the “supplier”) of rendering a particular service is the amount determined by the formula:
A - B - C - D - E
where
- A
- is the cost to the supplier of rendering the particular service,
- B
- is the total of all amounts each of which is the amount, if any, by which
(a) the cost to the supplier for a service (other than a service rendered by a person as an employee of the supplier) rendered by a person or partnership that does not deal at arm’s length with the supplier to the extent that the cost is incurred for the purpose of rendering the particular service
exceeds
(b) the adjusted service cost to the person or partnership referred to in paragraph (a) of rendering the service referred to in that paragraph to the supplier,
- C
- is the total of all amounts each of which is the amount, if any, by which
(a) the cost to the supplier of a property acquired by the supplier from a person or partnership that does not deal at arm’s length with the supplier
exceeds
(b) the adjusted selling cost to the person or partnership referred to in paragraph (a) of the property,
to the extent that the excess relates to the cost of rendering the particular service,
- D
- is the total of all amounts each of which is remuneration based on profits or a bonus paid or payable to an employee of the supplier to the extent that it is included in the cost to the supplier of rendering the particular service, and
- E
- is the total of all amounts each of which is government assistance or non-government assistance that can reasonably be considered to be in respect of rendering the particular service and that the supplier has received, is entitled to receive or can reasonably be expected to receive. (coût de service rajusté)
- adjusted selling cost
adjusted selling cost to a person or partnership (referred to in this definition as the “supplier”) of a property is the amount determined by the formula
A - B
where
- A
- is
(a) where the property is purchased from another person or partnership with which the supplier does not deal at arm’s length, the lesser of
(i) the cost to the supplier of the property, and
(ii) the adjusted selling cost to the other person or partnership of the property, and
(b) in any other case, the cost to the supplier of the property,
and for the purpose of paragraph (b),
(c) where part of the cost to a supplier of a particular property is attributable to another property acquired by the supplier from a person or partnership with which the supplier does not deal at arm’s length, that part of the cost is deemed to be the lesser of
(i) the amount of that part of the cost otherwise determined, and
(ii) the adjusted selling cost to the person or the partnership of the other property,
(d) where part of the cost to a supplier of a property is attributable to a service (other than a service rendered by a person as an employee of the supplier) rendered to the supplier by a person or partnership with which the supplier does not deal at arm’s length, that part of the cost is deemed to be the lesser of
(i) the amount of that part of the cost otherwise determined, and
(ii) the adjusted service cost to the person or partnership of rendering the service, and
(e) no part of the cost to a supplier of a property that is attributable to remuneration based on profits or a bonus paid or payable to an employee of the supplier shall be included, and
- B
- is the total of all amounts each of which is the amount of government assistance or non-government assistance that can reasonably be considered to be in respect of the property and that the supplier has received, is entitled to receive or can reasonably be expected to receive. (coût de vente rajusté)
Marginal note:Interpretation for non-arm’s length costs
(11.8) For the purposes of this subsection and subsections 127(11.6) and 127(11.7),
(a) the cost to a person or partnership (referred to in this paragraph as the “supplier”) of rendering a service or providing a property to another person or partnership (referred to in this paragraph as the “recipient”) with which the supplier does not deal at arm’s length does not include,
(i) where the cost to the recipient of the service rendered or property provided by the supplier would, but for this paragraph, be a cost to the recipient incurred in rendering a particular service or providing a particular property to a person or partnership with which the recipient does not deal at arm’s length, any expenditure of the supplier to the extent that it would, if it were incurred by the recipient in rendering the particular service or providing the particular property, be excluded from a cost to the recipient because of this paragraph, and
(ii) in any other case, any expenditure of the supplier to the extent that it would, if it were incurred by the recipient, not be a qualified expenditure of the recipient; and
(b) paragraph 69(1)(c) does not apply in determining the cost of a property.
(c) [Repealed, 2012, c. 31, s. 27]
Marginal note:Interpretation
(12) For the purposes of subsection 13(7.1), where, ursuant to a designation or an allocation from a trust or partnership, an amount is required by subsection 127(7) or 127(8) to be added in computing the investment tax credit of a taxpayer at the end of the taxpayer’s taxation year, the portion thereof that can reasonably be considered to relate to depreciable property shall be deemed to have been received by the partnership or trust, as the case may be, at the end of its fiscal period in respect of which the designation or allocation was made as assistance from a government for the acquisition of depreciable property.
Marginal note:Idem
(12.1) For the purposes of section 37, where, pursuant to a designation or an allocation from a trust or partnership, an amount is required by subsection 127(7) or 127(8) to be added in computing the investment tax credit of a taxpayer at the end of the taxpayer’s taxation year, the portion thereof that may reasonably be regarded as relating to expenditures of a current nature in respect of scientific research and experimental development that are qualified expenditures shall, at the end of the fiscal period of the trust or partnership, as the case may be, in respect of which the designation or allocation was made, reduce the total of such expenditures of a current nature as may be claimed by the trust or partnership in respect of scientific research and experimental development.
Marginal note:Idem
(12.2) For the purposes of paragraphs 53(2)(c), 53(2)(h) and 53(2)(k), where in a taxation year a taxpayer has deducted under subsection 127(5) an amount that may reasonably be regarded as attributable to amounts included in computing the investment tax credit of the taxpayer at the end of the year in respect of property acquired, or an expenditure made, in a subsequent taxation year, the taxpayer shall be deemed to have made the deduction under that subsection in that subsequent taxation year.
Marginal note:Idem
(12.3) For the purposes of the determination of J in the definition cumulative Canadian exploration expense in subsection 66.1(6), where, pursuant to a designation by a trust, an amount is required by subsection 127(7) to be added in computing the investment tax credit of a taxpayer at the end of the taxpayer’s taxation year, the portion thereof that can reasonably be considered to relate to a qualified Canadian exploration expenditure of the trust for a taxation year shall be deemed to have been received by the trust at the end of its taxation year in respect of which the designation was made as assistance from a government in respect of that expenditure.
Marginal note:Agreement to transfer qualified expenditures
(13) Where a taxpayer (referred to in this subsection and subsections 127(15) and 127(16) as the “transferor”) and another taxpayer (referred to in this subsection and subsection 127(15) as the “transferee”) file with the Minister an agreement or an amended agreement in respect of a particular taxation year of the transferor, the least of
(a) the amount specified in the agreement for the purpose of this subsection,
(b) the amount that but for the agreement would be the transferor’s SR&ED qualified expenditure pool at the end of the particular year, and
(c) the total of all amounts each of which is an amount that, if the transferor were dealing at arm’s length with the transferee, would be a contract payment
(i) for the performance of scientific research and experimental development for, or on behalf of, the transferee,
(ii) that is paid by the transferee to the transferor on or before the day that is 180 days after the end of the particular year, and
(iii) that would be in respect of
(A) a qualified expenditure that
(I) would be incurred by the transferor in the particular year (if this Act were read without reference to subsections 127(26) and 78(4)) in respect of that portion of the scientific research and experimental development that was performed at a time when the transferor did not deal at arm’s length with the transferee, and
(II) is paid by the transferor on or before the day that is 180 days after the end of the particular year, or
(B) an amount added because of this subsection to the transferor’s SR&ED qualified expenditure pool at the end of the particular year where the amount is attributable to an expenditure in respect of the scientific research and experimental development
is deemed to be
(d) an amount determined in respect of the transferor for the particular year for the purpose of determining the value of C in the definition SR&ED qualified expenditure pool in subsection 127(9), and
(e) an amount determined in respect of the transferee for the transferee’s first taxation year that ends at or after the end of the particular year for the purpose of determining the value of B in the definition SR&ED qualified expenditure pool in subsection 127(9),
and where the total of all amounts each of which is an amount specified in an agreement filed with the Minister under this subsection in respect of a particular taxation year of a transferor exceeds the amount that would be the transferor’s SR&ED qualified expenditure pool at the end of the particular year if no agreement were filed with the Minister in respect of the particular year, the least of the amounts determined under paragraphs 127(13)(a) to 127(13)(c) in respect of each such agreement is deemed to be nil.
Marginal note:Identification of amounts transferred
(14) Where
(a) a transferor and a transferee have filed an agreement under subsection 127(13) in respect of a taxation year of the transferor,
(b) the agreement includes a statement identifying the amount specified in the agreement for the purpose of subsection 127(13), or a part of that amount, as being related to
(i) a particular qualified expenditure included in the value of A in the formula in the definition SR&ED qualified expenditure pool in subsection 127(9) for the purpose of determining the transferor’s SR&ED qualified expenditure pool at the end of the year, or
(ii) a particular amount included in the value of B in the formula in that definition for the purpose of determining the transferor’s SR&ED qualified expenditure pool at the end of the year that is deemed by paragraph 127(14)(d) to be a qualified expenditure, and
(c) the total of all amounts so identified in agreements filed by the transferor under subsection 127(13) as being related to the particular expenditure or the particular amount does not exceed the particular expenditure or the particular amount, as the case may be,
for the purposes of this section (other than the description of A in the definition SR&ED qualified expenditure pool in subsection 127(9)) and section 127.1,
(d) the amount so identified that is included in the value of B in the formula in that definition for the purpose of determining the transferee’s SR&ED qualified expenditure pool at the end of the taxation year of the transferee is deemed to be a qualified expenditure either of a current nature or of a capital nature, incurred by the transferee in that year, where the particular expenditure or the particular amount was an expenditure of a current nature or of a capital nature, as the case may be, and
(e) except for the purpose of paragraph 127(14)(b), the amount of the transferor’s qualified expenditures of a current nature incurred in the taxation year of the transferor in respect of which the agreement is made is deemed not to exceed the amount by which the amount of such expenditures otherwise determined exceeds the total of all amounts identified under paragraph 127(14)(b) by the transferor in agreements filed under subsection 127(13) in respect of the year as being related to expenditures of a current nature.
Marginal note:Invalid agreements
(15) An agreement or amended agreement referred to in subsection 127(13) between a transferor and a transferee is deemed not to have been filed with the Minister for the purpose of that subsection where
(a) it is not in prescribed form;
(b) it is not filed
(i) on or before the transferor’s filing-due date for the particular taxation year to which the agreement relates,
(ii) in the period within which the transferor may serve a notice of objection to an assessment of tax payable under this Part for the particular year, or
(iii) in the period within which the transferee may serve a notice of objection to an assessment of tax payable under this Part for its first taxation year that ends at or after the end of the transferor’s particular year;
(c) it is not accompanied by,
(i) where the transferor is a corporation and its directors are legally entitled to administer its affairs, a certified copy of their resolution authorizing the agreement to be made,
(ii) where the transferor is a corporation and its directors are not legally entitled to administer its affairs, a certified copy of the document by which the person legally entitled to administer its affairs authorized the agreement to be made,
(iii) where the transferee is a corporation and its directors are legally entitled to administer its affairs, a certified copy of their resolution authorizing the agreement to be made, and
(iv) where the transferee is a corporation and its directors are not legally entitled to administer its affairs, a certified copy of the document by which the person legally entitled to administer its affairs authorized the agreement to be made; or
(d) an agreement amending the agreement has been filed in accordance with subsection 127(13) and this subsection, except where subsection 127(16) applies to the original agreement.
Marginal note:Non-arm’s length parties
(16) Where a taxpayer does not deal at arm’s length with another taxpayer as a result of a transaction, event or arrangement, or a series of transactions or events, the principal purpose of which can reasonably be considered to have been to enable the taxpayers to enter into an agreement referred to in subsection 127(13), for the purpose of paragraph 127(13)(e) the least of the amounts determined under paragraphs 127(13)(a) to 127(13)(c) in respect of the agreement is deemed to be nil.
Marginal note:Assessment
(17) Notwithstanding subsections 152(4) and 152(5), such assessment of the tax, interest and penalties payable by any taxpayer in respect of any taxation year that began before the day an agreement or amended agreement is filed under subsection 127(13) or 127(20) shall be made as is necessary to take into account the agreement or the amended agreement.
Marginal note:Reduction of qualified expenditures
(18) Where on or before the filing-due date for a taxation year of a person or partnership (referred to in this subsection as the “taxpayer”) the taxpayer has received, is entitled to receive or can reasonably be expected to receive a particular amount that is government assistance, non-government assistance or a contract payment that can reasonably be considered to be in respect of scientific research and experimental development, the amount by which the particular amount exceeds all amounts applied for preceding taxation years under this subsection or subsection 127(19) or 127(20) in respect of the particular amount shall be applied to reduce the taxpayer’s qualified expenditures otherwise incurred in the year that can reasonably be considered to be in respect of the scientific research and experimental development.
Marginal note:Reduction of qualified expenditures
(19) Where on or before the filing-due date for a taxation year of a person or partnership (referred to in this subsection as the “recipient”) the recipient has received, is entitled to receive or can reasonably be expected to receive a particular amount that is government assistance, non-government assistance or a contract payment that can reasonably be considered to be in respect of scientific research and experimental development and the particular amount exceeds the total of
(a) all amounts applied for preceding taxation years under this subsection or subsection 127(18) or 127(20) in respect of the particular amount,
(b) the total of all amounts each of which would be a qualified expenditure that is incurred in the year by the recipient and that can reasonably be considered to be in respect of the scientific research and experimental development if subsection 127(18) did not apply to the particular amount, and
(c) the total of all amounts each of which would, but for the application of this subsection to the particular amount, be a qualified expenditure
(i) that was incurred by a person or partnership in a taxation year of the person or partnership that ended in the recipient’s taxation year, and
(ii) that can reasonably be considered to be in respect of the scientific research and experimental development to the extent that it was performed by the person or partnership at a time when the person or partnership was not dealing at arm’s length with the recipient,
the particular amount shall be applied to reduce each qualified expenditure otherwise determined that is referred to in paragraph 127(19)(c).
Marginal note:Agreement to allocate
(20) Where
(a) on or before the filing-due date for a taxation year of a person or partnership (referred to in this subsection and subsection 127(22) as the “taxpayer”) the taxpayer has received, is entitled to receive or can reasonably be expected to receive a particular amount that is government assistance, non-government assistance or a contract payment that can reasonably be considered to be in respect of scientific research and experimental development,
(b) subsection 127(19) does not apply to the particular amount in respect of the year, and
(c) the taxpayer and a person or partnership (referred to in this subsection and subsection 127(22) as the “transferee”) with which the taxpayer does not deal at arm’s length file an agreement or amended agreement with the Minister,
the lesser of
(d) the amount specified in the agreement, and
(e) the total of all amounts each of which would, but for the agreement, be a qualified expenditure
(i) that was incurred by the transferee in a particular taxation year of the transferee that ended in the taxpayer’s taxation year, and
(ii) that can reasonably be considered to be in respect of the scientific research and experimental development to the extent that it was performed by the transferee at a time when the transferee was not dealing at arm’s length with the taxpayer
shall be applied to reduce the qualified expenditures otherwise determined that are described in paragraph 127(20)(e).
Marginal note:Failure to allocate
(21) Where on or before the filing-due date for a taxation year of a person or partnership (referred to in this subsection as the “recipient”) the recipient has received, is entitled to receive or can reasonably be expected to receive a particular amount that is government assistance, non-government assistance or a contract payment that can reasonably be considered to be in respect of scientific research and experimental development and subsection 127(19) does not apply to the particular amount in respect of the year, the lesser of
(a) the total of all amounts each of which is a qualified expenditure
(i) that was incurred by a particular person or partnership in a taxation year of the particular person or partnership that ended in the recipient’s taxation year, and
(ii) that can reasonably be considered to be in respect of the scientific research and experimental development to the extent that it was performed by the particular person or partnership at a time when the particular person or partnership was not dealing at arm’s length with the recipient, and
(b) the amount, if any, by which the particular amount exceeds the total of amounts applied for the year and preceding taxation years under subsection 127(18), 127(19) or 127(20) in respect of the particular amount
is deemed for the purposes of this section to be an amount of government assistance received at the end of the particular year by the particular person or partnership in respect of the scientific research and experimental development.
Marginal note:Invalid agreements
(22) An agreement or amended agreement referred to in subsection 127(20) between a taxpayer and a transferee is deemed not to have been filed with the Minister where
(a) it is not in prescribed form;
(b) it is not filed
(i) on or before the taxpayer’s filing-due date for the particular taxation year to which the agreement relates,
(ii) in the period within which the taxpayer may serve a notice of objection to an assessment of tax payable under this Part for the particular year, or
(iii) in the period within which the transferee may serve a notice of objection to an assessment of tax payable under this Part for its first taxation year that ends at or after the end of the taxpayer’s particular year;
(c) it is not accompanied by,
(i) where the taxpayer is a corporation and its directors are legally entitled to administer its affairs, a certified copy of their resolution authorizing the agreement to be made,
(ii) where the taxpayer is a corporation and its directors are not legally entitled to administer its affairs, a certified copy of the document by which the person legally entitled to administer its affairs authorized the agreement to be made,
(iii) where the transferee is a corporation and its directors are legally entitled to administer its affairs, a certified copy of their resolution authorizing the agreement to be made, and
(iv) where the transferee is a corporation and its directors are not legally entitled to administer its affairs, a certified copy of the document by which the person legally entitled to administer its affairs authorized the agreement to be made; or
(d) an agreement amending the agreement has been filed in accordance with subsection 127(20) and this subsection.
Marginal note:Partnership’s taxation year
(23) For the purposes of subsections 127(18) to 127(22), the taxation year of a partnership is deemed to be its fiscal period and its filing-due date for a taxation year is deemed to be the day that would be its filing-due date for the year if it were a corporation.
Marginal note:Exclusion from qualified expenditure
(24) Where
(a) a person or partnership (referred to in this subsection as the “first person”) does not deal at arm’s length with another person or partnership (referred to in this subsection as the “second person”),
(b) there is an arrangement under which an amount is paid or payable by the first person to a person or partnership with which the first person deals at arm’s length and an amount is received or receivable by the second person from a person or partnership with which the second person deals at arm’s length, and
(c) one of the main purposes of the arrangement can reasonably be considered to be to cause the amount paid or payable by the first person to be a qualified expenditure,
the amount paid or payable by the first person is deemed not to be a qualified expenditure.
Marginal note:Deemed contract payment
(25) Where
(a) a person or partnership (referred to in this subsection as the “first person”) deals at arm’s length with another person or partnership (referred to in this subsection as the “second person”),
(b) there is an arrangement under which an amount is paid or payable by the first person to a person or partnership (other than the second person) and a particular amount is received or receivable in respect of scientific research and experimental development by the second person from a person or partnership that is not a taxable supplier in respect of the particular amount, and
(c) one of the main purposes of the arrangement can reasonably be considered to be to cause the amount received or receivable by the second person not to be a contract payment,
the amount received or receivable by the second person is deemed to be a contract payment in respect of scientific research and experimental development.
Marginal note:Unpaid amounts
(26) For the purposes of subsections 127(5) to 127(25) and section 127.1, a taxpayer’s expenditure described in paragraph 37(1)(a) that is unpaid on the day that is 180 days after the end of the taxation year in which the expenditure is otherwise incurred is deemed
(a) not to have been incurred in the year; and
(b) to be incurred at the time it is paid.
Marginal note:Recapture of investment tax credit
(27) Where
(a) a taxpayer acquired a particular property from a person or partnership in a taxation year of the taxpayer or in any of the 10 preceding taxation years,
(b) the cost, or a portion of the cost, of the particular property was a qualified expenditure, or would if this Act were read without reference to subsection (26) be a qualified expenditure, to the taxpayer,
(c) the cost, or the portion of the cost, of the particular property is included, or would if this Act were read without reference to subsection (26) be included, in an amount, a percentage of which can reasonably be considered to be included in computing the taxpayer’s investment tax credit at the end of the taxation year, and
(d) in the year and after February 23, 1998, the taxpayer converts to commercial use, or disposes of without having previously converted to commercial use, the particular property or another property that incorporates the particular property,
there shall be added to the taxpayer’s tax otherwise payable under this Part for the year the lesser of
(e) the amount that can reasonably be considered to be included in the taxpayer’s investment tax credit at the end of any taxation year, or that would be so included if this Act were read without reference to subsection (26), in respect of the particular property, and
(f) the amount that is the percentage — that is the sum of each percentage described in paragraph (c) that has been applied to compute the taxpayer’s investment tax credit in respect of the particular property — of
(i) in the case where the particular property or the other property is disposed of to a person who deals at arm’s length with the taxpayer,
(A) the proceeds of disposition of the property, if the property
(I) is the particular property and is neither first term shared-use equipment nor second term shared-use equipment, or
(II) is the other property,
(B) 25% of the proceeds of disposition of the property, if the property is the particular property, is first term shared-use equipment and is not second term shared-use equipment, and
(C) 50% of the proceeds of disposition of the property, if the property is the particular property and is second term shared-use equipment, and
(ii) in the case where the particular property or the other property is converted to commercial use or is disposed of to a person who does not deal at arm’s length with the taxpayer,
(A) the fair market value of the property, if the property
(I) is the particular property and is neither first term shared-use equipment nor second term shared-use equipment, or
(II) is the other property,
(B) 25% of the fair market value of the property at the time of its conversion or disposition, if the particular property is first term shared-use equipment and is not second term shared-use equipment, and
(C) 50% of the fair market value of the property at the time of its conversion or disposition, if the particular property is second term shared-use equipment.
(27.1) to (27.12) [Repealed, 2017, c. 20, s. 23]
Marginal note:Recapture of investment tax credit of partnership
(28) For the purpose of computing the amount determined under subsection (8) in respect of a partnership at the end of a particular fiscal period, where
(a) a particular property, the cost of which is a qualified expenditure, is acquired by the partnership from a person or partnership in the particular fiscal period or in any of the 10 preceding fiscal periods of the partnership,
(b) the cost of the particular property is included in an amount, a percentage of which can reasonably be considered to have been included in computing the amount determined under subsection (8) in respect of the partnership at the end of a fiscal period, and
(c) in the particular fiscal period and after February 23, 1998, the partnership converts to commercial use, or disposes of without having previously converted to commercial use, the particular property or another property that incorporates the particular property,
there shall be deducted in computing the amount determined under subsection (8) in respect of the partnership at the end of the particular fiscal period the lesser of
(d) the amount that can reasonably be considered to have been included in respect of the particular property in computing the amount determined under subsection (8) in respect of the partnership, and
(e) the percentage (described in paragraph (b)) of
(i) where the particular property or the other property is disposed of to a person who deals at arm’s length with the partnership, the proceeds of disposition of that property, and
(ii) in any other case, the fair market value of the particular property or the other property at the time of the conversion or disposition.
(28.1) [Repealed, 2017, c. 20, s. 23]
Marginal note:Recapture of investment tax credit of allocating taxpayer
(29) Where
(a) a taxpayer acquired a particular property from a person or partnership in a taxation year or in any of the 10 preceding taxation years,
(b) the cost of the particular property was a qualified expenditure to the taxpayer,
(c) all or part of the qualified expenditure can reasonably be considered to have been the subject of an agreement made under subsection (13) by the taxpayer and another taxpayer (in this subsection referred to as the “transferee”), and
(d) in the year and after February 23, 1998, the taxpayer converts to commercial use, or disposes of without having previously converted to commercial use, the particular property or another property that incorporates the particular property,
there shall be added to the taxpayer’s tax otherwise payable under this Part for the year the lesser of
(e) the amount that can reasonably be considered to have been included in computing the transferee’s investment tax credit in respect of the qualified expenditure that was the subject of the agreement, and
(f) the amount determined by the formula
A × B - C
where
- A
- is the percentage applied by the transferee in determining its investment tax credit in respect of the qualified expenditure that was the subject of the agreement,
- B
- is
(i) where the particular property or the other property is disposed of to a person who deals at arm’s length with the taxpayer, the proceeds of disposition of that property, and
(ii) in any other case, the fair market value of the particular property or the other property at the time of the conversion or disposition, and
- C
- is the amount, if any, added to the taxpayer’s tax payable under subsection (27) in respect of the particular property.
Marginal note:Addition to tax
(30) Where a taxpayer is a member of a partnership at the end of a fiscal period of the partnership, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxpayer’s taxation year in which that fiscal period ends the amount that can reasonably be considered to be the taxpayer’s share of the amount, if any, by which
(a) the total of
(i) the total of all amounts each of which is the lesser of the amounts described in paragraphs (28)(d) and (e) in respect of the partnership in respect of the fiscal period, and
(ii) the total of all amounts each of which is the lesser of the amounts described in paragraphs (35)(c) and (d) in respect of the partnership in respect of the fiscal period,
(iii) [Repealed, 2017, c. 20, s. 23]
exceeds
(b) the amount that would be determined in respect of the partnership under subsection (8) if that subsection were read without reference to subsections (28) and (35).
Marginal note:Tiered partnership
(31) Where a taxpayer is a member of a particular partnership that is a member of another partnership and an amount would be added to the particular partnership’s tax payable under this Part for the year pursuant to subsection (30) if the particular partnership were a person and its fiscal period were its taxation year, that amount is deemed to be an amount that is the lesser of the amounts described in paragraphs (28)(d) and (e), in respect of a property of the particular partnership, that is required by subsection (28) to be deducted in computing the amount under subsection (8) in respect of the particular partnership at the end of the fiscal period.
Marginal note:Meaning of cost
(32) For the purposes of subsections (27), (28) and (29), cost of the particular property to a taxpayer shall not exceed the amount paid by the taxpayer to acquire the particular property from a transferor of the particular property and, for greater certainty, does not include amounts paid by the taxpayer to maintain, modify or transform the particular property.
Marginal note:Certain non-arm’s length transfers
(33) Subsections (27) to (29), (34) and (35) do not apply to a taxpayer or partnership (in this subsection referred to as the “transferor”) that disposes of a property to a person or partnership (in this subsection and subsections (34) and (35) referred to as the “purchaser”), that does not deal at arm’s length with the transferor, if the purchaser acquired the property in circumstances where the cost of the property to the purchaser would have been an expenditure of the purchaser described in subclause 37(8)(a)(ii)(A)(III) or (B)(III) (as those subclauses read on March 29, 2012) but for subparagraph 2902(b)(iii) of the Income Tax Regulations.
Marginal note:Recapture of investment tax credit
(34) Where, at any particular time in a taxation year and after February 23, 1998, a purchaser (other than a partnership) converts to commercial use, or disposes of without having previously converted to commercial use, a property
(a) that was acquired by the purchaser in circumstances described in subsection (33) or that is another property that incorporates a property acquired in such circumstances; and
(b) that was first acquired, or that incorporates a property that was first acquired, by a person or partnership (in this subsection referred to as the “original user”) with which the purchaser did not deal at arm’s length at the time at which the purchaser acquired the property, in the original user’s taxation year or fiscal period that includes the particular time (on the assumption that the original user had such a taxation year or fiscal period) or in any of the original user’s 10 preceding taxation years or fiscal periods,
there shall be added to the purchaser’s tax otherwise payable under this Part for the year the lesser of
(c) the amount
(i) included, in respect of the property, in the investment tax credit of the original user, or
(ii) where the original user is a partnership, that can reasonably be considered to have been included in respect of the property in computing the amount determined under subsection (8) in respect of the original user, and
(d) the amount determined by applying the percentage that was applied by the original user in determining the amount referred to in paragraph (c) to
(i) if the property or the other property is disposed of to a person who deals at arm’s length with the purchaser, the proceeds of disposition of that property, and
(ii) in any other case, the fair market value of the property or the other property at the time of the conversion or disposition.
Marginal note:Recapture of investment tax credit
(35) Where, at any particular time in a fiscal period and after February 23, 1998, a purchaser is a partnership that converts to commercial use, or disposes of without having previously converted to commercial use, a property
(a) that was acquired by the purchaser in circumstances described in subsection (33) or that is another property that incorporates a property acquired in such circumstances, and
(b) that was first acquired, or that incorporates a property that was first acquired, by a person or partnership (in this subsection referred to as the “original user”) with which the purchaser did not deal at arm’s length at the time at which the purchaser acquired the property, in the original user’s taxation year or fiscal period that includes the particular time (on the assumption that the original user had such a taxation year or fiscal period) or in any of the original user’s 10 preceding taxation years or fiscal periods,
there shall be deducted in computing the amount determined under subsection (8) in respect of the purchaser at the end of the fiscal period the lesser of
(c) the amount
(i) included, in respect of the property, in the investment tax credit of the original user, or
(ii) where the original user is a partnership, that can reasonably be considered to have been included in respect of the property in computing the amount determined under subsection (8) in respect of the original user, and
(d) the amount determined by applying the percentage that was applied by the original user in determining the amount referred to in paragraph (c) to
(i) if the property or the other property is disposed of to a person who deals at arm’s length with the purchaser, the proceeds of disposition of that property, and
(ii) in any other case, the fair market value of the property or the other property at the time of the conversion or disposition.
Marginal note:Transitional application of investment tax credit recapture
(36) For the purpose of applying each of subsection (27) or (29) in respect of a taxpayer, subsection (28) in respect of a partnership or subsection (34) or (35) in respect of a purchaser and an original user, as the case may be, (which taxpayer, partnership or original user is, in this subsection, referred to as the “taxpayer”), the reference to “10” in that subsection is to be read as a reference to the number that is the lesser of
(a) 20, and
(b) the number that is the total of 10 and the number of taxation years or fiscal periods, as the case may be, by which the number of taxation years or fiscal periods of the taxpayer that have ended after 1997 exceeds 11.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- R.S., 1985, c. 1 (5th Supp.), s. 127
- 1994, c. 7, Sch. II, s. 104, Sch. VIII, s. 68, c. 8, s. 15, c. 21, s. 61
- 1995, c. 3, s. 37
- 1996, c. 21, s. 30
- 1997, c. 25, s. 35
- 1998, c. 19, ss. 33, 146, 306
- 1999, c. 22, s. 48
- 2000, c. 9, s. 560
- 2001, c. 17, ss. 118, 213
- 2003, c. 15, s. 81, c. 19, s. 73, c. 28, s. 14
- 2004 c. 24, s. 24
- 2005, c. 19, s. 28
- 2006, c. 4, s. 75, c. 9, s. 64
- 2007, c. 2, s. 34, c. 35, s. 43
- 2008, c. 28, s. 19
- 2009, c. 2, ss. 40, 82
- 2010, c. 12, s. 14
- 2011, c. 24, s. 40
- 2012, c. 19, s. 5, c. 31, s. 27
- 2013, c. 33, s. 14, c. 34, s. 269, c. 40, s. 57
- 2014, c. 20, s. 18, c. 39, s. 42
- 2015, c. 36, s. 12
- 2016, c. 7, s. 35
- 2017, c. 20, s. 23, c. 33, s. 50
- 2018, c. 12, s. 21
- 2019, c. 29, s. 24
- 2022, c. 19, s. 22
- 2024, c. 15, s. 34
- 2024, c. 17, s. 34
- 2024, c. 17, s. 80
- Date modified: