If the Minister of Finance does not specify a particular amount that is relevant for the purposes of this section, that particular amount is deemed to be nil for the purpose of applying this section.
Marginal note:Deemed rebate in respect of fuel charges
(6)The amount deemed by this section to have been paid during a specified month on account of tax payable for a taxation year is deemed to have been paid during the specified month as a rebate in respect of charges levied under Part 1 of theGreenhouse Gas Pollution Pricing Actin respect of the relevant province.
Marginal note:Only one eligible individual
(7)If an individual is a qualified relation of another individual in relation to a month specified for a taxation year and both those individuals would be, but for this subsection, eligible individuals in relation to the specified month, only the individual that the Minister designates is the eligible individual in relation to the specified month.
Marginal note:Exception — qualified dependant
(8)If a person would, if this Act were read without reference to this subsection, be the qualified dependant of two or more individuals, in relation to a month specified for a taxation year,
(a)the person is deemed to be a qualified dependant, in relation to that month, of the one of those individuals on whom those individuals agree;
(b)in the absence of an agreement referred to in paragraph (a), the person is deemed to be, in relation to that month, a qualified dependant of the individuals, if any, who are, at the beginning of that month,eligible individuals(as defined in section 122.6, but the definitionqualified dependantin that section having the meaning assigned by subsection (1)) in respect of that person; and
(c)in any other case, the person is deemed to be, in relation to that month, a qualified dependant only of the individual that the Minister designates.
Marginal note:Notification to Minister
(8.1)An individual shall notify the Minister of the occurrence of any of the following events before the end of the month following the month in which the event occurs:
(a)the individual ceases to be an eligible individual;
(b)a person becomes or ceases to be the individual’s qualified relation; and
(c)a person ceases to be a qualified dependant of the individual, otherwise than because of attaining the age of 19 years.
Marginal note:Effect of bankruptcy
(9)For the purposes of this section, if an individual becomes bankrupt in a particular calendar year, notwithstanding subsection 128(2), any reference to the taxation year of the individual (other than in this subsection) is deemed to be a reference to the particular calendar year.
Marginal note:Definitions
122.9(1)The following definitions apply in this section.
eligible educator, in respect of a taxation year, means an individual who, at any time during the taxation year,
(a)is employed in Canada as a teacher or an early childhood educator at
(i)an elementary or secondary school, or
(ii)a regulated child care facility; and
(b)holds a valid and recognized (in the province or territory in which the individual is employed)
(i)teaching certificate, licence, permit or diploma, or
(ii)certificate or diploma in early childhood education. (éducateur admissible)
eligible supplies expense, of an eligible educator for a taxation year, means an amount (other than any amount deducted in computing any person’s income for any taxation year or any amount otherwise included in computing a deduction from any person’s tax payable under this Act for any taxation year) paid by the eligible educator in the taxation year for teaching supplies to the extent that
(a)the teaching supplies were
(i)purchased by the eligible educator for the purpose of teaching or facilitating students’ learning, and
(ii)directly consumed or used in the performance of the duties of the eligible educator’s employment; and
(b)the eligible educator is not entitled to receive a reimbursement, allowance or any other form of assistance (other than an amount that is included in computing the income for any taxation year of the eligible educator and that is not deductible in computing the taxable income of the eligible educator) in respect of the amount paid. (dépense admissible)
return of incomefiled by an eligible educator for a taxation year means a 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)) that is required to be filed for the year or that would be required to be filed if the eligible educator had tax payable under this Part for the year. (déclaration de revenu)
teaching suppliesmeans
(a)consumable supplies; and
(b)prescribed durable goods. (fournitures scolaires)
Marginal note:Deemed overpayment
(2)An eligible educator who files a return of income for a taxation year and who makes a claim under this subsection is deemed to have paid, at the end of the year, on account of tax payable under this Part for the year, an amount equal to 25% of the least of
(a)$1,000;
(b)the total of all amounts each of which is an eligible supplies expense of the eligible educator for the year; and
(c)if the eligible educator fails to provide the certificate referred to in subsection (3) in respect of the year, as and when requested by the Minister, nil.
Marginal note:Certificate
(3)If the Minister so demands, an eligible educator making a claim under this section in respect of a taxation year shall provide to the Minister a written certificate from their employer, or a delegated official of the employer, attesting to the eligible supplies expenses of the eligible educator for the year.
Marginal note:Effect of bankruptcy
(4)For the purposes of this Subdivision, if an eligible educator becomes bankrupt in a particular calendar year, notwithstanding subsection 128(2), any reference to the taxation year of the eligible educator (other than in this subsection) is deemed to be a reference to the particular calendar year.
Marginal note:Part-year residents
(5)If an eligible educator is resident in Canada throughout part of a taxation year and is non-resident throughout another part of the year, the total of the amounts that are deemed to be paid by the eligible educator under subsection (2) for the year cannot exceed the lesser of
(a)the total of
(i)the amounts deemed to be paid under subsection (2) that can reasonably be considered as wholly applicable to the period or periods in the year throughout which the eligible educator is not resident in Canada, computed as though that period or those periods were the whole taxation year, and
(ii)the amounts deemed to be paid under subsection (2) that can reasonably be considered as wholly applicable to the period or periods in the year throughout which the eligible educator is resident in Canada, computed as though that period or those periods were the whole taxation year; and
(b)the total of the amounts that would have been deemed to have been paid under subsection (2) for the year had the eligible educator been resident in Canada throughout the year.
Marginal note:Non-residents
(6)Subsection (2) does not apply in respect of a taxation year of an eligible educator if the eligible educator is, at no time in the year, resident in Canada, unless all or substantially all the eligible educator’s income for the year is included in computing the eligible educator’s taxable income earned in Canada for the year.
Marginal note:Claimed amount
122.91(1)An individual who is resident in Canada throughout a taxation year, files a return of income for the taxation year and makes a claim under this subsection is deemed to have paid, at the end of the taxation year, on account of tax payable under this Part for the taxation year, an amount claimed by the individual that does not exceed the lesser of
(a)the training amount limit of the individual for the taxation year, and
(b)50% of the amount that would be deductible under paragraph 118.5(1)(a) or (d) in computing the individual’s tax payable under this Part for the taxation year if
(i)this Act were read without reference to subsections 118.5(1.2) and (2), and
(ii)the appropriate percentage for the taxation year were 100%.
Marginal note:Training amount limit
(2)For the purposes of this section, the training amount limit of an individual for a taxation year is
(a)if the taxation year is after 2019 and the individual has attained the age of 26 years, and has not attained the age of 66 years, before the end of the taxation year, the lesser of
(i)the amount determined by the formula
A + B − C
where
(A)$250, if
(I)the individual has filed a return of income for the preceding taxation year,
(II)the individual was resident in Canada throughout the preceding taxation year,
(III)the total of the following amounts is greater than or equal to $10,000:
1the amount that would be the individual’sworking income(as defined in subsection 122.7(1)) for the preceding taxation year, if this Act were read without reference to paragraph 81(1)(a) and subsection 81(4),
2the total of all amounts each of which is an amount payable to the individual under subsection 22(1), 23(1), 152.04(1) or 152.05(1) of theEmployment Insurance Actin the preceding taxation year, and
3the amount that would be included in the individual’s income because of subparagraph 56(1)(a)(vii) in computing the individual’s income for the preceding taxation year, if this Act were read without reference to paragraph 81(1)(a), and
(IV)the individual’s income for the preceding taxation year under this Part does not exceed the higher dollar amount referred to in paragraph 117(2)(c), as adjusted under this Act for the preceding taxation year, and
(B)nil, in any other case, and
(ii)the amount determined by the formula
$5,000 − D
where
(b)nil, in any other case.
Marginal note:Effect of bankruptcy
(3)For the purpose of this Subdivision, if an individual becomes bankrupt in a particular calendar year,
(a)notwithstanding subsection 128(2), any reference to the taxation year of the individual (other than in this subsection) is deemed to be a reference to the particular calendar year; and
(b)the individual’s working income and income under this Part for the taxation year ending on December 31 of the particular calendar year is deemed to include the individual’s working income and the income under this Part for the taxation year that begins on January 1 of the particular calendar year.
Marginal note:Special rules in the event of death
(4)For the purposes of this section, if an individual dies in a calendar year,
(a)the individual is deemed to be resident in Canada from the time of death until the end of the year;
(b)the individual is deemed to be the same age at the end of the year as the individual would have been if the individual were alive at the end of the year; and
(c)any return of income filed by a legal representative of the individual is deemed to be a return of income filed by the individual.
Marginal note:Definitions
122.92(1)The following definitions apply in this section.
eligible dwelling, of a qualifying individual, for a renovation period taxation year, means a housing unit (including the land subjacent to the housing unit and the immediately contiguous land, but not including the portion of that land that exceeds the greater of ½ hectare and the portion of that land that is necessary for the use and enjoyment of the housing unit as a residence) located in Canada if
(a)the qualifying individual or a qualifying relation of the qualifying individual (or a trust under which the qualifying individual or a qualifying relation is a beneficiary) owns — whether jointly with another person or otherwise — at any time in the renovation period taxation year, the housing unit; and
(b)the housing unit is ordinarily inhabited, or is reasonably expected to be ordinarily inhabited, within 12 months after the end of the renovation period
(i)by the qualifying individual, and
(ii)by a qualifying relation of the qualifying individual. (logement admissible)
eligible individual, in respect of an eligible dwelling for a renovation period taxation year, means
(a)an individual who ordinarily resides, or intends to ordinarily reside, in the eligible dwelling within 12 months after the end of the renovation period in respect of a qualifying renovation of the eligible dwelling and who is
(i)a qualifying individual,
(ii)thecohabiting spouse or common-law partner(as defined in section 122.6) of a qualifying individual at any time in the renovation period taxation year, or
(iii)a qualifying relation of a qualifying individual; or
(b)an individual who
(i)is a qualifying relation of a qualifying individual, and
(ii)owns the eligible dwelling or is the beneficiary of a trust that owns the eligible dwelling. (particulier admissible)
individualdoes not include a trust. (particulier)
qualifying expenditure, of an individual, means a reasonable outlay or expense that
(a)is directly attributable to a qualifying renovation of an eligible dwelling in respect of which the individual is an eligible individual;
(b)is made or incurred by the individual before the end of the renovation period in respect of the qualifying renovation referred to in paragraph (a);
(c)is the cost of goods acquired or services received, including an outlay or expense for permits required for, or for the rental of equipment used in the course of, the qualifying renovation; and
(d)is not an outlay or expense
(i)for the cost of annual, recurring or routine repair or maintenance,
(ii)to acquire a household appliance,
(iii)to acquire an electronic home-entertainment device,
(iv)that is the cost of housekeeping, security monitoring, gardening, outdoor maintenance or similar services,
(v)for financing costs in respect of the qualifying renovation,
(vi)in respect of goods or services provided by a person not dealing at arm’s length with the individual, unless the person is registered for the purposes of Part IX of theExcise Tax Act, or
(vii)that can reasonably be considered to have been reimbursed. (dépense admissible)
qualifying individual, in respect of a renovation period taxation year, means an individual who has attained the age of
(a)65 years before the end of the renovation period taxation year; or
(b)18 years before the end of the renovation period taxation year and in respect of whom an amount is deductible, or would be deductible if this Act were read without reference to paragraph 118.3(1)(c), under section 118.3 in computing a taxpayer’s tax payable under this Part for the renovation period taxation year. (particulier déterminé)
qualifying relation, of a qualifying individual for a renovation period taxation year, means an individual who
(a)has attained the age of 18 years before the end of the renovation period taxation year; and
(b)at any time in the renovation period taxation year, is a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of either the qualifying individual or thecohabiting spouse or common-law partner(as defined in section 122.6) of the qualifying individual. (proche admissible)
qualifying renovationmeans a renovation or alteration of, or addition to, an eligible dwelling of a qualifying individual that
(a)is of an enduring nature and integral to the eligible dwelling; and
(b)is undertaken to enable the qualifying individual to reside in the dwelling with a qualifying relation of the qualifying individual by establishing a secondary unit within the dwelling for occupancy by the qualifying individual or the qualifying relation. (travaux de rénovation admissibles)
renovation period, for a qualifying renovation of an eligible dwelling, means a period that
(a)begins at the time that the first qualifying expenditure is made or incurred in respect of the qualifying renovation, and
(b)ends at the time of the completion of the qualifying renovation. (période de rénovation)
renovation period taxation yearmeans the taxation year in which the renovation period in respect of a qualifying renovation ends. (année d’imposition de la période de rénovation)
secondary unitmeans a self-contained housing unit that
(a)has a private entrance, kitchen, bathroom and sleeping area,
(b)if applicable, meets any local requirements to qualify as a secondary dwelling unit, and
(c)meets prescribed conditions, if any. (logement secondaire)
Marginal note:Qualifying expenditure — trusts
(2)For the purposes of this section, a qualifying expenditure of a particular individual who is an eligible individual in respect of an eligible dwelling includes an outlay or expense made or incurred by a trust of which the particular individual is a beneficiary, in respect of the eligible dwelling, to the extent of the share of that outlay or expense that is reasonably attributable to the eligible dwelling, having regard to the amount of the outlays or expenses made or incurred in respect of the eligible dwelling, if
(a)the outlay or expense would be a qualifying expenditure of the particular individual if the outlay or expense had been made or incurred by that individual; and
(b)the trust has notified the particular individual of the amount of the outlay or expenses that are attributable to the eligible dwelling.
Marginal note:Deemed overpayment
(3)An eligible individual who files a return of income for a renovation period taxation year and who makes a claim under this subsection in that return of income is deemed to have paid, at the end of the taxation year, on account of tax payable under this Part for the taxation year, an amount equal to the amount determined by the formula
A × B
where
(a)$50,000,
(b)the total of all amounts, each of which is a qualifying expenditure of the individual in respect of a qualifying renovation that ended in the taxation year, and
(c)if the individual is not resident in Canada throughout the taxation year, nil.
Marginal note:Limits
(4)For the purpose of this section,
(a)in respect of a qualifying individual, there may only be one qualifying renovation for the purpose of a claim under subsection (3) by all taxpayers during the lifetime of the qualifying individual;
(b)a maximum of $50,000 of qualifying expenditures may be claimed by all taxpayers in respect of the same qualifying renovation; and
(c)if more than one taxpayer is entitled to a deduction under subsection (3) in respect of the same qualifying individual or the same qualifying renovation and the taxpayers cannot agree as to what portion of the amount each can so deduct, the Minister may fix the portions.
Marginal note:Effect of bankruptcy
(5)For the purpose of this Subdivision, if an eligible individual becomes bankrupt in a particular calendar year, despite subsection 128(2), any reference to the taxation year of the eligible individual is deemed to be a reference to the particular calendar year.
Marginal note:Special rules in the event of death
(6)For the purpose of this section, if an eligible individual or a qualifying individual dies in a calendar year,
(a)the deceased individual is deemed to be resident in Canada from the time of death until the end of the year if, immediately before death, the deceased individual was resident in Canada;
(b)the deceased individual is deemed to be the same age at the end of the year as the individual would have been if the individual were alive at the end of the year;
(c)the deceased individual is deemed to be the cohabiting spouse or common-law partner of another individual (referred to in this paragraph as the “surviving spouse”) at the end of the year if,
(i)immediately before death, the deceased individual was thecohabiting spouse or common-law partner(as defined in section 122.6) of the surviving spouse, and
(ii)the surviving spouse is not thecohabiting spouse or common-law partner(as defined in section 122.6) of another individual at the end of the year; and
(d)any return of income filed by a legal representative of the deceased individual is deemed to be a return of income filed by the individual.
Marginal note:Rate for corporations
123(1)The tax payable under this Part for a taxation year by a corporation on its taxable income or taxable income earned in Canada, as the case may be, (in this section referred to as its “amount taxable”) for the year is, except where otherwise provided,
(a)38% of its amount taxable for the year.
Marginal note:Corporation surtax
123.1There shall be added to the tax otherwise payable under this Part for each taxation year by a corporation (other than a corporation that was throughout the year an investment corporation or a non-resident-owned investment corporation) an amount equal to that proportion of 5% of the amount, if any, by which
(a)the tax payable under this Part by the corporation for the year determined without reference to this section, sections 123.2 and 126 (except for the purposes of subsection 125(1) and section 125.1), subsections 127(3) and (5), 127.2(1) and 127.3(1) of this Act and paragraph 123(1)(b) and subsection 127(13) of theIncome Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, and as if subsection 124(1) of this Act were read without reference to the words “in a province” in that subsection
exceeds
(b)in the case of a Canadian-controlled private corporation to which subsection 125(1) applies, the amount, if any, by which
(i)15% of the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the year
exceeds
(ii)the amount, if any, determined under paragraph 125.1(1)(b) in respect of the corporation for the year,
(c)in the case of a mutual fund corporation, the least of the amounts that would be determined under paragraphs (a) to (c) of the description of A in the definitionrefundable capital gains tax on handin subsection 131(6) in respect of the corporation for the year if this Act were read without reference to this section, and
(d)in any other case, nil
that the number of days in that portion of the year that is after June 30, 1985 and before 1987 is of the number of days in the year.
123.2[Repealed, 2006, c. 4, s. 72]
Marginal note:Refundable tax on CCPC’s investment income
123.3There shall be added to the tax otherwise payable under this Part for each taxation year by a corporation that is throughout the year a Canadian-controlled private corporation an amount equal to 10 2/3% of the lesser of
(a)the corporation’s aggregate investment income for the year (within the meaning assigned by subsection 129(4)), and
(b)the amount, if any, by which its taxable income for the year exceeds the least of the amounts determined in respect of it for the year under paragraphs 125(1)(a) to (c).
Marginal note:Definitions
123.4(1)The definitions in this subsection apply in this section.
CCPC rate reduction percentage[Repealed, 2003, c. 15, s. 78(1)]
full rate taxable incomeof a corporation for a taxation year is
(a)if the corporation is not a corporation described in paragraph (b) or (c) for the year, the amount by which that portion of the corporation’s taxable income for the year (or, for greater certainty, if the corporation is non-resident, that portion of its taxable income earned in Canada for the year) that is subject to tax under subsection 123(1) exceeds the total of
(i)if an amount is deducted under subsection 125.1(1) from the corporation’s tax otherwise payable under this Part for the year, the amount obtained by dividing the amount so deducted by the corporation’s general rate reduction percentage for the taxation year,
(ii)if an amount is deducted under subsection 125.1(2) from the corporation’s tax otherwise payable under this Part for the year, the amount determined, in respect of the deduction, by the formula in that subsection,
(iii)the corporation’s income for the year from a personal services business, and
(iv)if the corporation is a credit union throughout the year and the corporation deducted an amount for the year under subsection 125(1) (because of the application of subsections 137(3) and (4)), the amount, if any, that is the product of the amount, if any, determined for B in subsection 137(3) multiplied by the amount determined for C in subsection 137(3) in respect of the corporation for the year;
(b)if the corporation is a Canadian-controlled private corporation throughout the year, the amount by which that portion of the corporation’s taxable income for the year that is subject to tax under subsection 123(1) exceeds the total of
(i)the amounts that would, if paragraph (a) applied to the corporation, be determined under subparagraphs (a)(i) to (iv) in respect of the corporation for the year,
(ii)the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the year, and
(iii)except for a corporation that is, throughout the year, a cooperative corporation (within the meaning assigned by subsection 136(2)) or a credit union, the corporation’s aggregate investment income for the year, within the meaning assigned by subsection 129(4); and
(iv)[Repealed, 2003, c. 15, s. 78(2)]
(c)if the corporation is throughout the year an investment corporation, a mortgage investment corporation or a mutual fund corporation, nil. (revenu imposable au taux complet)
general rate reduction percentageof a corporation for a taxation year is the total of
(a)that proportion of 7% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year,
(b)that proportion of 8.5% that the number of days in the taxation year that are in 2008 is of the number of days in the taxation year,
(c)that proportion of 9% that the number of days in the taxation year that are in 2009 is of the number of days in the taxation year,
(d)that proportion of 10% that the number of days in the taxation year that are in 2010 is of the number of days in the taxation year,
(e)that proportion of 11.5% that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year, and
(f)that proportion of 13% that the number of days in the taxation year that are after 2011 is of the number of days in the taxation year. (pourcentage de réduction du taux général)
Marginal note:General deduction from tax
(2)There may be deducted from a corporation’s tax otherwise payable under this Part for a taxation year the product obtained by multiplying the corporation’s general rate reduction percentage for the year by the corporation’s full rate taxable income for the year.
(3)[Repealed, 2003, c. 15, s. 78(5)]
Marginal note:Tax on personal services business income
123.5There shall be added to the tax otherwise payable under this Part for each taxation year by a corporation an amount equal to 5% of the corporation’s taxable income for the year from a personal services business.
Marginal note:Definition
123.6(1)The following definition applies in this section.
bank or life insurer group membermeans a corporation that is
(a)a bank;
(b)a life insurance corporation that carries on business in Canada; or
(c)afinancial institution(as defined in subsection 190(1)) that is related to any corporation described in paragraph (a) or (b). (membre d’un groupe de banques ou d’assureurs-vie)
Marginal note:Additional tax payable
(2)There shall be added to the tax otherwise payable under this Part for a taxation year, by a corporation that is a bank or life insurer group member at any time during the taxation year, an amount determined by the formula
0.015 (A − B)
where
(a)if the corporation is not related to another bank or life insurer group member at the end of the taxation year of the corporation,
(i)where the corporation’s taxation year is not less than 51 weeks, $100 million, and
(ii)in any other case, the amount determined by the formula
$100 million × (C ÷ 365)
where
(b)in any other case, subject to subsection (5), nil.
Marginal note:Related group
(3)For the purposes of this section, a corporation that is described in paragraph (a) or (b) of the definitionbank or life insurer group memberin subsection (1) at any time during a taxation year and that was related to another bank or life insurer group member at the end of the year (in this section, the corporation and each such bank or life insurer group member are referred to together as the “related group”) may file with the Minister, with the corporation’s return of income, an agreement in prescribed form on behalf of the related group under which an amount that does not exceed $100 million is allocated among the related group for all taxation years of members of the related group ending in the same calendar year.
Marginal note:Allocation by Minister
(4)The Minister may request a corporation that is a member of a related group at any time during a taxation year to file with the Minister an agreement referred to in subsection (3) and, if the corporation does not file the agreement within 30 days after receiving the request, the Minister may allocate the amount referred to in subsection (3) among the related group for the taxation years of the bank or life insurer group members ending in the same calendar year.
Marginal note:Allocation
(5)For the purposes of this section, the least amount allocated for a taxation year to each bank or life insurer group member under an agreement described in subsection (3) or by the Minister under subsection (4) is the amount determined for B in subsection (2) for the taxation year of that member, but, if no such allocation is made, the amount determined for B in subsection (2) of each bank or life insurer group member for that year is nil.
Marginal note:Anti-avoidance
(6)If an amount has been deducted in computing the income of a corporation, the amount is deemed not to have been deducted in computing the corporation’s taxable income, or taxable income earned in Canada, as the case may be, for the purpose of computing the tax payable by the corporation under subsection (2), if
(a)the deduction is in respect of an amount that can reasonably be considered to have been paid or payable (in this subsection referred to as “the payment”), directly or indirectly, to a person or partnership that was not dealing at arm’s length with the corporation;
(b)the person or partnership was not a bank or life insurer group member; and
(c)it can reasonably be considered that one of the purposes of the payment was to reduce the tax payable by the corporation under subsection (2).
Marginal note:Deduction from corporation tax
124(1)There may be deducted from the tax otherwise payable by a corporation under this Part for a taxation year an amount equal to 10% of the corporation’s taxable income earned in the year in a province.
Marginal note:Crown agents
(3)Notwithstanding subsection 124(1), no deduction may be made under this section from the tax otherwise payable under this Part for a taxation year by a corporation in respect of any taxable income of the corporation for the year that is not, because of an Act of Parliament, subject to tax under this Part or by a prescribed federal Crown corporation that is an agent of Her Majesty.
Marginal note:Definitions
(4)In this section,
provinceincludes the Newfoundland offshore area and the Nova Scotia offshore area; (province)
taxable income earned in the year in a provincemeans the amount determined under rules prescribed for the purpose by regulations made on the recommendation of the Minister of Finance. (revenu imposable gagné au cours de l’année dans une province)
Marginal note:Small business deduction
125(1)There may be deducted from the tax otherwise payable under this Part for a taxation year by a corporation that was, throughout the taxation year, a Canadian-controlled private corporation, an amount equal to the corporation’s small business deduction rate for the taxation year multiplied by the least of
(a)the amount, if any, by which the total of
(i)the total of all amounts each of which is the amount of income of the corporation for the year from an active business carried on in Canada, other than an amount that is
(A)described in paragraph (a) of the description of A in the definitionspecified partnership incomein subsection (7) for the year,
(B)described in subparagraph (a)(i) of the definitionspecified corporate incomein subsection (7) for the year, or
(C)paid or payable to the corporation by another corporation with which it is associated, that is deemed by subsection 129(6) to be income for the year from an active business carried on by the corporation in circumstances where the associated corporation is not a Canadian-controlled private corporation or is a Canadian-controlled private corporation that has made an election under subsection 256(2) in respect of its taxation year in which the amount was paid or payable,
(ii)the specified partnership income of the corporation for the year, and
(ii.1)the specified corporate income of the corporation for the year
exceeds the total of
(iii)the total of all amounts each of which is a loss of the corporation for the year from an active business carried on in Canada (other than a loss of the corporation for the year from a business carried on by it as a member of a partnership), and
(iv)the specified partnership loss of the corporation for the year,
(b)the amount, if any, by which the corporation’s taxable income for the year exceeds the total of
(i)100/28 of the total of the amounts that would be deductible under subsection 126(1) from the tax for the year otherwise payable under this Part by it if those amounts were determined without reference to sections 123.3 and 123.4,
(ii)the amount determined by multiplying the total of the amounts that would be deductible under subsection 126(2) from the tax for the year otherwise payable under this Part by it, if those amounts were determined without reference to section 123.4, by the relevant factor for the year, and
(iii)the amount, if any, of the corporation’s taxable income for the year that is not, because of an Act of Parliament, subject to tax under this Part, and
(c)the corporation’s business limit for the year.
Marginal note:Small business deduction rate
(1.1)For the purpose of subsection (1), a corporation’s small business deduction rate for a taxation year is the total of
(a)that proportion of 17.5% that the number of days in the taxation year that are before 2018 is of the number of days in the taxation year,
(b)that proportion of 18% that the number of days in the taxation year that are in 2018 is of the number of days in the taxation year, and
(c)that proportion of 19% that the number of days in the taxation year that are after 2018 is of the number of days in the taxation year.
(d) and (e)[Repealed, 2016, c. 7, s. 34]
Marginal note:Business limit
(2)For the purpose of this section, a corporation’s business limit for a taxation year is $500,000 unless the corporation is associated in the taxation year with one or more other Canadian-controlled private corporations, in which case, except as otherwise provided in this section, its business limit is nil.
Marginal note:Associated corporations
(3)Notwithstanding subsection (2), if all the Canadian-controlled private corporations that are associated with each other in a taxation year file with the Minister in prescribed form an agreement that assigns for the purpose of this section a percentage to one or more of them for the year, the business limit for the year of each of the corporations is
(a)if the total of the percentages assigned in the agreement does not exceed 100%, $500,000 multiplied by the percentage assigned to that corporation in the agreement; and
(b)in any other case, nil.
Marginal note:Reduction — business limit
(3.1)The business limit for the year of a corporation under subsection (2), (3) or (4) is reduced by the total of all amounts each of which is the portion, if any, of the business limit that the corporation assigns to another corporation under subsection (3.2).
Marginal note:Assignment
(3.2)For the purpose of this section, a Canadian-controlled private corporation (in this subsection referred to as thefirst corporation) may assign all or any portion of its business limit under subsection (2), (3) or (4) for a taxation year of the first corporation to another Canadian-controlled private corporation (in this subsection referred to as thesecond corporation) for a taxation year of the second corporation if
(a)the second corporation has an amount of income, for its taxation year, referred to in subparagraph (a)(i) of the definitionspecified corporate incomein subsection (7) from the provision of services or property directly to the first corporation;
(b)the first corporation’s taxation year ends in the second corporation’s taxation year;
(c)the amount assigned does not exceed the amount determined by the formula
A − B
where
(d)a prescribed form is filed with the Minister by
(i)the first corporation in its return of income for its taxation year, and
(ii)the second corporation in its return of income for its taxation year.
Marginal note:Failure to file agreement
(4)If any of the Canadian-controlled private corporations that are associated with each other in a taxation year has failed to file with the Minister an agreement as contemplated by subsection (3) within 30 days after notice in writing by the Minister has been forwarded to any of them that such an agreement is required for the purpose of any assessment of tax under this Part, the Minister shall, for the purpose of this section, allocate an amount to one or more of them for the taxation year