II, s. 202001, c. 17, s. 192010, c. 25, s. 72013, c. 33, s. 4
(a)if the taxpayer so elects in the taxpayer’s return of income under this Part for the year and the year begins before March 22, 2017, there shall not be included any amount in respect of work in progress at the end of the year; and(b)where the taxpayer has made an election under this section, paragraph 34(a) shall apply in computing the taxpayer’s income from the business for all subsequent taxation years unless the taxpayer, with the concurrence of the Minister and on such terms and conditions as are specified by the Minister, revokes the election to have that paragraph apply.
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 342017, c. 33, s. 7
34.1(1)Where(a)an individual (other than a graduated rate estate) carries on a business in a taxation year,(b)a fiscal period of the business begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and(c)the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,there shall be included in computing the individual’s income for the year from the business, the amount determined by the formula(A - B) × C/DwhereAis the total of the individual’s income from the business for the fiscal periods of the business that end in the year,Bis the lesser of(i)the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and(ii)the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,Cis the number of days on which the individual carries on the business that are both in the year and in the particular period, andDis the number of days on which the individual carries on the business that are in fiscal periods of the business that end in the year.Marginal note:Additional income election(2)Where(a)an individual (other than a graduated rate estate) begins carrying on a business in a taxation year and not earlier than the beginning of the first fiscal period of the business that begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and(b)the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,there shall be included in computing the individual’s income for the year from the business the lesser of(c)the amount designated in the individual’s return of income for the year, and(d)the amount determined by the formula(A - B) × C/DwhereAis the individual’s income from the business for the particular period,Bis the lesser of(i)the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and(ii)the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the taxation year that includes the end of the particular period,Cis the number of days on which the individual carries on the business that are both in the year and in the particular period, andDis the number of days on which the individual carries on the business that are in the particular period.Marginal note:Deduction(3)There shall be deducted in computing an individual’s income for a taxation year from a business the amount, if any, included under subsection 34.1(1) or 34.1(2) in computing the individual’s income for the preceding taxation year from the business.(4) to (7)[Repealed, 2013, c. 40, s. 15]Marginal note:No additional income inclusion(8)Subsections 34.1(1) and 34.1(2) do not apply in computing an individual’s income for a taxation year from a business where(a)the individual dies or otherwise ceases to carry on the business in the year; or(b)the individual becomes a bankrupt in the calendar year in which the taxation year ends.Marginal note:Death of partner or proprietor(9)Where(a)an individual carries on a business in a taxation year,(b)the individual dies in the year and after the end of a fiscal period of the business that ends in the year,(c)another fiscal period of the business ends because of the individual’s death (in this subsection referred to as the “short period”), and(d)the individual’s legal representative(i)elects that this subsection apply in computing the individual’s income for the year, or(ii)files a separate return of income under subsection 150(4) in respect of the individual’s business,notwithstanding subsection 34.1(8), there shall be included in computing the individual’s income for the year from the business, the amount determined by the formula(A - B) × C/DwhereAis the total of the individual’s income from the business for fiscal periods (other than the short period) of the business that end in the year,Bis the lesser of(i)the total of all amounts, each of which is an amount included in the value of A in respect of the business that is deemed to be a taxable capital gain for the purpose of section 110.6, and(ii)the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,Cis the number of days in the short period, andDis the total number of days in fiscal periods of the business (other than the short period) that end in the year.
(a)an individual (other than a graduated rate estate) carries on a business in a taxation year,(b)a fiscal period of the business begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and(c)the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,
(i)the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and(ii)the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,
(a)an individual (other than a graduated rate estate) begins carrying on a business in a taxation year and not earlier than the beginning of the first fiscal period of the business that begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and(b)the individual has elected under subsection 249.1(4) in respect of the business and the election has not been revoked,
(c)the amount designated in the individual’s return of income for the year, and(d)the amount determined by the formula(A - B) × C/DwhereAis the individual’s income from the business for the particular period,Bis the lesser of(i)the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and(ii)the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the taxation year that includes the end of the particular period,Cis the number of days on which the individual carries on the business that are both in the year and in the particular period, andDis the number of days on which the individual carries on the business that are in the particular period.
(i)the total of all amounts each of which is an amount included in the value of A in respect of the business and that is deemed to be a taxable capital gain for the purpose of section 110.6, and(ii)the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the taxation year that includes the end of the particular period,
(a)the individual dies or otherwise ceases to carry on the business in the year; or(b)the individual becomes a bankrupt in the calendar year in which the taxation year ends.
(a)an individual carries on a business in a taxation year,(b)the individual dies in the year and after the end of a fiscal period of the business that ends in the year,(c)another fiscal period of the business ends because of the individual’s death (in this subsection referred to as the “short period”), and(d)the individual’s legal representative(i)elects that this subsection apply in computing the individual’s income for the year, or(ii)files a separate return of income under subsection 150(4) in respect of the individual’s business,
(i)elects that this subsection apply in computing the individual’s income for the year, or(ii)files a separate return of income under subsection 150(4) in respect of the individual’s business,
(i)the total of all amounts, each of which is an amount included in the value of A in respect of the business that is deemed to be a taxable capital gain for the purpose of section 110.6, and(ii)the total of all amounts deducted under section 110.6 in computing the individual’s taxable income for the year,
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]1996, c. 21, s. 81998, c. 19, s. 842013, c. 40, s. 152014, c. 39, s. 8
34.2(1)The definitions in this subsection apply in this section.adjusted stub period accrualadjusted stub period accrualof a corporation in respect of a partnership — in which the corporation has a significant interest at the end of the last fiscal period of the partnership that ends in the corporation’s taxation year in circumstances where another fiscal period (in this definition referred to as the “particular period”) of the partnership begins in the year and ends after the year — means(a)if paragraph (b) does not apply, the amount determined by the formula[(A – B) × C/D] – (E + F)whereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for a fiscal period of the partnership that ends in the year (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for a fiscal period of the partnership that ends in the year,Cis the number of days that are in both the year and the particular period,Dis the number of days in fiscal periods of the partnership that end in the year,Eis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andFis an amount designated by the corporation in its return of income for the year (other than an amount included in the description of E) and filed with the Minister on or before its filing-due date for the year; and(b)if a fiscal period of the partnership ends in the corporation’s taxation year and the year is the first taxation year in which the fiscal period of the partnership is aligned with the fiscal period of one or more other partnerships under a multi-tier alignment (in this paragraph referred to as the “eligible fiscal period”),(i)where a fiscal period of the partnership ends in the year and before the eligible fiscal period, the amount determined by the formula[(A – B) × C/D] – (E + F)whereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the first fiscal period of the partnership that ends in the year (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the first fiscal period of the partnership that ends in the year,Cis the number of days that are in both the year and the particular period,Dis the number of days in the first fiscal period of the partnership that ends in the year,Eis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andFis an amount designated by the corporation in its return of income for the year (other than an amount included in the description of E) and filed with the Minister on or before its filing-due date for the year, and(ii)where the eligible fiscal period of the partnership is the first fiscal period of the partnership that ends in the corporation’s taxation year, the amount determined by the formula(A – B – C) × D/E – (F + G)whereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the eligible fiscal period,Cis the corporation’s eligible alignment income for the eligible fiscal period,Dis the number of days that are in both the year and the particular period,Eis the number of days that are in the eligible fiscal period that ends in the year,Fis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andGis an amount designated by the corporation in its return of income for the year (other than an amount included in the description of F) and filed with the Minister on or before its filing-due date for the year. (montant comptabilisé ajusté pour la période tampon)eligible alignment incomeeligible alignment income, of a corporation, means(a)if a partnership is subject to a single-tier alignment, the first aligned fiscal period of the partnership ends in the first taxation year of the corporation ending after March 22, 2011 (in this paragraph referred to as the “eligible fiscal period”) and the corporation is a member of the partnership at the end of the eligible fiscal period,(i)where the eligible fiscal period is preceded by another fiscal period of the partnership that ends in the corporation’s first taxation year that ends after March 22, 2011 and the corporation is a member of the partnership at the end of that preceding fiscal period, the amount determined by the formulaA – B – CwhereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the eligible fiscal period, andCis, where an outlay or expense of the partnership is deemed by subsection 66(18) to be made or incurred by the corporation at the end of the eligible fiscal period, the total of all amounts each of which is an amount that would be deductible by the corporation for the taxation year under any of sections 66.1, 66.2, 66.21 and 66.4 determined as if each such outlay or expense were the only amount relevant in determining the amount deductible, or(ii)where the eligible fiscal period is the first fiscal period of the partnership that ends in the corporation’s first taxation year ending after March 22, 2011, nil; and(b)if a partnership is subject to a multi-tier alignment, the first aligned fiscal period of the partnership ends in the taxation year of the corporation (in this paragraph referred to as the “eligible fiscal period”) and the corporation is a member of the partnership at the end of the eligible fiscal period, the amount determined by the formulaA – B – CwhereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period, other than any amount(i)for which a deduction is available under section 112 or 113, or(ii)that would be included in computing the income of the corporation for the year if there were no multi-tier alignment,Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of a partnership for the eligible fiscal period, andCis, where an outlay or expense of the partnership is deemed by subsection 66(18) to be made or incurred by the corporation at the end of the eligible fiscal period, the total of all amounts each of which is an amount that would be deductible by the corporation for the taxation year under any of sections 66.1, 66.2, 66.21 and 66.4 determined as if each such outlay or expense were the only amount relevant in determining the amount deductible. (revenu d’alignement admissible)multi-tier alignmentmulti-tier alignment, in respect of a partnership, means the alignment under subsection 249.1(9) or (11) of the fiscal period of the partnership and the fiscal period of one or more other partnerships.  (alignement pour paliers multiples)qualified resource expensequalified resource expense, of a corporation for a taxation year in respect of a fiscal period of a partnership that begins in the year and ends after the year, means an expense incurred by the partnership in the portion of the fiscal period that is in the year and that is described in any of the following definitions:(a)Canadian exploration expensein subsection 66.1(6);(b)Canadian development expensein subsection 66.2(5);(c)foreign resource expensein subsection 66.21(1); and(d)Canadian oil and gas property expensein subsection 66.4(5). (dépense admissible relative à des ressources)qualifying transitional incomequalifying transitional income, of a corporation that is a member of a partnership on March 22, 2011, means the amount that is the total of the following amounts, computed in accordance with subsection (15),(a)the corporation’s eligible alignment income in respect of the partnership, and(b)the corporation’s adjusted stub period accrual in respect of the partnership for(i)if there is a multi-tier alignment in respect of the partnership, the corporation’s taxation year during which ends the fiscal period of the partnership that is aligned with the fiscal period of one or more other partnerships under the multi-tier alignment, or(ii)in any other case, the corporation’s first taxation year that ends after March 22, 2011. (revenu admissible à l’allègement)significant interestsignificant interest, of a corporation in a partnership at any time, means a membership interest of the corporation in the partnership if the corporation, or the corporation together with one or more persons or partnerships related to or affiliated with the corporation, is entitled at that time to more than 10% of(a)the income or loss of the partnership; or(b)the assets (net of liabilities) of the partnership if it were to cease to exist. (participation importante)single-tier alignmentsingle-tier alignment, in respect of a partnership, means the ending of a fiscal period of the partnership under subsection 249.1(8). (alignement pour palier unique)specified percentagespecified percentage, of a corporation for a particular taxation year in respect of a partnership, means(a)if the first taxation year for which the corporation has qualifying transitional income ends in 2011 and the particular year ends in(i)2011, 100%,(ii)2012, 85%,(iii)2013, 65%,(iv)2014, 45%,(v)2015, 25%, and(vi)2016, 0%;(b)if the first taxation year for which the corporation has qualifying transitional income ends in 2012 and the particular year ends in(i)2012, 100%,(ii)2013, 85%,(iii)2014, 65%,(iv)2015, 45%,(v)2016, 25%, and(vi)2017, 0%; and(c)if the first taxation year for which the corporation has qualifying transitional income ends in 2013 and the particular year ends in(i)2013, 85%,(ii)2014, 65%,(iii)2015, 45%,(iv)2016, 25%, and(v)2017, 0%. (pourcentage déterminé)Marginal note:Income inclusion — adjusted stub period accrual(2)Subject to subsections (5) and (9), a corporation (other than a professional corporation) shall include in computing its income for a taxation year its adjusted stub period accrual in respect of a partnership if(a)the corporation has a significant interest in the partnership at the end of the last fiscal period of the partnership that ends in the year;(b)another fiscal period of the partnership begins in the year and ends after the year; and(c)at the end of the year, the corporation is entitled to a share of an income, loss, taxable capital gain or allowable capital loss of the partnership for the fiscal period referred to in paragraph (b).Marginal note:Income inclusion — new partner designation(3)Subject to subsection (5), if a corporation (other than a professional corporation) becomes a member of a partnership during a fiscal period of the partnership (in this subsection referred to as the “particular period”) that begins in the corporation’s taxation year and ends after the taxation year but on or before the filing-due date for the taxation year and the corporation has a significant interest in the partnership at the end of the particular period, the corporation may include in computing its income for the taxation year the lesser of(a)the amount, if any, designated by the corporation in its return of income for the taxation year, and(b)the amount determined by the formulaA × B/CwhereAis the corporation’s income from the partnership for the particular period (other than any amount for which a deduction is available under section 112 or 113),Bis the number of days that are both in the corporation’s taxation year and the particular period, andCis the number of days in the particular period.Marginal note:Treatment in following year(4)If an amount was included in computing the income of a corporation in respect of a partnership for the immediately preceding taxation year under subsection (2) or (3),(a)the portion of the amount that, because of subparagraph (5)(a)(i) or (ii), was income for that preceding year is deductible in computing the income of the corporation for the current taxation year; and(b)the portion of the amount that, because of subparagraph (5)(a)(i) or (ii), was taxable capital gains for that preceding year is deemed to be an allowable capital loss of the corporation for the current taxation year from the disposition of property.Marginal note:Character of amounts(5)For the purposes of this Act, the following rules apply:(a)in computing the income of a corporation for a taxation year,(i)an adjusted stub period accrual included under subsection (2) in respect of a partnership for the year is deemed to be income, and taxable capital gains from the disposition of property, having the same character and to be in the same proportions as any income and taxable capital gains that were allocated by the partnership to the corporation for all fiscal periods of the partnership ending in the year,(ii)an amount included under subsection (3) in respect of a partnership for the year is deemed to be income, and taxable capital gains from the disposition of property, having the same character and to be in the same proportions as any income and taxable capital gains that were allocated by the partnership to the corporation for the particular period referred to in that subsection,(iii)an amount, a portion of which is deductible or is an allowable capital loss under subsection (4) in respect of a partnership for the year, is deemed to have the same character and to be in the same proportions as the income and taxable capital gains included in the corporation’s income for the immediately preceding taxation year under subsection (2) or (3) in respect of the partnership,(iv)an amount claimed as a reserve under subsection (11) in respect of a partnership for the year is deemed to have the same character and to be in the same proportions as the qualifying transitional income in respect of the partnership for the year, and(v)an amount, a portion of which is included in income under paragraph (12)(a), or is deemed to be a taxable capital gain under paragraph (12)(b), in respect of a partnership for the year, is deemed to have the same character and to be in the same proportions as the amount claimed as a reserve under subsection (11) in respect of the partnership for the immediately preceding taxation year;(b)a corporation’s capital dividend account, as defined in subsection 89(1), is to be determined without reference to this section; and(c)the reference in subparagraph 53(2)(c)(i.4) to an amount deducted under subsection (11) by a taxpayer includes an amount deemed to be an allowable capital loss under subparagraph (11)(b)(ii).Marginal note:Designation — qualified resource expense(6)A corporation may designate an amount for a taxation year in respect of a qualified resource expense under the definitionadjusted stub period accrualin subsection (1) subject to the following rules:(a)the corporation cannot designate an amount for the year in respect of a qualified resource expense in respect of a partnership except to the extent the corporation obtains from the partnership, before the corporation’s filing-due date for the year, information in writing identifying the corporation’s qualified resource expenses described(i)in paragraph (h) of the definitionCanadian exploration expensein subsection 66.1(6), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year,(ii)in paragraph (f) of the definitionCanadian development expensein subsection 66.2(5), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year,(iii)in paragraph (e) of the definitionforeign resource expensein subsection 66.21(1), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year, and(iv)in paragraph (b) of the definitionCanadian oil and gas property expensein subsection 66.4(5), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year; and(b)the amount designated for the year by the corporation is not to exceed the maximum amount that would be deductible by the corporation under any of sections 66.1, 66.2, 66.21 and 66.4 in computing its income for the year if(i)the amounts referred to in paragraph (a) in respect of the partnership were the only amounts relevant in determining the maximum amount, and(ii)the fiscal period of the partnership that begins in the year and ends after the year had ended at the end of the year and each qualified resource expense were deemed under subsection 66(18) to be incurred by the corporation at the end of the year.Marginal note:No additional income — bankrupt(7)Subsections (2) and (3) do not apply in computing a corporation’s income for a taxation year in respect of a partnership if the corporation becomes a bankrupt in the year.Marginal note:Foreign affiliates(8)This section does not apply for the purposes of computing, for a taxation year of a foreign affiliate of a corporation resident in Canada,(a)the foreign accrual property income of the affiliate in respect of the corporation; and(b)except to the extent that the context otherwise requires, the exempt surplus or exempt deficit, the hybrid surplus or hybrid deficit, and the taxable surplus or taxable deficit (as those terms are defined in subsection 5907(1) of theIncome Tax Regulations) of the affiliate in respect of the corporation.Marginal note:Special case — multi-tier alignment(9)If a corporation is a member of a partnership subject to a multi-tier alignment, subsection (2) does not apply to the corporation in respect of the partnership for taxation years preceding the taxation year that includes the end of the first aligned fiscal period of the partnership under the multi-tier alignment.Marginal note:Designations(10)Once a corporation makes a designation in calculating its adjusted stub period accrual in respect of a partnership for a taxation year under any of the description of E or F of paragraph (a), the description of E or F of subparagraph (b)(i) and the description of F or G of subparagraph (b)(ii) of the definitionadjusted stub period accrualin subsection (1), the designation cannot be amended or revoked.Marginal note:Transitional reserve(11)If a corporation has qualifying transitional income in respect of a partnership for a particular taxation year,(a)the corporation may, in computing its income for the particular year, claim an amount, as a reserve, not exceeding the least of(i)the specified percentage for the particular year of the corporation’s qualifying transitional income in respect of the partnership,(ii)if, for the immediately preceding taxation year, an amount was claimed under this subsection in computing the corporation’s income in respect of the partnership, the amount that is the total of(A)the amount included under subsection (12) in computing the corporation’s income for the particular year in respect of the partnership, and(B)the amount by which the corporation’s qualifying transitional income in respect of the partnership is increased in the particular year because of the application of subsections (16) and (17), and(iii)the amount determined by the formulaA – BwhereAis the corporation’s income for the particular year computed before deducting or claiming any amount under this subsection in respect of the partnership or under section 61.3 and 61.4, andBis the total of all amounts each of which is an amount deductible by the corporation for the year under section 112 or 113 in respect of a dividend received by the corporation after December 20, 2012; and(b)the portion of the amount claimed under paragraph (a) for the particular year that, because of subparagraph (5)(a)(iv), has(i)a character other than capital is deductible in computing the income of the corporation for the particular year, and(ii)the character of capital is deemed to be an allowable capital loss of the corporation for the particular year from the disposition of property.Marginal note:Inclusion of prior year reserve(12)Subject to subsection (5), if a reserve was claimed by a corporation under subsection (11) in respect of a partnership for the immediately preceding taxation year,(a)the portion of the reserve that was deducted under subparagraph (11)(b)(i) for that preceding year is to be included in computing the income of the corporation for the current taxation year; and(b)the portion of the reserve that was deemed by subparagraph (11)(b)(ii) to be an allowable capital loss of the corporation for that preceding year is deemed to be a taxable capital gain of the corporation for the current taxation year from the disposition of property.Marginal note:No reserve(13)No claim shall be made under subsection (11) in computing a corporation’s income for a taxation year in respect of a partnership(a)unless,(i)in the case of a corporation that is a member of a partnership in respect of which there is a multi-tier alignment, the corporation has been a member of the partnership continuously since before March 22, 2011 to the end of the year,(ii)in the case of a corporation that is a member of a partnership in respect of which there is no multi-tier alignment, the corporation is a member of the partnership(A)at the end of the partnership’s fiscal period that begins before March 22, 2011 and ends in the year of the corporation that includes March 22, 2011,(B)at the end of the partnership’s fiscal period commencing immediately after the fiscal period referred to in clause (A) and continues to be a member until after the end of the year of the corporation that includes March 22, 2011, and(C)continuously since before March 22, 2011 until the end of the year;(b)if at the end of the year or at any time in the following taxation year,(i)the corporation’s income is exempt from tax under this Part, or(ii)the corporation is non-resident and the partnership does not carry on business through a permanent establishment (as defined for the purpose of subsection 16.1(1)) in Canada; or(c)if the year ends immediately before another taxation year(i)at the beginning of which the partnership no longer principally carries on the activities to which the reserve relates,(ii)in which the corporation becomes a bankrupt, or(iii)in which the corporation is dissolved or wound up (other than in circumstances to which subsection 88(1) applies).Marginal note:Deemed partner(14)A corporation that cannot claim an amount under subsection (11) for a taxation year in respect of a partnership solely because it has disposed of its interest in the partnership is deemed for the purposes of paragraph (13)(a) to be a member of a partnership continuously until the end of the taxation year if(a)the corporation disposed of its interest to another corporation related to, or affiliated with, the corporation at the time of the disposition; and(b)a corporation related to, or affiliated with, the corporation has the partnership interest referred to in paragraph (a) at the end of the taxation year.Marginal note:Computing qualifying transitional income — special rules(15)For the purposes of determining a corporation’s qualifying transitional income, the income or loss, as the case may be, of a partnership for a fiscal period shall be computed as if(a)the partnership had deducted for the period the maximum amount deductible in respect of any expense, reserve, allowance or other amount;(b)this Act were read without reference to paragraph 28(1)(b); and(c)the partnership had made an election under paragraph 34(a).Marginal note:Qualifying transition income adjustment  — conditions for application(16)Subsection (17) applies for a particular taxation year of a corporation and for each subsequent taxation year for which the corporation may claim an amount under subsection (11) in respect of a partnership if the particular year is the first taxation year(a)that is after the taxation year in which the corporation has, or would have if the partnership had income, an adjusted stub period accrual that is included in the corporation’s qualifying transitional income in respect of the partnership by reason of paragraph (b) of the definitionqualifying transitional incomein subsection (1); and(b)in which ends the fiscal period of the partnership that began in the taxation year referred to in paragraph (a).Marginal note:Adjustment of qualifying transitional income(17)If this subsection applies in respect of a partnership for a taxation year of a corporation, the adjusted stub period accrual included in the corporation’s qualifying transitional income in respect of the partnership for the year is computed as if(a)the descriptions in paragraph (a) and subparagraph (b)(i) of the definitionadjusted stub period accrualin subsection (1) read as follows:Ais the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the particular period (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the particular period,Cis the number of days that are in both the year and the particular period,Dis the number of days in the particular period,Eis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andFis nil; and(b)the descriptions in subparagraph (b)(ii) of the definitionadjusted stub period accrualin subsection (1) read as follows:Ais the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the particular period (other than any amount for which a deduction is available under section 112 or 113),Bthe total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the particular period,Cis nil,Dis the number of days that are in both the year and the particular period,Eis the number of days in the particular period,Fis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andGis nil.Marginal note:Anti-avoidance(18)If it is reasonable to conclude that one of the main reasons a corporation is a member of a partnership in a taxation year is to avoid the application of subsection (13), the corporation is deemed not to be a member of the partnership for the purposes of that subsection.
(a)if paragraph (b) does not apply, the amount determined by the formula[(A – B) × C/D] – (E + F)whereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for a fiscal period of the partnership that ends in the year (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for a fiscal period of the partnership that ends in the year,Cis the number of days that are in both the year and the particular period,Dis the number of days in fiscal periods of the partnership that end in the year,Eis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andFis an amount designated by the corporation in its return of income for the year (other than an amount included in the description of E) and filed with the Minister on or before its filing-due date for the year; and(b)if a fiscal period of the partnership ends in the corporation’s taxation year and the year is the first taxation year in which the fiscal period of the partnership is aligned with the fiscal period of one or more other partnerships under a multi-tier alignment (in this paragraph referred to as the “eligible fiscal period”),(i)where a fiscal period of the partnership ends in the year and before the eligible fiscal period, the amount determined by the formula[(A – B) × C/D] – (E + F)whereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the first fiscal period of the partnership that ends in the year (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the first fiscal period of the partnership that ends in the year,Cis the number of days that are in both the year and the particular period,Dis the number of days in the first fiscal period of the partnership that ends in the year,Eis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andFis an amount designated by the corporation in its return of income for the year (other than an amount included in the description of E) and filed with the Minister on or before its filing-due date for the year, and(ii)where the eligible fiscal period of the partnership is the first fiscal period of the partnership that ends in the corporation’s taxation year, the amount determined by the formula(A – B – C) × D/E – (F + G)whereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the eligible fiscal period,Cis the corporation’s eligible alignment income for the eligible fiscal period,Dis the number of days that are in both the year and the particular period,Eis the number of days that are in the eligible fiscal period that ends in the year,Fis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andGis an amount designated by the corporation in its return of income for the year (other than an amount included in the description of F) and filed with the Minister on or before its filing-due date for the year. (montant comptabilisé ajusté pour la période tampon)
(i)where a fiscal period of the partnership ends in the year and before the eligible fiscal period, the amount determined by the formula[(A – B) × C/D] – (E + F)whereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the first fiscal period of the partnership that ends in the year (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the first fiscal period of the partnership that ends in the year,Cis the number of days that are in both the year and the particular period,Dis the number of days in the first fiscal period of the partnership that ends in the year,Eis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andFis an amount designated by the corporation in its return of income for the year (other than an amount included in the description of E) and filed with the Minister on or before its filing-due date for the year, and(ii)where the eligible fiscal period of the partnership is the first fiscal period of the partnership that ends in the corporation’s taxation year, the amount determined by the formula(A – B – C) × D/E – (F + G)whereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the eligible fiscal period,Cis the corporation’s eligible alignment income for the eligible fiscal period,Dis the number of days that are in both the year and the particular period,Eis the number of days that are in the eligible fiscal period that ends in the year,Fis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andGis an amount designated by the corporation in its return of income for the year (other than an amount included in the description of F) and filed with the Minister on or before its filing-due date for the year. (montant comptabilisé ajusté pour la période tampon)
(a)if a partnership is subject to a single-tier alignment, the first aligned fiscal period of the partnership ends in the first taxation year of the corporation ending after March 22, 2011 (in this paragraph referred to as the “eligible fiscal period”) and the corporation is a member of the partnership at the end of the eligible fiscal period,(i)where the eligible fiscal period is preceded by another fiscal period of the partnership that ends in the corporation’s first taxation year that ends after March 22, 2011 and the corporation is a member of the partnership at the end of that preceding fiscal period, the amount determined by the formulaA – B – CwhereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the eligible fiscal period, andCis, where an outlay or expense of the partnership is deemed by subsection 66(18) to be made or incurred by the corporation at the end of the eligible fiscal period, the total of all amounts each of which is an amount that would be deductible by the corporation for the taxation year under any of sections 66.1, 66.2, 66.21 and 66.4 determined as if each such outlay or expense were the only amount relevant in determining the amount deductible, or(ii)where the eligible fiscal period is the first fiscal period of the partnership that ends in the corporation’s first taxation year ending after March 22, 2011, nil; and(b)if a partnership is subject to a multi-tier alignment, the first aligned fiscal period of the partnership ends in the taxation year of the corporation (in this paragraph referred to as the “eligible fiscal period”) and the corporation is a member of the partnership at the end of the eligible fiscal period, the amount determined by the formulaA – B – CwhereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period, other than any amount(i)for which a deduction is available under section 112 or 113, or(ii)that would be included in computing the income of the corporation for the year if there were no multi-tier alignment,Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of a partnership for the eligible fiscal period, andCis, where an outlay or expense of the partnership is deemed by subsection 66(18) to be made or incurred by the corporation at the end of the eligible fiscal period, the total of all amounts each of which is an amount that would be deductible by the corporation for the taxation year under any of sections 66.1, 66.2, 66.21 and 66.4 determined as if each such outlay or expense were the only amount relevant in determining the amount deductible. (revenu d’alignement admissible)
(i)where the eligible fiscal period is preceded by another fiscal period of the partnership that ends in the corporation’s first taxation year that ends after March 22, 2011 and the corporation is a member of the partnership at the end of that preceding fiscal period, the amount determined by the formulaA – B – CwhereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the eligible fiscal period (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the eligible fiscal period, andCis, where an outlay or expense of the partnership is deemed by subsection 66(18) to be made or incurred by the corporation at the end of the eligible fiscal period, the total of all amounts each of which is an amount that would be deductible by the corporation for the taxation year under any of sections 66.1, 66.2, 66.21 and 66.4 determined as if each such outlay or expense were the only amount relevant in determining the amount deductible, or(ii)where the eligible fiscal period is the first fiscal period of the partnership that ends in the corporation’s first taxation year ending after March 22, 2011, nil; and
(i)for which a deduction is available under section 112 or 113, or(ii)that would be included in computing the income of the corporation for the year if there were no multi-tier alignment,
(a)Canadian exploration expensein subsection 66.1(6);(b)Canadian development expensein subsection 66.2(5);(c)foreign resource expensein subsection 66.21(1); and(d)Canadian oil and gas property expensein subsection 66.4(5). (dépense admissible relative à des ressources)
(a)the corporation’s eligible alignment income in respect of the partnership, and(b)the corporation’s adjusted stub period accrual in respect of the partnership for(i)if there is a multi-tier alignment in respect of the partnership, the corporation’s taxation year during which ends the fiscal period of the partnership that is aligned with the fiscal period of one or more other partnerships under the multi-tier alignment, or(ii)in any other case, the corporation’s first taxation year that ends after March 22, 2011. (revenu admissible à l’allègement)
(i)if there is a multi-tier alignment in respect of the partnership, the corporation’s taxation year during which ends the fiscal period of the partnership that is aligned with the fiscal period of one or more other partnerships under the multi-tier alignment, or(ii)in any other case, the corporation’s first taxation year that ends after March 22, 2011. (revenu admissible à l’allègement)
(a)the income or loss of the partnership; or(b)the assets (net of liabilities) of the partnership if it were to cease to exist. (participation importante)
(a)if the first taxation year for which the corporation has qualifying transitional income ends in 2011 and the particular year ends in(i)2011, 100%,(ii)2012, 85%,(iii)2013, 65%,(iv)2014, 45%,(v)2015, 25%, and(vi)2016, 0%;(b)if the first taxation year for which the corporation has qualifying transitional income ends in 2012 and the particular year ends in(i)2012, 100%,(ii)2013, 85%,(iii)2014, 65%,(iv)2015, 45%,(v)2016, 25%, and(vi)2017, 0%; and(c)if the first taxation year for which the corporation has qualifying transitional income ends in 2013 and the particular year ends in(i)2013, 85%,(ii)2014, 65%,(iii)2015, 45%,(iv)2016, 25%, and(v)2017, 0%. (pourcentage déterminé)
(i)2011, 100%,(ii)2012, 85%,(iii)2013, 65%,(iv)2014, 45%,(v)2015, 25%, and(vi)2016, 0%;
(i)2012, 100%,(ii)2013, 85%,(iii)2014, 65%,(iv)2015, 45%,(v)2016, 25%, and(vi)2017, 0%; and
(i)2013, 85%,(ii)2014, 65%,(iii)2015, 45%,(iv)2016, 25%, and(v)2017, 0%. (pourcentage déterminé)
(a)the corporation has a significant interest in the partnership at the end of the last fiscal period of the partnership that ends in the year;(b)another fiscal period of the partnership begins in the year and ends after the year; and(c)at the end of the year, the corporation is entitled to a share of an income, loss, taxable capital gain or allowable capital loss of the partnership for the fiscal period referred to in paragraph (b).
(a)the amount, if any, designated by the corporation in its return of income for the taxation year, and(b)the amount determined by the formulaA × B/CwhereAis the corporation’s income from the partnership for the particular period (other than any amount for which a deduction is available under section 112 or 113),Bis the number of days that are both in the corporation’s taxation year and the particular period, andCis the number of days in the particular period.
(a)the portion of the amount that, because of subparagraph (5)(a)(i) or (ii), was income for that preceding year is deductible in computing the income of the corporation for the current taxation year; and(b)the portion of the amount that, because of subparagraph (5)(a)(i) or (ii), was taxable capital gains for that preceding year is deemed to be an allowable capital loss of the corporation for the current taxation year from the disposition of property.
(a)in computing the income of a corporation for a taxation year,(i)an adjusted stub period accrual included under subsection (2) in respect of a partnership for the year is deemed to be income, and taxable capital gains from the disposition of property, having the same character and to be in the same proportions as any income and taxable capital gains that were allocated by the partnership to the corporation for all fiscal periods of the partnership ending in the year,(ii)an amount included under subsection (3) in respect of a partnership for the year is deemed to be income, and taxable capital gains from the disposition of property, having the same character and to be in the same proportions as any income and taxable capital gains that were allocated by the partnership to the corporation for the particular period referred to in that subsection,(iii)an amount, a portion of which is deductible or is an allowable capital loss under subsection (4) in respect of a partnership for the year, is deemed to have the same character and to be in the same proportions as the income and taxable capital gains included in the corporation’s income for the immediately preceding taxation year under subsection (2) or (3) in respect of the partnership,(iv)an amount claimed as a reserve under subsection (11) in respect of a partnership for the year is deemed to have the same character and to be in the same proportions as the qualifying transitional income in respect of the partnership for the year, and(v)an amount, a portion of which is included in income under paragraph (12)(a), or is deemed to be a taxable capital gain under paragraph (12)(b), in respect of a partnership for the year, is deemed to have the same character and to be in the same proportions as the amount claimed as a reserve under subsection (11) in respect of the partnership for the immediately preceding taxation year;(b)a corporation’s capital dividend account, as defined in subsection 89(1), is to be determined without reference to this section; and(c)the reference in subparagraph 53(2)(c)(i.4) to an amount deducted under subsection (11) by a taxpayer includes an amount deemed to be an allowable capital loss under subparagraph (11)(b)(ii).
(i)an adjusted stub period accrual included under subsection (2) in respect of a partnership for the year is deemed to be income, and taxable capital gains from the disposition of property, having the same character and to be in the same proportions as any income and taxable capital gains that were allocated by the partnership to the corporation for all fiscal periods of the partnership ending in the year,(ii)an amount included under subsection (3) in respect of a partnership for the year is deemed to be income, and taxable capital gains from the disposition of property, having the same character and to be in the same proportions as any income and taxable capital gains that were allocated by the partnership to the corporation for the particular period referred to in that subsection,(iii)an amount, a portion of which is deductible or is an allowable capital loss under subsection (4) in respect of a partnership for the year, is deemed to have the same character and to be in the same proportions as the income and taxable capital gains included in the corporation’s income for the immediately preceding taxation year under subsection (2) or (3) in respect of the partnership,(iv)an amount claimed as a reserve under subsection (11) in respect of a partnership for the year is deemed to have the same character and to be in the same proportions as the qualifying transitional income in respect of the partnership for the year, and(v)an amount, a portion of which is included in income under paragraph (12)(a), or is deemed to be a taxable capital gain under paragraph (12)(b), in respect of a partnership for the year, is deemed to have the same character and to be in the same proportions as the amount claimed as a reserve under subsection (11) in respect of the partnership for the immediately preceding taxation year;
(a)the corporation cannot designate an amount for the year in respect of a qualified resource expense in respect of a partnership except to the extent the corporation obtains from the partnership, before the corporation’s filing-due date for the year, information in writing identifying the corporation’s qualified resource expenses described(i)in paragraph (h) of the definitionCanadian exploration expensein subsection 66.1(6), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year,(ii)in paragraph (f) of the definitionCanadian development expensein subsection 66.2(5), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year,(iii)in paragraph (e) of the definitionforeign resource expensein subsection 66.21(1), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year, and(iv)in paragraph (b) of the definitionCanadian oil and gas property expensein subsection 66.4(5), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year; and(b)the amount designated for the year by the corporation is not to exceed the maximum amount that would be deductible by the corporation under any of sections 66.1, 66.2, 66.21 and 66.4 in computing its income for the year if(i)the amounts referred to in paragraph (a) in respect of the partnership were the only amounts relevant in determining the maximum amount, and(ii)the fiscal period of the partnership that begins in the year and ends after the year had ended at the end of the year and each qualified resource expense were deemed under subsection 66(18) to be incurred by the corporation at the end of the year.
(i)in paragraph (h) of the definitionCanadian exploration expensein subsection 66.1(6), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year,(ii)in paragraph (f) of the definitionCanadian development expensein subsection 66.2(5), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year,(iii)in paragraph (e) of the definitionforeign resource expensein subsection 66.21(1), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year, and(iv)in paragraph (b) of the definitionCanadian oil and gas property expensein subsection 66.4(5), determined as if those expenses had been incurred by the partnership in its last fiscal period that ended in the year; and
(i)the amounts referred to in paragraph (a) in respect of the partnership were the only amounts relevant in determining the maximum amount, and(ii)the fiscal period of the partnership that begins in the year and ends after the year had ended at the end of the year and each qualified resource expense were deemed under subsection 66(18) to be incurred by the corporation at the end of the year.
(a)the foreign accrual property income of the affiliate in respect of the corporation; and(b)except to the extent that the context otherwise requires, the exempt surplus or exempt deficit, the hybrid surplus or hybrid deficit, and the taxable surplus or taxable deficit (as those terms are defined in subsection 5907(1) of theIncome Tax Regulations) of the affiliate in respect of the corporation.
(a)the corporation may, in computing its income for the particular year, claim an amount, as a reserve, not exceeding the least of(i)the specified percentage for the particular year of the corporation’s qualifying transitional income in respect of the partnership,(ii)if, for the immediately preceding taxation year, an amount was claimed under this subsection in computing the corporation’s income in respect of the partnership, the amount that is the total of(A)the amount included under subsection (12) in computing the corporation’s income for the particular year in respect of the partnership, and(B)the amount by which the corporation’s qualifying transitional income in respect of the partnership is increased in the particular year because of the application of subsections (16) and (17), and(iii)the amount determined by the formulaA – BwhereAis the corporation’s income for the particular year computed before deducting or claiming any amount under this subsection in respect of the partnership or under section 61.3 and 61.4, andBis the total of all amounts each of which is an amount deductible by the corporation for the year under section 112 or 113 in respect of a dividend received by the corporation after December 20, 2012; and(b)the portion of the amount claimed under paragraph (a) for the particular year that, because of subparagraph (5)(a)(iv), has(i)a character other than capital is deductible in computing the income of the corporation for the particular year, and(ii)the character of capital is deemed to be an allowable capital loss of the corporation for the particular year from the disposition of property.
(i)the specified percentage for the particular year of the corporation’s qualifying transitional income in respect of the partnership,(ii)if, for the immediately preceding taxation year, an amount was claimed under this subsection in computing the corporation’s income in respect of the partnership, the amount that is the total of(A)the amount included under subsection (12) in computing the corporation’s income for the particular year in respect of the partnership, and(B)the amount by which the corporation’s qualifying transitional income in respect of the partnership is increased in the particular year because of the application of subsections (16) and (17), and(iii)the amount determined by the formulaA – BwhereAis the corporation’s income for the particular year computed before deducting or claiming any amount under this subsection in respect of the partnership or under section 61.3 and 61.4, andBis the total of all amounts each of which is an amount deductible by the corporation for the year under section 112 or 113 in respect of a dividend received by the corporation after December 20, 2012; and
(A)the amount included under subsection (12) in computing the corporation’s income for the particular year in respect of the partnership, and(B)the amount by which the corporation’s qualifying transitional income in respect of the partnership is increased in the particular year because of the application of subsections (16) and (17), and
(i)a character other than capital is deductible in computing the income of the corporation for the particular year, and(ii)the character of capital is deemed to be an allowable capital loss of the corporation for the particular year from the disposition of property.
(a)the portion of the reserve that was deducted under subparagraph (11)(b)(i) for that preceding year is to be included in computing the income of the corporation for the current taxation year; and(b)the portion of the reserve that was deemed by subparagraph (11)(b)(ii) to be an allowable capital loss of the corporation for that preceding year is deemed to be a taxable capital gain of the corporation for the current taxation year from the disposition of property.
(a)unless,(i)in the case of a corporation that is a member of a partnership in respect of which there is a multi-tier alignment, the corporation has been a member of the partnership continuously since before March 22, 2011 to the end of the year,(ii)in the case of a corporation that is a member of a partnership in respect of which there is no multi-tier alignment, the corporation is a member of the partnership(A)at the end of the partnership’s fiscal period that begins before March 22, 2011 and ends in the year of the corporation that includes March 22, 2011,(B)at the end of the partnership’s fiscal period commencing immediately after the fiscal period referred to in clause (A) and continues to be a member until after the end of the year of the corporation that includes March 22, 2011, and(C)continuously since before March 22, 2011 until the end of the year;(b)if at the end of the year or at any time in the following taxation year,(i)the corporation’s income is exempt from tax under this Part, or(ii)the corporation is non-resident and the partnership does not carry on business through a permanent establishment (as defined for the purpose of subsection 16.1(1)) in Canada; or(c)if the year ends immediately before another taxation year(i)at the beginning of which the partnership no longer principally carries on the activities to which the reserve relates,(ii)in which the corporation becomes a bankrupt, or(iii)in which the corporation is dissolved or wound up (other than in circumstances to which subsection 88(1) applies).
(i)in the case of a corporation that is a member of a partnership in respect of which there is a multi-tier alignment, the corporation has been a member of the partnership continuously since before March 22, 2011 to the end of the year,(ii)in the case of a corporation that is a member of a partnership in respect of which there is no multi-tier alignment, the corporation is a member of the partnership(A)at the end of the partnership’s fiscal period that begins before March 22, 2011 and ends in the year of the corporation that includes March 22, 2011,(B)at the end of the partnership’s fiscal period commencing immediately after the fiscal period referred to in clause (A) and continues to be a member until after the end of the year of the corporation that includes March 22, 2011, and(C)continuously since before March 22, 2011 until the end of the year;
(A)at the end of the partnership’s fiscal period that begins before March 22, 2011 and ends in the year of the corporation that includes March 22, 2011,(B)at the end of the partnership’s fiscal period commencing immediately after the fiscal period referred to in clause (A) and continues to be a member until after the end of the year of the corporation that includes March 22, 2011, and(C)continuously since before March 22, 2011 until the end of the year;
(i)the corporation’s income is exempt from tax under this Part, or(ii)the corporation is non-resident and the partnership does not carry on business through a permanent establishment (as defined for the purpose of subsection 16.1(1)) in Canada; or
(i)at the beginning of which the partnership no longer principally carries on the activities to which the reserve relates,(ii)in which the corporation becomes a bankrupt, or(iii)in which the corporation is dissolved or wound up (other than in circumstances to which subsection 88(1) applies).
(a)the corporation disposed of its interest to another corporation related to, or affiliated with, the corporation at the time of the disposition; and(b)a corporation related to, or affiliated with, the corporation has the partnership interest referred to in paragraph (a) at the end of the taxation year.
(a)the partnership had deducted for the period the maximum amount deductible in respect of any expense, reserve, allowance or other amount;(b)this Act were read without reference to paragraph 28(1)(b); and(c)the partnership had made an election under paragraph 34(a).
(a)that is after the taxation year in which the corporation has, or would have if the partnership had income, an adjusted stub period accrual that is included in the corporation’s qualifying transitional income in respect of the partnership by reason of paragraph (b) of the definitionqualifying transitional incomein subsection (1); and(b)in which ends the fiscal period of the partnership that began in the taxation year referred to in paragraph (a).
(a)the descriptions in paragraph (a) and subparagraph (b)(i) of the definitionadjusted stub period accrualin subsection (1) read as follows:Ais the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the particular period (other than any amount for which a deduction is available under section 112 or 113),Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the particular period,Cis the number of days that are in both the year and the particular period,Dis the number of days in the particular period,Eis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andFis nil; and(b)the descriptions in subparagraph (b)(ii) of the definitionadjusted stub period accrualin subsection (1) read as follows:Ais the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the partnership for the particular period (other than any amount for which a deduction is available under section 112 or 113),Bthe total of all amounts each of which is the corporation’s share of a loss or allowable capital loss — to the extent that the total of all allowable capital losses does not exceed the total of all taxable capital gains included in the description of A — of the partnership for the particular period,Cis nil,Dis the number of days that are in both the year and the particular period,Eis the number of days in the particular period,Fis the amount of the qualified resource expense in respect of the particular period of the partnership that is designated by the corporation for the year under subsection (6) in its return of income for the year filed with the Minister on or before its filing-due date for the year, andGis nil.
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]1996, c. 21, s. 81998, c. 19, s. 852011, c. 24, s. 32013, c. 34, s. 58, c. 40, s. 16
34.3(1)The definitions in this subsection and in subsection 34.2(1) apply in this section.actual stub period accrualactual stub period accrual, of a corporation in respect of a qualifying partnership for a taxation year, means the positive or negative amount determined by the formula(A – B) × C/D – EwhereAis the total of all amounts each of which is the corporation’s share of an income or taxable capital gain of the qualifying partnership for the last fiscal period of the partnership that began in the base year (other than any amount for which a deduction was available under section 112 or 113);Bis the total of all amounts each of which is the corporation’s share of a loss or allowable capital loss of the qualifying partnership for the last fiscal period of the partnership that began in the base year (to the extent that the total of all allowable capital losses included under this description in respect of all qualifying partnerships for the taxation year does not exceed the corporation’s share of all taxable capital gains of all qualifying partnerships for the taxation year);Cis the number of days that are in both the base year and the fiscal period;Dis the number of days in the fiscal period; andEis the amount of the qualified resource expense in respect of the qualifying partnership that was designated by the corporation for the base year under subsection 34.2(6) in its return of income for the base year filed with the Minister on or before its filing-due date for the base year. (montant comptabilisé réel pour la période tampon)base yearbase year, of a corporation in respect of a qualifying partnership for a taxation year, means the preceding taxation year of the corporation in which began a fiscal period of the partnership that ends in the corporation’s taxation year. (année de base)income shortfall adjustmentincome shortfall adjustment, of a corporation in respect of a qualifying partnership for a taxation year, means the positive or negative amount determined by the formula(A – B) × C × DwhereAis the amount that is the lesser of(a)the actual stub period accrual in respect of the qualifying partnership, and(b)the amount that would be the corporation’s adjusted stub period accrual for the base year in respect of the qualifying partnership if the value of F in paragraph (a) of the definitionadjusted stub period accrualin subsection 34.2(1) were nil;Bis the amount included under subsection 34.2(2) in computing the corporation’s income for the base year in respect of the qualifying partnership;Cis the number of days in the period that(a)begins on the day after the day on which the base year ends, and(b)ends on the day on which the taxation year ends; andDis the average daily rate of interest determined by reference to the rate of interest prescribed under paragraph 4301(a) of theIncome Tax Regulationsfor the period referred to in the description of C. (rajustement pour revenu insuffisant)qualifying partnershipqualifying partnership, in respect of a corporation for a particular taxation year, means a partnership(a)a fiscal period of which began in a preceding taxation year and ends in the particular taxation year; and(b)in respect of which the corporation was required to calculate an adjusted stub period accrual for the preceding taxation year. (société de personnes admissible)Marginal note:Application of subsection (3)(2)Subsection (3) applies to a corporation for a taxation year if(a)the corporation has designated an amount for the purpose of the description of F in paragraph (a) of the definitionadjusted stub period accrualin subsection 34.2(1) in calculating its adjusted stub period accrual for the base year in respect of a qualifying partnership for the taxation year; and(b)where the corporation has qualifying transitional income, the taxation year is after the first taxation year of the corporation to which subsection 34.2(17) applies.Marginal note:Income shortfall adjustment — inclusion(3)If this subsection applies to a corporation for a taxation year, the corporation shall include in computing its income for the taxation year the amount determined by the formulaA + 0.50 × (A – B)whereAis the amount that is the total of all amounts each of which is the corporation’s income shortfall adjustment in respect of a qualifying partnership for the year; andBis the amount that is the lesser of A and the total of all amounts each of which is 25% of the positive amount, if any, that would be the income shortfall adjustment in respect of a qualifying partnership for the year if the value of the description of B in the definitionincome shortfall adjustmentin subsection (1) were nil.
(a)the actual stub period accrual in respect of the qualifying partnership, and(b)the amount that would be the corporation’s adjusted stub period accrual for the base year in respect of the qualifying partnership if the value of F in paragraph (a) of the definitionadjusted stub period accrualin subsection 34.2(1) were nil;
(a)begins on the day after the day on which the base year ends, and(b)ends on the day on which the taxation year ends; and
(a)a fiscal period of which began in a preceding taxation year and ends in the particular taxation year; and(b)in respect of which the corporation was required to calculate an adjusted stub period accrual for the preceding taxation year. (société de personnes admissible)
(a)the corporation has designated an amount for the purpose of the description of F in paragraph (a) of the definitionadjusted stub period accrualin subsection 34.2(1) in calculating its adjusted stub period accrual for the base year in respect of a qualifying partnership for the taxation year; and(b)where the corporation has qualifying transitional income, the taxation year is after the first taxation year of the corporation to which subsection 34.2(17) applies.
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]2011, c. 24, s. 3
35(1)Where a share of the capital stock of a corporation(a)is received in a taxation year by an individual as consideration for the disposition by the individual to the corporation of a mining property or an interest, or for civil law a right, therein acquired by the individual as a result of the individual’s efforts as a prospector, either alone or with others, or(b)is received in a taxation year(i)by a person who has, either under an arrangement with a prospector made before the prospecting, exploration or development work or as an employer of a prospector, advanced money for, or paid part or all of, the expenses of prospecting or exploring for minerals or of developing a property for minerals, and(ii)as consideration for the disposition by the person referred to in subparagraph (i) to the corporation of a mining property or an interest, or for civil law a right, therein acquired under the arrangement under which that person made the advance or paid the expenses, or if the prospector’s employee, acquired by the person through the employee’s efforts,the following rules apply:(c)notwithstanding any other provision of this Act, no amount in respect of the receipt of the share shall be included(i)in computing the income for the year of the individual or person, as the case may be, except as provided in paragraph 35(1)(d), or(ii)in computing at any time the amount to be determined for F in the definitioncumulative Canadian development expensein subsection 66.2(5) in respect of the individual or person, as the case may be,(d)in the case of an individual or partnership (other than a partnership each member of which is a taxable Canadian corporation), an amount in respect of the receipt of the share equal to the lesser of its fair market value at the time of acquisition and its fair market value at the time of disposition or exchange of the share shall be included in computing the income of the individual or partnership, as the case may be, for the year in which the share is disposed of or exchanged,(e)notwithstanding Subdivision C, in computing the cost to the individual, person or partnership, as the case may be, of the share, no amount shall be included in respect of the disposition of the mining property or the interest, or for civil law the right, therein, as the case may be,(f)notwithstanding sections 66 and 66.2, in computing the cost to the corporation of the mining property or the interest, or for civil law the right, therein, as the case may be, no amount shall be included in respect of the share, and(g)for the purpose of paragraph 35(1)(d), an individual or partnership shall be deemed to have disposed of or exchanged shares that are identical properties in the order in which they were acquired.Marginal note:Definitions(2)In this section,mining propertymining propertymeans(a)a right, licence or privilege to prospect, explore, drill or mine for minerals in a mineral resource in Canada, or(b)real property or an immovable in Canada (other than depreciable property) the principal value of which depends on its mineral resource content; (bien minier)prospectorprospectormeans an individual who prospects or explores for minerals or develops a property for minerals on behalf of the individual, on behalf of the individual and others or as an employee. (prospecteur)
(a)is received in a taxation year by an individual as consideration for the disposition by the individual to the corporation of a mining property or an interest, or for civil law a right, therein acquired by the individual as a result of the individual’s efforts as a prospector, either alone or with others, or(b)is received in a taxation year(i)by a person who has, either under an arrangement with a prospector made before the prospecting, exploration or development work or as an employer of a prospector, advanced money for, or paid part or all of, the expenses of prospecting or exploring for minerals or of developing a property for minerals, and(ii)as consideration for the disposition by the person referred to in subparagraph (i) to the corporation of a mining property or an interest, or for civil law a right, therein acquired under the arrangement under which that person made the advance or paid the expenses, or if the prospector’s employee, acquired by the person through the employee’s efforts,
(i)by a person who has, either under an arrangement with a prospector made before the prospecting, exploration or development work or as an employer of a prospector, advanced money for, or paid part or all of, the expenses of prospecting or exploring for minerals or of developing a property for minerals, and(ii)as consideration for the disposition by the person referred to in subparagraph (i) to the corporation of a mining property or an interest, or for civil law a right, therein acquired under the arrangement under which that person made the advance or paid the expenses, or if the prospector’s employee, acquired by the person through the employee’s efforts,
(c)notwithstanding any other provision of this Act, no amount in respect of the receipt of the share shall be included(i)in computing the income for the year of the individual or person, as the case may be, except as provided in paragraph 35(1)(d), or(ii)in computing at any time the amount to be determined for F in the definitioncumulative Canadian development expensein subsection 66.2(5) in respect of the individual or person, as the case may be,(d)in the case of an individual or partnership (other than a partnership each member of which is a taxable Canadian corporation), an amount in respect of the receipt of the share equal to the lesser of its fair market value at the time of acquisition and its fair market value at the time of disposition or exchange of the share shall be included in computing the income of the individual or partnership, as the case may be, for the year in which the share is disposed of or exchanged,(e)notwithstanding Subdivision C, in computing the cost to the individual, person or partnership, as the case may be, of the share, no amount shall be included in respect of the disposition of the mining property or the interest, or for civil law the right, therein, as the case may be,(f)notwithstanding sections 66 and 66.2, in computing the cost to the corporation of the mining property or the interest, or for civil law the right, therein, as the case may be, no amount shall be included in respect of the share, and(g)for the purpose of paragraph 35(1)(d), an individual or partnership shall be deemed to have disposed of or exchanged shares that are identical properties in the order in which they were acquired.
(i)in computing the income for the year of the individual or person, as the case may be, except as provided in paragraph 35(1)(d), or(ii)in computing at any time the amount to be determined for F in the definitioncumulative Canadian development expensein subsection 66.2(5) in respect of the individual or person, as the case may be,
(a)a right, licence or privilege to prospect, explore, drill or mine for minerals in a mineral resource in Canada, or(b)real property or an immovable in Canada (other than depreciable property) the principal value of which depends on its mineral resource content; (bien minier)
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 352001, c. 17, s. 202013, c. 34, ss. 99, 100
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 362013, c. 40, s. 17
37(1)Where a taxpayer carried on a business in Canada in a taxation year, there may be deducted in computing the taxpayer’s income from the business for the year such amount as the taxpayer claims not exceeding the amount, if any, by which the total of(a)the total of all amounts each of which is an expenditure of a current nature made by the taxpayer in the year or in a preceding taxation year ending after 1973(i)on scientific research and experimental development related to a business of the taxpayer, carried on in Canada and directly undertaken by the taxpayer,(i.01)on scientific research and experimental development related to a business of the taxpayer, carried on in Canada and directly undertaken on behalf of the taxpayer,(i.1)by payments to a corporation resident in Canada to be used for scientific research and experimental development carried on in Canada that is related to a business of the taxpayer, but only where the taxpayer is entitled to exploit the results of that scientific research and experimental development,(ii)by payments to(A)an approved association that undertakes scientific research and experimental development,(B)an approved university, college, research institute or other similar institution,(C)a corporation resident in Canada and exempt from tax under paragraph 149(1)(j), or(D)[Repealed, 1996, c. 21, s. 9(4)](E)an approved organization that makes payments to an association, institution or corporation described in any of clauses A to (C)to be used for scientific research and experimental development carried on in Canada that is related to a business of the taxpayer, but only where the taxpayer is entitled to exploit the results of that scientific research and experimental development, or(iii)where the taxpayer is a corporation, by payments to a corporation resident in Canada and exempt from tax because of paragraph 149(1)(j), for scientific research and experimental development that is basic research or applied research carried on in Canada(A)the primary purpose of which is the use of results therefrom by the taxpayer in conjunction with other scientific research and experimental development activities undertaken or to be undertaken by or on behalf of the taxpayer that relate to a business of the taxpayer, and(B)that has the technological potential for application to other businesses of a type unrelated to that carried on by the taxpayer, and(b)[Repealed, 2012, c. 31, s. 9](c)the total of all amounts each of which is an expenditure made by the taxpayer in the year or in a preceding taxation year ending after 1973 by way of repayment of amounts described in paragraph 37(1)(d),(c.1)all amounts included by virtue of paragraph 12(1)(v), in computing the taxpayer’s income for any previous taxation year,(c.2)all amounts added because of subsection 127(27), (29) or (34) to the taxpayer’s tax otherwise payable under this Part for any preceding taxation year, and(c.3)in the case of a partnership, all amounts each of which is an excess referred to in subsection 127(30) in respect of the partnership for any preceding fiscal period,exceeds the total of(d)the total of all amounts each of which is the amount of any government assistance or non-government assistance (as defined in subsection 127(9)) in respect of an expenditure described in paragraph (a) or (b), as paragraph (a) or (b), as the case may be, read in its application in respect of the expenditure, that at the taxpayer’s filing-due date for the year the taxpayer has received, is entitled to receive or can reasonably be expected to receive,(d.1)the total of all amounts each of which is the super-allowance benefit amount (within the meaning assigned by subsection 127(9)) for the year or for a preceding taxation year in respect of the taxpayer in respect of a province,(e)that part of the total of all amounts each of which is an amount deducted under subsection 127(5) in computing the tax payable under this Part by the taxpayer for a preceding taxation year where the amount can reasonably be attributed to(i)a prescribed proxy amount for a preceding taxation year,(ii)an expenditure of a current nature incurred in a preceding taxation year that was a qualified expenditure incurred in that preceding year in respect of scientific research and experimental development for the purposes of section 127, or(iii)an amount included because of paragraph 127(13)(e) in the taxpayer’s SR&ED qualified expenditure pool at the end of a preceding taxation year within the meaning assigned by subsection 127(9),(f)the total of all amounts each of which is an amount deducted under this subsection in computing the taxpayer’s income for a preceding taxation year, except amounts described in subsection 37(6),(f.1)the total of all amounts each of which is the lesser of(i)the amount deducted under section 61.3 in computing the taxpayer’s income for a preceding taxation year, and(ii)the amount, if any, by which the amount that was deductible under this subsection in computing the taxpayer’s income for that preceding year exceeds the amount claimed under this subsection in computing the taxpayer’s income for that preceding year,(g)the total of all amounts each of which is an amount equal to twice the amount claimed under subparagraph 194(2)(a)(ii) by the taxpayer for the year or any preceding taxation year, and(h)if the taxpayer was subject to a loss restriction event before the end of the year, the amount determined for the year under subsection (6.1) with respect to the taxpayer.Marginal note:Business of related corporations(1.1)Notwithstanding paragraph 37(8)(c), for the purposes of subsection 37(1), where a taxpayer is a corporation, scientific research and experimental development, related to a business carried on by another corporation to which the taxpayer is related (otherwise than by reason of a right referred to in paragraph 251(5)(b)) and in which that other corporation is actively engaged, at the time at which an expenditure or payment in respect of the scientific research and experimental development is made by the taxpayer, shall be considered to be related to a business of the taxpayer at that time.Marginal note:Deemed time of capital expenditure(1.2)For the purposes of paragraph 37(1)(b), an expenditure made by a taxpayer in respect of property shall be deemed not to have been made before the property is considered to have become available for use by the taxpayer.Marginal note:SR&ED in the exclusive economic zone(1.3)For the purposes of this section and section 127 of this Act and Part XXIX of theIncome Tax Regulations, an expenditure is deemed to have been made by a taxpayer in Canada if the expenditure is(a)made by the taxpayer in the course of a business carried on by the taxpayer in Canada; and(b)made for the prosecution of scientific research and experimental development in the exclusive economic zone of Canada, within the meaning of theOceans Act, or in the airspace above that zone or the seabed or subsoil below that zone.Marginal note:Salary or wages for SR&ED outside Canada(1.4)For the purposes of this section, section 127 and Part XXIX of theIncome Tax Regulations, the amount of a taxpayer’s expenditure for a taxation year determined under subsection (1.5) is deemed to be made in the taxation year in respect of scientific research and experimental development carried on in Canada by the taxpayer.Marginal note:Salary or wages outside Canada — limit determined(1.5)The amount of a taxpayer’s expenditure for a taxation year determined under this subsection is the lesser of(a)the amount that is the total of all expenditures each of which is an expenditure made by the taxpayer, in the taxation year and after February 25, 2008, in respect of an expense incurred in the taxation year for salary or wages paid to the taxpayer’s employee who was resident in Canada at the time the expense was incurred in respect of scientific research and experimental development,(i)that was carried on outside Canada,(ii)that was directly undertaken by the taxpayer,(iii)that related to a business of the taxpayer, and(iv)that was solely in support of scientific research and experimental development carried on in Canada by the taxpayer, and(b)the amount that is 10 per cent of the total of all expenditures, made by the taxpayer in the year, each of which would, if this Act were read without reference to subsection (1.4), be an expenditure made in respect of an expense incurred in the year for salary or wages paid to an employee in respect of scientific research and experimental development that was carried on in Canada, that was directly undertaken by the taxpayer and that related to a business of the taxpayer.Marginal note:Research outside Canada(2)In computing the income of a taxpayer for a taxation year from a business of the taxpayer, there may be deducted expenditures of a current nature made by the taxpayer in the year(a)on scientific research and experimental development carried on outside Canada, directly undertaken by or on behalf of the taxpayer, and related to the business (except to the extent that subsection (1.4) deems the expenditures to have been made in Canada); or(b)by payments to an approved association, university, college, research institute or other similar institution to be used for scientific research and experimental development carried on outside Canada related to the business provided that the taxpayer is entitled to exploit the results of that scientific research and experimental development.Marginal note:Minister may obtain advice(3)The Minister may obtain the advice of the Department of Industry, the National Research Council of Canada, the Defence Research Board or any other agency or department of the Government of Canada carrying on activities in the field of scientific research as to whether any particular activity constitutes scientific research and experimental development.Marginal note:Where no deduction allowed under section(4)No deduction may be made under this section in respect of an expenditure made to acquire rights in, or arising out of, scientific research and experimental development.Marginal note:Where no deduction allowed under ss. 110.1 and 118.1(5)Where, in respect of an expenditure on scientific research and experimental development made by a taxpayer in a taxation year, an amount is otherwise deductible under this section and under section 110.1 or 118.1, no deduction may be made in respect of the expenditure under section 110.1 or 118.1 in computing the taxable income of, or the tax payable by, the taxpayer for any taxation year.Marginal note:Expenditures of a capital nature(6)For the purposes of section 13, an amount claimed under subsection (1) that may reasonably be considered to be in respect of a property described in paragraph (1)(b), as that paragraph read in its application in respect of the property, is deemed to be an amount allowed to the taxpayer in respect of the property under regulations made under paragraph 20(1)(a), and for that purpose the property is deemed to be of a separate prescribed class.Marginal note:Loss restriction event(6.1)If a taxpayer was, at any time (in this subsection referred to as “that time”) before the end of a taxation year of the taxpayer, last subject to a loss restriction event, the amount determined for the purposes of paragraph (1)(h) for the year with respect to the taxpayer in respect of a business is the amount, if any, by which(a)the amount, if any, by which(i)the total of all amounts each of which is(A)an expenditure described in paragraph (1)(a) or (c) that was made by the taxpayer before that time,(B)the lesser of the amounts determined immediately before that time in respect of the taxpayer under subparagraphs (1)(b)(i) and (ii), as those paragraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the taxpayer before 2014, or(C)an amount determined in respect of the taxpayer under paragraph (1)(c.1) for its taxation year that ended immediately before that timeexceeds the total of all amounts each of which is(ii)the total of all amounts determined in respect of the taxpayer under paragraphs (1)(d) to (g) for its taxation year that ended immediately before that time, or(iii)the amount deducted under subsection (1) in computing the taxpayer’s income for its taxation year that ended immediately before that timeexceeds(b)the total of(i)if the business to which the amounts described in any of clauses (a)(i)(A) to (C) can reasonably be considered to have been related was carried on by the taxpayer for profit or with a reasonable expectation of profit throughout the year, the total of(A)the taxpayer’s income for the year from the business before making any deduction under subsection (1), and(B)if properties were sold, leased, rented or developed, or services were rendered, in the course of carrying on the business before that time, the taxpayer’s income for the year, before making any deduction under subsection (1), from any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services, and(ii)the total of all amounts each of which is an amount determined in respect of a preceding taxation year of the taxpayer that ended after that time equal to the lesser of(A)the amount determined under subparagraph (i) with respect to the taxpayer in respect of the business for that preceding year, and(B)the amount in respect of the business deducted under subsection (1) in computing the taxpayer’s income for that preceding year.Marginal note:Definitions(7)In this section,approvedapprovedmeans approved by the Minister after the Minister has, if the Minister considers it necessary, obtained the advice of the Department of Industry or the National Research Council of Canada. (agréé)scientific research and experimental developmentscientific research and experimental development[Repealed, 1996, c. 21, s. 9(8)]Marginal note:Interpretation(8)In this section,(a)references to expenditures on or in respect of scientific research and experimental development(i)where the references occur in subsection 37(2), include only(A)expenditures each of which was an expenditure incurred for and all or substantially all of which was attributable to the prosecution of scientific research and experimental development, and(B)expenditures of a current nature that were directly attributable, as determined by regulation, to the prosecution of scientific research and experimental development, and(ii)where the references occur other than in subsection 37(2), include only(A)expenditures incurred by a taxpayer in a taxation year (other than a taxation year for which the taxpayer has elected under clause (B)), each of which is(I)an expenditure of a current nature all or substantially all of which was attributable to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, or(II)an expenditure of a current nature directly attributable, as determined by regulation, to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, and(III)[Repealed, 2012, c. 31, s. 9](B)where a taxpayer has elected in prescribed form and in accordance with subsection 37(10) for a taxation year, expenditures incurred by the taxpayer in the year each of which is(I)[Repealed, 2012, c. 31, s. 9](II)an expenditure of a current nature for the prosecution of scientific research and experimental development in Canada directly undertaken on behalf of the taxpayer,(III)[Repealed, 2012, c. 31, s. 9](IV)that portion of an expenditure made in respect of an expense incurred in the year for salary or wages of an employee who is directly engaged in scientific research and experimental development in Canada that can reasonably be considered to relate to such work having regard to the time spent by the employee thereon, and, for this purpose, where that portion is all or substantially all of the expenditure, that portion shall be deemed to be the amount of the expenditure, or(V)the cost of materials consumed or transformed in the prosecution of scientific research and experimental development in Canada, or(VI)[Repealed, 2012, c. 31, s. 9](b)for greater certainty, references to scientific research and experimental development related to a business include any scientific research and experimental development that may lead to or facilitate an extension of that business;(c)except in the case of a taxpayer who derives all or substantially all of the taxpayer’s revenue from the prosecution of scientific research and experimental development (including the sale of rights arising out of scientific research and experimental development carried on by the taxpayer), the prosecution of scientific research and experimental development shall not be considered to be a business of the taxpayer to which scientific research and experimental development is related; and(d)references to expenditures of a current nature include any expenditure made by a taxpayer other than an expenditure made by the taxpayer for(i)the acquisition from a person or partnership of a property that is a capital property of the taxpayer, or(ii)the use of, or the right to use, property that would be capital property of the taxpayer if it were owned by the taxpayer.Marginal note:Salary or wages(9)An expenditure of a taxpayer(a)does not include, for the purposes of clauses (8)(a)(ii)(A) and (B), remuneration based on profits or a bonus, where the remuneration or bonus, as the case may be, is in respect of a specified employee of the taxpayer, and(b)includes, for the purpose of paragraph (1.5)(a), an amount paid in respect of an expense incurred for salary or wages paid to an employee only if the taxpayer reasonably believes that the salary or wages is not subject to an income or profits tax imposed, because of the employee’s presence or activity in a country other than Canada, by a government of that other country.Marginal note:Limitation re specified employees(9.1)For the purposes of clauses (8)(a)(ii)(A) and (B), expenditures incurred by a taxpayer in a taxation year do not include expenses incurred in the year in respect of salary or wages of a specified employee of the taxpayer to the extent that those expenses exceed the amount determined by the formulaA × B/365whereAis 5 times the Year’s Maximum Pensionable Earnings (as determined under section 18 of theCanada Pension Plan) for the calendar year in which the taxation year ends; andBis the number of days in the taxation year on which the employee is a specified employee of the taxpayer.Marginal note:Associated corporations(9.2)Where(a)in a taxation year of a corporation that ends in a calendar year, the corporation employs an individual who is a specified employee of the corporation,(b)the corporation is associated with another corporation (in this subsection and subsection 37(9.3) referred to as the “associated corporation”) in a taxation year of the associated corporation that ends in the calendar year, and(c)the individual is a specified employee of the associated corporation in the taxation year of the associated corporation that ends in the calendar year,for the purposes of clauses (8)(a)(ii)(A) and (B), the expenditures incurred by the corporation in its taxation year or years that end in the calendar year and by each associated corporation in its taxation year or years that end in the calendar year do not include expenses incurred in those taxation years in respect of salary or wages of the specified employee unless the corporation and all of the associated corporations have filed with the Minister an agreement referred to in subsection 37(9.3) in respect of those years.Marginal note:Agreement among associated corporations(9.3)Where all of the members of a group of associated corporations of which an individual is a specified employee file, in respect of their taxation years that end in a particular calendar year, an agreement with the Minister in which they allocate an amount in respect of the individual to one or more of them for those years and the amount so allocated or the total of the amounts so allocated, as the case may be, does not exceed the amount determined by the formulaA × B/365whereAis 5 times the Year’s Maximum Pensionable Earnings (as determined under section 18 of theCanada Pension Plan) for the particular calendar year, andBis the lesser of 365 and the number of days in those taxation years on which the individual was a specified employee of one or more of the corporations,the maximum amount that may be claimed in respect of salary or wages of the individual for the purposes of clauses (8)(a)(ii)(A) and (B) by each of the corporations for each of those years is the amount so allocated to it for each of those years.Marginal note:Filing(9.4)An agreement referred to in subsection 37(9.3) is deemed not to have been filed by a taxpayer unless(a)it is in prescribed form; and(b)where the taxpayer is a corporation, it is accompanied by(i)where its directors are legally entitled to administer its affairs, a certified copy of their resolution authorizing the agreement to be made, and(ii)where 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.Marginal note:Deemed corporation(9.5)For the purposes of subsections 37(9.2) and 37(9.3) and this subsection, each(a)individual related to a particular corporation,(b)partnership of which a majority-interest partner is(i)an individual related to a particular corporation, or(ii)a corporation associated with a particular corporation, and(c)limited partnership of which a member whose liability as a member is not limited is(i)an individual related to a particular corporation, or(ii)a corporation associated with a particular corporation,is deemed to be a corporation associated with the particularcorporation.Marginal note:Time for election(10)Any election made under clause (8)(a)(ii)(B) for a taxation year by a taxpayer shall be filed by the taxpayer on the day on which the taxpayer first files a prescribed form referred to in subsection 37(11) for the year.Marginal note:Filing requirement(11)A prescribed form must be filed by a taxpayer with the Minister in respect of any expenditure, that would be incurred by the taxpayer in a taxation year that begins after 1995 if this Act were read without reference to subsection 78(4), that is claimed by the taxpayer for the year as a deduction under this section, on or before the day that is 12 months after the taxpayer’s filing-due date for the taxation year, containing(a)prescribed information in respect of the expenditure; and(b)claim preparer information, as defined in subsection 162(5.3).Marginal note:Failure to file(11.1)Subject to subsection (12), if the prescribed information in respect of an expenditure referred to in paragraph (11)(a) is not contained in the form referred to in subsection (11), no amount in respect of the expenditure may be deducted under subsection (1).Marginal note:Misclassified expenditures(12)If a taxpayer has not filed a prescribed form in respect of an expenditure in accordance with subsection 37(11), for the purposes of this Act, the expenditure is deemed not to be an expenditure on or in respect of scientific research and experimental development.Marginal note:Non-arm’s length contract — linked work(13)For the purposes of this section and sections 127 and 127.1, where(a)work is performed by a taxpayer for a person or partnership at a time when the person or partnership does not deal at arm’s length with the taxpayer, and(b)the work would be scientific research and experimental development if it were performed by the person or partnership,the work is deemed to be scientific research and experimental development.Marginal note:Look-through rule(14)For the purposes of subparagraphs (1)(a)(i.01) to (iii), the amount of a particular expenditure made by a taxpayer shall be reduced by the amount of any related expenditure of the person or partnership to whom the particular expenditure is made that is not an expenditure of a current nature of the person or partnership.Marginal note:Reporting of certain payments(15)If an expenditure is required to be reduced because of subsection (14), the person or the partnership referred to in that subsection is required to inform the taxpayer in writing of the amount of the reduction without delay if requested by the taxpayer and in any other case no later than 90 days after the end of the calendar year in which the expenditure was made.
(a)the total of all amounts each of which is an expenditure of a current nature made by the taxpayer in the year or in a preceding taxation year ending after 1973(i)on scientific research and experimental development related to a business of the taxpayer, carried on in Canada and directly undertaken by the taxpayer,(i.01)on scientific research and experimental development related to a business of the taxpayer, carried on in Canada and directly undertaken on behalf of the taxpayer,(i.1)by payments to a corporation resident in Canada to be used for scientific research and experimental development carried on in Canada that is related to a business of the taxpayer, but only where the taxpayer is entitled to exploit the results of that scientific research and experimental development,(ii)by payments to(A)an approved association that undertakes scientific research and experimental development,(B)an approved university, college, research institute or other similar institution,(C)a corporation resident in Canada and exempt from tax under paragraph 149(1)(j), or(D)[Repealed, 1996, c. 21, s. 9(4)](E)an approved organization that makes payments to an association, institution or corporation described in any of clauses A to (C)to be used for scientific research and experimental development carried on in Canada that is related to a business of the taxpayer, but only where the taxpayer is entitled to exploit the results of that scientific research and experimental development, or(iii)where the taxpayer is a corporation, by payments to a corporation resident in Canada and exempt from tax because of paragraph 149(1)(j), for scientific research and experimental development that is basic research or applied research carried on in Canada(A)the primary purpose of which is the use of results therefrom by the taxpayer in conjunction with other scientific research and experimental development activities undertaken or to be undertaken by or on behalf of the taxpayer that relate to a business of the taxpayer, and(B)that has the technological potential for application to other businesses of a type unrelated to that carried on by the taxpayer, and(b)[Repealed, 2012, c. 31, s. 9](c)the total of all amounts each of which is an expenditure made by the taxpayer in the year or in a preceding taxation year ending after 1973 by way of repayment of amounts described in paragraph 37(1)(d),(c.1)all amounts included by virtue of paragraph 12(1)(v), in computing the taxpayer’s income for any previous taxation year,(c.2)all amounts added because of subsection 127(27), (29) or (34) to the taxpayer’s tax otherwise payable under this Part for any preceding taxation year, and(c.3)in the case of a partnership, all amounts each of which is an excess referred to in subsection 127(30) in respect of the partnership for any preceding fiscal period,
(i)on scientific research and experimental development related to a business of the taxpayer, carried on in Canada and directly undertaken by the taxpayer,(i.01)on scientific research and experimental development related to a business of the taxpayer, carried on in Canada and directly undertaken on behalf of the taxpayer,(i.1)by payments to a corporation resident in Canada to be used for scientific research and experimental development carried on in Canada that is related to a business of the taxpayer, but only where the taxpayer is entitled to exploit the results of that scientific research and experimental development,(ii)by payments to(A)an approved association that undertakes scientific research and experimental development,(B)an approved university, college, research institute or other similar institution,(C)a corporation resident in Canada and exempt from tax under paragraph 149(1)(j), or(D)[Repealed, 1996, c. 21, s. 9(4)](E)an approved organization that makes payments to an association, institution or corporation described in any of clauses A to (C)to be used for scientific research and experimental development carried on in Canada that is related to a business of the taxpayer, but only where the taxpayer is entitled to exploit the results of that scientific research and experimental development, or(iii)where the taxpayer is a corporation, by payments to a corporation resident in Canada and exempt from tax because of paragraph 149(1)(j), for scientific research and experimental development that is basic research or applied research carried on in Canada(A)the primary purpose of which is the use of results therefrom by the taxpayer in conjunction with other scientific research and experimental development activities undertaken or to be undertaken by or on behalf of the taxpayer that relate to a business of the taxpayer, and(B)that has the technological potential for application to other businesses of a type unrelated to that carried on by the taxpayer, and
(A)an approved association that undertakes scientific research and experimental development,(B)an approved university, college, research institute or other similar institution,(C)a corporation resident in Canada and exempt from tax under paragraph 149(1)(j), or(D)[Repealed, 1996, c. 21, s. 9(4)](E)an approved organization that makes payments to an association, institution or corporation described in any of clauses A to (C)
(A)the primary purpose of which is the use of results therefrom by the taxpayer in conjunction with other scientific research and experimental development activities undertaken or to be undertaken by or on behalf of the taxpayer that relate to a business of the taxpayer, and(B)that has the technological potential for application to other businesses of a type unrelated to that carried on by the taxpayer, and
(d)the total of all amounts each of which is the amount of any government assistance or non-government assistance (as defined in subsection 127(9)) in respect of an expenditure described in paragraph (a) or (b), as paragraph (a) or (b), as the case may be, read in its application in respect of the expenditure, that at the taxpayer’s filing-due date for the year the taxpayer has received, is entitled to receive or can reasonably be expected to receive,(d.1)the total of all amounts each of which is the super-allowance benefit amount (within the meaning assigned by subsection 127(9)) for the year or for a preceding taxation year in respect of the taxpayer in respect of a province,(e)that part of the total of all amounts each of which is an amount deducted under subsection 127(5) in computing the tax payable under this Part by the taxpayer for a preceding taxation year where the amount can reasonably be attributed to(i)a prescribed proxy amount for a preceding taxation year,(ii)an expenditure of a current nature incurred in a preceding taxation year that was a qualified expenditure incurred in that preceding year in respect of scientific research and experimental development for the purposes of section 127, or(iii)an amount included because of paragraph 127(13)(e) in the taxpayer’s SR&ED qualified expenditure pool at the end of a preceding taxation year within the meaning assigned by subsection 127(9),(f)the total of all amounts each of which is an amount deducted under this subsection in computing the taxpayer’s income for a preceding taxation year, except amounts described in subsection 37(6),(f.1)the total of all amounts each of which is the lesser of(i)the amount deducted under section 61.3 in computing the taxpayer’s income for a preceding taxation year, and(ii)the amount, if any, by which the amount that was deductible under this subsection in computing the taxpayer’s income for that preceding year exceeds the amount claimed under this subsection in computing the taxpayer’s income for that preceding year,(g)the total of all amounts each of which is an amount equal to twice the amount claimed under subparagraph 194(2)(a)(ii) by the taxpayer for the year or any preceding taxation year, and(h)if the taxpayer was subject to a loss restriction event before the end of the year, the amount determined for the year under subsection (6.1) with respect to the taxpayer.
(i)a prescribed proxy amount for a preceding taxation year,(ii)an expenditure of a current nature incurred in a preceding taxation year that was a qualified expenditure incurred in that preceding year in respect of scientific research and experimental development for the purposes of section 127, or(iii)an amount included because of paragraph 127(13)(e) in the taxpayer’s SR&ED qualified expenditure pool at the end of a preceding taxation year within the meaning assigned by subsection 127(9),
(i)the amount deducted under section 61.3 in computing the taxpayer’s income for a preceding taxation year, and(ii)the amount, if any, by which the amount that was deductible under this subsection in computing the taxpayer’s income for that preceding year exceeds the amount claimed under this subsection in computing the taxpayer’s income for that preceding year,
(a)made by the taxpayer in the course of a business carried on by the taxpayer in Canada; and(b)made for the prosecution of scientific research and experimental development in the exclusive economic zone of Canada, within the meaning of theOceans Act, or in the airspace above that zone or the seabed or subsoil below that zone.
(a)the amount that is the total of all expenditures each of which is an expenditure made by the taxpayer, in the taxation year and after February 25, 2008, in respect of an expense incurred in the taxation year for salary or wages paid to the taxpayer’s employee who was resident in Canada at the time the expense was incurred in respect of scientific research and experimental development,(i)that was carried on outside Canada,(ii)that was directly undertaken by the taxpayer,(iii)that related to a business of the taxpayer, and(iv)that was solely in support of scientific research and experimental development carried on in Canada by the taxpayer, and(b)the amount that is 10 per cent of the total of all expenditures, made by the taxpayer in the year, each of which would, if this Act were read without reference to subsection (1.4), be an expenditure made in respect of an expense incurred in the year for salary or wages paid to an employee in respect of scientific research and experimental development that was carried on in Canada, that was directly undertaken by the taxpayer and that related to a business of the taxpayer.
(i)that was carried on outside Canada,(ii)that was directly undertaken by the taxpayer,(iii)that related to a business of the taxpayer, and(iv)that was solely in support of scientific research and experimental development carried on in Canada by the taxpayer, and
(a)on scientific research and experimental development carried on outside Canada, directly undertaken by or on behalf of the taxpayer, and related to the business (except to the extent that subsection (1.4) deems the expenditures to have been made in Canada); or(b)by payments to an approved association, university, college, research institute or other similar institution to be used for scientific research and experimental development carried on outside Canada related to the business provided that the taxpayer is entitled to exploit the results of that scientific research and experimental development.
(a)the amount, if any, by which(i)the total of all amounts each of which is(A)an expenditure described in paragraph (1)(a) or (c) that was made by the taxpayer before that time,(B)the lesser of the amounts determined immediately before that time in respect of the taxpayer under subparagraphs (1)(b)(i) and (ii), as those paragraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the taxpayer before 2014, or(C)an amount determined in respect of the taxpayer under paragraph (1)(c.1) for its taxation year that ended immediately before that timeexceeds the total of all amounts each of which is(ii)the total of all amounts determined in respect of the taxpayer under paragraphs (1)(d) to (g) for its taxation year that ended immediately before that time, or(iii)the amount deducted under subsection (1) in computing the taxpayer’s income for its taxation year that ended immediately before that time
(i)the total of all amounts each of which is(A)an expenditure described in paragraph (1)(a) or (c) that was made by the taxpayer before that time,(B)the lesser of the amounts determined immediately before that time in respect of the taxpayer under subparagraphs (1)(b)(i) and (ii), as those paragraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the taxpayer before 2014, or(C)an amount determined in respect of the taxpayer under paragraph (1)(c.1) for its taxation year that ended immediately before that timeexceeds the total of all amounts each of which is(ii)the total of all amounts determined in respect of the taxpayer under paragraphs (1)(d) to (g) for its taxation year that ended immediately before that time, or(iii)the amount deducted under subsection (1) in computing the taxpayer’s income for its taxation year that ended immediately before that time
(A)an expenditure described in paragraph (1)(a) or (c) that was made by the taxpayer before that time,(B)the lesser of the amounts determined immediately before that time in respect of the taxpayer under subparagraphs (1)(b)(i) and (ii), as those paragraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the taxpayer before 2014, or(C)an amount determined in respect of the taxpayer under paragraph (1)(c.1) for its taxation year that ended immediately before that time
(b)the total of(i)if the business to which the amounts described in any of clauses (a)(i)(A) to (C) can reasonably be considered to have been related was carried on by the taxpayer for profit or with a reasonable expectation of profit throughout the year, the total of(A)the taxpayer’s income for the year from the business before making any deduction under subsection (1), and(B)if properties were sold, leased, rented or developed, or services were rendered, in the course of carrying on the business before that time, the taxpayer’s income for the year, before making any deduction under subsection (1), from any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services, and(ii)the total of all amounts each of which is an amount determined in respect of a preceding taxation year of the taxpayer that ended after that time equal to the lesser of(A)the amount determined under subparagraph (i) with respect to the taxpayer in respect of the business for that preceding year, and(B)the amount in respect of the business deducted under subsection (1) in computing the taxpayer’s income for that preceding year.
(i)if the business to which the amounts described in any of clauses (a)(i)(A) to (C) can reasonably be considered to have been related was carried on by the taxpayer for profit or with a reasonable expectation of profit throughout the year, the total of(A)the taxpayer’s income for the year from the business before making any deduction under subsection (1), and(B)if properties were sold, leased, rented or developed, or services were rendered, in the course of carrying on the business before that time, the taxpayer’s income for the year, before making any deduction under subsection (1), from any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services, and(ii)the total of all amounts each of which is an amount determined in respect of a preceding taxation year of the taxpayer that ended after that time equal to the lesser of(A)the amount determined under subparagraph (i) with respect to the taxpayer in respect of the business for that preceding year, and(B)the amount in respect of the business deducted under subsection (1) in computing the taxpayer’s income for that preceding year.
(A)the taxpayer’s income for the year from the business before making any deduction under subsection (1), and(B)if properties were sold, leased, rented or developed, or services were rendered, in the course of carrying on the business before that time, the taxpayer’s income for the year, before making any deduction under subsection (1), from any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services, and
(A)the amount determined under subparagraph (i) with respect to the taxpayer in respect of the business for that preceding year, and(B)the amount in respect of the business deducted under subsection (1) in computing the taxpayer’s income for that preceding year.
(a)references to expenditures on or in respect of scientific research and experimental development(i)where the references occur in subsection 37(2), include only(A)expenditures each of which was an expenditure incurred for and all or substantially all of which was attributable to the prosecution of scientific research and experimental development, and(B)expenditures of a current nature that were directly attributable, as determined by regulation, to the prosecution of scientific research and experimental development, and(ii)where the references occur other than in subsection 37(2), include only(A)expenditures incurred by a taxpayer in a taxation year (other than a taxation year for which the taxpayer has elected under clause (B)), each of which is(I)an expenditure of a current nature all or substantially all of which was attributable to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, or(II)an expenditure of a current nature directly attributable, as determined by regulation, to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, and(III)[Repealed, 2012, c. 31, s. 9](B)where a taxpayer has elected in prescribed form and in accordance with subsection 37(10) for a taxation year, expenditures incurred by the taxpayer in the year each of which is(I)[Repealed, 2012, c. 31, s. 9](II)an expenditure of a current nature for the prosecution of scientific research and experimental development in Canada directly undertaken on behalf of the taxpayer,(III)[Repealed, 2012, c. 31, s. 9](IV)that portion of an expenditure made in respect of an expense incurred in the year for salary or wages of an employee who is directly engaged in scientific research and experimental development in Canada that can reasonably be considered to relate to such work having regard to the time spent by the employee thereon, and, for this purpose, where that portion is all or substantially all of the expenditure, that portion shall be deemed to be the amount of the expenditure, or(V)the cost of materials consumed or transformed in the prosecution of scientific research and experimental development in Canada, or(VI)[Repealed, 2012, c. 31, s. 9](b)for greater certainty, references to scientific research and experimental development related to a business include any scientific research and experimental development that may lead to or facilitate an extension of that business;(c)except in the case of a taxpayer who derives all or substantially all of the taxpayer’s revenue from the prosecution of scientific research and experimental development (including the sale of rights arising out of scientific research and experimental development carried on by the taxpayer), the prosecution of scientific research and experimental development shall not be considered to be a business of the taxpayer to which scientific research and experimental development is related; and(d)references to expenditures of a current nature include any expenditure made by a taxpayer other than an expenditure made by the taxpayer for(i)the acquisition from a person or partnership of a property that is a capital property of the taxpayer, or(ii)the use of, or the right to use, property that would be capital property of the taxpayer if it were owned by the taxpayer.
(i)where the references occur in subsection 37(2), include only(A)expenditures each of which was an expenditure incurred for and all or substantially all of which was attributable to the prosecution of scientific research and experimental development, and(B)expenditures of a current nature that were directly attributable, as determined by regulation, to the prosecution of scientific research and experimental development, and(ii)where the references occur other than in subsection 37(2), include only(A)expenditures incurred by a taxpayer in a taxation year (other than a taxation year for which the taxpayer has elected under clause (B)), each of which is(I)an expenditure of a current nature all or substantially all of which was attributable to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, or(II)an expenditure of a current nature directly attributable, as determined by regulation, to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, and(III)[Repealed, 2012, c. 31, s. 9](B)where a taxpayer has elected in prescribed form and in accordance with subsection 37(10) for a taxation year, expenditures incurred by the taxpayer in the year each of which is(I)[Repealed, 2012, c. 31, s. 9](II)an expenditure of a current nature for the prosecution of scientific research and experimental development in Canada directly undertaken on behalf of the taxpayer,(III)[Repealed, 2012, c. 31, s. 9](IV)that portion of an expenditure made in respect of an expense incurred in the year for salary or wages of an employee who is directly engaged in scientific research and experimental development in Canada that can reasonably be considered to relate to such work having regard to the time spent by the employee thereon, and, for this purpose, where that portion is all or substantially all of the expenditure, that portion shall be deemed to be the amount of the expenditure, or(V)the cost of materials consumed or transformed in the prosecution of scientific research and experimental development in Canada, or(VI)[Repealed, 2012, c. 31, s. 9]
(A)expenditures each of which was an expenditure incurred for and all or substantially all of which was attributable to the prosecution of scientific research and experimental development, and(B)expenditures of a current nature that were directly attributable, as determined by regulation, to the prosecution of scientific research and experimental development, and
(A)expenditures incurred by a taxpayer in a taxation year (other than a taxation year for which the taxpayer has elected under clause (B)), each of which is(I)an expenditure of a current nature all or substantially all of which was attributable to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, or(II)an expenditure of a current nature directly attributable, as determined by regulation, to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, and(III)[Repealed, 2012, c. 31, s. 9](B)where a taxpayer has elected in prescribed form and in accordance with subsection 37(10) for a taxation year, expenditures incurred by the taxpayer in the year each of which is(I)[Repealed, 2012, c. 31, s. 9](II)an expenditure of a current nature for the prosecution of scientific research and experimental development in Canada directly undertaken on behalf of the taxpayer,(III)[Repealed, 2012, c. 31, s. 9](IV)that portion of an expenditure made in respect of an expense incurred in the year for salary or wages of an employee who is directly engaged in scientific research and experimental development in Canada that can reasonably be considered to relate to such work having regard to the time spent by the employee thereon, and, for this purpose, where that portion is all or substantially all of the expenditure, that portion shall be deemed to be the amount of the expenditure, or(V)the cost of materials consumed or transformed in the prosecution of scientific research and experimental development in Canada, or(VI)[Repealed, 2012, c. 31, s. 9]
(I)an expenditure of a current nature all or substantially all of which was attributable to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, or(II)an expenditure of a current nature directly attributable, as determined by regulation, to the prosecution, or to the provision of premises, facilities or equipment for the prosecution, of scientific research and experimental development in Canada, and(III)[Repealed, 2012, c. 31, s. 9]
(I)[Repealed, 2012, c. 31, s. 9](II)an expenditure of a current nature for the prosecution of scientific research and experimental development in Canada directly undertaken on behalf of the taxpayer,(III)[Repealed, 2012, c. 31, s. 9](IV)that portion of an expenditure made in respect of an expense incurred in the year for salary or wages of an employee who is directly engaged in scientific research and experimental development in Canada that can reasonably be considered to relate to such work having regard to the time spent by the employee thereon, and, for this purpose, where that portion is all or substantially all of the expenditure, that portion shall be deemed to be the amount of the expenditure, or(V)the cost of materials consumed or transformed in the prosecution of scientific research and experimental development in Canada, or(VI)[Repealed, 2012, c. 31, s. 9]
(i)the acquisition from a person or partnership of a property that is a capital property of the taxpayer, or(ii)the use of, or the right to use, property that would be capital property of the taxpayer if it were owned by the taxpayer.
(a)does not include, for the purposes of clauses (8)(a)(ii)(A) and (B), remuneration based on profits or a bonus, where the remuneration or bonus, as the case may be, is in respect of a specified employee of the taxpayer, and(b)includes, for the purpose of paragraph (1.5)(a), an amount paid in respect of an expense incurred for salary or wages paid to an employee only if the taxpayer reasonably believes that the salary or wages is not subject to an income or profits tax imposed, because of the employee’s presence or activity in a country other than Canada, by a government of that other country.
(a)in a taxation year of a corporation that ends in a calendar year, the corporation employs an individual who is a specified employee of the corporation,(b)the corporation is associated with another corporation (in this subsection and subsection 37(9.3) referred to as the “associated corporation”) in a taxation year of the associated corporation that ends in the calendar year, and(c)the individual is a specified employee of the associated corporation in the taxation year of the associated corporation that ends in the calendar year,
(a)it is in prescribed form; and(b)where the taxpayer is a corporation, it is accompanied by(i)where its directors are legally entitled to administer its affairs, a certified copy of their resolution authorizing the agreement to be made, and(ii)where 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.
(i)where its directors are legally entitled to administer its affairs, a certified copy of their resolution authorizing the agreement to be made, and(ii)where 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.
(a)individual related to a particular corporation,(b)partnership of which a majority-interest partner is(i)an individual related to a particular corporation, or(ii)a corporation associated with a particular corporation, and(c)limited partnership of which a member whose liability as a member is not limited is(i)an individual related to a particular corporation, or(ii)a corporation associated with a particular corporation,
(i)an individual related to a particular corporation, or(ii)a corporation associated with a particular corporation, and
(i)an individual related to a particular corporation, or(ii)a corporation associated with a particular corporation,
(a)prescribed information in respect of the expenditure; and(b)claim preparer information, as defined in subsection 162(5.3).
(a)work is performed by a taxpayer for a person or partnership at a time when the person or partnership does not deal at arm’s length with the taxpayer, and(b)the work would be scientific research and experimental development if it were performed by the person or partnership,
[NOTE: Application provisions are not included in the consolidated textsee relevant amending Acts and regulations.]R.S., 1985, c. 1 (5th Supp.), s. 371994, c. 7, Sch