The total amount so allocated must equal the least of the amounts that would, if none of the corporations were associated with any other corporation during the year and if this Act were read without reference to subsections (5) and (5.1), be the business limits of the corporations for the year.
Marginal note:Special rules for business limit
(5)Notwithstanding subsections (2), (3) and (4),
(a)where a Canadian-controlled private corporation (in this paragraph referred to as the “first corporation”) has more than one taxation year ending in the same calendar year and it is associated in 2 or more of those taxation years with another Canadian-controlled private corporation that has a taxation year ending in that calendar year, the business limit of the first corporation for each taxation year ending in the calendar year in which it is associated with the other corporation that ends after the first such taxation year ending in that calendar year is, subject to the application of paragraph 125(5)(b), an amount equal to the lesser of
(i)its business limit determined under subsection 125(3) or 125(4) for the first such taxation year ending in the calendar year, and
(ii)its business limit determined under subsection 125(3) or 125(4) for the particular taxation year ending in the calendar year; and
(b)where a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, its business limit for the year is that proportion of its business limit for the year determined without reference to this paragraph that the number of days in the year is of 365.
Marginal note:Business limit reduction
(5.1)Notwithstanding subsections (2), (3), (4) and (5), a Canadian-controlled private corporation’s business limit for a particular taxation year ending in a calendar year is the amount, if any, by which its business limit otherwise determined for the particular taxation year exceeds the greater of
(a)the amount determined by the formula
A × B ÷ $90,000
where
0.225% × (C – $10 million)
where
(i)if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the preceding taxation year,
(ii)if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation for the particular taxation year, or
(iii)if, in the particular taxation year, the corporation is associated with one or more particular corporations, the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2(1) or 181.3(1) or section 181.4, as the case may be) of the corporation or of any of the particular corporations for its last taxation year that ended in the preceding calendar year, and
(b)the amount determined by the formula
D/$500,000 × 5(E − $50,000)
where
Marginal note:Anti-avoidance
(5.2)A particular corporation and another corporation are deemed to be associated with each other at a particular time for the purposes of paragraph (5.1)(b) if
(a)the particular corporation lends or transfers property at any time, either directly or indirectly, by means of a trust or by any other means whatever, to the other corporation;
(b)the other corporation is, at the particular time, related to the particular corporation but is not associated with it; and
(c)it may reasonably be considered that one of the reasons the loan or transfer was made was to reduce the amount determined for E in paragraph (5.1)(b) in respect of the particular corporation, or of any corporation with which it is associated, for a taxation year.
Marginal note:Corporate partnerships
(6)Where in a taxation year a corporation is a member of a particular partnership and in the year the corporation or a corporation with which it is associated in the year is a member of one or more other partnerships and it may reasonably be considered that one of the main reasons for the separate existence of the partnerships is to increase the amount of a deduction of any corporation under subsection 125(1), the specified partnership income of the corporation for the year shall, for the purposes of this section, be computed in respect of those partnerships as if all amounts each of which is the income of one of the partnerships for a fiscal period ending in the year from an active business carried on in Canada were nil except for the greatest of those amounts.
Marginal note:Corporation deemed member of partnership
(6.1)For the purposes of this section, a corporation that is a member, or is deemed by this subsection to be a member, of a partnership that is a member of another partnership shall be deemed to be a member of the other partnership and the corporation’s share of the income of the other partnership for a fiscal period shall be deemed to be equal to the amount of that income to which the corporation was directly or indirectly entitled.
Marginal note:Specified partnership income deemed nil
(6.2)Notwithstanding any other provision of this section, where a corporation is a member of a partnership that was controlled, directly or indirectly in any manner whatever, by one or more non-resident persons, by one or more public corporations (other than a prescribed venture capital corporation) or by any combination thereof at any time in its fiscal period ending in a taxation year of the corporation, the income of the partnership for that fiscal period from an active business carried on in Canada shall, for the purposes of computing the specified partnership income of a corporation for the year, be deemed to be nil.
Marginal note:Partnership deemed to be controlled
(6.3)For the purposes of subsection 125(6.2), a partnership shall be deemed to be controlled by one or more persons at any time if the total of the shares of that person or those persons of the income of the partnership from any source for the fiscal period of the partnership that includes that time exceeds 1/2 of the income of the partnership from that source for that period.
Marginal note:Definitions
(7)In this section,
active asset, of a particular corporation at any time, means property that is
(a)used at that time principally in an active business carried on primarily in Canada by the particular corporation or by a Canadian-controlled private corporation that is related to the particular corporation,
(b)a share of the capital stock of another corporation if, at that time,
(i)the other corporation is connected with the particular corporation (within the meaning assigned by subsection 186(4) on the assumption that the other corporation is at that time a payer corporation within the meaning of that subsection), and
(ii)the share would be aqualified small business corporation share(as defined in subsection 110.6(1)) if
(A)the references in that definition to an “individual” were references to the particular corporation, and
(B)that definition were read without reference to “the individual’s spouse or common-law partner”, or
(c)an interest in a partnership, if
(i)at that time, the fair market value of the particular corporation’s interest in the partnership is equal to or greater than 10% of the total fair market value of all interests in the partnership,
(ii)throughout the 24–month period ending before that time, more than 50% of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b), and
(iii)at that time, all or substantially all of the fair market value of the property of the partnership was attributable to property described in this paragraph or in paragraph (a) or (b); (bien actif)
active business carried on by a corporationmeans any business carried on by the corporation other than a specified investment business or a personal services business and includes an adventure or concern in the nature of trade; (entreprise exploitée activement)
adjusted aggregate investment income, of a corporation (other than a corporation that is deemed not to be a private corporation by subsection 136(1) or 137(7) or section 141.1) for a taxation year, means the amount that would be theaggregate investment income(as defined in subsection 129(4)) of the corporation for the year, if
(a)paragraph (a) of that definition read as follows:
(a)the amount, if any, by which
(i)the eligible portion of the corporation’s taxable capital gains (other than taxable capital gains from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year
exceeds
(ii)the eligible portion of its allowable capital losses (other than allowable capital losses from the disposition of property that is, at the time of disposition, an active asset of the corporation) for the year, or
(b)subparagraph (b)(iii) of that definition read as follows:
(iii)a dividend from a corporation connected with it (within the meaning assigned by subsection 186(4) on the assumption that the corporation is at that time a payer corporation within the meaning of that subsection), and
(c)paragraph (a) of the definitionincomeorlossin subsection 129(4) read as follows:
(a)includes
(i)the income or loss from a specified investment business carried on by it, and
(ii)amounts in respect of a life insurance policy that are included in computing the corporation’s income for the year, to the extent that the amounts would not otherwise be included in the computation of the corporation’s aggregate investment income, but
and
(d)no amount were deducted under subsection 91(4) by the corporation in computing its income for the year; (revenu de placement total ajusté)
Canadian-controlled private corporationmeans a private corporation that is a Canadian corporation other than
(a)a corporation controlled, directly or indirectly in any manner whatever, by one or more non-resident persons, by one or more public corporations (other than a prescribed venture capital corporation), by one or more corporations described in paragraph (c), or by any combination of them,
(b)a corporation that would, if each share of the capital stock of a corporation that is owned by a non-resident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation described in paragraph (c) were owned by a particular person, be controlled by the particular person,
(c)a corporation a class of the shares of the capital stock of which is listed on a designated stock exchange, or
(d)in applying subsection (1), paragraphs 87(2)(vv) and (ww) (including, for greater certainty, in applying those paragraphs as provided under paragraph 88(1)(e.2)), the definitionsexcessive eligible dividend designation,general rate income poolandlow rate income poolin subsection 89(1) and subsections 89(4) to (6), (8) to (10) and 249(3.1), a corporation that has made an election under subsection 89(11) and that has not revoked the election under subsection 89(12); (société privée sous contrôle canadien)
designated member, of a particular partnership in a taxation year, means a Canadian-controlled private corporation that provides (directly or indirectly, in any manner whatever) services or property to the particular partnership at any time in the corporation’s taxation year where, at any time in the year,
(a)the corporation is not a member of the particular partnership, and
(b)either
(i)one of its shareholders holds a direct or indirect interest in the particular partnership, or
(ii)if subparagraph (i) does not apply,
(A)the corporation does not deal at arm’s length with a person that holds a direct or indirect interest in the particular partnership, and
(B)it is not the case that all or substantially all of the corporation’s income for the year from an active business is from providing services or property to
(I)persons with which the corporation deals at arm’s length, or
(II)partnerships (other than the particular partnership) with which the corporation deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest; (associé désigné)
income of the corporation for the year from an active businessmeans the total of
(a)the corporation’s income for the year from an active business carried on by it including any income for the year pertaining to or incident to that business, other than income for the year from a source in Canada that is a property (within the meaning assigned by subsection 129(4)), and
(b)the amount, if any, included under subsection 12(10.2) in computing the corporation’s income for the year; (revenu de la société pour l’année provenant d’une entreprise exploitée activement)
personal services businesscarried on by a corporation in a taxation year means a business of providing services where
(a)an individual who performs services on behalf of the corporation (in this definition and paragraph 18(1)(p) referred to as an “incorporated employee”), or
(b)any person related to the incorporated employee
is a specified shareholder of the corporation and the incorporated employee would reasonably be regarded as an officer or employee of the person or partnership to whom or to which the services were provided but for the existence of the corporation, unless
(c)the corporation employs in the business throughout the year more than five full-time employees, or
(d)the amount paid or payable to the corporation in the year for the services is received or receivable by it from a corporation with which it was associated in the year; (entreprise de prestation de services personnels)
specified cooperative income[Repealed, 2019, c. 29, s. 22]
specified corporate income,of a corporation for a taxation year, means the lesser of
(a)the lesser of
(i)the total of all amounts each of which is income (other than specified farming or fishing income of the corporation for the year) from an active business of the corporation for the year from the provision of services or property to a private corporation (directly or indirectly, in any manner whatever) if
(A)at any time in the year, the corporation (or one of its shareholders) or a person who does not deal at arm’s length with the corporation (or one of its shareholders) holds a direct or indirect interest in the private corporation, and
(B)it is not the case that all or substantially all of the corporation’s income for the year from an active business is from the provision of services or property to
(I)persons (other than the private corporation) with which the corporation deals at arm’s length, or
(II)partnerships with which the corporation deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest, and
(ii)the total of all amounts each of which is the portion, if any, of the business limit of a private corporation described in subparagraph (i) for a taxation year that the private corporation assigns to the corporation under subsection (3.2), and
(b)an amount that the Minister determines to be reasonable in the circumstances; (revenu de société déterminé)
specified farming or fishing income, of a particular corporation for a taxation year, means income of the particular corporation (other than an amount included in the particular corporation’s income under subsection 135(7)), if
(a)the income is from the sale of the farming products or fishing catches of the particular corporation’s farming or fishing business to another corporation, and
(b)the particular corporation deals at arm’s length with the other corporation; (revenu d’agriculture ou de pêche déterminé)
specified investment business, carried on by a corporation in a taxation year, means a business (other than a business carried on by a credit union or a business of leasing property other than real or immovable property) the principal purpose of which is to derive income (including interest, dividends, rents and royalties) from property but, except where the corporation was a prescribed labour-sponsored venture capital corporation at any time in the year, does not include a business carried on by the corporation in the year where
(a)the corporation employs in the business throughout the year more than 5 full-time employees, or
(b)any other corporation associated with the corporation provides, in the course of carrying on an active business, managerial, administrative, financial, maintenance or other similar services to the corporation in the year and the corporation could reasonably be expected to require more than 5 full-time employees if those services had not been provided; (entreprise de placement déterminée)
specified partnership business limit,of a person for a taxation year, at any particular time, means the amount determined by the formula
(K/L) × M – T
where
(a)the amount of the business limit indicated in subsection (2) for a corporation that is not associated in a taxation year with one or more other Canadian-controlled private corporations, and
(b)the product obtained by the formula
(Q/R) × S
where
specified partnership incomeof a corporation for a taxation year means the amount determined by the formula
A + B
where
(a)the total of all amounts each of which is an amount in respect of an active business carried on in Canada by the corporation as a member, or a designated member, of the partnership determined by the formula
G – H
where
(i)the corporation’s share of the income (determined in accordance with Subdivision J of Division B) of the partnership for a fiscal period of the business that ends in the year,
(ii)income of the corporation for the year from the provision (directly or indirectly, in any manner whatever) of services or property to the partnership, or
(iii)an amount included in the corporation’s income for the year in respect of the business under any of subsections 34.2(2), (3) and (12), and
(b)an amount equal to
(i)if the corporation was a member of the partnership, the corporation’s specified partnership business limit for the year, and
(ii)if the corporation was a designated member of the partnership, the total of all amounts assigned to it under subsection (8) for the year and, where no such amounts have been assigned, nil, and
(c)nil, if
(i)the corporation is a member, or a designated member, of the partnership (including indirectly through one or more other partnerships) in the year, and
(ii)the partnership provides services or property to either
(A)a private corporation (directly or indirectly in any manner whatever) in the year, if
(I)the corporation (or one of its shareholders) or a person who does not deal at arm’s length with the corporation (or one of its shareholders) holds a direct or indirect interest in the private corporation, and
(II)it is not the case that all or substantially all of the partnership’s income for the year from an active business is from the provision of services or property to
1persons (other than the private corporation) that deal at arm’s length with the partnership and each person that holds a direct or indirect interest in the partnership, or
2partnerships with which the partnership deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest, or
(B)a particular partnership (directly or indirectly in any manner whatever) in the year, if
(I)the corporation (or one of its shareholders) does not deal at arm’s length with the particular partnership or a person that holds a direct or indirect interest in the particular partnership, and
(II)it is not the case that all or substantially all of the partnership’s income for the year from an active business is from the provision of services or property to
1persons that deal at arm’s length with the partnership and each person that holds a direct or indirect interest in the partnership, or
2partnerships (other than the particular partnership) with which the partnership deals at arm’s length, other than a partnership in which a person that does not deal at arm’s length with the corporation holds a direct or indirect interest, and
(a)the total of the amounts determined in respect of the corporation for the year under subparagraphs 125(1)(a)(iii) and 125(1)(a)(iv), and
(b)the total of all amounts each of which is an amount in respect of a partnership of which the corporation was a member, or a designated member, in the year equal to the amount determined by the formula
N – O
where
(i)if the corporation was a member of the partnership, under subparagraph (b)(i) of the description of A, and
(ii)if the corporation was a designated member of the partnership, under subparagraph (b)(ii) of the description of A; (revenu de société de personnes déterminé)
specified partnership lossof a corporation for a taxation year means the total of all amounts each of which is an amount in respect of a partnership of which the corporation was a member in the year determined by the formula
A + B
where
G - H
where
Marginal note:Assignment — specified partnership business limit
(8)For the purpose of the definitionspecified partnership incomein subsection (7), a person that is a member of a partnership in a taxation year may assign to a designated member of the partnership — for a taxation year of the designated member — all or any portion of the person’s specified partnership business limit (determined without reference to this assignment) in respect of the person’s taxation year if
(a)the person is described in paragraph (b) of the definitiondesignated memberin subsection (7) in respect of the designated member in the designated member’s taxation year;
(b)the specified partnership business limit of the person is in respect of a fiscal period of the partnership that ends in the designated member’s taxation year; and
(c)a prescribed form is filed with the Minister by
(i)the designated member in its return of income for the designated member’s taxation year, and
(ii)the person in its return of income for the person’s taxation year.
Marginal note:Anti-avoidance
(9)If a corporation provides services or property to a person or partnership that holds a direct or indirect interest in a particular partnership or corporation and one of the reasons for the provision of the services or property to the person or partnership, instead of to the particular partnership or corporation, is to avoid the application of subparagraph (1)(a)(ii) or (ii.1) in respect of the income from the provision of the services or property, no amount in respect of the corporation’s income from the provision of the services or property is to be included in the total amount determined under paragraph (1)(a).
Marginal note:Computational rule — specified corporate income
(10)For the purpose of determining an amount for a taxation year in respect of a corporation under clause (1)(a)(i)(B) or subparagraph (1)(a)(ii.1), an amount of income is to be excluded if the amount is
(a)income from an active business of the corporation for the year from the provision of services or property to another corporation with which the corporation is associated (in this subsection referred to as theassociated corporation); and
(b)not deductible by the associated corporation for its taxation year in respect of an amount included in the income of the associated corporation that is
(i)referred to in any of clauses (1)(a)(i)(A) to (C), or
(ii)reasonable to consider as being attributable to or derived from an amount referred to in clause (1)(a)(i)(C).
Marginal note:Manufacturing and processing profits deductions
125.1(1)There may be deducted from the tax otherwise payable under this Part by a corporation for a taxation year an amount equal to the corporation’s general rate reduction percentage for the taxation year (within the meaning assigned by subsection 123.4(1)) multiplied by the lesser of
(a)the amount, if any, by which the corporation’s Canadian manufacturing and processing profits for the year exceed, where the corporation was a Canadian-controlled private corporation throughout the year, the least of the amounts determined under paragraphs 125(1)(a) to 125(1)(c) in respect of the corporation for the year, and
(b)the amount, if any, by which the corporation’s taxable income for the year exceeds the total of
(i)where the corporation was a Canadian-controlled private corporation throughout the year, the least of the amounts determined under paragraphs 125(1)(a) to 125(1)(c) in respect of the corporation for the year,
(ii)the amount determined by multiplying the total of the amounts that would be deductible under subsection 126(2) from the tax for the year otherwise payable under this Part by it, if those amounts were determined without reference to section 123.4, by the relevant factor for the year, and
(iii)where the corporation was a Canadian-controlled private corporation throughout the year, its aggregate investment income for the year (within the meaning assigned by subsection 129(4)).
Marginal note:Electrical energy and steam
(2)A corporation that generates electrical energy for sale, or produces steam for sale, in a taxation year may deduct from its tax otherwise payable under this Part for the year an amount equal to the corporation’s general rate reduction percentage for the taxation year (within the meaning assigned by subsection 123.4(1)) multiplied by the amount determined by the formula
A - B
where
(a)the amount determined under paragraph (1)(a) in respect of the corporation for the year, and
(b)the amount determined under paragraph (1)(b) in respect of the corporation for the year; and
(a)the amount determined under paragraph (1)(a) in respect of the corporation for the year, and
(b)the amount determined under paragraph (1)(b) in respect of the corporation for the year.
Marginal note:Definitions
(3)In this section,
Canadian manufacturing and processing profitsof a corporation for a taxation year means such portion of the total of all amounts each of which is the income of the corporation for the year from an active business carried on in Canada as is determined under rules prescribed for that purpose by regulation made on the recommendation of the Minister of Finance to be applicable to the manufacturing or processing in Canada of goods for sale or lease; (bénéfices de fabrication et de transformation au Canada)
manufacturing or processingdoes not include
(a)farming or fishing,
(b)logging,
(c)construction,
(d)operating an oil or gas well or extracting petroleum or natural gas from a natural accumulation of petroleum or natural gas,
(e)extracting minerals from a mineral resource,
(f)processing
(i)ore (other than iron ore or tar sands ore) from a mineral resource located in Canada to any stage that is not beyond the prime metal stage or its equivalent,
(ii)iron ore from a mineral resource located in Canada to any stage that is not beyond the pellet stage or its equivalent, or
(iii)tar sands ore from a mineral resource located in Canada to any stage that is not beyond the crude oil stage or its equivalent,
(g)producing industrial minerals,
(h)producing or processing electrical energy or steam, for sale,
(i)processing natural gas as part of the business of selling or distributing gas in the course of operating a public utility,
(j)processing heavy crude oil recovered from a natural reservoir in Canada to a stage that is not beyond the crude oil stage or its equivalent,
(k)Canadian field processing, or
(l)any manufacturing or processing of goods for sale or lease, if, for any taxation year of a corporation in respect of which the expression is being applied, less than 10% of its gross revenue from all active businesses carried on in Canada was from
(i)the selling or leasing of goods manufactured or processed in Canada by it, and
(ii)the manufacturing or processing in Canada of goods for sale or lease, other than goods for sale or lease by it. (fabrication ou transformation)
Marginal note:Determination of gross revenue
(4)For the purposes of paragraph (l) of the definitionmanufacturing or processingin subsection 125.1(3), where a corporation was a member of a partnership at any time in a taxation year,
(a)there shall be included in the gross revenue of the corporation for the year from all active businesses carried on in Canada, that proportion of the gross revenue from each such business carried on in Canada by means of the partnership, for the fiscal period of the partnership coinciding with or ending in that year, that the corporation’s share of the income of the partnership from that business for that fiscal period is of the income of the partnership from that business for that fiscal period; and
(b)there shall be included in the gross revenue of the corporation for the year from all activities described in subparagraphs (l)(i) and (ii) of the definitionmanufacturing or processingin subsection 125.1(3), that proportion of the gross revenue from each such activity engaged in in the course of a business carried on by means of the partnership, for the fiscal period of the partnership coinciding with or ending in that year, that the corporation’s share of the income of the partnership from that business for that fiscal period is of the income of the partnership from that business for that fiscal period.
Marginal note:Interpretation
(5)For the purpose of the description of A in subsection (2) and for the purpose of applying the Income Tax Regulations (other than section 5201 of those Regulations) to that subsection other than the description of B,
(a)electrical energy and steam are deemed to be goods; and
(b)the generation of electrical energy for sale, and the production of steam for sale, are deemed to be, subject to paragraph (l) of the definitionmanufacturing or processingin subsection (3), manufacturing or processing.
125.11[Repealed, 2003, c. 28, s. 13(2)]
Marginal note:Definitions
125.2(1)The following definitions apply in this section.
adjusted business income, of a corporation for a taxation year, has the same meaning as in Part LII of theIncome Tax Regulations. (revenu rajusté tiré d’une entreprise)
cost of capital, of a corporation for a taxation year, has the same meaning as in Part LII of theIncome Tax Regulations. (coût en capital)
cost of labour, of a corporation for a taxation year, has the same meaning as in Part LII of theIncome Tax Regulations. (coût en main-d’oeuvre)
zero-emission technology manufacturing profits, of a corporation for a taxation year, means the amount determined by the formula
A × B × C
where
D ÷ E
where
(a)if the fraction determined for B is at least 0.9, the fraction determined by the formula
F ÷ G
where
(b)1, in any other case. (bénéfices de fabrication de technologies à zéro émission)
ZETM cost of capital, of a corporation for a taxation year, has the same meaning as in Part LII of theIncome Tax Regulations. (coût en capital de FTZE)
ZETM cost of labour, of a corporation for a taxation year, has the same meaning as in Part LII of theIncome Tax Regulations. (coût en main-d’œuvre de FTZE)
Marginal note:Zero-emission technology manufacturing
(2)There may be deducted from the tax otherwise payable under this Part by a corporation for a taxation year the amount determined by the formula
(A × B) + (C × D)
where
(a)0.075, if the taxation year begins after 2021 and before 2029,
(b)0.05625, if the taxation year begins after 2028 and before 2030,
(c)0.0375, if the taxation year begins after 2029 and before 2031,
(d)0.01875, if the taxation year begins after 2030 and before 2032, and
(e)nil, in any other case;
(a)the corporation’s zero-emission technology manufacturing profits for the taxation year,
(b)the amount of the corporation’s adjusted business income for the taxation year (determined without reference to section 5203 of theIncome Tax Regulations) less
(i)if the corporation was a Canadian-controlled private corporation throughout the taxation year, the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the taxation year, and
(ii)in any other case, nil, and
(c)the amount, if any, by which the corporation’s taxable income for the taxation year exceeds the total of
(i)if the corporation was a Canadian-controlled private corporation throughout the taxation year, the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the taxation year,
(ii)the corporation’saggregate investment income(as defined in subsection 129(4)) for the taxation year, and
(iii)the amount determined by multiplying the total of the amounts deducted under subsection 126(2) from its tax for the taxation year otherwise payable under this Part, by the relevant factor for the taxation year;
(a)0.045, if the taxation year begins after 2021 and before 2029,
(b)0.03375, if the taxation year begins after 2028 and before 2030,
(c)0.0225, if the taxation year begins after 2029 and before 2031,
(d)0.01125, if the taxation year begins after 2030 and before 2032, and
(e)nil, in any other case; and
(a)if the corporation was a Canadian-controlled private corporation throughout the taxation year, the lesser of
(i)the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the taxation year, and
(ii)the amount determined by the formula
E − F
where
(b)nil, in any other case.
Marginal note:Part XIII tax  — eligible bank affiliate
125.21There may be deducted in computing the tax payable under this Part for a taxation year by a particular corporation that is throughout the year an eligible Canadian bank (as defined in subsection 95(2.43)) the total of all amounts, each of which is the amount, if any, by which
(a)an amount paid under paragraph 212(1)(b) in respect of interest paid or credited in the year by the particular corporation in respect of an upstream deposit (as defined in subsection 95(2.43)) owing to a non-resident corporation that is, throughout the year, an eligible bank affiliate (as defined in subsection 95(2.43)) of the particular corporation
exceeds
(b)the total of all amounts each of which is a portion of the amount described in paragraph (a) that is available to the non-resident corporation or any other person or partnership at any time as a credit or reduction of, or deduction from, any amount otherwise payable to the government of a country other than Canada, or a political subdivision of that country, having regard to all available provisions of the laws of that country, or political subdivision, as the case may be, any tax treaty with that country and any other agreements entered into by that country or political subdivision.
Marginal note:Deduction of Part I.3 tax
125.3(1)There may be deducted in computing the tax payable under this Part for a taxation year by a corporation (other than a corporation that was throughout the year a financial institution, within the meaning assigned by section 190) an amount equal to such part as the corporation claims of its unused Part I.3 tax credits for any of its 7 immediately preceding taxation years ending before 1992, to the extent that that amount does not exceed the amount, if any, by which
(a)its Canadian surtax payable for the year
exceeds
(b)the amount that would, but for subsection 181.1(4), be its tax payable under Part I.3 for the year.
Marginal note:Idem
(1.1)There may be deducted in computing the tax payable under this Part for a taxation year by a corporation that was a financial institution (within the meaning assigned by section 190) throughout the year an amount equal to such part as the corporation claims of its unused Part I.3 tax credits for any of its 7 immediately preceding taxation years ending before 1992, to the extent that that amount does not exceed the lesser of
(a)the amount, if any, by which its Canadian surtax payable for the year exceeds the amount that would, but for subsection 181.1(4), be its tax payable under Part I.3 for the year, and
(b)the amount, if any, by which its tax payable under this Part (determined without reference to this section) for the year exceeds the amount that would, but for subsections 181.1(4) and 190.1(3), be the total of its taxes payable under Parts I.3 and VI for the year.
Marginal note:Special rules
(2)For the purposes of this section,
(a)no amount may be claimed under subsection 125.3(1) in computing a corporation’s tax payable under this Part for a particular taxation year in respect of its unused Part I.3 tax credit for another taxation year until its unused Part I.3 tax credits for taxation years preceding the other year that may be claimed for the particular year have been claimed; and
(b)an amount in respect of a corporation’s unused Part I.3 tax credit for a taxation year may be claimed under subsection 125.3(1) in computing its tax payable under this Part for another taxation year only to the extent that it exceeds the total of all amounts each of which is the amount claimed in respect of that unused Part I.3 tax credit in computing its tax payable under this Part for a taxation year preceding that other year.
Marginal note:Acquisition of control
(3)Where, at any time, control of a corporation has been acquired by a person or group of persons, no amount in respect of its unused Part I.3 tax credit for a taxation year ending before that time is deductible by the corporation for a taxation year ending after that time and no amount in respect of its unused Part I.3 tax credit for a taxation year ending after that time is deductible by the corporation for a taxation year ending before that time, except that
(a)where a business was carried on by the corporation in a taxation year ending before that time, its unused Part I.3 tax credit for that year is deductible by the corporation for a particular taxation year ending after that time only if that business was carried on by the corporation for profit or with a reasonable expectation of profit throughout the particular year and only to the extent of that proportion of the corporation’s Canadian surtax payable for the particular year that
(i)the amount, if any, by which
(A)the total of its income for the particular year from that business and, where properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, its income for the particular year from any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services
exceeds
(B)the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or (d) for the particular year by the corporation in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of that business or the other business,
is of the greater of
(ii)the amount determined under subparagraph 125.3(3)(a)(i), and
(iii)the corporation’s taxable income for the particular year; and
(b)where a business was carried on by the corporation throughout a taxation year ending after that time, its unused Part I.3 tax credit for that year is deductible by the corporation for a particular taxation year ending before that time only if that business was carried on by the corporation for profit or with a reasonable expectation of profit in the particular year and only to the extent of that proportion of the corporation’s Canadian surtax payable for the particular year that
(i)the amount, if any, by which
(A)the total of its income for the particular year from that business and, where properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, its income for the particular year from any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services
exceeds
(B)the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or (d) for the particular year by the corporation in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of that business or the other business,
is of the greater of
(ii)the amount determined under subparagraph 125.3(3)(b)(i), and
(iii)the corporation’s taxable income for the particular year.
Marginal note:Definitions
(4)For the purposes of this section,
Canadian surtax payableof a corporation for a taxation year means
(a)in the case of a corporation that is non-resident throughout the year, the lesser of
(i)the amount determined under section 123.2 in respect of the corporation for the year, and
(ii)its tax payable under this Part for the year, and
(b)in any other case, the lesser of
(i)the prescribed proportion of the amount determined under section 123.2 in respect of the corporation for the year, and
(ii)its tax payable under this Part for the year; (surtaxe canadienne payable)
unused Part I.3 tax creditof a corporation for a taxation year means
(a)where the year ended before 1992, the amount, if any, by which its tax payable under Part I.3 for the year exceeds the amount deductible under subsection 125.3(1) in computing its tax payable under this Part for the year, and
(b)where the year ends after 1991, the amount, if any, by which the corporation’s tax payable under Part I.3 for the year (determined without reference to subsection 181.1(4)) exceeds its Canadian surtax payable under this Part for the year. (crédit d’impôt de la partie I.3 inutilisé)
Marginal note:Definitions
125.4(1)The definitions in this subsection apply in this section.
assistancemeans an amount, other than a prescribed amount or an amount deemed under subsection (3) to have been paid, that would be included under paragraph 12(1)(x) in computing a taxpayer’s income for any taxation year if that paragraph were read without reference to
(a)subparagraphs 12(1)(x)(v) to (viii), if the amount were received
(i)from a person or partnership described in subparagraph 12(1)(x)(ii), or
(ii)in circumstances where clause 12(1)(x)(i)(C) applies; and
(b)subparagraphs 12(1)(x)(v) to (vii), in any other case. (montant d’aide)
Canadian film or video productionhas the meaning assigned by regulation. (production cinématographique ou magnétoscopique canadienne)
Canadian film or video production certificatemeans a certificate issued in respect of a production by the Minister of Canadian Heritage certifying that the production is a Canadian film or video production in respect of which that Minister is satisfied that, except where the production is a treaty co-production (as defined in subsection 1106(3) of theIncome Tax Regulations), an acceptable share of revenues from the exploitation of the production in non-Canadian markets is, under the terms of any agreement, retained by
(a)a qualified corporation that owns or owned an interest in, or for civil law a right in, the production;
(b)a prescribed taxable Canadian corporation related to the qualified corporation; or
(c)any combination of corporations described in paragraph (a) or (b). (certificat de production cinématographique ou magnétoscopique canadienne)
investor[Repealed, 2014, c. 39, s. 41]
labour expenditure, of a corporation for a taxation year in respect of a Canadian film or video production, means, in the case of a corporation that is not a qualified corporation for the taxation year, nil, and in the case of a corporation that is a qualified corporation for the taxation year, subject to subsection (2), the total of the following amounts to the extent that they are reasonable in the circumstances and included in the cost to, or in the case of depreciable property the capital cost to, the corporation, or any other person or partnership, of the production:
(a)the salary or wages directly attributable to the production that are incurred after 1994 and in the taxation year, or the preceding taxation year, by the corporation for the stages of production of the property, from the production commencement time to the end of the post-production stage, and paid by it in the taxation year or within 60 days after the end of the taxation year (other than amounts incurred in that preceding taxation year that were paid within 60 days after the end of that preceding taxation year),
(b)that portion of the remuneration (other than salary or wages and other than remuneration that relates to services rendered in the preceding taxation year and that was paid within 60 days after the end of that preceding taxation year) that is directly attributable to the production of property, that relates to services rendered after 1994 and in the taxation year, or that preceding taxation year, to the corporation for the stages of production, from the production commencement time to the end of the post-production stage, and that is paid by it in the taxation year or within 60 days after the end of the taxation year to
(i)an individual who is not an employee of the corporation, to the extent that the amount paid
(A)is attributable to services personally rendered by the individual for the production of the property, or
(B)is attributable to and does not exceed the salary or wages of the individual’s employees for personally rendering services for the production of the property,
(ii)another taxable Canadian corporation, to the extent that the amount paid is attributable to and does not exceed the salary or wages of the other corporation’s employees for personally rendering services for the production of the property,
(iii)another taxable Canadian corporation all the issued and outstanding shares of the capital stock of which (except directors’ qualifying shares) belong to an individual and the activities of which consist principally of the provision of the individual’s services, to the extent that the amount paid is attributable to services rendered personally by the individual for the production of the property, or
(iv)a partnership that is carrying on business in Canada, to the extent that the amount paid
(A)is attributable to services personally rendered by an individual who is a member of the partnership for the production of the property, or
(B)is attributable to and does not exceed the salary or wages of the partnership’s employees for personally rendering services for the production of the property, and
(c)where
(i)the corporation is a subsidiary wholly-owned corporation of another taxable Canadian corporation (in this section referred to as the “parent”), and
(ii)the corporation and the parent have agreed that this paragraph apply in respect of the production,
the reimbursement made by the corporation in the year, or within 60 days after the end of the year, of an expenditure that was incurred by the parent in a particular taxation year of the parent in respect of that production and that would be included in the labour expenditure of the corporation in respect of the property for the particular taxation year because of paragraph (a) or (b) if
(iii)the corporation had had such a particular taxation year, and
(iv)the expenditure were incurred by the corporation for the same purpose as it was by the parent and were paid at the same time and to the same person or partnership as it was by the parent. (dépense de main-d’oeuvre)
production commencement time, in respect of a Canadian film or video production, means the earlier of
(a)the time at which principal photography of the production begins, and
(b)the latest of
(i)the time at which a qualified corporation that has an interest in, or for civil law a right in, the production, or the parent of the corporation, first makes an expenditure for salary or wages or other remuneration for activities, of scriptwriters, that are directly attributable to the development by the corporation of script material of the production,
(ii)the time at which the corporation or the parent of the corporation acquires a property, on which the production is based, that is a published literary work, screenplay, play, personal history or all or part of the script material of the production, and
(iii)two years before the date on which principal photography of the production begins. (début de la production)
qualified corporationfor a taxation year means a corporation that is throughout the year a prescribed taxable Canadian corporation the activities of which in the year are primarily the carrying on through a permanent establishment (as defined by regulation) in Canada of a business that is a Canadian film or video production business. (société admissible)
qualified labour expenditure, of a corporation for a taxation year in respect of a Canadian film or video production, means the lesser of
(a)the amount, if any, by which
(i)the total of
(A)the labour expenditure of the corporation for the year in respect of the production, and
(B)the amount by which the total of all amounts each of which is the labour expenditure of the corporation for a preceding taxation year in respect of the production exceeds the total of all amounts each of which is a qualified labour expenditure of the corporation in respect of the production for a preceding taxation year before the end of which the principal filming or taping of the production began
exceeds
(ii)where the corporation is a parent, the total of all amounts each of which is an amount that is the subject of an agreement in respect of the production referred to in paragraph (c) of the definitionlabour expenditurebetween the corporation and its wholly-owned corporation, and
(b)the amount determined by the formula
A - B
where
(i)the total of all amounts each of which is an expenditure by the corporation in respect of the production that is included in the cost to, or in the case of depreciable property the capital cost to, the corporation or any other person or partnership of the production at the end of the taxation year,
exceeds
(ii)the total of all amounts each of which is an amount of assistance in respect of that cost that, at the time of the filing of its return of income for the year, the corporation or any other person or partnership has received, is entitled to receive or can reasonably be expected to receive, that has not been repaid before that time pursuant to a legal obligation to do so (and that does not otherwise reduce that cost), and
salary or wagesdoes not include an amount
(a)described in section 7;
(b)determined by reference to profits or revenues; or
(c)paid to a person in respect of services rendered by the person at a time when the person was non-resident, unless the person was at that time a Canadian citizen. (traitement ou salaire)
script material, in respect of a production, means written material describing the story on which the production is based and, for greater certainty, includes a draft script, an original story, a screen story, a narration, a television production concept, an outline or a scene-by-scene schematic, synopsis or treatment. (texte)
Marginal note:COVID-19 — production commencement time
(1.1)The reference to “two years” in subparagraph (b)(iii) of the definitionproduction commencement timein subsection (1) is to be read as a reference to “three years” in respect of film or video productions for which the labour expenditure of the corporation in respect of the production for the taxation year ending in 2020 or 2021 was greater than nil.
Marginal note:Rules governing labour expenditure of a corporation
(2)For the purposes of the definitionslabour expenditureandqualified labour expenditurein subsection (1),
(a)remuneration does not include remuneration
(i)determined by reference to profits or revenues, or
(ii)in respect of services rendered by a person at a time when the person was non-resident, unless the person was at that time a Canadian citizen;
(b)services referred to in paragraph (b) of that definition that relate to the post-production stage of the production include only the services that are rendered at that stage by a person who performs the duties of animation cameraman, assistant colourist, assistant mixer, assistant sound-effects technician, boom operator, colourist, computer graphics designer, cutter, developing technician, director of post production, dubbing technician, encoding technician, inspection technician — clean up, mixer, optical effects technician, picture editor, printing technician, projectionist, recording technician, senior editor, sound editor, sound-effects technician, special effects editor, subtitle technician, timer, video-film recorder operator, videotape operator or by a person who performs a prescribed duty;
(c)that definition does not apply to an amount to which section 37 applies; and
(d)an expenditure incurred in respect of a film or video production by a qualified corporation (in this paragraph referred to as the “co-producer”) in respect of goods supplied or services rendered by another qualified corporation to the co-producer in respect of the production is not a labour expenditure to the co-producer or, for the purpose of applying this section to the co-producer, a cost or capital cost of the production.
Marginal note:Tax credit
(3)Where
(a)a qualified corporation for a taxation year files with its return of income for the year
(i)a Canadian film or video production certificate issued in respect of a Canadian film or video production of the corporation,
(ii)a prescribed form containing prescribed information, and
(iii)each other document prescribed in respect of the production, and
(b)the principal filming or taping of the production began before the end of the year,
the corporation is deemed to have paid on its balance-due day for the year an amount on account of its tax payable under this Part for the year equal to 25% of its qualified labour expenditure for the year in respect of the production.
Marginal note:Exception
(4)This section does not apply to a Canadian film or video production if the production  — or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law a right in, the production  — is a tax shelter investment for the purpose of section 143.2.
Marginal note:When assistance received
(5)For the purposes of this Act other than this section, and for greater certainty, the amount that a corporation is deemed under subsection 125.4(3) to have paid for a taxation year is assistance received by the corporation from a government immediately before the end of the year.
Marginal note:Revocation of certificate
(6)If an omission or incorrect statement was made for the purpose of obtaining a Canadian film or video production certificate in respect of a production, or if the production is not a Canadian film or video production,
(a)the Minister of Canadian Heritage may
(i)revoke the certificate, or
(ii)if the certificate was issued in respect of productions included in an episodic television series, revoke the certificate in respect of one or more episodes in the series;
(b)for greater certainty, for the purposes of this section, the expenditures and cost of production in respect of productions included in an episodic television series that relate to an episode in the series in respect of which a certificate has been revoked are not attributable to a Canadian film or video production; and
(c)for the purpose of subparagraph (3)(a)(i), a certificate that has been revoked is deemed never to have been issued.
Marginal note:Guidelines
(7)The Minister of Canadian Heritage shall issue guidelines respecting the circumstances under which the conditions in the definitionCanadian film or video production certificatein subsection (1) are satisfied