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

Act current to 2014-04-02 and last amended on 2014-01-01. Previous Versions

Marginal note:Refundable investment tax credit
  •  (1) Where a taxpayer (other than a person exempt from tax under section 149) files

    • (a) with the taxpayer’s return of income (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(f) or subsection 150(4)) for a taxation year, or

    • (b) with a prescribed form amending a return referred to in paragraph 127.1(1)(a)

    a prescribed form containing prescribed information, the taxpayer is deemed to have paid on the taxpayer’s balance-due day for the year an amount on account of the taxpayer’s tax payable under this Part for the year equal to the lesser of

    • (c) the taxpayer’s refundable investment tax credit for the year, and

    • (d) the amount designated by the taxpayer in the prescribed form.

  • Marginal note:Definitions

    (2) In this section,

    “excluded corporation”

    « société exclue »

    “excluded corporation” for a taxation year means a corporation that is, at any time in the year,

    • (a) controlled directly or indirectly, in any manner whatever, by

      • (i) one or more persons exempt from tax under this Part by virtue of section 149,

      • (ii) Her Majesty in right of a province, a Canadian municipality or any other public authority, or

      • (iii) any combination of persons each of whom is a person referred to in subparagraph (i) or (ii), or

    • (b) related to any person referred to in paragraph (a);

    “qualifying corporation”

    « société admissible »

    “qualifying corporation”, for a particular taxation year that ends in a calendar year, means a particular corporation that is a Canadian-controlled private corporation in the particular taxation year the taxable income of which for its immediately preceding taxation year  —  together with, if the particular corporation is associated in the particular taxation year with one or more other corporations (in this subsection referred to as “associated corporations”), the taxable income of each associated corporation for its last taxation year that ended in the preceding calendar year (determined before taking into consideration the specified future tax consequences for that last year)  —  does not exceed the qualifying income limit, if any, of the particular corporation for the particular taxation year;

    “qualifying income limit”

    « plafond de revenu admissible »

    “qualifying income limit” of a corporation for a particular taxation year is the amount determined by the formula

    $500,000 × [($40 million – A)/$40 million]

    where

    A 
    is
    • (a) nil, if $10 million is greater than or equal to the amount (in paragraph (b) referred to as the “taxable capital amount”) that is the total of the corporation’s taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) for its immediately preceding taxation year and the taxable capital employed in Canada (within the meaning assigned by section 181.2 or 181.3) of each associated corporation for the associated corporation’s last taxation year that ended in the last calendar year that ended before the end of the particular taxation year, or

    • (b) in any other case, the lesser of $40 million and the amount by which the taxable capital amount exceeds $10 million;

    “refundable investment tax credit”

    « crédit d’impôt à l’investissement remboursable »

    “refundable investment tax credit” of a taxpayer for a taxation year means, in the case of a taxpayer who is

    • (a) a qualifying corporation for the year,

    • (b) an individual other than a trust, or

    • (c) a trust each beneficiary of which is a person referred to in paragraph (a) or (b),

    an amount equal to 40% of the amount, if any, by which

    • (d) the total of all amounts included in computing the taxpayer’s investment tax credit at the end of the year

      • (i) in respect of property (other than qualified small-business property) acquired, or a qualified expenditure (other than an expenditure in respect of which an amount is included under paragraph (f) in computing the taxpayer’s refundable investment tax credit for the year) incurred, by the taxpayer in the year, or

      • (ii) because of paragraph (b) of the definition “investment tax credit” in subsection 127(9) in respect of a property (other than qualified small-business property) acquired or a qualified expenditure (other than an expenditure in respect of which an amount is included under paragraph (f) in computing the taxpayer’s refundable investment tax credit for the year) incurred

    exceeds

    • (e) the total of

      • (i) the portion of the total of all amounts deducted under subsection 127(5) for the year or a preceding taxation year (other than an amount deemed by subsection 127.1(3) to be so deducted for the year) that can reasonably be considered to be in respect of the total determined under paragraph (d), and

      • (ii) the portion of the total of all amounts required by subsection 127(6) or 127(7) to be deducted in computing the taxpayer’s investment tax credit at the end of the year that can reasonably be considered to be in respect of the total determined under paragraph (d),

    plus where the taxpayer is a qualifying corporation (other than an excluded corporation) for the year, the amount, if any, by which

    • (f) the total of

      • (i) the portion of the amount required by subsection 127(10.1) to be added in computing the taxpayer’s investment tax credit at the end of the year that is in respect of qualified expenditures (other than expenditures of a capital nature) incurred by the taxpayer in the year, and

      • (ii) all amounts determined under paragraph (a.1) of the definition “investment tax credit” in subsection 127(9) in respect of expenditures for which an amount is included in subparagraph (i)

    exceeds

    • (g) the total of

      • (i) the portion of the total of all amounts deducted by the taxpayer under subsection 127(5) for the year or a preceding taxation year (other than an amount deemed by subsection 127.1(3) to be so deducted for the year) that can reasonably be considered to be in respect of the total determined under paragraph (f), and

      • (ii) the portion of the total of all amounts required by subsection 127(6) to be deducted in computing the taxpayer’s investment tax credit at the end of the year that can reasonably be considered to be in respect of the total determined under paragraph (f).

  • Marginal note:Addition to refundable investment tax credit

    (2.01) In the case of a taxpayer that is a Canadian-controlled private corporation other than a qualifying corporation or an excluded corporation, the refundable investment tax credit of the taxpayer for a taxation year is 40% of the amount, if any, by which

    • (a) the total of

      • (i) the portion of the amount required by subsection 127(10.1) to be added in computing the taxpayer’s investment tax credit at the end of the year that is in respect of qualified expenditures (other than expenditures of a current nature) incurred by the taxpayer in the year, and

      • (ii) all amounts determined under paragraph (a.1) of the definition “investment tax credit” in subsection 127(9) in respect of expenditures for which an amount is included in subparagraph 127.1(2.01)(a)(i)

    exceeds

    • (b) the total of

      • (i) the portion of the total of all amounts deducted by the taxpayer under subsection 127(5) for the year or a preceding taxation year (other than an amount deemed by subsection 127.1(3) to have been so deducted for the year) that can reasonably be considered to be in respect of the total determined under paragraph 127.1(2.01)(a), and

      • (ii) the portion of the total of all amounts required by subsection 127(6) to be deducted in computing the taxpayer’s investment tax credit at the end of the year that can reasonably be considered to be in respect of the total determined under paragraph 127.1(2.01)(a)

    plus the amount, if any, by which

    • (c) the total of

      • (i) the portion of the amount required by subsection 127(10.1) to be added in computing the taxpayer’s investment tax credit at the end of the year that is in respect of qualified expenditures (other than expenditures of a capital nature) incurred by the taxpayer in the year, and

      • (ii) all amounts determined under paragraph (a.1) of the definition “investment tax credit” in subsection 127(9) in respect of expenditures for which an amount is included in subparagraph 127.1(2.01)(c)(i)

    exceeds

    • (d) the total of

      • (i) the portion of the total of all amounts deducted by the taxpayer under subsection 127(5) for the year or a preceding taxation year (other than an amount deemed by subsection 127.1(3) to have been so deducted for the year) that can reasonably be considered to be in respect of the total determined under paragraph 127.1(2.01)(c), and

      • (ii) the portion of the total of all amounts required by subsection 127(6) to be deducted in computing the taxpayer’s investment tax credit at the end of the year that can reasonably be considered to be in respect of the total determined under paragraph 127.1(2.01)(c).

  • Marginal note:Application of s. 127(9)

    (2.1) The definitions in subsection 127(9) apply to this section.

  • Marginal note:Refundable investment tax credit — associated CCPCs

    (2.2) If a particular Canadian-controlled private corporation is associated with another corporation in circumstances where those corporations would not be associated if the Act were read without reference to paragraph 256(1.2)(a), the particular corporation has issued shares to one or more persons who have been issued shares by the other corporation and there is at least one shareholder of the particular corporation who is not a shareholder of the other corporation or one shareholder of the other corporation who is not a shareholder of the particular corporation, the particular corporation is not associated with the other corporation for the purpose of calculating that portion of the particular corporation’s refundable investment tax credit that is in respect of qualified expenditures.

  • Marginal note:Application of subsection (2.2)

    (2.3) Subsection (2.2) applies to the particular corporation and the other corporation referred to in that subsection only if the Minister is satisfied that

    • (a) the particular corporation and the other corporation are not otherwise associated under this Act; and

    • (b) the existence of one or more shareholders of the particular corporation who is not a shareholder of the other corporation, or the existence of one or more shareholders of the other corporation who is not a shareholder of the particular corporation, is not for the purpose of satisfying the requirements of subsection (2.2) or 127(10.22).

  • Marginal note:Deemed deduction

    (3) For the purposes of this Act, the amount deemed under subsection 127.1(1) to have been paid by a taxpayer for a taxation year shall be deemed to have been deducted by the taxpayer under subsection 127(5) for the year.

  • Marginal note:Qualifying income limit determined in certain cases

    (4) For the purpose of the definition of “qualifying corporation” in subsection (2), where a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, the taxable income of the corporation for the year shall be determined by multiplying that amount by the ratio that 365 is of the number of days in that year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 127.1;
  • 1994, c. 8, s. 16;
  • 1995, c. 3, s. 38;
  • 1996, c. 21, s. 31;
  • 1997, c. 25, s. 36;
  • 1998, c. 19, s. 147;
  • 2005, c. 19, s. 29;
  • 2009, c. 2, s. 41;
  • 2013, c. 40, s. 58.