Marginal note:Refundable investment tax credit
127.1 (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); (société exclue)
qualifying corporation
société admissible
qualifying corporation for a particular taxation year that ends in a calendar year means
(a) a corporation that is a Canadian-controlled private corporation throughout the particular year (other than a corporation associated with another corporation in the particular year) the taxable income of which for its immediately preceding taxation year (determined before taking into consideration the specified future tax consequences for that preceding year) does not exceed its business limit for that preceding year, or
(b) a corporation that is a Canadian-controlled private corporation throughout the particular year and associated with another corporation in the particular year, where the total of all amounts each of which is the taxable income of the corporation or such an 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 total of all amounts each of which is the business limit of the corporation or such an associated corporation for that last year; (société admissible)
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). (crédit d’impôt à l’investissement remboursable)
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: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.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- R.S., 1985, c. 1 (5th Supp.), s. 127.1
- 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
- Date modified: