Income Tax Act — I-3.3 (a)
Canadian labour expenditure of a corporation for a taxation year in respect of an accredited production means, in the case of a corporation that is not an eligible production corporation in respect of the production for the year, nil, and in any other case, subject to subsection 125.5(2), the total of the following amounts in respect of the production to the extent that they are reasonable in the circumstances: (a) the salary or wages directly attributable to the production that are incurred by the corporation after October 1997, and in the year or the preceding taxation year, and that relate to services rendered in Canada for the stages of production of the production, from the final script stage to the end of the post-production stage, and paid by it in the year or within 60 days after the end of the year to employees of the corporation who were resident in Canada at the time the payments were made (other than amounts incurred in that preceding year that were paid within 60 days after the end of that preceding 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 year) that is directly attributable to the production, that relates to services rendered in Canada after October 1997 and in the year, or that preceding year, to the corporation for the stages of production of the production, from the final script stage to the end of the post-production stage, and that is paid by it in the year or within 60 days after the end of the year to a person or a partnership, that carries on a business in Canada through a permanent establishment (as defined by regulation), and that is (i) an individual resident in Canada at the time the amount is paid and 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 in Canada in respect of the accredited production, or (B) is attributable to and does not exceed the salary or wages paid by the individual to the individual’s employees at a time when they were resident in Canada for personally rendering services in Canada in respect of the accredited production, (ii) another corporation that is a taxable Canadian corporation, to the extent that the amount paid is attributable to and does not exceed the salary or wages paid to the other corporation’s employees at a time when they were resident in Canada for personally rendering services in Canada in respect of the accredited production, (iii) another corporation that is a taxable Canadian corporation, all the issued and outstanding shares of the capital stock of which (except directors’ qualifying shares) belong to an individual who was resident in Canada 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 in Canada by the individual in respect of the accredited production, or (iv) a partnership, to the extent that the amount paid (A) is attributable to services personally rendered in respect of the accredited production by an individual who is resident in Canada and who is a member of the partnership, or (B) is attributable to and does not exceed the salary or wages paid by the partnership to its employees at a time when they were resident in Canada for personally rendering services in Canada in respect of the accredited production, and (c) where (i) the corporation is a subsidiary wholly-owned corporation of another corporation that is a taxable Canadian corporation (in this section referred to as the “parent”), and (ii) the corporation and the parent have filed with the Minister an agreement 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