Income Tax Act — I-3.3 (a)
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 t