Income Tax Act — I-3.3 37
or a leasehold interest therein, other than a prescribed special-purpose building, (ii) any outlay or expense made or incurred for the use of, or the right to use, a building other than a prescribed special-purpose building, (iii) any payment made by a taxpayer to a corporation, or to an approved research institute or an approved association with which the taxpayer does not deal at arm’s length, to the extent that the amount of the payment may reasonably be considered to have been made to enable the recipient to acquire a building or a leasehold interest in a building or to pay an amount in respect of the rental expense in respect of a building, and (iv) any payment made by a taxpayer to an approved university, college or organization, to the extent that the amount of the payment may reasonably be considered to have been made to enable the recipient to acquire a building, or a leasehold interest in a building, in which the taxpayer has, or may reasonably be expected to acquire, an interest. Salary or wages (9) An expenditure of a taxpayer (a) does not include, for the purposes of clauses (8)(a)(ii)(A) and (B), remuneration based on profits or a bonus, where the remuneration or bonus, as the case may be, is in respect of a specified employee of the taxpayer, and (b) includes, for the purpose of paragraph (1.5)(a), an amount paid in respect of an expense incurred for salary or wages paid to an employee only if the taxpayer reasonably believes that the salary or wages is not subject to an income or profits tax imposed, because of the employee’s presence or activity in a country other than Canada, by a government of that other country. Limitation re specified employees (9.1) For the purposes of clauses (8)(a)(ii)(A) and (B), expenditures incurred by a taxpayer in a taxation year do not include expenses incurred in the year in respect of salary or wages of a specified employee of the taxpayer to the extent that those expenses exceed the amount determined by the formula A × B/365 where A is 5 times the Year’s Maximum Pensionable Earnings (as determined under section 18 of the Canada Pension Plan ) for the calendar year in which the taxation year ends; and B is the number of days in the taxation year on which the employee is a specified employee of the taxpayer. Associated corporations (9.2) Where (a) in a taxation year of a corporation that ends in a calendar year, the corporation employs an individual who is a specified employee of the corporation, (b) the corporation is associated with another corporation (in this subsection and subsection 37(9.3) referred to as the “associated corporation”) in a taxation year of the associated corporation that ends in the calendar year, and (c) the individual is a specified employee of the associated corporation in the taxation year of the associated corporation that ends in the calendar year, for the purposes of clauses (8)(a)(ii)(A) and (B), the expenditures incurred by the corporation in its taxation year or years that end in the calendar year and by each associated corporation in its taxation year or years that end in the calendar year do not include expenses incurred in those taxation years in respect of salary or wages of the specified employee unless the corporation and all of the associated corporations have filed with the Minister an agreement referred to in subsection 37(9.3) in respect of those years. Agreement among associated corporations (9.3) Where all of the members of a group of associated corporations of which an individual is a specified employee file, in respect of their taxation years that end in a particular calendar year, an agreement with the Minister in which they allocate an amount in respect of the individual to one or more of them for those years and the amount so allocated or the total of the amounts so allocated, as the case may be, does not exceed the amount determined by the formula A × B/365 where A is 5 times the Year’s Maximum Pensionable Earnings (as determined