12 (1) In this section, “amalgamated corporation” means a corporation that is a new corporation for the purposes of section 87 of the Income Tax Act (Canada); (“société issue de la fusion”) “base period”, of a corporation for a particular taxation year, means the three previous taxation years of the corporation or, where the corporation has had fewer than three previous taxation years, the period commencing on the first day of its first taxation year and ending immediately before the particular taxation year, except that, (a) if the corporation is an amalgamated corporation that, after the amalgamation, has had fewer than three taxation years ending before the particular taxation year, the base period, (i) shall commence on the earliest day within the thirty-six-month period immediately before the particular taxation year on which a taxation year of a predecessor corporation commenced, and (ii) shall end immediately before the particular taxation year, or (b) if the corporation was a parent corporation in a winding-up to which subsection 88 (1) of the Income Tax Act (Canada) applied and has had fewer than three taxation years ending before the particular taxation year, the base period, (i) shall commence on the earliest day within the thirty-six-month period immediately before the particular taxation year on which a taxation year of the parent corporation or of a subsidiary corporation commenced, and (ii) shall end immediately before the particular taxation year; (“période de base”) “contract payment” has the meaning given to that expression by subsection 127 (9) of the Income Tax Act
(Canada); (“paiement contractuel”) “eligible qualified expenditure” means a qualified expenditure made after the 20th day of April, 1988; (“dépense admissible autorisée”) “eligible research property” means research property acquired after the 20th day of April, 1988; (“bien servant à la recherche admissible”) “expenditure base”, of a corporation for a particular taxation year, means the ratio of the number of days in the taxation year to the number of days in the corporation’s base period for the particular taxation year, multiplied by the amount if any by which the aggregate of, (a) the total of, (i) all qualified expenditures made by the corporation during taxation years commencing before January 1, 1996 that are in the base period, and (ii) the aggregate of the corporation’s SR & ED qualified expenditure pool at the end of each taxation year commencing after December 31, 1995 that is in the base period, and (b) all amounts paid by the corporation during the base period that may reasonably be considered to be repayments of amounts referred to in clause (d) received by the corporation before or during the base period, exceeds the aggregate of, (c) all amounts each of which was deducted by the corporation under subsection 127 (5) of the Income Tax Act (Canada) in determining the amount of tax payable for a taxation year if, (i) the amount deducted is reasonably attributable to, (A) a qualified expenditure made by the corporation during a taxation year commencing before January 1, 1996 that is in or before the base period, or (B) an amount included in the corporation’s SR & ED qualified expenditure pool at the end of a taxation year commencing after December 31, 1995 that is in or before the base period, and (ii) the amount deducted was included under paragraph 12 (1) (t) of that Act, as applicable for the purposes of this Act, in computing the corporation’s income for a taxation year ending in the base period or was first required to be included in an amount determined under paragraph 13 (7.1) (e), element I in the formula in the definition of “undepreciated capital cost” in subsection 13 (21) or paragraph 37 (1) (e) of that Act, as applicable for the purposes of this Act, for a taxation year ending in the base period, and (d) all amounts received or receivable by the corporation in the base period as government assistance, non-government assistance or a contract payment, to the extent that each amount may reasonably be considered to relate to a qualified expenditure made by the corporation; (“base de dépenses”) “government assistance” and “non-government assistance” have the meanings given to those expressions by subsection 127 (9) of the Income Tax Act (Canada); (“aide gouvernementale”, “aide non gouvernementale”) “net qualified expenditures”, of a corporation for a taxation year, means the amount, if any, by which, (a) the total of the corporation’s SR & ED qualified expenditure pool at the end of the taxation year and the amount determined under subsection 43.3 (9) that would be the amount of the corporation’s eligible repayments for the taxation year for the purposes of section 43.3, exceeds, (b) the total of, (i) all amounts deducted by the corporation under subsection 127 (5) of the Income Tax Act (Canada) in computing tax payable under that Act for the previous taxation year, to the extent that the amounts deducted may reasonably be attributable to the corporation’s eligible qualified expenditures for taxation years commencing before January 1, 1996 or to amounts included in the corporation’s SR & ED qualified expenditure pool at the end of a taxation year commencing after December 31, 1995, and (ii) any amount by which the aggregate determined under this clause in respect of the immediately preceding taxation year exceeds the aggregate determined under clause (a) for the immediately preceding taxation year; (“dépenses admissibles nettes”) “Ontario allocation factor”, of a corporation for a taxation year, means the fraction equal to “A/B” where, (a) “A” equals the amount of taxable income of the corporation, or the taxable income of the corporation earned in Canada if the corporation is a corporation to which subsection 2 (2) applies, that would be determined for the taxation year if no amount were deductible under this section or any of sections 13 to 13.5 and that would not be considered for the purposes of section 39 to have been earned in jurisdictions other than Ontario, except that the taxable income or the taxable income earned in Canada shall be deemed to be $1 if there would otherwise be no taxable income or taxable income earned in Canada, and (b) “B” equals the taxable income of the corporation, or the taxable income of the corporation earned in Canada if the corporation is a corporation to which subsection 2 (2) applies, that would be determined for the taxation year if no amount were deductible under this section or any of sections 13 to 13.5, except that the taxable income or the taxable income earned in Canada shall be deemed to be $1 if there would otherwise be no taxable income or taxable income earned in Canada; (“coefficient de répartition de l’Ontario”) “parent corporation” means a corporation that is a “parent” under subsection 88 (1) of the Income Tax Act
(Canada); (“société mère”) “predecessor corporation” means a corporation that was a predecessor corporation referred to in section 87 of the Income Tax Act (Canada) and includes any corporation in respect of which a predecessor corporation was an amalgamated corporation; (“société remplacée”) “qualified expenditure” means an expenditure made by a corporation in respect of scientific research and experimental development carried on in Ontario that is a qualified expenditure for the purposes of section 127 of the Income Tax Act (Canada), or that would have been a qualified expenditure for the purposes of that section but for the corporation previously specifying the expenditure for the purposes of clause 194 (2) (a) (ii) (A) of that Act, but does not include an expenditure of the type described in subparagraph 37 (8) (d) (i), (ii) or (iii) of that Act; (“dépense admissible”) “research property” means property of a corporation referred to in subparagraph 37 (1) (b) (i) of the Income Tax Act (Canada); (“bien servant à la recherche”) “specified percentage”, in respect of a particular research property, is the percentage represented by the ratio of all amounts deducted under this section in respect of the research property to the capital cost of the research property; (“pourcentage déterminé”) “SR & ED qualified expenditure pool”, of a corporation at the end of a taxation year, has the meaning given to that expression in subsection 127 (9) of the Income Tax Act (Canada), except that the expression “qualified expenditure” shall have the meaning given to that expression by this section; (“compte de dépenses admissibles de recherche et de développement”) “subsidiary corporation” means a corporation that is a “subsidiary” under subsection 88 (1) of the Income Tax Act
(Canada). (“filiale”)  R.S.O. 1990, c. C.40, s. 12 (1); 1996, c. 29, s. 38; 1997, c. 43, Sched. A, s. 7 (1-3); 1998, c. 5, s. 7; 1998, c. 34, s. 29; 1999, c. 9, s. 76; 2000, c. 42, s. 11; 2004, c. 16, s. 2 (2). Research and development super allowance (2) A corporation may deduct a research and development super allowance in computing its income from a business for a taxation year in an amount calculated according to the following formula: A = [(B × C) + (D × E)] / F where: “A” is the research and development super allowance for the corporation for the taxation year; “B” is 0.35 if the corporation is a Canadian-controlled private corporation throughout the taxation year, or 0.25 otherwise; “C” is the lesser of the net qualified expenditures of the corporation for the taxation year or the expenditure base of the corporation for the taxation year; “D” is 0.525 if the corporation is a Canadian-controlled private corporation throughout the taxation year, or 0.375 otherwise; “E” is the amount, if any, by which the net qualified expenditures of the corporation for the taxation year exceed the expenditure base of the corporation for the taxation year; “F” is the corporation’s Ontario allocation factor for the taxation year unless the Ontario allocation factor is 0, in which case “F” is 1. R.S.O. 1990, c. C.40, s. 12 (2); 1997, c. 43, Sched. A, s. 7 (4); 2004, c. 16, s. 2 (2). Exception, specified taxation year (2.1) Despite subsection (2), no amount is deductible under this section by a corporation for a taxation year that is a specified taxation year of the corporation within the meaning of section 11.2.  2001, c. 23, s. 24; 2004, c. 16, s. 2 (2). Expenditure base after amalgamation (3) In determining the amount of the expenditure base of an amalgamated corporation for a particular taxation year, each amount determined under clauses (a) to (d) in the definition of “expenditure base” in subsection (1) includes all amounts described under those clauses in respect of any predecessor corporation in respect of all of its taxation years commencing in the base period of the amalgamated corporation.  R.S.O. 1990, c. C.40, s. 12 (3); 2004, c. 16, s. 2 (2). Expenditure base after winding-up into parent (4) If subsection 88 (1) of the Income Tax Act (Canada) applies with respect to a winding-up of a subsidiary corporation, the amount of the expenditure base of the parent corporation for a particular taxation year includes in each amount determined under clauses (a) to (d) in the definition of “expenditure base” in subsection (1), all amounts described under those clauses in respect of the subsidiary corporation in respect of its taxation years commencing in the base period of the parent corporation.  R.S.O. 1990, c. C.40, s. 12 (4); 2004, c. 16, s. 2 (2). Associated corporations (5) The expenditure base for a taxation year of a corporation that is associated with one or more other corporations during the taxation year shall be determined according to the following formula: B = A × C/D where: “B” is the expenditure base for the corporation for the particular taxation year; “A” is the aggregate of, (a) the expenditure base of the corporation that would be determined, but for this subsection, for the particular taxation year, and (b) the expenditure base, as determined without reference to this subsection, of each corporation with which the corporation was associated at any time during the particular taxation year, for each taxation year of each associated corporation ending in the same calendar year as the particular taxation year; “C” is the net qualified expenditures of the corporation for the particular taxation year; and “D” is the aggregate of “C” and the net qualified expenditures of each corporation with which the corporation was associated at any time during the particular taxation year for each taxation year of each associated corporation ending in the same calendar year as the particular taxation year. R.S.O. 1990, c. C.40, s. 12 (5); 1997, c. 43, Sched. A, s. 7 (4); 2004, c. 16, s. 2 (2). Recapture on disposition of eligible research property (6) Except as provided in subsections (7) and (8), if a corporation has disposed of an eligible research property at any time in a particular taxation year, there shall be included in computing the income of the corporation for the particular taxation year an amount equal to the lesser of, (a) the specified percentage of the lesser of the fair market value of the property at the time of the disposition or the capital cost to the corporation of the property immediately before the disposition; or (b) the amount, if any, by which the aggregate of, (i) all amounts deducted under this section by the corporation in computing its income for any taxation year commencing before the disposition and by any corporation associated with the corporation in the particular taxation year in computing its income for any taxation year ending in or before the particular taxation year, exceeds the aggregate of, (ii) all amounts included by virtue of this subsection in respect of any other eligible research property in computing the income of the corporation for any taxation year commencing before the disposition, or in computing the income of any corporation associated with the corporation in the particular taxation year, for any taxation year ending in or before the particular taxation year.  R.S.O. 1990, c. C.40, s. 12 (6); 2004, c. 16, s. 2 (2). Idem (7) If subsection 85 (1) or 88 (1) of the Income Tax Act (Canada) is applicable with respect to the disposition of eligible research property by a corporation to another corporation that is associated with the corporation in the taxation year in which the disposition occurs, (a) the property shall be deemed to be eligible research property of the other corporation; and (b) if the capital cost of the eligible research property to the corporation exceeds the proceeds of disposition, the capital cost of the eligible research property to the other corporation shall be deemed to be the amount that was the capital cost thereof to the corporation.  R.S.O. 1990, c. C.40, s. 12 (7); 2004, c. 16, s. 2 (2). Idem (8) If section 87 or subsection 88 (1) of the Income Tax Act (Canada) is applicable with respect to an amalgamation of two or more corporations or to a winding-up of a subsidiary corporation, the amalgamated corporation or the parent corporation, as applicable, shall be deemed, (a) to have deducted, in computing its income for a taxation year commencing before the amalgamation or winding-up, all amounts deducted under this section by any predecessor corporation or subsidiary corporation, as applicable, in computing its income for a taxation year; and (b) to have included, in computing its income for any taxation year commencing before the amalgamation or winding-up, all amounts included under this section by any predecessor corporation or subsidiary corporation, as applicable, in computing its income for a taxation year.  R.S.O. 1990, c. C.40, s. 12 (8); 2004, c. 16, s. 2 (2). Capital cost after amalgamation (9) If section 87 of the Income Tax Act (Canada) is applicable in respect of an amalgamation of two or more corporations, the capital cost to the amalgamated corporation of any property that was eligible research property of a predecessor corporation and that becomes the property of the amalgamated corporation because of the amalgamation shall be deemed to be the capital cost thereof to the predecessor corporation and the property shall be deemed to be eligible research property of the amalgamated corporation.  R.S.O. 1990, c. C.40, s. 12 (9); 2004, c. 16, s. 2 (2). (10) Repealed:  1997, c. 43, Sched. A, s. 7 (5). Where previously associated (11) If another corporation was not associated with a particular corporation in a taxation year, but was associated with the particular corporation at any time during the particular corporation’s base period for the taxation year, and all or substantially all of the property of the previously associated corporation that was used by it in carrying on any business during the base period was acquired in any manner by the particular corporation, or by one or more corporations associated with the particular corporation in the taxation year, the following rules apply for the purposes of this section: 1. The previously associated corporation shall be deemed to continue to exist, if it has ceased to exist. 2. The previously associated corporation shall be deemed to be associated with the particular corporation in the taxation year. 3. The previously associated corporation shall be deemed to have had taxation years ending on the same day in each year as the last day of its taxation year in which it was last associated with the particular corporation.  R.S.O. 1990, c. C.40, s. 12 (11); 2004, c. 16, s. 2 (2). Exception (12) Subsection (11) does not apply if, (a) the previously associated corporation was a predecessor corporation of the particular corporation, or of a corporation associated with the particular corporation in the taxation year; or (b) the previously associated corporation was a subsidiary corporation that was wound up before the taxation year and whose parent corporation was either the particular corporation or a corporation associated with the particular corporation in the taxation year.  R.S.O. 1990, c. C.40, s. 12 (12); 2004, c. 16, s. 2 (2). Corporate partners (13) If a corporation is a member of a partnership, the following rules apply for the purposes of this section: 1. If the partnership makes, during a fiscal period of the partnership, an expenditure that, if it were made by a corporation, would be a qualified expenditure or an eligible repayment for the purposes of section 43.3, an amount equal to the proportion of the expenditure that the corporation’s share of the income or loss of the partnership for the fiscal period bears to the total income or loss of the partnership for the fiscal period shall be deemed to be a qualified expenditure or eligible repayment made by the corporation for the purposes of section 43.3 in the taxation year of the corporation in which that fiscal period ends. 2. If the partnership disposes of a property that would be an eligible research property of the partnership if the partnership were a corporation, an amount equal to the proportion of the amount that would be included under this section, as a result of the disposition, in the income of the partnership, if the partnership were a corporation, that the corporation’s share of the income or loss of the partnership for the fiscal period in which the property was disposed of bears to the total income or loss of the partnership in the fiscal period shall be included in computing the income of the corporation for the taxation year in which the fiscal period ends. 3. Subsection 127 (13) of the Income Tax Act (Canada) does not apply to a corporation that is a member of a partnership in respect of expenditures incurred by the partnership or by the corporation on behalf of the partnership.  R.S.O. 1990, c. C.40, s. 12 (13); 1997, c. 43, Sched. A, s. 7 (6); 2004, c. 16, s. 2 (2). Maximum deduction by limited partner (14) If a corporation is a limited partner in a limited partnership at any time in a taxation year and is deemed by subsection (13) to have made a qualified expenditure or eligible repayment for the purposes of section 43.3, the following rules apply: 1. The maximum amount deductible under subsection (2) by the corporation in the taxation year in respect of the corporation’s share of the qualified expenditure or eligible repayment shall not exceed the aggregate of, i. the share of the income, if any, of the limited partnership included in the computation of income of the corporation for the taxation year, and ii. any amount included in the income of the corporation for the taxation year under paragraph 2 of subsection (13).  R.S.O. 1990, c. C.40, s. 12 (14); 1992, c. 3, s. 3; 1997, c. 43, Sched. A, s. 7 (7, 8); 2004, c. 16, s. 2 (2). Anti-avoidance (15) A corporation is not entitled to a deduction under this section during a year with respect to any expenditure made by it if, as a result of a transaction or an event, or a series of transactions or events, it is reasonable for the Minister to believe that one of the principal purposes of the carrying out of such a transaction or event or series of transactions or events is to enable the corporation to claim a deduction under this section that would not otherwise be allowed.  R.S.O. 1990, c. C.40, s. 12 (15); 2004, c. 16, s. 2 (2). Section Amendments with date in force (d/m/y) 1992, c. 3, s. 3 - 25/06/1992; 1996, c. 29, s. 38 (1) - 01/03/1994; 1996, c. 29, s. 38 (2, 3) - 28/02/1995; 1997, c. 43, Sched. A, s. 7 (1-9) - 01/01/1996; 1998, c. 5, s. 7 - 07/05/1997; 1998, c. 34, s. 29 (1) - 06/05/1998; 1998, c. 34, s. 29 (2) - 01/07/1998; 1999, c. 9, s. 76 (1, 2) - 05/05/1999 2000, c. 42, s. 11 (1, 2) - 03/05/2000 2001, c. 23, s. 24
- 05/12/2001 2004, c. 16, s. 2 (2)
- 01/01/2004 CTS 6 OC 14 - 2 Current cost allowance deduction