43.3 (1) A corporation that is a qualifying corporation for a taxation year may deduct from its tax otherwise payable under this Part for the taxation year, after making all deductions claimed under sections 39, 40, 41 and 43 for the taxation year, an amount not exceeding the amount of its Ontario innovation tax credit for the taxation year.  1996, c. 1, Sched. B, s. 7 (1); 1996, c. 29, s. 48; 2004, c. 16, s. 2 (2). Same (2) A corporation that is a qualifying corporation for a taxation year may deduct from its tax otherwise payable for the year under Parts III and IV of the Act an amount not exceeding the amount by which its Ontario innovation tax credit for the taxation year exceeds the maximum amount, if any, deductible by the corporation for the year under subsection (1).  1996, c. 1, Sched. B, s. 7 (1); 2004, c. 16, s. 2 (2). Amount of tax credit (3) The amount of a qualifying corporation’s Ontario innovation tax credit for a taxation year is 10 per cent of the lesser of, (a) the total of the amount of the corporation’s SR & ED qualified expenditure pool at the end of the year and the amount of its eligible repayments, if any, for the taxation year; and (b) the amount of the corporation’s expenditure limit for the taxation year.  1997, c. 43, Sched. A, s. 17 (1); 1999, c. 9, s. 81 (1); 2004, c. 16, s. 2 (2). Expenditure limit (3.1) The amount of a corporation’s expenditure limit for a taxation year that ends before May 5, 1999 is the amount that would be determined to be the corporation’s expenditure limit for the taxation year for the purposes of subsection 127 (10.1) of the Income Tax Act (Canada).  1999, c. 9, s. 81 (2); 2004, c. 16, s. 2 (2). Expenditure limit, taxation year ending after May 4, 1999 and before February 26, 2008 (3.2) Subject to subsections (3.3) and (3.7), the amount of a corporation’s expenditure limit for a taxation year that ends after May 4, 1999 and before February 26, 2008 is the amount that would be determined to be its expenditure limit for the taxation year for the purposes of subsection 127 (10.1) of the Income Tax Act
(Canada) if, for the purposes of the definition of “B” in subsection 127 (10.2) of that Act, the business limit of a corporation were considered to be the amount, if any, by which the business limit of the corporation for the taxation year as determined under subsection 41 (3.1) without the application of paragraph 125 (5) (b) of the Income Tax Act (Canada) and this subsection exceeds the amount calculated using the formula, C × D/$25 million in which, “C” is the amount that would be determined under subsection 41 (3.1) to be the business limit of the corporation for the taxation year without the application of paragraph 125 (5) (b) of the Income Tax Act (Canada) and this subsection, and “D” is, (a) for a corporation that is not associated with any other corporation in the taxation year, the amount, if any, by which $25 million is less than, (i) the corporation’s taxable paid-up capital for the preceding taxation year as determined under Part III, if the corporation is a corporation that is not a financial institution as defined in subsection 58 (2), a credit union or an insurance corporation, (ii) the corporation’s adjusted taxable paid-up capital for the preceding taxation year as determined under Part III, if the corporation is a financial institution as defined in subsection 58 (2), other than a credit union, or (iii) the corporation’s taxable capital employed in Canada for the preceding taxation year as determined under Part I.3 of the Income Tax Act (Canada), if the corporation is a credit union or an insurance corporation, or (b) for a corporation that is associated with one or more other corporations in the taxation year, the amount, if any, by which $25 million is less than the total of all amounts, each of which is an amount described in subclause (a) (i), (ii) or (iii) in respect of the corporation for the preceding taxation year or in respect of an associated corporation for its last taxation year ending in the corporation’s preceding taxation year. 1999, c. 9, s. 81 (2); 2004, c. 16, s. 2 (2); 2008, c. 7, Sched. E, s. 4; 2008, c. 19, Sched. C, s. 1 (1). Expenditure limit, taxation year ending after February 25, 2008 (3.2.1) Subject to subsections (3.2.5) and (3.7), the amount of a corporation’s expenditure limit for a taxation year ending after February 25, 2008 is the amount calculated using the formula, ($7 million – 10A) × [($25 million – B)/$25 million] in which, “A” is the greater of, (a) $400,000, and (b) the amount that is, (i) if the corporation is not associated with any other corporation in the taxation year, the corporation’s taxable income under the Income Tax Act (Canada) for its immediately preceding taxation year, determined before taking into consideration the specified future tax consequences for that preceding year, or (ii) if the corporation is associated with one or more corporations in the taxation year, the associated group’s taxable income for the corporation’s immediately preceding taxation year, as determined under subsection (3.2.2), and “B” is, (a) nil if, (i) the corporation’s taxable capital amount for the immediately preceding taxation year, as determined under subsection (3.2.3), is not more than $25 million and the corporation is not associated with any other corporation in the taxation year, or (ii) the corporation is associated with one or more corporations in the taxation year and the associated group’s taxable capital amount for the preceding taxation year as determined under subsection (3.2.4) is not more than $25 million, or (b) in any other case, the lesser of $25 million and the amount by which the corporation’s taxable capital amount for the immediately preceding taxation year or, if the corporation is associated with one or more corporations in the taxation year, the associated group’s taxable capital amount for the immediately preceding taxation year exceeds $25 million. 2008, c. 19, Sched. C, s. 1 (2). Associated group’s taxable income (3.2.2) If a corporation is associated with one or more corporations in a particular taxation year, the associated group’s taxable income for the corporation’s immediately preceding taxation year is the sum of, (a) the corporation’s taxable income under the Income Tax Act (Canada) for its last taxation year ending in the last calendar year that ended before the end of the particular taxation year, determined before taking into consideration the specified future tax consequences for that preceding year; and (b) the sum of all amounts each of which is the taxable income of an associated corporation under the Income Tax Act (Canada) for the associated corporation’s last taxation year ending in the last calendar year that ended before the end of the particular taxation year of the corporation referred to in clause (a), determined before taking into consideration the specified future tax consequences for that last taxation year.  2008, c. 19, Sched. C, s. 1 (2). Taxable capital amount (3.2.3) A corporation’s taxable capital amount for a taxation year is, (a) the corporation’s taxable paid-up capital for the year as determined under Part III, if the corporation is a corporation that is not a financial institution as defined in subsection 58 (2), a credit union or an insurance corporation; (b) the corporation’s adjusted taxable paid-up capital for the year as determined under Part III, if the corporation is a financial institution as defined in subsection 58 (2), other than a credit union; or (c) the corporation’s taxable capital employed in Canada for the year as determined under Part I.3 of the Income Tax Act (Canada), if the corporation is a credit union or an insurance corporation.  2008, c. 19, Sched. C, s. 1 (2). Associated group’s taxable capital amount (3.2.4) If a corporation is associated with one or more corporations in a particular taxation year, the associated group’s taxable capital amount for the immediately preceding taxation year is the sum of, (a) the corporation’s taxable capital amount for its last taxation year ending in the last calendar year that ended before the end of the particular taxation year, as determined under subsection (3.2.3); and (b) the sum of all amounts each of which is the taxable capital amount, as determined under subsection (3.2.3), of a corporation with which the corporation is associated in the taxation year, for the associated corporation’s last taxation year ending in the last calendar year that ended before the end of the particular taxation year of the corporation referred to in clause (a).  2008, c. 19, Sched. C, s. 1 (2). Transitional, February 26, 2008 (3.2.5) A corporation’s expenditure limit for a taxation year that straddles February 26, 2008 is equal to the amount determined by the formula: A + [(B – A) × (C/D)] in which, “A” is the amount that would be determined in respect of the corporation under subsection (3.2) if that subsection applied for the taxation year, “B” is the amount that would be determined in respect of the corporation for the taxation year under subsection (3.2.1) if this subsection did not apply, “C” is the number of days in the taxation year that are after February 25, 2008, and “D” is the number of days in the taxation year. 2008, c. 19, Sched. C, s. 1 (2). Application of federal rules (3.2.6) Subsections 127 (10.21), (10.22), (10.23), (10.3), (10.4) and (10.6) of the Income Tax Act (Canada) apply with necessary modifications for the purposes of subsections (3.2.1) and (3.7) and, without limiting the generality of the foregoing, in the application of section 127 of the Income Tax Act (Canada) for the purposes of subsections (3.2.1) and (3.7), a reference to a Canadian-controlled private corporation is deemed to be a reference to a qualifying corporation as defined in subsection (4).  2008, c. 19, Sched. C, s. 1 (2). Transition (3.3) A corporation’s expenditure limit for a taxation year that straddles May 5, 1999 is the sum of the following amounts: 1. The expenditure limit that would be determined under subsection (3.1) for the corporation for the taxation year if the taxation year ended on May 4, 1999, multiplied by the ratio of the number of days in the taxation year before May 5, 1999 to the number of days in the taxation year. 2. The expenditure limit that would be determined under subsection (3.2) for the corporation for the taxation year, multiplied by the ratio of the number of days in the taxation year after May 4, 1999 to the number of days in the taxation year.  1999, c. 9, s. 81 (2); 2004, c. 16, s. 2 (2). Interpretation (3.4) In the application of subsection 41 (3.1) of this Act and sections 125 and 127 of the Income Tax Act
(Canada) for the purposes of subsection (3.2) of this section, a reference to a Canadian-controlled private corporation shall be deemed to be a reference to a qualifying corporation as defined in subsection (4).  1999, c. 9, s. 81 (2); 2004, c. 16, s. 2 (2). (3.5) Repealed:  2005, c. 28, Sched. D, s. 9 (1). Rules for taxation years ending after May 11, 2005 (3.6) The following rules apply for the purposes of subsection (3.2) for a taxation year that commences after December 8, 2002 and ends on or before May 11, 2005: 1. A corporation that is required to compute its paid-up capital employed in Canada for a taxation year under Division C of Part III shall determine the amount that would be its taxable paid-up capital for the taxation year under Part III as if it were a corporation incorporated in Canada. 2. A corporation that would be a financial institution as defined in subsection 58 (2) in a taxation year if it carried on business in Canada and if it had been incorporated in Canada shall determine the amount that would be its adjusted taxable paid-up capital for the taxation year under Part III as if it were a financial institution defined in subsection 58 (2) and had a permanent establishment in Ontario. 3. A corporation that is a financial institution as defined in subsection 58 (2) and that has a permanent establishment in Canada but not in Ontario in a taxation year shall determine the amount that would be its adjusted taxable paid-up capital for the taxation year under Part III as if it had a permanent establishment in Ontario. 4. A corporation that is an insurance corporation that was not resident in Canada at any time in a taxation year shall determine the amount that would be its taxable capital employed in Canada under Part I.3 of the Income Tax Act (Canada) as if it were resident in Canada at any time during the year. 5. A corporation that has a permanent establishment in Canada but not in Ontario shall, if the corporation is not a financial institution as defined in subsection 58 (2) or an insurance corporation, determine the amount that would be its taxable paid-up capital for the taxation year under Part III as if it were a corporation incorporated in Canada and had a permanent establishment in Ontario. 6. A corporation that does not have a permanent establishment in Canada shall, if the corporation is not an insurance corporation or a corporation that would be a financial institution as defined in subsection 58 (2) if it carried on business in Canada and had been incorporated in Canada, determine the amount that would be its taxable paid-up capital for the taxation year under Part III as if it were a corporation incorporated in Canada and had a permanent establishment in Ontario. 7. The taxable income of a corporation incorporated outside Canada and that does not have a permanent establishment in Canada shall be determined, for the purposes of calculating the expenditure limit of the corporation under subsection 127 (10.2) of the Income Tax Act (Canada) as it applies for the purposes of subsection (3.2), in accordance with that Act as if it were subject to tax under that Act.  2002, c. 22, s. 46 (2); 2004, c. 16, s. 2 (2); 2005, c. 28, Sched. D, s. 9 (2). Rules for taxation years ending after May 11, 2005 (3.7) The following rules apply for the purposes of subsection (3.2) for a taxation year ending after May 11, 2005: 1. A corporation that is required to compute its paid-up capital employed in Canada for a taxation year under Division C of Part III shall determine the amount that would be its taxable paid-up capital for the taxation year under Part III as if it were a corporation resident in Canada. 2. A corporation that would be a financial institution, as defined in subsection 58 (2), in a taxation year if it carried on business in Canada and if it had been incorporated in Canada shall determine the amount that would be its adjusted taxable paid-up capital for the taxation year under Part III as if it were a financial institution, as defined in subsection 58 (2), that had a permanent establishment in Ontario. 3. A corporation that is a financial institution, as defined in subsection 58 (2), and that has a permanent establishment in Canada but not in Ontario in a taxation year shall determine the amount that would be its adjusted taxable paid-up capital for the taxation year under Part III as if it had a permanent establishment in Ontario. 4. A corporation that is an insurance corporation that was not resident in Canada at any time in a taxation year shall determine the amount that would be its taxable capital employed in Canada under Part I.3 of the Income Tax Act
(Canada) as if it were resident in Canada at any time during the year. 5. A corporation that has a permanent establishment in Canada but not in Ontario shall, if the corporation is not a financial institution, as defined in subsection 58 (2), or an insurance corporation, determine the amount that would be its taxable paid-up capital for the taxation year under Part III as if the corporation were resident in Canada and had a permanent establishment in Ontario. 6. A corporation that does not have a permanent establishment in Canada shall, if the corporation is not an insurance corporation or a corporation that would be a financial institution, as defined in subsection 58 (2), if it carried on business in Canada and had been incorporated in Canada, determine the amount that would be its taxable paid-up capital for the taxation year under Part III as if the corporation were resident in Canada and had a permanent establishment in Ontario. 7. The taxable income of a non-resident corporation that does not have a permanent establishment in Canada shall be determined, for the purposes of calculating the expenditure limit of the corporation under subsection 127 (10.2) of the Income Tax Act
(Canada) as it applies for the purposes of subsection (3.2), in accordance with that Act as if it were subject to tax under that Act.  2005, c. 28, Sched. D, s. 9 (3). Qualifying corporation (4) A corporation is a qualifying corporation for a taxation year for the purposes of this section if, (a) it has a permanent establishment in Ontario at any time during the taxation year; (b) it carries on scientific research and experimental development in Ontario during the taxation year; and (c) it is eligible to claim an investment tax credit for the taxation year under section 127 of the Income Tax Act (Canada) with respect to a qualified expenditure made by the corporation in the taxation year and it files a prescribed form under that section in respect of the investment tax credit.  1996, c. 1, Sched. B, s. 7 (1); 1999, c. 9, s. 81 (3); 2004, c. 16, s. 2 (2). Qualified expenditure (5) An expenditure made by a corporation is a qualified expenditure for a taxation year for the purposes of this section if, (a) the expenditure is incurred by the corporation in respect of scientific research and experimental development carried on in Ontario; (b) the expenditure would be considered to be a qualified expenditure made by the corporation in that year for the purposes of section 127 of the Income Tax Act (Canada); and (c) the expenditure is incurred by the corporation at a time when the corporation has a permanent establishment in Ontario.  1996, c. 1, Sched. B, s. 7 (1); 2004, c. 16, s. 2 (2). SR & ED qualified expenditure pool (6) The amount of a corporation’s SR & ED qualified expenditure pool at the end of a taxation year for the purposes of this section is the amount that would be determined to be the corporation’s SR & ED qualified expenditure pool at the end of the year under the definition of that expression in subsection 127 (9) of the Income Tax Act (Canada), if the following rules applied in determining that amount: 1. The expression “qualified expenditure” in the definition of “SR & ED qualified expenditure pool” in subsection 127 (9) means an expenditure that is a qualified expenditure for the purposes of this section. 2. Only 40 per cent of qualified expenditures of a capital nature for the taxation year may be included in determining the amount of qualified expenditures in the year. 3. Any tax credit available to the corporation under this section or section 43.9 in respect of qualified expenditures is deemed not to be government assistance for the purposes of that section. 4. No amount is required to be deducted in respect of a specified contract payment received, receivable or reasonably expected to be received by the corporation. 5. No amount is included in respect of any expenditure incurred by a partnership of which the corporation is a member. 6. In determining the amount that is “C” in the formula in the definition of “SR & ED qualified expenditure pool” in subsection 127 (9) of the Income Tax Act (Canada), no amount needs to be included in respect of an amount transferred by the corporation under subsection 127 (13) of that Act to a person not dealing at arm’s length with the corporation, if that person is not eligible to claim, under this Act or under an Act of another province, a tax credit or incentive, other than a deduction under section 37 of the Income Tax Act (Canada) as it applies for income tax purposes under this Act and in other provinces, in respect of the amount transferred by the corporation.  1997, c. 43, Sched. A, s. 17 (2, 3); 2004, c. 16, s. 2 (2). Specified contract payment (7) For the purposes of this section, a payment is a specified contract payment if, (a) the payment is a contract payment for the performance of scientific research and experimental development carried on in Ontario; and (b) the payment is from a corporation that, (i) does not have a permanent establishment in Ontario, and (ii) is not entitled to receive a payment from a corporation that is eligible to claim a tax credit under this section, or a research and development super allowance under section 12, in respect of the scientific research and experimental development to which the contract payment relates.  1996, c. 1, Sched. B, s. 7 (1); 2004, c. 16, s. 2 (2). (8) Repealed:  1997, c. 43, Sched. A, s. 17 (4). Eligible repayments (9) The amount of a corporation’s eligible repayments for a taxation year for the purposes of this section is the amount determined according to the following formula: R = C + 0.4 (D + E) where: “R” is the amount of the corporation’s eligible repayments for the taxation year; “C” is the total of the corporation’s designated repayments, if any, for the taxation year in respect of government assistance, non-government assistance or contract payments relating to qualified expenditures of a current nature; “D” is the total of the corporation’s designated repayments, if any, for the taxation year in respect of government assistance, non-government assistance or contract payments relating to qualified expenditures of a capital nature, other than qualified expenditures referred to in paragraph 127 (11.5) (b) of the Income Tax Act
(Canada); “E” is one-quarter of the total of the designated repayments, if any, considered to be repayments made by the corporation in the taxation year, for the purposes of paragraph (e.2) of the definition of “investment tax credit” in subsection 127 (9) of the Income Tax Act (Canada), in respect of government assistance, non-government assistance or contract payments relating to qualified expenditures referred to in paragraph 127 (11.5) (b) of that Act. 1996, c. 1, Sched. B, s. 7 (1); 1997, c. 43, Sched. A, s. 17 (5); 2004, c. 16, s. 2 (2). Designated repayment (10) An amount repaid in a taxation year by a corporation, or deemed under subsection 127 (10.8) of the Income Tax Act (Canada) to be repaid in a taxation year by a corporation, is a designated repayment made by the corporation in the year for the purposes of this section to the extent the repayment can reasonably be considered to be a repayment of, (a) government assistance, non-government assistance or a contract payment received, receivable or reasonably expected to be received by the corporation, other than a specified contract payment; (b) an amount that was deducted in determining for the purposes of this section the amount of a qualified expenditure made by the corporation for the taxation year or a prior taxation year; (c) an amount, the deduction of which in determining for the purposes of this section the amount of a qualified expenditure, resulted in a reduction in the amount of a tax credit that would have otherwise been available to the corporation under this section for the taxation year or a prior taxation year; and (d) an amount that under subsections 127 (11.5) and (18) to (21) of the Income Tax Act (Canada) reduced the amount of a qualified expenditure made by the corporation for the purposes of the definition of “investment tax credit” in subsection 127 (9) of that Act.  1996, c. 1, Sched. B, s. 7 (1); 1997, c. 43, Sched. A, s. 17 (6); 2004, c. 16, s. 2 (2). Deemed tax payment (11) A qualifying corporation shall be deemed to pay on account of its tax payable under this Act for a taxation year an amount claimed by the corporation, not exceeding the amount, if any, by which, (a) the corporation’s Ontario innovation tax credit for the taxation year, exceeds, (b) the maximum amount, if any, deductible by the corporation under subsections (1) and (2) in determining its tax payable under this Act for the taxation year.  1996, c. 1, Sched. B, s. 7 (1); 2004, c. 16, s. 2 (2). Time of deemed payment (12) A qualifying corporation shall be deemed to make the payment referred to in subsection (11) and the Minister to apply the deemed payment on the day referred to in clause 78 (2) (b) on or before which the corporation would be required to pay any balance of tax payable for the taxation year.  1996, c. 1, Sched. B, s. 7 (1); 2004, c. 16, s. 2 (2). Waiver of tax credit (13) A corporation may waive its eligibility for a tax credit, or a portion of a tax credit, under this section for a taxation year by delivering a written waiver with its return required to be delivered under this Act for the taxation year or in an amended return for that year.  1996, c. 1, Sched. B, s. 7 (1); 2004, c. 16, s. 2 (2). Same (14) If a corporation files a waiver under subsection (13) in respect of a taxation year, (a) the corporation shall be deemed never to have been a qualifying corporation under this section for that year in respect of the tax credit or the portion of the tax credit that is waived; and (b) the corporation’s instalments of tax, balance of tax payable and interest payable under this Act in respect of any taxation year shall be determined as if the corporation had qualified for a tax credit under this section for the taxation year only in the amount of the tax credit that is not waived.  1996, c. 1, Sched. B, s. 7 (1); 2004, c. 16, s. 2 (2). Anti-avoidance (15) A corporation is not entitled to a tax credit under this section for a taxation year if, as a result of a transaction or event, or a series of transactions or events, it is reasonable for the Minister to believe that one of the principal purposes of the transaction or event, or series of transactions or events, is to render the corporation eligible for a tax credit under this section to which it would not have otherwise been entitled, or a tax credit in an amount in excess of the amount to which it would have otherwise been entitled.  1996, c. 1, Sched. B, s. 7 (1); 2004, c. 16, s. 2 (2). Interpretation (16) For the purposes of this section, the following rules apply: 1. The terms “contract payment”, “government assistance” and “non-government assistance” each have the meaning given to those terms in section 127 of the Income Tax Act
(Canada), except that a tax credit under this section or section 43.9 shall be deemed not to be government assistance. 2. Expenditures in respect of scientific research and experimental development will be considered to be of a current or capital nature if they are considered to be such under the Income Tax Act (Canada).  1996, c. 1, Sched. B, s. 7 (1); 1997, c. 43, Sched. A, s. 17 (7); 2004, c. 16, s. 2 (2). Definition (17) In this section, “associated group” means, in respect of a corporation for a taxation year, the corporation and all corporations associated with the corporation in the taxation year.  2008, c. 19, Sched. C, s. 1 (3). (18) Repealed:  1996, c. 24, s. 26. Section Amendments with date in force (d/m/y) 1996, c. 1, Sched. B, s. 7 (1, 2) - 01/01/1995; 1996, c. 24, s. 26 - 08/05/1996; 1996, c. 29, s. 48 - 01/01/1995; 1997, c. 43, Sched. A, s. 17 (1, 2, 4-6, 8) - 01/01/1996; 1997, c. 43, Sched. A, s. 17 (3, 7) - 07/05/1997; 1999, c. 9, s. 81 (1-4) - 05/05/1999 2002, c. 22, s. 46 (1)
- 05/05/1999; 2002, c. 22, s. 46 (2)
- 09/12/2002 2004, c. 16, s. 2 (2)
- 01/01/2004 2005, c. 28, Sched. D, s. 9 (1-3) - 11/05/2005 2008, c. 7, Sched. E, s. 4 (1, 2) - 05/05/1999; 2008, c. 19, Sched. C, s. 1 (1-3) - 26/02/2008 CTS 3 NO 14 - 1