Ontario labour expenditure
 35. (1) For the purposes of section 93 of the Act, the Ontario labour expenditure of a qualifying corporation for a taxation year for an eligible product is the sum of, (a) the qualifying wage amount of the qualifying corporation or qualifying predecessor corporation for the year with respect to the eligible product; (b) for expenditures incurred before March 27, 2009, if the eligible product is not a specified product, 50 per cent of the qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation for the year with respect to the eligible product; and (c) for expenditures incurred after March 26, 2009, the qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation for the year with respect to the eligible product.  O. Reg. 37/09, s. 35 (1); O. Reg. 70/10, s. 7 (1). (2) Subject to subsection (4), the qualifying wage amount of a qualifying corporation or qualifying predecessor corporation for a taxation year with respect to an eligible product is the amount incurred during the year on account of salaries or wages for the corporation’s employees.  O. Reg. 37/09, s. 35 (2). (3) Subject to subsection (4), the qualifying remuneration amount of a qualifying corporation or qualifying predecessor corporation for a taxation year with respect to an eligible product is the sum of all amounts each of which is an expenditure incurred during the year by the qualifying corporation or qualifying predecessor corporation on account of remuneration paid to any of the following persons or entities in the circumstances that are described: 1. An individual who is not an employee of the qualifying corporation or qualifying predecessor corporation, as the case may be, and who deals at arm’s length with that corporation, to the extent that the expenditure is attributable to services personally rendered by the individual. 2. An individual described in paragraph 1 for services rendered by the individual’s employees, to the extent that the expenditure does not exceed the salaries and wages of those employees for personally rendering those services. 3. A taxable Canadian corporation for services rendered personally by an individual, i. if all of the issued and outstanding shares of the capital stock of the taxable Canadian corporation (other than directors’ qualifying shares) are owned by the individual, ii. if the individual deals at arm’s length with the qualifying corporation or qualifying predecessor corporation, as the case may be, and iii. if the taxable Canadian corporation’s primary activity is the provision of the individual’s services. 4. For expenditures incurred before March 27, 2009 in respect of an eligible product and for expenditures incurred after March 26, 2009 in respect of an eligible product that is not a digital game, as referred to in paragraph 2 of subsection 93.1 (9) of the Act, a taxable Canadian corporation that deals at arm’s length with the qualifying corporation or qualifying predecessor corporation for services rendered by employees of the taxable Canadian corporation, to the extent that the expenditure does not exceed the salaries and wages of those employees for personally rendering those services. 5. An eligible partnership described in subsection (6), i. for services rendered personally by a member of the eligible partnership, or ii. for services rendered personally by employees of the eligible partnership, to the extent that the expenditure does not exceed the salaries and wages of those employees for personally rendering those services.  O. Reg. 37/09, s. 35 (3); O. Reg. 70/10, s. 7 (2). (4) An expenditure is not included in the qualifying wage amount or qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation, as the case may be, for a taxation year with respect to an eligible product unless all the following conditions are satisfied: 1. The expenditure is directly attributable to the development of the eligible product. 2. The expenditure is included in the cost or, in the case of depreciable property, the capital cost of the eligible product. 3. The expenditure is paid no later than 60 days after the end of the year. 4. The expenditure was incurred for services personally rendered by an individual who was resident in Ontario at the end of the calendar year that precedes the calendar year in which he or she rendered the services. 5. In the case of the qualifying wage amount, the expenditure is paid to an employee of the qualifying corporation or qualifying predecessor corporation, as the case may be, who reported to a permanent establishment of that corporation in Ontario at which the eligible product was being developed. 6. In the case of the qualifying remuneration amount, the expenditure is paid for services rendered at a permanent establishment in Ontario of the qualifying corporation, of a qualifying predecessor corporation or of a person or entity described in one of the paragraphs of subsection (3). 7. The expenditure is not an amount for which the qualifying corporation or qualifying predecessor corporation makes a claim under section 90, 91 or 92 of the Act or section 43.5, 43.8 or 43.10 of the Corporations Tax Act. 8. The expenditure is not an amount incurred by the qualifying corporation or a qualifying predecessor corporation in carrying out activities that constitute scientific research and experimental development for the purposes of paragraph 37 (1) (a) of the Federal Act or subparagraph 37 (1) (b) (i) of that Act. 9. If the expenditure was incurred after April 23, 2015 in respect of the product, i. the primary purpose of the product is to entertain the user or to educate users who are under 12 years of age, and ii. the product satisfies all of the conditions set out in subsection 34 (5). O. Reg. 37/09, s. 35 (4); O. Reg. 77/17, s. 6 (1). (5) An expenditure that is not included in the qualifying wage amount or qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation, as the case may be, for a taxation year because of paragraph 3 of subsection (4) may be included in the qualifying wage amount or qualifying remuneration amount for a subsequent taxation year if the expenditure is paid no later than 60 days after the end of that subsequent taxation year.  O. Reg. 37/09, s. 35 (5). (6) For the purposes of paragraph 5 of subsection (3), an eligible partnership is a partnership carrying on business in Canada whose members are all individuals. However, a partnership is not an eligible partnership in relation to a qualifying corporation or in relation to a qualifying predecessor corporation, as the case may be, if more than 50 per cent of the income of the partnership is allocable (or would be allocable if it had income) to one or more members, (a) who directly or indirectly control the qualifying corporation or qualifying predecessor corporation; or (b) who are related to one or more persons who directly or indirectly control the qualifying corporation or qualifying predecessor corporation.  O. Reg. 37/09, s. 35 (6); O. Reg. 70/10, s. 7 (3). (7) For the purposes of the definition of “marketing and distribution expenditure” in subsection 93 (14) of the Act and subject to subsection (8), the marketing and distribution expenditure incurred by a qualifying corporation or qualifying predecessor corporation in respect of an eligible product is sum of all amounts each of which is an expenditure incurred by the qualifying corporation or qualifying predecessor corporation in a taxation year that satisfies all of the following conditions: 1. The expenditure is directly attributable to advertising or promoting the eligible product or distributing the eligible product to customers or potential customers. 2. The expenditure is paid no later than 60 days after the end of the year. 3. The expenditure is not an amount for which the qualifying corporation or qualifying predecessor corporation, as the case may be, makes a claim under 90, 91 or 92 of the Act or section 43.5, 43.8 or 43.10 of the Corporations Tax Act. 4. The expenditure is not incurred by the qualifying corporation or qualifying predecessor corporation in carrying out activities that constitute scientific research and experimental development for the purposes of paragraph 37 (1) (a) of the Federal Act or subparagraph 37 (1) (b) (i) of that Act. 5. If the qualifying corporation sells the eligible product directly to a consumer of the eligible product, the expenditure is not directly related to processing an order by a consumer or shipping an eligible product to a consumer. 6. If the expenditure relates to an amount paid or payable for meals or entertainment, only 50 per cent of the amount is included in the marketing and distribution expenditure incurred by the qualifying corporation or qualifying predecessor corporation, as the case may be, in a taxation year. 7. If the expenditure was incurred after April 23, 2015 in respect of the product, i. the primary purpose of the product is to entertain the user or to educate users who are under 12 years of age, and ii. the product satisfies all of the conditions set out in subsection 34 (5). O. Reg. 37/09, s. 35 (7); O. Reg. 77/17, s. 6 (2). (8) An expenditure that is not included in the marketing and distribution expenditure incurred by a qualifying corporation or a qualifying predecessor corporation, as the case may be, in a taxation year because of paragraph 2 of subsection (7) may be included in the marketing and distribution expenditure incurred by the corporation in a subsequent taxation year if the expenditure is paid no later than 60 days after the end of that subsequent taxation year.  O. Reg. 37/09, s. 35 (8).