1201. (1) For the purposes of subsection 43.8 (17) of the Act, “eligible computer animation and special effects activities” means activities undertaken to produce eligible animation or visual effects and includes designing, modelling, rendering, lighting, painting, animating and compositing, but does not include activities that are scientific research and experimental development for the purposes of paragraph 37 (1) (a) of the Income Tax Act (Canada) or subparagraph 37 (1) (b) (i) of that Act; “prescribed cost”, incurred by a qualifying corporation in a taxation year in respect of an eligible production, means the total of all costs incurred by the corporation after June 30, 1997 and in the taxation year in respect of the production, where each cost satisfies the following conditions: 1. The cost is incurred by the corporation in carrying on eligible computer animation and special effects activities for the eligible production. 2. The amount of the cost is reasonable in the circumstances. 3. The cost, i. is included in the amount of the corporation’s cost or, in the case of a depreciable property, its capital cost of the eligible production that incorporates the results of the eligible computer animation and special effects activities, or ii. is incurred by the corporation in performing eligible computer animation and special effects activities under a contract entered into, A. with the producer of the eligible production, or B. with another qualifying corporation that is carrying on eligible computer animation and special effects activities for the eligible production.  O. Reg. 76/99, s. 6; O. Reg. 194/00, s. 3 (1). (2) For the purposes of the definition of “eligible computer animation and special effects activities” in subsection (1), “eligible animation or visual effects” means, in respect of an eligible production, animation or visual effects created primarily with digital technologies, but does not include, (a) audio effects, (b) in camera effects, (c) credit rolls, (d) subtitles, (e) animation or visual effects all or substantially all of which are created by editing activities, or (f) animation or visual effects for use in promotional material for the eligible production.  O. Reg. 76/99, s. 6. (3) For the purposes of the definition of “Ontario labour expenditure” in subsection 43.8 (17) of the Act, the amount of the Ontario labour expenditure of the qualifying corporation for a taxation year with respect to an eligible production is the sum of, (a) the qualifying wage amount as described in subsection (4) of the qualifying corporation for the taxation year with respect to the eligible production; and (b) 50 per cent of the qualifying remuneration amount of the corporation as described in subsection (5) of the qualifying corporation for the taxation year with respect to the eligible production.  O. Reg. 194/00, s. 3 (2). (4) Subject to subsection (6), the qualifying wage amount of the qualifying corporation for a taxation year with respect to the eligible production is the sum of, (a) the amount incurred by it during the taxation year and after June 30, 1997 on account of salaries or wages that are directly attributable to eligible computer animation and special effects activities carried out by the qualifying corporation in Ontario for the eligible production; and (b) if principal photography for the eligible production commenced after March 22, 2007, the amount, if any, determined under subsection (5.2) in respect of the qualifying corporation and the eligible production for the taxation year.  O. Reg. 150/08, s. 2 (1). (5) Subject to subsection (6), the qualifying remuneration amount of the qualifying corporation for a taxation year with respect to the eligible production is the sum of, (a) the amount determined under subsection (5.1); and (b) if principal photography for the eligible production commenced after March 22, 2007, the amount, if any, determined under subsection (5.2) in respect of the qualifying corporation and the eligible production for the taxation year.  O. Reg. 150/08, s. 2 (1). (5.1) The amount determined under this subsection is the amount incurred during the taxation year and after May 4, 1999 that is directly attributable to eligible computer animation and special effects activities undertaken for the eligible production on behalf of the qualifying corporation, which is 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 corporation and who deals at arm’s length with the qualifying corporation, if the expenditure is attributable to activities personally undertaken by the individual. 2. An individual described in paragraph 1 for activities undertaken by the individual’s employees, if the expenditure does not exceed the salaries and wages of those employees for personally undertaking those activities. 3. An eligible partnership described in subsection (7), i. for activities personally undertaken by a member of the eligible partnership, or ii. for activities personally undertaken by employees of the eligible partnership, if the expenditure does not exceed the salaries and wages of those employees for personally undertaking those activities.  O. Reg. 150/08, s. 2 (1). (5.2) The amount determined under this subsection in respect of the eligible production and the qualifying corporation for a taxation year is the amount of the reimbursement made by the qualifying corporation to another taxable Canadian corporation (in this subsection referred to as the “parent”) of an expenditure that was previously incurred by the parent in respect of the eligible production if all of the following conditions are met: 1. The qualifying corporation is a wholly-owned subsidiary of the parent. 2. The qualifying corporation and the parent have filed with the Minister an agreement that this subsection applies in respect of the eligible production. 3. The reimbursement is made by the qualifying corporation in the taxation year or within 60 days after the end of the taxation year. 4. If the amount is being determined for the purposes of clause (4) (b), the expenditure was incurred in a particular taxation year of the parent and would have been included in the qualifying wage amount of the qualifying corporation in respect of the eligible production for the particular taxation year because of clause (4) (a), i. if the qualifying corporation had had that particular taxation year, and ii. if the expenditure had been incurred by the qualifying corporation for the same purpose as it was incurred by the parent and had been paid at the same time and to the same person or partnership as it was by the parent. 5. If the amount is being determined for the purpose of clause (5) (b), the expenditure was incurred in a particular taxation year of the parent and would have been included in the qualifying remuneration amount of the qualifying corporation in respect of the eligible production for the particular taxation year because of clause (5) (a), i. if the qualifying corporation had had that particular taxation year, and ii. if the expenditure had been incurred by the qualifying corporation for the same purpose as it was incurred by the parent and had been paid at the same time and to the same person or partnership as it was by the parent.  O. Reg. 150/08, s. 2 (1). (6) An expenditure is not to be included in the qualifying wage amount or qualifying remuneration amount of the qualifying corporation for a taxation year with respect to the eligible production unless it meets all of the following conditions: 1. The expenditure is paid by the qualifying corporation no later than 60 days after the end of the taxation year. 2. The expenditure was incurred for activities personally undertaken by an individual who was subject to tax under section 2 of the Income Tax Act (by virtue of being an individual described in clause 2 (a) of that Act) for the calendar year before the calendar year in which he or she undertook the activities. 3. In the case of the qualifying wage amount, the expenditure is paid to an employee of the qualifying corporation who reported to a permanent establishment of the qualifying corporation in Ontario where the eligible computer animation and special effects activities were undertaken for the eligible production. 4. In the case of the qualifying remuneration amount, the expenditure is paid for activities undertaken at a permanent establishment in Ontario of the qualifying corporation or of a person or entity described in subsection (5). 5. The expenditure is not the subject of an agreement in respect of the eligible production referred to in paragraph 2 of subsection (5.2) between the qualifying corporation and a wholly-owned subsidiary of the qualifying corporation.  O. Reg. 194/00, s. 3 (2); O. Reg. 150/08, s. 2 (2). (6.1) Despite paragraph 1 of subsection (6), an expenditure that is excluded from the qualifying wage amount or qualifying remuneration amount of the qualifying corporation for a taxation year because it was not paid within 60 days after the end of the taxation year may be included in the corporation’s qualifying wage amount or qualifying remuneration amount for a subsequent taxation year if it is paid within 60 days after the end of that subsequent taxation year.  O. Reg. 160/01, s. 4. (7) For the purposes of paragraph 3 of subsection (5), 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 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 (b) who are related to one or more persons who directly or indirectly control the qualifying corporation.  O. Reg. 194/00, s. 3 (2). Forms 1-4 Revoked:  O. Reg. 485/00, s. 2.