38 (1) In this subdivision, “contract payment” means a payment that is a contract payment for the purposes of section 127 of the Federal Act; (“paiement contractuel”) “current portion” means, in respect of a corporation’s Ontario research and development tax credit at the end of a taxation year, the sum of, (a) all amounts each of which is added under clause (a), (a.1), (a.2) or (b) of the definition of “A” in subsection (2) in computing the corporation’s Ontario research and development tax credit at the end of the year, and (b) all amounts each of which is added under clause (d) or (e) of the definition of “A” in subsection (2) in computing the corporation’s Ontario research and development tax credit at the end of the year by reason of a repayment made by the corporation in the year; (“portion de l’année”) “eligible expenditure” means, in respect of a corporation, an expenditure attributable to a permanent establishment in Ontario that would be a qualified expenditure for the purposes of section 127 of the Federal Act in respect of scientific research and experimental development carried on in Ontario if that section were read without reference to subsections (18) to (21) of that section; (“dépense admissible”) “government assistance” has the same meaning as in section 127 of the Federal Act, except that a tax credit under this subdivision is deemed not to be government assistance; (“aide gouvernementale”) “non-government assistance” has the same meaning as in section 127 of the Federal Act. (“aide non gouvernementale”)  2007, c. 11, Sched. A, s. 38 (1); 2016, c. 5, Sched. 28, s. 14 (1). Ontario research and development tax credit (2) Subject to subsections (3) and 43 (2), the amount of a corporation’s Ontario research and development tax credit at the end of a taxation year for the purposes of this subdivision is the amount, if any, by which “A” exceeds “B” where, “A” is the sum of, (a) for a taxation year that ends on or after June 1, 2016 and that does not include May 31, 2016, 3.5 per cent of the corporation’s Ontario SR & ED expenditure pool at the end of the year, (a.1) for a taxation year that ends on or after June 1, 2016 and that includes May 31, 2016, the amount equal to the corporation’s Ontario SR & ED expenditure pool at the end of the year multiplied by the percentage that is the sum of, (i) 4.5 per cent multiplied by the ratio of the number of days in the year that are before June 1, 2016 to the total number of days in the year, and (ii) 3.5 per cent multiplied by the ratio of the number of days in the year that are after May 31, 2016 to the total number of days in the year, (a.2) for a taxation year that ends before June 1, 2016, 4.5 per cent of the corporation’s Ontario SR & ED expenditure pool at the end of the year, (b) the sum of amounts required by subsection 40 (1) to be added in computing the corporation’s Ontario research and development tax credit at the end of the year, (c) the sum of all amounts each of which is an amount determined under clause (a), (a.1), (a.2) or (b) in respect of the corporation for any of the 20 taxation years preceding or the three taxation years following the year, (d) the sum of, (i) in respect of eligible expenditures incurred by the corporation in a taxation year that ends on or after June 1, 2016 and that does not include May 31, 2016, all amounts each of which is 3.5 per cent of that part of a repayment, other than a repayment to which clause (e) applies, made by the corporation in the year or in any of the 20 taxation years preceding or the three taxation years following the year that can reasonably be considered to be, for the purposes of section 41, a repayment of government assistance, non-government assistance or a contract payment that reduced, for the purposes of this subdivision, the eligible expenditures incurred by the corporation in that year, (ii) in respect of eligible expenditures incurred by the corporation in a taxation year that ends on or after June 1, 2016 and that includes May 31, 2016, all amounts each of which is that part of a repayment, other than a repayment to which clause (e) applies, made by the corporation in the year or in any of the 20 taxation years preceding or the three taxation years following the year that can reasonably be considered to be, for the purposes of section 41, a repayment of government assistance, non-government assistance or a contract payment that reduced, for the purposes of this subdivision, the eligible expenditures incurred by the corporation in that year multiplied by the percentage that is the sum of, A.  4.5 per cent multiplied by the ratio of the number of days in the year that are before June 1, 2016 to the total number of days in the year, and B.  3.5 per cent multiplied by the ratio of the number of days in the year that are after May 31, 2016 to the total number of days in the year, and (iii) in respect of eligible expenditures incurred by the corporation in a taxation year that ends before June 1, 2016, all amounts each of which is 4.5 per cent of that part of a repayment, other than a repayment to which clause (e) applies, made by the corporation in the year or in any of the 20 taxation years preceding or the three taxation years following the year that can reasonably be considered to be, for the purposes of section 41, a repayment of government assistance, non-government assistance or a contract payment that reduced, for the purposes of this subdivision, the eligible expenditures incurred by the corporation in that year, and (e) the sum of all amounts each of which is 4.5 per cent of one-quarter of that part of a repayment made by the corporation in the year or in any of the 20 taxation years preceding or the three taxation years following the year that can reasonably be considered to be, for the purposes of section 41, a repayment of government assistance, non-government assistance or a contract payment that reduced, for the purposes of this subdivision, an eligible expenditure incurred by the corporation in respect of first term shared-use-equipment or second term shared-use-equipment and, for the purposes of this clause, a repayment made by the corporation in any taxation year preceding the first taxation year that ends coincidentally with the first period or the second period in respect of first term shared-use-equipment or second term shared-use-equipment, respectively, is deemed to have been incurred by the corporation in that first taxation year, and “B” is the sum of, (a) the sum of all amounts each of which is an amount deducted under section 39 in computing the corporation’s tax payable under this Division for a preceding taxation year in respect of the current portion of the corporation’s Ontario research and development tax credit at the end of the year or at the end of any of the 20 taxation years preceding or the two taxation years following the year, (b) the amount determined under subsection 44 (1) where control of the corporation has been acquired by a person or group of persons at any time before the end of the year, and (c) the amount determined under subsection 44 (2) where control of the corporation has been acquired by a person or group of persons at any time after the end of the year.  2007, c. 11, Sched. A, s. 38 (2); 2016, c. 5, Sched. 28, s. 14 (2-4). Amounts to be excluded in calculation of credit (3) In determining the amount of a corporation’s Ontario research and development tax credit at the end of a taxation year, no amount shall be included in an amount determined under any of clause (a), (a.1), (a.2), (b), (c), (d) or (e) of the definition of “A” in subsection (2) in respect of an eligible expenditure that would, if the Federal Act were read without reference to subsections 78 (4) and 127 (26) of that Act, be incurred by the corporation in the course of earning income in a particular taxation year, if, (a) any of the income is exempt income or is exempt from tax under this Division; or (b) the corporation does not file with the Federal Minister a form containing the information in respect of the amount as required by paragraph (m) of the definition of “investment tax credit” in subsection 127 (9) of the Federal Act on or before the day that form is required to be filed for the purposes of that paragraph.  2007, c. 11, Sched. A, s. 38 (3); 2016, c. 5, Sched. 28, s. 14 (5); 2020, c. 36, Sched. 43, s. 3 (1). Ontario SR & ED expenditure pool (4) The amount of a corporation’s Ontario SR & ED expenditure pool at the end of a taxation year for the purposes of this subdivision is nil for a taxation year ending before January 1, 2009 and, for a taxation year ending after December 31, 2008, is the amount calculated using the formula, C + D – E in which, “C” is the sum of all amounts each of which is an eligible expenditure incurred by the corporation in the year, “D” is the sum of all amounts each of which is an amount determined under paragraph 2 of section 42 for the year in respect of the corporation, and in respect of which the corporation has, for the purposes of the value of “B” in the definition of “SR & ED qualified expenditure pool” in subsection 127 (9) of the Federal Act, filed with the Federal Minister a prescribed form containing prescribed information by the day the form is required to be filed for the purposes of the value of “B”, and “E” is the sum of all amounts each of which is an amount determined under paragraph 1 of section 42 for the year in respect of the corporation. 2007, c. 11, Sched. A, s. 38 (4); 2020, c. 36, Sched. 43, s. 3 (2). Application of certain provisions of s. 127 of the Federal Act (5) For the purposes of this subdivision, the definitions of “first period”, “first term shared-use-equipment”, “second period” and “second term shared-use-equipment” in subsection 127 (9) of the Federal Act and subsections 127 (11.2), (17) and (26) of the Federal Act apply.  2007, c. 11, Sched. A, s. 38 (5). Application of other provisions of the Federal Act (6) A provision of the Federal Act or Federal regulations, other than a provision in section 127 of the Federal Act, that applies for the purposes of applying a provision in section 127 of that Act for the purposes of that Act applies for the purposes of this subdivision, unless otherwise provided in this subdivision.  2007, c. 11, Sched. A, s. 38 (6). Rules re corporate reorganization (7) The following rules apply for the purposes of this subdivision: 1. A corporation formed as a result of an amalgamation or merger of two or more predecessor corporations is deemed to be the same corporation as and a continuation of each of its predecessor corporations except for the purposes of determining the amount of tax payable under this Division by the predecessor corporations. 2. A parent corporation is deemed, after the last taxation year of its subsidiary corporation, to be the same corporation as and a continuation of the subsidiary corporation except for the purposes of determining, i. the amount of tax payable under this Division by the parent corporation for a taxation year ending at or before the end of the last taxation year of its subsidiary, and ii. the amount of tax payable under this Division by the subsidiary corporation.  2007, c. 11, Sched. A, s. 38 (7). Section Amendments with date in force (d/m/y) 2016, c. 5, Sched. 28, s. 14 (1-5) - 19/04/2016 2020, c. 36, Sched. 43, s. 3 (1, 2) - 13/03/2020