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9. (1) The portion of subsection 37(1) of
the Act before paragraph (a) is replaced by
the following:
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| Scientific
research and
experimental
development
|
37. (1) Where a taxpayer carried on a
business in Canada in a taxation year, there
may be deducted in computing the taxpayer's
income from the business for the year such
amount as the taxpayer claims not exceeding
the amount, if any, by which the total of
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(2) Paragraph 37(1)(a) of the Act is
amended by adding the following after
subparagraph (i):
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(i.1) by payments to a corporation
resident in Canada to be used for
scientific research and experimental
development carried on in Canada that is
related to a business of the taxpayer, but
only where the taxpayer is entitled to
exploit the results of that scientific
research and experimental development,
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(3) The portion of subparagraph
37(1)(a)(ii) of the French version of the Act
before clause (A) is replaced by the
following:
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(ii) soit sous forme de
paiement - devant servir à des activités
de recherche scientifique et de
développement expérimental exercées
au Canada en rapport avec une entreprise
du contribuable, mais seulement dans le
cas où le contribuable est en droit
d'exploiter les résultats de ces
activités - à l'une des entités
suivantes :
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(4) Subparagraph 37(1)(a)(ii) of the Act is
amended by adding the word ``or'' at the
end of clause (C) and by repealing clause
(D).
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(5) The portion of subparagraph
37(1)(a)(ii) of the English version of the Act
after clause (E) is replaced by the following:
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to be used for scientific research and
experimental development carried on in
Canada that is related to a business of the
taxpayer, but only where the taxpayer is
entitled to exploit the results of that
scientific research and experimental
development, or
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(6) Subparagraph 37(1)(a)(iii) of the
English version of the Act is amended by
striking out the word ``and'' at the end of
that subparagraph.
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(7) Paragraphs 37(1)(d) and (e) of the Act
are replaced by the following:
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(d) the total of all amounts each of which is
the amount of any government assistance or
non-government assistance (within the
meanings assigned to those expressions by
subsection 127(9)) in respect of an
expenditure described in paragraph (a) or
(b) that, at the taxpayer's filing-due date for
the year, the taxpayer has received, is
entitled to receive or can reasonably be
expected to receive,
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(e) that part of the total of all amounts each
of which is an amount deducted under
subsection 127(5) in computing the tax
payable under this Part by the taxpayer for
a preceding taxation year where the amount
can reasonably be attributed to
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(i) a prescribed proxy amount for a
preceding taxation year,
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(ii) an expenditure of a current nature
incurred in a preceding taxation year that
was a qualified expenditure incurred in
that preceding year in respect of
scientific research and experimental
development for the purposes of section
127, or
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(iii) an amount included because of
paragraph 127(13)(e) in the taxpayer's
SR&ED qualified expenditure pool at the
end of a preceding taxation year within
the meaning assigned by subsection
127(9),
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(8) The definition ``scientific research
and experimental development'' in
subsection 37(7) of the Act is repealed.
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(9) Subsection 37(10) of the Act is
replaced by the following:
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| Time for
election
|
(10) Any election made under clause
(8)(a)(ii)(B) for a taxation year by a taxpayer
shall be filed by the taxpayer on the day on
which the taxpayer first files a prescribed form
referred to in subsection (11) for the year.
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(10) Subsection 37(11) of the Act is
replaced by the following:
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| Filing
requirement
|
(11) Subject to subsection (12), no amount
in respect of an expenditure that would be
incurred by a taxpayer in a taxation year that
begins after 1995 if this Act were read without
reference to subsection 78(4) may be deducted
under subsection (1) unless the taxpayer files
with the Minister a prescribed form containing
prescribed information in respect of the
expenditure on or before the day that is 12
months after the taxpayer's filing-due date for
the year.
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| Reclassified
expenditures
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(12) A taxpayer is not required to file the
prescribed form referred to in subsection (11)
in respect of an expenditure that would be
incurred in a taxation year by the taxpayer if
this Act were read without reference to
subsection 78(4) where the expenditure is
reclassified by the Minister on an assessment
of the taxpayer's tax payable under this Part
for the year, or on a determination that no tax
under this Part is payable by the taxpayer for
the year, as an expenditure in respect of
scientific research and experimental
development.
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| Non-arm's
length
contract -
linked work
|
(13) For the purposes of this section and
sections 127 and 127.1, where
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(a) work is performed by a taxpayer for a
person or partnership at a time when the
person or partnership does not deal at arm's
length with the taxpayer, and
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(b) the work would be scientific research
and experimental development described in
paragraph 2900(1)(d) of the Income Tax
Regulations if it were performed by the
person or partnership,
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the work is deemed to be scientific research
and experimental development.
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(11) Subsections (1), (7), (9) and (10)
apply to taxation years that begin after
1995.
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(12) Subsections (2) to (5) apply to
payments made after 1995.
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(13) Subsection (8) applies to work
performed after February 27, 1995 except
that, for the purposes of paragraphs
149(1)(j) and (8)(b) of the Act, subsection (8)
does not apply to work performed pursuant
to an agreement in writing entered into
before February 28, 1995.
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10. (1) Paragraph 45(3)(b) of the Act is
replaced by the following:
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(b) the taxpayer's filing-due date for the
taxation year in which the property is
actually disposed of by the taxpayer.
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(2) Subsection (1) applies to the 1995 and
subsequent taxation years.
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11. (1) Subsection 48.1(2) of the Act is
replaced by the following:
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| Time for
election
|
(2) An election made under subsection (1)
by an individual for a taxation year shall be
made on or before the individual's filing-due
date for the year.
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(2) Subsection (1) applies to the 1995 and
subsequent taxation years.
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12. (1) Paragraph 53(2)(c) of the Act is
amended by adding the following after
subparagraph (i.3)
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(i.4) if the taxpayer is a member of the
partnership who was a specified member
of the partnership at all times since
becoming a member of the partnership or
the taxpayer is at that time a limited
partner of the partnership for the
purposes of subsection 40(3.1), the
amount
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(A) deducted under subsection 34.2(4)
in computing the taxpayer's income
for the taxation year in respect of the
interest, where that time is in the
taxpayer's first taxation year in which
a qualifying fiscal period (within the
meaning assigned by subsection
34.2(1)) of the business carried on by
the taxpayer as a member of the
partnership ends and is after the end of
that period, and
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(B) where that time is in any other
taxation year, deducted under
subsection 34.2(4) in respect of the
interest in computing the taxpayer's
income for the taxation year preceding
that other year
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(C) that time is immediately before a
disposition of the interest and no
amount is deductible under subsection
34.2(4) in respect of the interest in
computing the taxpayer's income for
the taxation year following the
taxation year that includes that time,
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(D) the taxpayer has December 31,
1995 income in respect of the business
because of section 34.1, or
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(E) the taxpayer's partnership interest
was held by the taxpayer on February
22, 1994 and is an excluded interest
(within the meaning assigned by
subsection 40(3.15)) at the end of the
fiscal period of the partnership that
includes that time,
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(2) Subsection (1) applies after 1994.
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13. (1) Clause 60(j.1)(ii)(A) of the Act is
replaced by the following:
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(A) $2,000 multiplied by the number
of years before 1996 during which the
employee or former employee in
respect of whom the payment was
made (in this paragraph referred to as
the ``retiree'') was employed by the
employer or a person related to the
employer, and
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(2) Subsection (1) applies to the 1996 and
subsequent taxation years.
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14. (1) Paragraph 70(7)(a) of the Act is
replaced by the following:
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(a) for the purpose of determining the day
on or before which a return (in this
subsection referred to as the ``taxpayer's
return'') of the taxpayer's income for the
taxation year in which the taxpayer died is
required to be filed by the taxpayer's legal
representatives, subsection 150(1) shall be
read without reference to paragraph
150(1)(b) and as if paragraph 150(1)(d)
read as follows:
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``(d) in the case of any other person, by the
person's legal representative within 18
months after the person's death; or''; and
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(2) Subsection (1) applies after 1994.
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15. (1) Paragraph 87(2)(j) of the Act is
replaced by the following:
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| Special
reserves
|
(j) for the purposes of paragraphs 20(1)(m),
(m.1) and (m.2), subsection 20(24) and
section 34.2, the new corporation is deemed
to be the same corporation as, and a
continuation of, each predecessor
corporation;
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(2) Subsection 87(2) of the Act is amended
by adding the following after paragraph
(j.93):
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| Canadian film
or video
production tax
credit
|
(j.94) for the purpose of section 125.4, the
new corporation is deemed to be the same
corporation as, and a continuation of, each
predecessor corporation;
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(3) Paragraph 87(2)(aa) of the Act is
replaced by the following:
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| Refundable
dividend tax
on hand
|
(aa) where the new corporation was a
private corporation immediately after the
amalgamation, for the purpose of
computing the refundable dividend tax on
hand (within the meaning assigned by
subsection 129(3)) of the new corporation
at the end of its first taxation year there shall
be added to the total determined under
subsection 129(3) in respect of the new
corporation for the year the total of all
amounts each of which is the amount, if any,
by which the refundable dividend tax on
hand of a predecessor corporation at the end
of its last taxation year exceeds its dividend
refund (within the meaning assigned by
subsection 129(1)) for its last taxation year,
except that no amount shall be added under
this paragraph in respect of a predecessor
corporation
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(i) that was not a private corporation at
the end of its last taxation year, or
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(ii) where subsection 129(1.2) would
have applied to deem a dividend paid by
the predecessor corporation immediately
before the amalgamation not to be a
taxable dividend for the purpose of
subsection 129(1);
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(4) Subsections (1) and (2) apply to
amalgamations that occur and windings-up
that begin after 1994.
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(5) Subsection (3) applies to
amalgamations that occur and windings-up
that begin after June 1995.
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16. (1) The portion of paragraph
88(1)(e.2) of the Act before subparagraph
(i) is replaced by the following:
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(e.2) paragraphs 87(2)(c), (d.1), (e.1), (e.3),
(g) to (l), (l.3) to (u), (x), (y.1), (z.1), (z.2),
(aa), (cc), (ll), (nn), (pp), (rr), (tt) and (uu),
subsection 87(6) and, subject to section 78,
subsection 87(7) apply to the winding-up as
if the references therein to
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(2) Paragraph 88(1)(e.5) of the Act is
repealed.
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(3) Subsections (1) and (2) apply to
windings-up that begin after June 1995.
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17. (1) Paragraph 96(1)(d) of the Act is
replaced by the following:
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(d) each income or loss of the partnership
for a taxation year were computed as if this
Act were read without reference to
paragraph 20(1)(v.1), section 34.1 and
subsections 66.1(1), 66.2(1) and 66.4(1)
and as if no deduction were permitted under
any of section 29 of the Income Tax
Application Rules, subsections 34.2(4) and
65(1) and sections 66, 66.1, 66.2 and 66.4;
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(2) The portion of subsection 96(1.1) of
the Act before paragraph (a) is replaced by
the following:
|
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| Allocation of
share of
income to
retiring
partner
|
(1.1) For the purposes of subsection (1) and
sections 34.1, 34.2, 101, 103 and 249.1,
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(3) Subsection 96(1.6) of the Act is
replaced by the following:
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| Members of
partnership
deemed to be
carrying on
business in
Canada
|
(1.6) Where a partnership carries on a
business in Canada at any time, each taxpayer
who is deemed by paragraph (1.1)(a) to be a
member of the partnership at that time is
deemed to carry on the business in Canada at
that time for the purposes of subsection 2(3),
sections 34.1 and 150 and (subject to
subsection 34.2(7)) section 34.2.
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(4) Subparagraph 96(2.2)(d)(ii) of the Act
is repealed.
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(5) The portion of subsection 96(3) of the
Act before paragraph (a) is replaced by the
following:
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| Agreement or
election of
partnership
|
(3) Where a taxpayer who was a member of
a partnership in a fiscal period has, for any
purpose relevant to the computation of the
taxpayer's income from the partnership for the
fiscal period, made or executed an agreement,
a designation or an election under or in respect
of the application of any of subsections 13(4),
(15) and (16), 14(6), 20(9) and 21(1) to (4),
section 22, subsection 29(1), section 34,
clause 37(8)(a)(ii)(B), subsections 44(1) and
(6), 50(1) and 80(5), (9), (10) and (11), section
80.04 and subsections 97(2) and 249.1(4) and
(6) that, but for this subsection, would be a
valid agreement, designation or election,
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(6) Subsections (1), (2) and (5) apply after
1994.
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(6.1) Subsection (3) applies after 1993.
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(7) Subsection (4) applies to revenue
guarantees granted after 1995.
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17.1 (1) Subsection 99(2) of the Act is
replaced by the following:
|
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| Fiscal period
of terminated
partnership
for individual
member
|
(2) Where an individual was a member of a
partnership that, at any time in a fiscal period
of a partnership, has or would have, but for
subsection 98(1), ceased to exist, for the
purposes of computing the individual's
income for a taxation year the partnership's
fiscal period may, if the individual so elects
and subsection 249.1(4) does not apply in
respect of the partnership, be deemed to have
ended immediately before the time when the
fiscal period of the partnership would have
ended if the partnership had not so ceased to
exist.
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(2) Subsection (1) applies to fiscal periods
that begin after 1994.
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18. (1) Paragraph 104(4)(a.1) of the Act is
replaced by the following:
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(a.1) where the trust is a pre-1972 spousal
trust on January 1, 1993 and the spouse
referred to in the definition ``pre-1972
spousal trust'' in subsection 108(1) in
respect of the trust was
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(i) in the case of a trust created by the will
of a taxpayer, alive on January 1, 1976,
and
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(ii) in the case of a trust created by a
taxpayer during the taxpayer's lifetime,
alive on May 26, 1976,
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the day that is the later of
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(iii) the day on which that spouse dies,
and
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(2) Subparagraph 104(4)(b)(iii) of the Act
is replaced by the following:
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