|
|
(b) the amount that but for the agreement
would be the transferor's SR&ED qualified
expenditure pool at the end of the particular
year, and
|
|
|
|
(c) the total of all amounts each of which is
an amount that, if the transferor were
dealing at arm's length with the transferee,
would be a contract payment
|
|
|
|
(i) for the performance of scientific
research and experimental development
for, or on behalf of, the transferee,
|
|
|
|
(ii) that is paid by the transferee to the
transferor on or before the day that is 180
days after the end of the particular year,
and
|
|
|
|
(iii) that would be in respect of
|
|
|
|
(A) a qualified expenditure that
|
|
|
|
(I) would be incurred by the
transferor in the particular year (if
this Act were read without reference
to subsections (26) and 78(4)) in
respect of that portion of the
scientific research and experimental
development that was performed at
a time when the transferor did not
deal at arm's length with the
transferee, and
|
|
|
|
(II) is paid by the transferor on or
before the day that is 180 days after
the end of the particular year, or
|
|
|
|
(B) an amount added because of this
subsection to the transferor's SR&ED
qualified expenditure pool at the end
of the particular year where the
amount is attributable to an
expenditure in respect of the scientific
research and experimental
development
|
|
|
|
is deemed to be
|
|
|
|
(d) an amount determined in respect of the
transferor for the particular year for the
purpose of determining the value of C in the
definition ``SR&ED qualified expenditure
pool'' in subsection (9), and
|
|
|
|
(e) an amount determined in respect of the
transferee for the transferee's first taxation
year that ends at or after the end of the
particular year for the purpose of
determining the value of B in the definition
``SR&ED qualified expenditure pool'' in
subsection (9),
|
|
|
|
and where the total of all amounts each of
which is an amount specified in an agreement
filed with the Minister under this subsection in
respect of a particular taxation year of a
transferor exceeds the amount that would be
the transferor's SR&ED qualified expenditure
pool at the end of the particular year if no
agreement were filed with the Minister in
respect of the particular year, the least of the
amounts determined under paragraphs (a) to
(c) in respect of each such agreement is
deemed to be nil.
|
|
| Identification
of amounts
transferred
|
(14) Where
|
|
|
|
(a) a transferor and a transferee have filed
an agreement under subsection (13) in
respect of a taxation year of the transferor,
|
|
|
|
(b) the agreement includes a statement
identifying the amount specified in the
agreement for the purpose of subsection
(13), or a part of that amount, as being
related to
|
|
|
|
(i) a particular qualified expenditure
included in the value of A in the formula
in the definition ``SR&ED qualified
expenditure pool'' in subsection (9) for
the purpose of determining the
transferor's SR&ED qualified
expenditure pool at the end of the year, or
|
|
|
|
(ii) a particular amount included in the
value of B in the formula in that
definition for the purpose of determining
the transferor's SR&ED qualified
expenditure pool at the end of the year
that is deemed by paragraph (d) to be a
qualified expenditure, and
|
|
|
|
(c) the total of all amounts so identified in
agreements filed by the transferor under
subsection (13) as being related to the
particular expenditure or the particular
amount does not exceed the particular
expenditure or the particular amount, as the
case may be,
|
|
|
|
for the purposes of this section (other than the
description of A in the definition ``SR&ED
qualified expenditure pool'' in subsection (9))
and section 127.1,
|
|
|
|
(d) the amount so identified that is included
in the value of B in the formula in that
definition for the purpose of determining
the transferee's SR&ED qualified
expenditure pool at the end of the taxation
year of the transferee is deemed to be a
qualified expenditure either of a current
nature or of a capital nature, incurred by the
transferee in that year, where the particular
expenditure or the particular amount was an
expenditure of a current nature or of a
capital nature, as the case may be, and
|
|
|
|
(e) except for the purpose of paragraph (b),
the amount of the transferor's qualified
expenditures of a current nature incurred in
the taxation year of the transferor in respect
of which the agreement is made is deemed
not to exceed the amount by which the
amount of such expenditures otherwise
determined exceeds the total of all amounts
identified under paragraph (b) by the
transferor in agreements filed under
subsection (13) in respect of the year as
being related to expenditures of a current
nature.
|
|
| Invalid
agreements
|
(15) An agreement or amended agreement
referred to in subsection (13) between a
transferor and a transferee is deemed not to
have been filed with the Minister for the
purpose of that subsection where
|
|
|
|
(a) it is not in prescribed form;
|
|
|
|
|
|
|
|
(i) on or before the transferor's filing-due
date for the particular taxation year to
which the agreement relates,
|
|
|
|
(ii) in the period within which the
transferor may serve a notice of objection
to an assessment of tax payable under this
Part for the particular year, or
|
|
|
|
(iii) in the period within which the
transferee may serve a notice of
objection to an assessment of tax payable
under this Part for its first taxation year
that ends at or after the end of the
transferor's particular year;
|
|
|
|
(c) it is not accompanied by,
|
|
|
|
(i) where the transferor is a corporation
and its directors are legally entitled to
administer its affairs, a certified copy of
their resolution authorizing the
agreement to be made,
|
|
|
|
(ii) where the transferor is a corporation
and its directors are not legally entitled to
administer its affairs, a certified copy of
the document by which the person legally
entitled to administer its affairs
authorized the agreement to be made,
|
|
|
|
(iii) where the transferee is a corporation
and its directors are legally entitled to
administer its affairs, a certified copy of
their resolution authorizing the
agreement to be made, and
|
|
|
|
(iv) where the transferee is a corporation
and its directors are not legally entitled to
administer its affairs, a certified copy of
the document by which the person legally
entitled to administer its affairs
authorized the agreement to be made; or
|
|
|
|
(d) an agreement amending the agreement
has been filed in accordance with
subsection (13) and this subsection, except
where subsection (16) applies to the
original agreement.
|
|
| Non-arm's
length parties
|
(16) Where a taxpayer does not deal at
arm's length with another taxpayer as a result
of a transaction, event or arrangement, or a
series of transactions or events, the principal
purpose of which can reasonably be
considered to have been to enable the
taxpayers to enter into an agreement referred
to in subsection (13), for the purpose of
paragraph (13)(e) the least of the amounts
determined under paragraphs (13)(a) to (c) in
respect of the agreement is deemed to be nil.
|
|
| Assessment
|
(17) Notwithstanding subsections 152(4)
and (5), such assessment of the tax, interest
and penalties payable by any taxpayer in
respect of any taxation year that began before
the day an agreement or amended agreement
is filed under subsection (13) or (20) shall be
made as is necessary to take into account the
agreement or the amended agreement.
|
|
| Reduction of
qualified
expenditures
|
(18) Where on or before the filing-due date
for a taxation year of a person or partnership
(referred to in this subsection as the
``taxpayer'') the taxpayer has received, is
entitled to receive or can reasonably be
expected to receive a particular amount that is
government assistance, non-government
assistance or a contract payment that can
reasonably be considered to be in respect of
scientific research and experimental
development, the amount by which the
particular amount exceeds all amounts
applied for preceding taxation years under this
subsection or subsection (19) or (20) in respect
of the particular amount shall be applied to
reduce the taxpayer's qualified expenditures
otherwise incurred in the year that can
reasonably be considered to be in respect of
the scientific research and experimental
development.
|
|
| Reduction of
qualified
expenditures
|
(19) Where on or before the filing-due date
for a taxation year of a person or partnership
(referred to in this subsection as the
``recipient'') the recipient has received, is
entitled to receive or can reasonably be
expected to receive a particular amount that is
government assistance, non-government
assistance or a contract payment that can
reasonably be considered to be in respect of
scientific research and experimental
development and the particular amount
exceeds the total of
|
|
|
|
(a) all amounts applied for preceding
taxation years under this subsection or
subsection (18) or (20) in respect of the
particular amount,
|
|
|
|
(b) the total of all amounts each of which
would be a qualified expenditure that is
incurred in the year by the recipient and that
can reasonably be considered to be in
respect of the scientific research and
experimental development if subsection
(18) did not apply to the particular amount,
and
|
|
|
|
(c) the total of all amounts each of which
would, but for the application of this
subsection to the particular amount, be a
qualified expenditure
|
|
|
|
(i) that was incurred by a person or
partnership in a taxation year of the
person or partnership that ended in the
recipient's taxation year, and
|
|
|
|
(ii) that can reasonably be considered to
be in respect of the scientific research and
experimental development to the extent
that it was performed by the person or
partnership at a time when the person or
partnership was not dealing at arm's
length with the recipient,
|
|
|
|
the particular amount shall be applied to
reduce each qualified expenditure otherwise
determined that is referred to in paragraph (c).
|
|
| Agreement to
allocate
|
(20) Where
|
|
|
|
(a) on or before the filing-due date for a
taxation year of a person or partnership
(referred to in this subsection and
subsection (22) as the ``taxpayer'') the
taxpayer has received, is entitled to receive
or can reasonably be expected to receive a
particular amount that is government
assistance, non-government assistance or a
contract payment that can reasonably be
considered to be in respect of scientific
research and experimental development,
|
|
|
|
(b) subsection (19) does not apply to the
particular amount in respect of the year, and
|
|
|
|
(c) the taxpayer and a person or partnership
(referred to in this subsection and
subsection (22) as the ``transferee'') with
which the taxpayer does not deal at arm's
length file an agreement or amended
agreement with the Minister,
|
|
|
|
the lesser of
|
|
|
|
(d) the amount specified in the agreement,
and
|
|
|
|
(e) the total of all amounts each of which
would, but for the agreement, be a qualified
expenditure
|
|
|
|
(i) that was incurred by the transferee in
a particular taxation year of the
transferee that ended in the taxpayer's
taxation year, and
|
|
|
|
(ii) that can reasonably be considered to
be in respect of the scientific research and
experimental development to the extent
that it was performed by the transferee at
a time when the transferee was not
dealing at arm's length with the taxpayer
|
|
|
|
shall be applied to reduce the qualified
expenditures otherwise determined that are
described in paragraph (e).
|
|
| Failure to
allocate
|
(21) Where on or before the filing-due date
for a taxation year of a person or partnership
(referred to in this subsection as the
``recipient'') the recipient has received, is
entitled to receive or can reasonably be
expected to receive a particular amount that is
government assistance, non-government
assistance or a contract payment that can
reasonably be considered to be in respect of
scientific research and experimental
development and subsection (19) does not
apply to the particular amount in respect of the
year, the lesser of
|
|
|
|
(a) the total of all amounts each of which is
a qualified expenditure
|
|
|
|
(i) that was incurred by a particular
person or partnership in a taxation year of
the particular person or partnership that
ended in the recipient's taxation year, and
|
|
|
|
(ii) that can reasonably be considered to
be in respect of the scientific research and
experimental development to the extent
that it was performed by the particular
person or partnership at a time when the
particular person or partnership was not
dealing at arm's length with the recipient,
and
|
|
|
|
(b) the amount, if any, by which the
particular amount exceeds the total of
amounts applied for the year and preceding
taxation years under subsection (18), (19)
or (20) in respect of the particular amount
|
|
|
|
is deemed for the purposes of this section to be
an amount of government assistance received
at the end of the particular year by the
particular person or partnership in respect of
the scientific research and experimental
development.
|
|
| Invalid
agreements
|
(22) An agreement or amended agreement
referred to in subsection (20) between a
taxpayer and a transferee is deemed not to
have been filed with the Minister where
|
|
|
|
(a) it is not in prescribed form;
|
|
|
|
|
|
|
|
(i) on or before the taxpayer's filing-due
date for the particular taxation year to
which the agreement relates,
|
|
|
|
(ii) in the period within which the
taxpayer may serve a notice of objection
to an assessment of tax payable under this
Part for the particular year, or
|
|
|
|
(iii) in the period within which the
transferee may serve a notice of
objection to an assessment of tax payable
under this Part for its first taxation year
that ends at or after the end of the
taxpayer's particular year;
|
|
|
|
(c) it is not accompanied by,
|
|
|
|
(i) where the taxpayer is a corporation
and its directors are legally entitled to
administer its affairs, a certified copy of
their resolution authorizing the
agreement to be made,
|
|
|
|
(ii) where the taxpayer is a corporation
and its directors are not legally entitled to
administer its affairs, a certified copy of
the document by which the person legally
entitled to administer its affairs
authorized the agreement to be made,
|
|
|
|
(iii) where the transferee is a corporation
and its directors are legally entitled to
administer its affairs, a certified copy of
their resolution authorizing the
agreement to be made, and
|
|
|
|
(iv) where the transferee is a corporation
and its directors are not legally entitled to
administer its affairs, a certified copy of
the document by which the person legally
entitled to administer its affairs
authorized the agreement to be made; or
|
|
|
|
(d) an agreement amending the agreement
has been filed in accordance with
subsection (20) and this subsection.
|
|
| Partnership's
taxation year
|
(23) For the purposes of subsections (18) to
(22), the taxation year of a partnership is
deemed to be its fiscal period and its filing-due
date for a taxation year is deemed to be the day
that would be its filing-due date for the year if
it were a corporation.
|
|
| Exclusion
from qualified
expenditure
|
(24) Where
|
|
|
|
(a) a person or partnership (referred to in
this subsection as the ``first person'') does
not deal at arm's length with another person
or partnership (referred to in this subsection
as the ``second person''),
|
|
|
|
(b) there is an arrangement under which an
amount is paid or payable by the first person
to a person or partnership with which the
first person deals at arm's length and an
amount is received or receivable by the
second person from a person or partnership
with which the second person deals at arm's
length, and
|
|
|
|
(c) one of the main purposes of the
arrangement can reasonably be considered
to be to cause the amount paid or payable by
the first person to be a qualified
expenditure,
|
|
|
|
the amount paid or payable by the first person
is deemed not to be a qualified expenditure.
|
|
| Deemed
contract
payment
|
(25) Where
|
|
|
|
(a) a person or partnership (referred to in
this subsection as the ``first person'') deals
at arm's length with another person or
partnership (referred to in this subsection as
the ``second person''),
|
|
|
|
(b) there is an arrangement under which an
amount is paid or payable by the first person
to a person or partnership (other than the
second person) and a particular amount is
received or receivable in respect of
scientific research and experimental
development by the second person from a
person or partnership that is not a taxable
supplier in respect of the particular amount,
and
|
|
|
|
(c) one of the main purposes of the
arrangement can reasonably be considered
to be to cause the amount received or
receivable by the second person not to be a
contract payment,
|
|
|
|
the amount received or receivable by the
second person is deemed to be a contract
payment in respect of scientific research and
experimental development.
|
|
| Unpaid
amounts
|
(26) For the purposes of subsections (5) to
(25) and section 127.1, a taxpayer's
expenditure described in paragraph 37(1)(a)
that is unpaid on the day that is 180 days after
the end of the taxation year in which the
expenditure is otherwise incurred is deemed
|
|
|
|
(a) not to have been incurred in the year;
and
|
|
|
|
(b) to be incurred at the time it is paid.
|
|
|
|
(26) Subsections (1) to (3) and (5) to (23),
subsections 127(11.4) and (11.5) of the Act,
as enacted by subsection (24), and
subsections 127(13) to (25) of the Act, as
enacted by subsection (25), apply to
taxation years that begin after 1995.
|
|