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(a) the corporation employs in the
business throughout the year more than 5
full-time employees, or
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(b) any other corporation associated with
the corporation provides, in the course of
carrying on an active business,
managerial, administrative, financial,
maintenance or other similar services to
the corporation in the year and the
corporation could reasonably be
expected to require more than 5 full-time
employees if those services had not been
provided;
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(4) Subsection (1) applies to taxation
years that end after June 1988, except that
there shall be added to the amount
otherwise determined under subsection
125(1) of the Act, as amended by subsection
(1), in respect of a corporation's taxation
year that began before July 1988 and ended
after June 1988, that proportion of 5% of
the least of the amounts determined under
paragraphs 125(1)(a) to (c) of the Act in
respect of the corporation for the year that
the number of days in the year that are
before July 1988 is of the number of days in
the year.
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(5) Subsection (2) applies after 1995.
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(6) Subsection (3) applies to the 1995 and
subsequent taxation years.
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145.1 (1) The Act is amended by adding
the following after section 125.4:
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| Definitions
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125.5 (1) The definitions in this subsection
apply in this section.
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``accredited
film or video
production
certificate''
« certificat de
production
cinémato-
graphique ou
magnétos-
copique
agréée »
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``accredited film or video production
certificate'', in respect of a film or video
production, means a certificate issued by
the Minister of Canadian Heritage
certifying that the production is an
accredited production.
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``accredited
production''
« production
agréée »
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``accredited production'' has the meaning
assigned by regulation.
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``assistan-
ce''
« montant
d'aide »
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``assistance'' means an amount, other than an
amount deemed under subsection (3) to
have been paid, that would be included
under paragraph 12(1)(x) in computing the
income of a taxpayer for any taxation year
if that paragraph were read without
reference to subparagraphs (v) to (vii).
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``Canadian
labour
expenditure''
« dépense de
main-
d'oeuvre au
Canada »
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``Canadian labour expenditure'' of a
corporation for a taxation year in respect of
an accredited production means, in the case
of a corporation that is not an eligible
production corporation in respect of the
production for the year, nil, and in any other
case, subject to subsection (2), the total of
the following amounts in respect of the
production to the extent that they are
reasonable in the circumstances:
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(a) the salary or wages directly
attributable to the production that are
incurred by the corporation after October
1997, and in the year or the preceding
taxation year, and that relate to services
rendered in Canada for the stages of
production of the production, from the
final script stage to the end of the
post-production stage, and paid by it in
the year or within 60 days after the end of
the year to employees of the corporation
who were resident in Canada at the time
the payments were made (other than
amounts incurred in that preceding year
that were paid within 60 days after the
end of that preceding year),
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(b) that portion of the remuneration
(other than salary or wages and other than
remuneration that relates to services
rendered in the preceding taxation year
and that was paid within 60 days after the
end of that preceding year) that is directly
attributable to the production, that relates
to services rendered in Canada after
October 1997 and in the year, or that
preceding year, to the corporation for the
stages of production of the production,
from the final script stage to the end of the
post-production stage, and that is paid by
it in the year or within 60 days after the
end of the year to a person or a
partnership, that carries on a business in
Canada through a permanent
establishment (as defined by regulation),
and that is
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(i) an individual resident in Canada at
the time the amount is paid and who is
not an employee of the corporation, to
the extent that the amount paid
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(A) is attributable to services
personally rendered by the
individual in Canada in respect of
the accredited production, or
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(B) is attributable to and does not
exceed the salary or wages paid by
the individual to the individual's
employees at a time when they were
resident in Canada for personally
rendering services in Canada in
respect of the accredited
production,
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(ii) another corporation that is a
taxable Canadian corporation, to the
extent that the amount paid is
attributable to and does not exceed the
salary or wages paid to the other
corporation's employees at a time
when they were resident in Canada for
personally rendering services in
Canada in respect of the accredited
production,
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(iii) another corporation that is a
taxable Canadian corporation, all the
issued and outstanding shares of the
capital stock of which (except
directors' qualifying shares) belong to
an individual who was resident in
Canada and the activities of which
consist principally of the provision of
the individual's services, to the extent
that the amount paid is attributable to
services rendered personally in
Canada by the individual in respect of
the accredited production, or
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(iv) a partnership, to the extent that the
amount paid
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(A) is attributable to services
personally rendered in respect of the
accredited production by an
individual who is resident in Canada
and who is a member of the
partnership, or
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(B) is attributable to and does not
exceed the salary or wages paid by
the partnership to its employees at a
time when they were resident in
Canada for personally rendering
services in Canada in respect of the
accredited production, and
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(i) the corporation is a subsidiary
wholly-owned corporation of another
corporation that is a taxable Canadian
corporation (in this section referred to
as the ``parent''), and
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(ii) the corporation and the parent have
filed with the Minister an agreement
that this paragraph apply in respect of
the production,
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the reimbursement made by the
corporation in the year, or within 60 days
after the end of the year, of an
expenditure that was incurred by the
parent in a particular taxation year of the
parent in respect of the production and
that would be included in the Canadian
labour expenditure of the corporation in
respect of the production for the
particular taxation year because of
paragraph (a) or (b) if
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(iii) the corporation had had such a
particular taxation year, and
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(iv) the expenditure were incurred by
the corporation for the same purpose as
it was incurred by the parent and were
paid at the same time and to the same
person or partnership as it was paid by
the parent.
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``eligible
production
corporation''
« société de
production
admissible »
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``eligible production corporation'', in respect
of an accredited production for a taxation
year, means a corporation, the activities of
which in the year in Canada are primarily
the carrying on through a permanent
establishment (as defined by regulation) in
Canada of a film or video production
business or a film or video production
services business and that
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(a) owns the copyright in the accredited
production throughout the period during
which the production is produced in
Canada, or
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(b) has contracted directly with the owner
of the copyright in the accredited
production to provide production
services in respect of the production,
where the owner of the copyright is not an
eligible production corporation in
respect of the production,
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except a corporation that is
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(c) a person all or part of whose taxable
income is exempt from tax under this
Part,
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(d) controlled directly or indirectly in any
manner whatever by one or more persons
all or part of whose taxable income is
exempt from tax under this Part, or
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(e) prescribed to be a labour-sponsored
venture capital corporation for the
purpose of section 127.4.
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``qualified
Canadian
labour
expenditure''
« dépense de
main-
d'oeuvre
admissible au
Canada »
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``qualified Canadian labour expenditure'' of
an eligible production corporation for a
taxation year in respect of an accredited
production means the amount, if any, by
which
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(a) the total of all amounts each of which
is the corporation's Canadian labour
expenditure for the year or a preceding
taxation year
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(b) the total of all amounts, each of which
is an amount of assistance that can
reasonably be considered to be in respect
of amounts included in the total
determined under paragraph (a) in
respect of the corporation for the year
that, at the time of filing its return of
income for the year, the corporation or
any other person or partnership has
received, is entitled to receive or can
reasonably be expected to receive, that
has not been repaid before that time
pursuant to a legal obligation to do so
(and that does not otherwise reduce that
expenditure),
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(c) the total of all amounts, each of which
is the qualified Canadian labour
expenditure of the corporation in respect
of the accredited production for a
preceding taxation year before the end of
which the principal filming or taping of
the production began, and
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(d) where the corporation is a parent, the
total of all amounts each of which is
included in the total determined under
paragraph (a) in respect of the
corporation for the year and is the subject
of an agreement in respect of the
accredited production referred to in
paragraph (c) of the definition
``Canadian labour expenditure'' between
the corporation and its subsidiary
wholly-owned corporation.
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``salary or
wages''
« traitement
ou salaire »
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``salary or wages'' does not include an amount
described in section 7 or an amount
determined by reference to profits or
revenues.
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| Rules
governing
Canadian
labour
expenditure of
a corporation
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(2) For the purpose of the definition
``Canadian labour expenditure'' in subsection
(1),
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(a) remuneration does not include
remuneration determined by reference to
profits or revenues;
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(b) services referred to in paragraph (b) of
that definition that relate to the
post-production stage of the accredited
production include only the services that
are rendered at that stage by a person who
performs the duties of animation
cameraman, assistant colourist, assistant
mixer, assistant sound-effects technician,
boom operator, colourist, computer
graphics designer, cutter, developing
technician, director of post production,
dubbing technician, encoding technician,
inspection technician - clean up, mixer,
optical effects technician, picture editor,
printing technician, projectionist,
recording technician, senior editor, sound
editor, sound-effects technician, special
effects editor, subtitle technician, timer,
video-film recorder operator, videotape
operator or by a person who performs a
prescribed duty;
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(c) that definition does not apply to an
amount to which section 37 applies; and
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(d) for greater certainty, that definition does
not apply to an amount that is not a
production cost including an amount in
respect of advertising, marketing,
promotion, market research or an amount
related in any way to another film or video
production.
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| Tax credit
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(3) Subject to subsection (4), where
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(a) an eligible production corporation in
respect of an accredited production for a
taxation year files with its return of income
for the year
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(i) a prescribed form containing
prescribed information in respect of the
production,
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(ii) an accredited film or video
production certificate in respect of the
production, and
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(iii) each other document prescribed in
respect of the production, and
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(b) the principal filming or taping of the
production began before the end of the year,
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the corporation is deemed to have paid on its
balance-due day for the year an amount on
account of its tax payable under this Part for
the year equal to 11% of its qualified Canadian
labour expenditure for the year in respect of
the production.
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| Canadian film
or video
production
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(4) Subsection (3) does not apply in respect
of a production in respect of which an amount
is deemed to have been paid under subsection
125.4(3).
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| When
assistance
received
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(5) For the purposes of this Act other than
this section, and for greater certainty, the
amount that a corporation is deemed under
subsection (3) to have paid for a taxation year
is assistance received by the corporation from
a government immediately before the end of
the year.
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| Revocation of
certificate
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(6) An accredited film or video production
certificate in respect of an accredited
production may be revoked by the Minister of
Canadian Heritage where
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(a) an omission or incorrect statement was
made for the purpose of obtaining the
certificate, or
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(b) the production is not an accredited
production,
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and, for the purpose of subparagraph
(3)(a)(ii), a certificate that has been revoked is
deemed never to have been issued.
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(2) Subsection (1) applies to taxation
years that end after October 1997.
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146. (1) Paragraph (f) of the definition
``specified percentage'' in subsection 127(9)
of the Act is replaced by the following:
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(f) in respect of the repayment of
government assistance, non-government
assistance or a contract payment that
reduced
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(i) the capital cost to the taxpayer of a
property under paragraph (11.1)(b),
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(ii) the amount of a qualified
expenditure incurred by the taxpayer
under paragraph (11.1)(c) or (e) for
taxation years that began before 1996,
or
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(iii) the prescribed proxy amount of
the taxpayer under paragraph (11.1)(f)
for taxation years that began before
1996,
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the specified percentage that applied in
respect of the property, the expenditure
or the prescribed proxy amount, as the
case may be,
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(f.1) in respect of the repayment of
government assistance, non-government
assistance or a contract payment that
reduced a qualified expenditure incurred
by the taxpayer under any of subsections
(18) to (20), 20%,
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(2) Subsection (1) applies to taxation
years that begin after 1995.
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147. (1) Paragraph 127.1(1)(a) of the Act
is replaced by the following:
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(a) with the taxpayer's return of income
(other than a return of income filed under
subsection 70(2) or 104(23), paragraph
128(2)(f) or subsection 150(4)) for a
taxation year, or
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(2) Subsection (1) applies to taxation
years that begin after April 26, 1995.
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148. (1) The description of B in
paragraph 127.41(1)(a) of the Act is
replaced by the following:
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B is the amount, if any, by which the total
of all amounts in respect of the trust that
were included (otherwise than because
of being a member of a partnership)
because of the application of subsection
107.3(1) in computing the taxpayer's
income for the particular year exceeds
the total of all amounts in respect of the
trust that were deducted (otherwise than
because of being a member of a
partnership) because of the application
of subsection 107.3(1) in computing
that income, and
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(2) Subsection (1) applies to taxation
years that end after February 22, 1994.
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149. (1) The portion of section 127.5 of the
Act before paragraph (a) is replaced by the
following:
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| Obligation to
pay minimum
tax
|
127.5 Notwithstanding any other provision
of this Act but subject to section 127.55, where
the amount that, but for sections 120 and
120.1, would be determined under Division E
to be the tax payable by an individual for a
taxation year is less than the amount
determined under subparagraph (a)(i) in
respect of the individual, the tax payable
under this Part for the year by the individual is
the amount, if any, by which
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(2) Subsection (1) applies to the 1992 and
subsequent taxation years.
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150. (1) Paragraphs 127.52(1)(b) and (c)
of the Act are replaced by the following:
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(b) the total of all amounts each of which is
an amount deductible under paragraph
20(1)(a) or any of paragraphs 20(1)(c) to (f)
in computing the individual's income for
the year in respect of a rental or leasing
property (other than an amount included in
the individual's share of a loss referred to in
paragraph (c.1)) were the lesser of the total
of all amounts otherwise so deductible and
the amount, if any, by which the total of
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(i) the total of all amounts each of which
is the individual's income for the year
from the renting or leasing of a rental or
leasing property owned by the individual
or by a partnership, computed without
reference to paragraphs 20(1)(a) and (c)
to (f), and
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(ii) the amount, if any, by which
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(A) the total of all amounts each of
which is the individual's taxable
capital gain for the year from the
disposition of a rental or leasing
property owned by the individual or by
a partnership
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