I-3, r. 1 - Regulation respecting the Taxation Act

Section 771.1r1 Disposition versions

2017-12-20

771.1R1. In this Title,

“cost of capital” of a corporation for a taxation year means, subject to section 771.1R2, the aggregate of all amounts each of which is the gross cost to the corporation of a property referred to in section 130R40, paragraph e or g of section 130R205, any of sections 130R209, 130R210 and 130R216 or Schedule B, if the property was owned by the corporation at the end of the taxation year and was used by the corporation at any time during the year;

“cost of labour” of a corporation for a taxation year means, subject to section 771.1R3, the amount equal to the aggregate of all amounts each of which is the salaries and wages paid or payable during the year to an employee of the corporation for services performed during the year and to any other amount paid or payable during the year for the performance during the year by any person, other than an employee of the corporation, of functions relating to the management or administration of the corporation, scientific research and experimental development activities, or a service or function that would normally be performed by an employee of the corporation;

“cost of primary and manufacturing sectors labour” of a corporation for a taxation year means, without exceeding the cost of labour of the corporation for the year, the product obtained when 100/75 is multiplied by that portion of the cost of labour of the corporation for the year that is attributable to the salaries and wages included in computing the cost of labour that were paid or payable to persons for the portion of their time that they were directly engaged in qualified activities of the corporation during the year, or to other amounts included in computing the cost of labour that were paid or payable to persons for the performance of functions that would be directly related to qualified activities of the corporation during the year if those persons were employees of the corporation;

“excluded activities” means any of the following activities:

(a)  storing, shipping, selling and leasing of finished goods;

(b)  purchasing of raw materials;

(c)  administration, including clerical and personnel activities;

(d)  purchase and resale operations;

(e)  data processing; and

(f)  providing facilities for employees, including cafeterias, clinics and recreational facilities;

“gross cost” to a corporation of a property is equal, where the property is available for use by the corporation for the purposes of section 93.6 of the Act, to the capital cost to the corporation of the property, computed without reference to paragraph e of section 99 of the Act, sections 101, 101.6, 101.7 and 180 to 182 of the Act, subdivisions 1 and 2 of Division III of Chapter V of Title VII of Part I of the Act, subparagraph c of the second paragraph of section 736 of the Act and the third paragraph of that section and, in any other case, to zero;

“manufacturing sector activities” means any of the following activities other than excluded activities:

(a)  when they are performed in Canada in connection with manufacturing or processing in Canada, not including the activities listed in section 130R12, of goods for sale or lease:

i.  engineering design of products and production facilities,

ii.  receiving and storing of raw materials,

iii.  producing, assembling and handling of goods in process,

iv.  inspecting and packaging of finished goods,

v.  line supervision,

vi.  production support activities including security, cleaning, heating and factory maintenance,

vii.  quality and production control,

viii.  repair of production facilities, and

ix.  pollution control;

(b)  all other activities that are performed in Canada directly in connection with manufacturing or processing in Canada, not including the activities listed in section 130R12, of goods for sale or lease; and

(c)  scientific research and experimental development activities carried on in Canada;

“primary sector activities” means the activities in the agriculture, forestry, fishing and hunting sector and the activities in the mining, quarrying, and oil and gas extraction sector, that are included in the group described under code 11 or 21 of the North American Industry Classification System (NAICS) Canada, as amended from time to time and published by Statistics Canada;

“qualified activities” means primary sector activities and manufacturing sector activities;

“salaries and wages” means salaries, wages and commissions, but does not include any other type of remuneration, any superannuation or pension benefits, any retiring allowances or any amount referred to in any of sections 34 to 58.3 of the Act.

O.C. 1182-2017, s. 9.