I-3 - Taxation Act

Section 737.18.36 Disposition versions

2017-12-07

737.18.36. In this Title, unless the context indicates otherwise,

“cost of labour” of a corporation for a taxation year means the portion of the cost of labour of the corporation for the year, determined in accordance with the definition of that expression in section 5202 of the Income Tax Regulations made under the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)), that may reasonably be attributed to activities carried out in Québec;

“cost of manufacturing and processing labour” of a corporation for a taxation year means the lesser of the cost of labour of the corporation for the year and the amount that would be the cost of manufacturing and processing labour of the corporation for the year, determined in accordance with the definition of that expression in section 5202 of the Income Tax Regulations, if that definition were read without reference to the portion after paragraph b and if the definition of “qualified activities” in that section 5202 were read as if “Canada” were replaced wherever it appears by “Québec”;

“manufacturing corporation” for a taxation year means a corporation in respect of which the proportion of the manufacturing and processing activities for the year is at least 50%;

“proportion of the manufacturing and processing activities” of a corporation for a taxation year means the proportion that the cost of manufacturing and processing labour of the corporation for the year is of the cost of labour of the corporation for the year;

“qualified manufacturing corporation” for a taxation year means a manufacturing corporation for the year whose paid-up capital determined for the year in accordance with section 737.18.37 is at least $15,000,000;

“qualified patented part” of a qualified manufacturing corporation for a taxation year means an invention of the corporation if

(a)  the corporation has made sustained innovation efforts in relation to the invention;

(b)  the invention derives in whole or in part from scientific research and experimental development work undertaken in Québec by the corporation or another corporation associated with it at the time the work was undertaken, or on behalf of the corporation or the other corporation, as the case may be, and the corporation or the other corporation is deemed to have paid an amount to the Minister under any of Divisions II to II.3.0.1 of Chapter III.1 of Title III of Book IX in respect of the work; and

(c)  the corporation, alone or together with other persons, holds a patent, in respect of the invention, that satisfies the following conditions:

i.  it is issued under the Patent Act (R.S.C. 1985, c. P-4) or an Act having the same effect of a jurisdiction other than Canada,

ii.  the application by virtue of which the patent is issued is made, after 17 March 2016, in accordance with the requirements of an Act referred to in subparagraph i, and

iii.  it is valid throughout the year;

“qualified property” of a qualified manufacturing corporation for a taxation year means property in respect of which the following conditions are satisfied:

(a)  it incorporates at least one qualified patented part of the corporation;

(b)  it is sold, leased or rented by the corporation in the year;

(c)  the corporation keeps a register containing the information necessary to prepare separate accounts, in respect of the property, by virtue of which the corporation designates, in relation to the property, a portion of the corporation’s gross revenue for the year from the sale, lease or rental of the property and a portion of the expenses, reserves, allowances and other amounts otherwise deductible by the corporation in computing its income for the year that may reasonably be considered to be attributable to the property; and

(d)  the gross revenue of the corporation for the year from the sale, lease or rental of the property is reasonably attributable to an establishment of the corporation situated in Québec.

A qualified manufacturing corporation is deemed to hold a patent and satisfy the conditions of paragraph c of the definition of “qualified patented part” in the first paragraph, in respect of the patent, for a taxation year if the application for a patent is made, after 17 March 2016, in accordance with the requirements of an Act referred to in subparagraph i of that paragraph c and if a decision by the competent authority regarding the application is pending in the year.

2017, c. 29, s. 115.