I-3 - Taxation Act

Section 222 Disposition versions

2015-10-21

222. (1)  A taxpayer who carries on a business in Canada in a taxation year may deduct, in computing the taxpayer’s income from the business for the year, an amount not exceeding the aggregate of all amounts each of which is an expenditure of a current nature made by the taxpayer in the year or in a preceding taxation year ending after 31 December 1973

(a)  on scientific research and experimental development that is related to a business of the taxpayer and directly undertaken in Canada by the taxpayer;

(b)  on scientific research and experimental development that is related to a business of the taxpayer and directly undertaken in Canada on behalf of the taxpayer;

(c)  by payments to a corporation resident in Canada to be used for scientific research and experimental development undertaken in Canada that is related to a business of the taxpayer, where the taxpayer is entitled to exploit the results of that scientific research and experimental development;

(d)  by payments to be used for scientific research and experimental development undertaken in Canada that is related to a business of the taxpayer, if the taxpayer is entitled to exploit the results of that scientific research and experimental development and if the payment was made to

i.  an association recognized by the Minister to undertake scientific research and experimental development,

ii.  a university, college, research institute or other similar institution recognized by the Minister,

iii.  a corporation resident in Canada and exempt from tax under section 991, or

iv.  an organization recognized by the Minister that makes payments to an association, institution or corporation described in any of subparagraphs i to iii; or

(e)  where the taxpayer is a corporation, by payments to an entity described in subparagraph iii of paragraph d, for scientific research and experimental development undertaken in Canada that is basic research or applied research the primary purpose of which is the use of results therefrom by the taxpayer in conjunction with other scientific research and experimental development activities undertaken or to be undertaken by or on behalf of the taxpayer that relate to a business of the taxpayer, and that has the technological potential for application to other businesses of a type unrelated to that carried on by the taxpayer.

(2)  In this division, “scientific research and experimental development” means, subject to subsection 4, systematic investigation or search that is carried out in a field of science or technology by means of

(a)  basic research or applied research undertaken for the advancement of scientific knowledge; or

(b)  experimental development undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, products, devices or processes, including incremental improvements thereto.

(3)  For the purposes of the definition of “scientific research and experimental development” in subsection 2 in respect of a taxpayer, scientific research and experimental development include work undertaken by or on behalf of the taxpayer with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing and psychological research, where the work is directly in support of research referred to in paragraph a of subsection 2 that is undertaken in Canada by or on behalf of the taxpayer, or experimental development referred to in paragraph b of that subsection that is undertaken in Canada by or on behalf of the taxpayer, and is commensurate with the needs of such research or experimental development.

(4)  For the purposes of the definition of “scientific research and experimental development” in subsection 2, scientific research and experimental development do not include work related to

(a)  market research or sales promotion;

(b)  quality control or routine testing of materials, products, devices or processes;

(c)  research in the social sciences or the humanities;

(d)  prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas;

(e)  the commercial production of a new or improved material, device or product, or the commercial use of a new or improved process;

(f)  style changes; or

(g)  routine data collection.

1972, c. 23, s. 210; 1975, c. 22, s. 32; 1987, c. 67, s. 45; 1988, c. 18, s. 13; 1989, c. 5, s. 49; 1993, c. 16, s. 105; 1996, c. 39, s. 59; 1997, c. 3, s. 71; 1997, c. 31, s. 28; 2000, c. 5, s. 56; 2015, c. 21, s. 135.

2006-03-01

222. (1)  A taxpayer who carries on a business in Canada in a taxation year may deduct in computing the taxpayer’s income from the business for the year an amount not exceeding the aggregate of all amounts each of which is an expenditure of a current nature made by the taxpayer in the year or in a preceding taxation year ending after 31 December 1973 on scientific research and experimental development related to a business of the taxpayer and directly undertaken in Canada by or on behalf of the taxpayer, or by way of a payment described in section 222.1, or by way of a payment to be used for scientific research and experimental development carried on in Canada that is related to a business of the taxpayer, where the taxpayer is entitled to exploit the results of that scientific research and experimental development and the payment was made to one of the following entities:

(a)  an association recognized by the Minister to undertake scientific research and experimental development;

(b)  a university, college, research institute or other similar institution recognized by the Minister;

(c)  a corporation resident in Canada and exempt from tax under section 991;

(d)  (paragraph repealed);

(e)  an organization recognized by the Minister that makes payments to an association, institution or corporation described in any of paragraphs a to c.

(2)  In this division, “scientific research and experimental development” means, subject to subsection 4, systematic investigation or search that is carried out in a field of science or technology by means of

(a)  basic research or applied research undertaken for the advancement of scientific knowledge; or

(b)  experimental development undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, products, devices or processes, including incremental improvements thereto.

(3)  For the purposes of the definition of “scientific research and experimental development” in subsection 2 in respect of a taxpayer, scientific research and experimental development include work undertaken by or on behalf of the taxpayer with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing and psychological research, where the work is directly in support of research referred to in paragraph a of subsection 2 that is undertaken in Canada by or on behalf of the taxpayer, or experimental development referred to in paragraph b of that subsection that is undertaken in Canada by or on behalf of the taxpayer, and is commensurate with the needs of such research or experimental development.

(4)  For the purposes of the definition of “scientific research and experimental development” in subsection 2, scientific research and experimental development do not include work related to

(a)  market research or sales promotion;

(b)  quality control or routine testing of materials, products, devices or processes;

(c)  research in the social sciences or the humanities;

(d)  prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas;

(e)  the commercial production of a new or improved material, device or product, or the commercial use of a new or improved process;

(f)  style changes; or

(g)  routine data collection.

1972, c. 23, s. 210; 1975, c. 22, s. 32; 1987, c. 67, s. 45; 1988, c. 18, s. 13; 1989, c. 5, s. 49; 1993, c. 16, s. 105; 1996, c. 39, s. 59; 1997, c. 3, s. 71; 1997, c. 31, s. 28; 2000, c. 5, s. 56.