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Part 6 — British Columbia Scientific Research and Experimental Development Tax Credit
97 In this Part:
"BC qualified expenditure" incurred by a qualifying corporation in a taxation year means an amount that is a qualified expenditure, to the extent that the expenditure is
(a) incurred in the taxation year by the corporation in respect of scientific research and experimental development carried on in British Columbia,
(b) incurred after August 31, 1999 and before September 1, 2027, and
(c) incurred at a time when the corporation has a permanent establishment in British Columbia,
but does not include
(d) the corporation's share of an expenditure incurred by a partnership or by a trust of which the corporation is a beneficiary,
(e) a type or class of expenditure prescribed by regulation, and
(f) an expenditure incurred by the corporation in the course of earning income in the taxation year if any of the income is exempt income, as defined in section 248 (1) of the federal Act, or is exempt from tax under Part 1 of the federal Act;
"designated assistance" means
(a) any non-government assistance or contract payment, as these terms are defined in section 127 (9) of the federal Act, and
(b) government assistance defined in this section;
"eligible repayment" of a qualifying corporation in a taxation year means the total of all amounts of designated assistance repaid in the taxation year by the corporation, or deemed repaid in that taxation year under section 127 (10.8) of the federal Act, to the extent that
(a) each of the amounts can reasonably be considered a repayment of designated assistance that, in the taxation year or a previous taxation year, the corporation received, was entitled to receive or could reasonably have been expected to receive, in respect of a BC qualified expenditure, and
(b) by the operation of paragraph (h) of the definition of "qualified expenditure" in section 127 (9) of the federal Act, the designated assistance reduced an amount of a BC qualified expenditure in the taxation year or a previous taxation year;
has the same meaning as in section 127 (9) of the federal Act;
"government assistance" means assistance from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance, but does not include
(a) an amount deemed to have been paid under section 98 (2),
(b) a deduction under section 99 (2), or
(c) a deduction under section 127 (5) or (6) of the federal Act;
"partnership amount" means the amount referred to in section 99.1 (1) (a);
"permanent establishment", in relation to a partnership, has the same meaning as in section 8201 of the Income Tax Regulations (Canada) except that section is to be read without reference to the text after paragraph (e);
"qualified expenditure" has the same meaning as in the definition of "qualified expenditure" in section 127 (9) of the federal Act except that in reading section 127 (18) to (20) of the federal Act for the purpose of computing the amount to be excluded in paragraph (h) of that definition, the references to government assistance are to be read as references to government assistance as defined in this section;
"qualifying corporation", for a taxation year, means a corporation that has a permanent establishment in British Columbia at any time during that taxation year, but does not include a corporation that
(a) is exempt from tax under section 27,
(b) is 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 section 27 of this Act or under Part 1 of the federal Act,
(c) is an employee venture capital corporation registered under section 8 of the Employee Investment Act,
(d) is a small business venture capital corporation registered under section 3 of the Small Business Venture Capital Act, or
(e) is of a type or class of corporation prescribed by regulation;
"scientific research and experimental development" has the same meaning as in section 248 (1) of the federal Act;
has the same meaning as in section 127 (9) of the federal Act;
"SR&ED qualified BC expenditure" of a qualifying corporation in a taxation year means the total of the following:
(a) the total of all BC qualified expenditures incurred by the corporation in the taxation year;
(b) the corporation's eligible repayment for that taxation year.
97.1 Sections 102.11, 102.4 and 102.6 apply to a partnership as if the partnership's fiscal period were its taxation year.
98 (1) Subject to section 103, a qualifying corporation that is a Canadian-controlled private corporation carrying on scientific research and experimental development in British Columbia during a taxation year may claim a tax credit for the taxation year under this Part equal to 10% of the lesser of
(a) the corporation's SR&ED qualified BC expenditure for the taxation year, and
(b) the corporation's expenditure limit as defined in section 127 (10.2) of the federal Act for the taxation year.
(2) A corporation that is eligible for and has claimed a tax credit under subsection (1) for a taxation year is deemed to have paid, at the time referred to in section 157 (1) (b) of the federal Act as that section relates to the taxation year, the amount of that credit on account of its tax payable under this Act.
(2) Subject to section 103, a qualifying corporation may deduct from its tax otherwise payable for a taxation year ending after August 31, 1999, an amount equal to the lesser of
(a) the amount determined at the end of the taxation year under subsection (3), and
(b) the amount of tax that would otherwise be payable but for that credit.
(3) The amount eligible for deduction under subsection (2) (a) at the end of the taxation year is an amount equal to the total of the following:
(a) the corporation's annual non-refundable tax credit for that taxation year;
(b) the total of the corporation's annual non-refundable tax credits for the 10 taxation years immediately preceding, less any of those amounts that were previously deducted by the corporation under subsection (2);
(c) the total of the corporation's annual non-refundable tax credits for the 3 taxation years immediately following, less any of those amounts that were previously deductible by the corporation under subsection (2) for the subsequent year.
(3.1) A qualifying corporation's annual non-refundable tax credit for a taxation year is the amount by which the total of
(a) 10% of the corporation's SR&ED qualified BC expenditure in the taxation year, and
(b) the amount equal to the total of all amounts each of which is an appropriate portion determined under section 99.1 in respect of a partnership of which the corporation was a member in the taxation year as provided for in that section,
exceeds the total of
(c) any amount deemed to have been paid under section 98 (2) for that year by the corporation, and
(d) any amount renounced under section 100 for that year by the corporation.
(4) If the qualifying corporation is a corporation described in paragraph (j) or (k) of the definition of "investment tax credit" in section 127 (9) of the federal Act, the net amount determined under subsection (3) (b) and (c) of this section must be reduced by the proportion described in section 127 (9.1) (d) or (9.2) (d) of the federal Act, as the case may be.
99.1 (1) If in a taxation year a qualifying corporation is a member of a partnership, other than a specified member as defined in section 248 (1) of the federal Act, the qualifying corporation may claim for the taxation year the appropriate portion of the amount by which
(a) the amount equal to 10% of the SR&ED qualified BC expenditure of the partnership for its taxation year ending in the taxation year of the corporation
exceeds the total of
(b) the amount equal to the total of all amounts each of which is an amount determined under section 102.11 (2) for the partnership for its taxation year ending in the taxation year of the corporation, and
(c) the amount equal to the total of all amounts each of which is an amount determined under section 102.4 (2) for the partnership for its taxation year ending in the taxation year of the corporation.
(2) For the purpose of determining the amount that a qualifying corporation may claim under subsection (1) in respect of a partnership, the following rules apply:
(a) in section 97 [definitions], in the definitions of "BC qualified expenditure", "eligible repayment" and "SR&ED qualified BC expenditure",
(i) the references to "qualifying corporation" and "corporation" are to be read as "partnership", and
(ii) the references to "corporation's" are to be read as "partnership's";
(b) in section 97, in the definition of "BC qualified expenditure",
(i) the reference in paragraph (b) to "August 31, 1999" is to be read as "February 20, 2007", and
(ii) paragraph (d) is to be read without reference to "by a partnership or";
(c) the amount referred to in subsection (1) (a) of this section is determined as if
(i) the partnership were a person,
(ii) its fiscal period were its taxation year, and
(iii) its filing-due date were its filing-due date for the year if it were a corporation;
(d) the appropriate portion is that portion that may reasonably be considered to be the qualifying corporation's share of the amount determined under subsection (1);
(e) if the qualifying corporation is at any time in a taxation year a member of a particular partnership that is a member of another partnership,
(i) the qualifying corporation is deemed to be a member of the other partnership, and
(ii) despite paragraph (d), the qualifying corporation's appropriate portion of the amount determined under subsection (1) for the other partnership is deemed to equal that portion that may reasonably be considered to be that share of the amount determined under subsection (1) to which the qualifying corporation is directly or indirectly entitled.
100 (1) A corporation may renounce all or part of the annual non-refundable tax credit under section 99 (3.1) (a) in respect of the corporation's SR&ED qualified BC expenditure incurred during a taxation year.
(2) If the corporation renounces its entitlement to all or part of the tax credit under subsection (1), the corporation is deemed for all purposes never to have been entitled to receive, or have had reasonable expectation of receiving, that credit or part of it.
101 (1) If, after August 31, 1999, 2 or more corporations amalgamate within the meaning of section 87 (1) of the federal Act, the new corporation is deemed, for the purposes of this Part, to be the continuation of each of its predecessor corporations.
(2) If, after August 31, 1999, a subsidiary corporation is wound up within the meaning of section 88 (1) of the federal Act, the parent corporation is deemed, for the purposes of this Part, to be the continuation of the subsidiary corporation.
102 A corporation that has made a deduction in accordance with section 17 for a taxation year may not claim or deduct a tax credit under this Part for the same taxation year.
102.1 (1) This section applies to a qualifying corporation if
(a) the corporation acquired a particular property and the cost, or a portion of the cost, of the property
(i) was a BC qualified expenditure of the corporation in a taxation year, or
(ii) would be a BC qualified expenditure of the corporation in a taxation year if, for the purposes of the definition of "qualified expenditure" in section 97 of this Act, the federal Act were read without reference to section 127 (26) of the federal Act,
(b) the cost, or portion of the cost, of the property is an amount that
(i) was included in computing the corporation's tax credit under this Part, or
(ii) would be included in computing the corporation's tax credit under this Part if, for the purposes of the definition of "qualified expenditure" in section 97 of this Act, the federal Act were read without reference to section 127 (26) of the federal Act, and
(c) after March 31, 2000 and within 10 taxation years of the acquisition described in paragraph (a), the corporation converts to commercial use, or disposes of without having previously converted to commercial use, that property or another property that incorporates that property.
(2) The qualifying corporation must add the lesser of the following to its tax otherwise payable for the taxation year in which the conversion or disposition described in subsection (1) (c) occurs:
(i) included in the corporation's tax credit under this Part in respect of the particular property, or
(ii) that would be included in the corporation's tax credit under this Part in respect of the particular property if, for the purposes of the definition of "qualified expenditure" in section 97 of this Act, the federal Act were read without reference to section 127 (26) of the federal Act;
(b) the amount determined under subsection (2.1).
(2.1) The amount for the purpose of subsection (2) (b) is the product obtained by multiplying the percentage applied in computing the tax credit referred to in subsection (1) (b) by,
(a) in the case where the particular property or the property that incorporates the particular property is disposed of to a person who deals at arm's length with the corporation,
(i) the proceeds of disposition of the property, if the property disposed of
(A) is the particular property and is neither first term shared-use-equipment nor second term shared-use-equipment, or
(B) is the property that incorporates the particular property,
(ii) 25% of the proceeds of disposition of the property, if the property disposed of is the particular property, is first term shared-use-equipment and is not second term shared-use-equipment, and
(iii) 50% of the proceeds of disposition of the property, if the property disposed of is the particular property and is second term shared-use-equipment, and
(b) in the case where the particular property or the property that incorporates the particular property is converted to commercial use or is disposed of to a person who does not deal at arm's length with the corporation,
(i) the fair market value of the property at the time of its conversion or disposition, if the property converted or disposed of
(A) is the particular property and is neither first term shared-use-equipment nor second term shared-use-equipment, or
(B) is the property that incorporates the particular property,
(ii) 25% of the fair market value of the property at the time of its conversion or disposition, if the property converted or disposed of is the particular property, is first term shared-use-equipment and is not second term shared-use-equipment, and
(iii) 50% of the fair market value of the property at the time of its conversion or disposition, if the property converted or disposed of is the particular property and is second term shared-use-equipment.
(3) The cost of the property under subsection (1) (a) and (b)
(a) must not exceed the amount paid by the corporation to acquire that property from a transferor, and
(b) must not include any amounts paid by the corporation to maintain, modify or transform that property.
102.11 (1) This section applies to a partnership if
(a) the partnership acquired a particular property and the cost of the property was a BC qualified expenditure of the partnership in a taxation year,
(b) the cost of the property is an amount that was included in computing the partnership amount in respect of the partnership for the taxation year referred to in paragraph (a), and
(c) in the taxation year and after February 20, 2007, and within 10 taxation years of the acquisition described in paragraph (a), the partnership converts to commercial use, or disposes of without having previously converted to commercial use, that property or another property that incorporates that property.
(2) For the taxation year in which the conversion or disposition described in subsection (1) (c) occurs, the amount determined for the partnership for the purpose of section 99.1 (1) (b) is, subject to section 102.6 (2), the lesser of the following:
(a) the amount included in respect of the property in computing the partnership amount referred to in subsection (1) (b) of this section;
(i) if that property or the property that incorporates that property is disposed of to a person who deals at arm's length with the partnership, the proceeds of disposition of that property multiplied by the percentage that was applied in computing the partnership amount referred to in subsection (1) (b) of this section, or
(ii) in any other case, the fair market value at the time of conversion or disposition of that property or the property that incorporates that property multiplied by the percentage that was applied in computing the partnership amount referred to in subsection (1) (b) of this section.
(3) The cost of the property under subsection (1) (a) and (b)
(a) must not exceed the amount paid by the partnership to acquire that property from a transferor, and
(b) must not include any amounts paid by the partnership to maintain, modify or transform that property.
102.2 Sections 102.1, 102.11, 102.3 and 102.4 do not apply to a qualifying corporation or partnership (in this section, the "transferor") that disposes of a property to a qualifying corporation or partnership (in this section and sections 102.3 and 102.4, the "purchaser") that does not deal at arm's length with the transferor, if the purchaser acquired the property in circumstances where the cost of the property to the purchaser would have been an expenditure of the purchaser described in section 37 (8) (a) (ii) (A) (III) or (B) (III) of the federal Act, as that section read on March 29, 2012, but for section 2902 (b) (iii) of the federal regulations.
102.3 (1) This section applies to a purchaser that is a qualifying corporation if, at any particular time in a taxation year and after March 31, 2000, the purchaser converts to commercial use, or disposes of without having previously converted to commercial use, a property
(i) was acquired by the purchaser in circumstances described in section 102.2, or
(ii) incorporates other property acquired by the purchaser in those circumstances, and
(b) that was first acquired, or that incorporates other property that was first acquired, by a corporation or partnership (in this section, the "original user") in the original user's taxation year that includes the particular time, assuming that the original user had such a taxation year, or in any of the original user's 10 preceding taxation years.
(2) The purchaser must add to its tax otherwise payable for the taxation year the lesser of the following:
(i) if the original user is a qualifying corporation, included in the original user's tax credit under this Part in respect of the property, or
(ii) if the original user is a partnership, included in computing the original user's partnership amount in respect of the property;
(i) if that property or the property that incorporates that property is disposed of to a person who deals at arm's length with the purchaser, the proceeds of disposition of that property multiplied by the percentage applied by the original user in computing its tax credit under this Part, or
(ii) in any other case, the fair market value at the time of conversion or disposition of that property or the property that incorporates that property multiplied by the percentage applied by the original user in computing its tax credit under this Part.
102.4 (1) This section applies to a purchaser that is a partnership if, at any particular time in a taxation year and after February 20, 2007, the purchaser converts to commercial use, or disposes of without having previously converted to commercial use, a property
(i) was acquired by the purchaser in circumstances described in section 102.2, or
(ii) incorporates other property acquired by the purchaser in those circumstances, and
(b) that was first acquired, or that incorporates other property that was first acquired, by a corporation or partnership (in this section, the "original user") with which the purchaser did not deal at arm's length at the time at which the purchaser acquired the property, in the original user's taxation year that includes the particular time, assuming that the original user had such a taxation year, or in any of the original user's 10 preceding taxation years.
(2) In respect of the partnership that is the purchaser under subsection (1), for the purpose of section 99.1 (1) (c), the amount determined for the partnership for the taxation year is the lesser of the following:
(i) if the original user is a qualifying corporation, included in the original user's tax credit under this Part in respect of the property, or
(ii) if the original user is a partnership, included in computing the original user's partnership amount in respect of the property;
(i) if that property or the property that incorporates that property is disposed of to a person who deals at arm's length with the purchaser, the proceeds of disposition of that property multiplied by the percentage applied by the original user,
(A) if the original user is a qualifying corporation, in computing its tax credit under this Part, or
(B) if the original user is a partnership, in computing its partnership amount, or
(ii) in any other case, the fair market value at the time of conversion or disposition of that property or the property that incorporates that property multiplied by the percentage applied by the original user,
(A) if the original user is a qualifying corporation, in computing its tax credit under this Part, or
(B) if the original user is a partnership, in computing its partnership amount.
102.5 (1) This section applies to a qualifying corporation for a taxation year if
(a) the corporation is a member of a partnership in the taxation year, and
(i) the amount equal to the total of all amounts each of which is an amount determined under section 102.11 (2) in respect of a property of the partnership, and
(ii) the amount equal to the total of all amounts each of which is an amount determined under section 102.4 (2) in respect of a property of the partnership,
exceeds the amount computed as the partnership amount in respect of the partnership.
(2) The qualifying corporation must add to its tax otherwise payable for the taxation year the portion of the excess under subsection (1) (b) that can reasonably be considered to be the qualifying corporation's share of the excess.
102.6 (1) This section applies to a partnership for a taxation year if
(a) a qualifying corporation is a member of the partnership,
(b) section 102.11 applies to the partnership for the taxation year,
(c) the partnership is a member of another partnership in the taxation year, and
(d) an amount would be added to the partnership's tax payable under section 102.5 for the taxation year if the partnership were a qualifying corporation.
(2) The amount referred to in subsection (1) (d) is deemed to be the lesser of the amounts described in section 102.11 (2) (a) and (b) in respect of a property of the partnership for the taxation year.
103 (1) A qualifying corporation that wishes to claim a tax credit under this Part in respect of a taxation year must file, with the return of income filed by the corporation under section 29 for that taxation year, an application for the tax credit in the form, and containing the information, required by the Commissioner of Income Tax.
(2) A qualifying corporation is not entitled to a tax credit under this Part in respect of a taxation year unless, within 18 months after the end of the taxation year, the corporation files the form containing the information required under subsection (1).
(3) The time limit of 18 months referred to in subsection (2) is extended by 6 months or until December 31, 2020, whichever extension is shorter, if the time limit would otherwise expire during the period beginning on March 13, 2020 and ending on December 30, 2020.
Contents | Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16
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