INVESTMENT TAX CREDIT - CORPORATIONS (for taxation years starting after 1995)

Transcription

1 Revenue Canada Revenu Canada INVESTMENT TAX CREDIT - CORPORATIONS (for taxation years starting after 1995) Note: Use T2038 (CORP)(E) Rev. 93 if your taxation year begins before Use Rev.95 if your taxation year begins before Page 1 of 6 Genera Information 1. Use this form for a corporation that, during a taxation year: a) earned an investment tax credit (the credit); b) is caiming a deduction against their Part I tax payabe; c) is caiming a refund of credit earned during the current taxation year; d) is caiming a carry-forward of credit from preceding taxation years; e) is transferring a credit foowing an amagamation or wind-up of a subsidiary, as described under subsections 87(1) and 88(1) of the Income Tax Act; or f) is requesting a credit carry-back References to parts, sections, and subsections on this form are to the Income Tax Act and the Income Tax Reguations. References to Interpretation Buetins and Information Circuars are to the atest version. The credit is eigibe for a three year carry back (if not deductibe in the year earned) and a ten year carry forward. Investments or expenditures, as defined in subsection 127(9) and Part XLVI of the Income Tax Reguations, that earn the investment tax credit are: Quaified property; Certified property; and Quaified expenditures for scientific research and experimenta deveopment (SR&ED). Compete and fie Form T661, Caim for Scientific Research and Experimenta Deveopment Expenditures Carried on in Canada. Attach a competed copy of this form with the corporation's T2 Corporation Income Tax Return. 6. For more information on investment tax credits, see the section caed "Investment Tax Credit Form T2038(CORP)" in the T2 Corporation Income Tax Guide, Information Circuar IC 78-4, Investment Tax Credit Rates, and reated Specia Reease. Aso see Interpretation Buetin IT-151, Scientific Research and Experimenta Deveopment Expenditures. 7. For information on SR&ED, see Interpretation Buetin IT-151, Scientific Research and Experimenta Deveopment Expenditures; Information Circuar IC 86-4, Scientific Research and Experimenta Deveopment; T4052, Scientific Research and Experimenta Deveopment An Information Guide to the Tax Incentive Program; and T4088, Caiming Scientific Research and Experimenta Deveopment Expenditures (guide to Form T661). Detaied Information 1. For the purpose of this form, "investment" means: The capita cost of the property (excuding amounts added by an eection under section 21), determined without reference to subsections 13(7.1) and 13(7.4), minus the amount of any government assistance or non-government assistance that the corporation has received, is entited to receive or can reasonaby be expected to receive for that property at the time of fiing the income tax return for the year in which the property was acquired An investment tax credit (ITC) deducted or refunded in a taxation year for a depreciabe property, other than a depreciabe property deductibe under paragraph 37(1)(b), reduces the capita cost of that property in the next taxation year. It aso reduces the undepreciated capita cost of that cass in the next taxation year. An investment tax credit for SR&ED deducted or refunded in a taxation year wi reduce the baance in the SR&ED poo and the adjusted cost base (ACB) of an interest in a partnership, in the next taxation year. Property acquired has to be "avaiabe for use" to be eigibe for an investment tax credit. Quaified expenditures must be identified by the caimant on Forms T661 and T2038 no ater than 12 months after the caimant's income tax return is due for the taxation year in which the expenditures were incurred. Effective February 19, 1997, capita costs and expenditures for property quaifying for an investment tax credit (ITC) wi be restricted to those costs and expenditures that are identified on Form T2038 (CORP), which must be fied by May 31, 1997, or tweve months after the caimant's income tax return is due for the taxation year in which the expenditures were incurred, whichever is ater. A request for an adjustment for an ITC for taxation years ending before December 1, 1995 must be made by May 31, Partnership aocations Subsection 127(8) provides for the aocation of the amount that may reasonaby be considered to be a partner's share of the investment tax credits (the credits) of the partnership at the end of the fisca period of the partnership. An aocation of credits is generay considered to be the partner's reasonabe share of the credits if it is made in the same proportion in which the partners have agreed to share any income or oss and if section 103 is not appicabe for the agreement to share any income or oss. For more information, see Interpretation Buetin IT-151. T2038 (CORP) E (97) (Ce formuaire existe aussi en français.) 1723

2 Page 2 of 6 Detaied Information continued from page A "quaifying corporation" for the purpose of a refundabe investment tax credit is defined under subsection 127.1(2). The corporation has to be a Canadian controed private corporation (CCPC) throughout the particuar taxation year and the taxabe income for its preceding taxation year or, if it is associated with any other corporations in the particuar taxation year, the taxabe income of the corporation for its ast taxation year ending in the preceding caendar year pus the taxabe incomes of a the associated corporations for their ast taxation years ending in the preceding caendar year, cannot exceed the tota of the business imits as determined for the sma business deduction. A quaifying corporation may earn a 100% cash refund on its share of any investment tax credits earned at the 35% rate up to the aocated expenditure imit on quaified current expenditures for SR&ED. The 100% refund does not appy to quaified capita expenditures eigibe for the 35% credit rate, they are ony eigibe for the 40% refund. The 100% refund wi not be avaiabe to a corporation that is an "excuded corporation" as defined under subsection 127.1(2). A corporation is an "excuded corporation" if, at any time during the year, it is a corporation that is either controed (directy or indirecty, in any manner whatever) by, or is reated to: a) one or more persons exempt from Part I tax under section 149, b) Her Majesty in right of a province, a Canadian Municipaity or any other pubic authority, or c) any combination of persons referred to in a or b above. Name of corporation Account / Business Number Taxation year end Day Month Year Part 1 Eigibe Investments from the Current Taxation Year (Property from Codes 3A, 12, and 14) List your investments beow and record the totas for each code in the corresponding areas for each code in Part 8, on page 5. CCA cass number Code from page 3 Description of investment Date avaiabe for use Location used (province, county, or township) Amount of investment

3 INVESTMENT TAX CREDIT CORPORATIONS (for taxation years starting after 1995) Page 3 of 6 Name of corporation Account / Business Number Taxation year-end Day Month Year Part 2 Investments or Expenditures, Percentages, and Codes Quaified property acquired primariy for use in: a) Newfoundand, Prince Edward Isand, Nova Scotia, New Brunswick, the Gaspé Peninsua or a prescribed offshore region Specified percentage 10% Code 14 b) under transitiona provisions for property described in a) above, and is either: acquired by the taxpayer under a written agreement entered into before February 22, 1994; under construction by the taxpayer or on his behaf on February 22, 1994; or property that was machinery or equipment that wi be a fixed and integra part of property under construction by or on behaf of the taxpayer on February 22, % 12 c) Certified property... 30% 3A Part 3 Determination of a Quaifying Corporation Quaified expenditures for scientific research and experimenta deveopment (SR&ED) incurred by: a) A corporation that is a Canadian-controed private corporation (CCPC) throughout the current taxation year and; (i) is not associated with any other corporations, enter your taxabe income for the preceding taxation year A (ii) is associated with other corporations, enter the tota taxabe incomes from coumn 2 on page 2 of Form T B Enter amount from ine A or B (whichever is appicabe) (iii) (iv) is not associated with any other corporations, enter your reduced business imit for the preceding taxation year (as determined under section 125)... is associated with other corporations, enter the tota reduced business imits from coumn (4) on page 2 of Form T C D Enter amount from ine C or D (whichever is appicabe) Line 1 minus ine 2 (if negative, enter zero) (if the resut is zero, you are a quaifying corporation) Specified percentage Code If you are a quaifying corporation, code 11B wi appy to you on at east a portion of quaified expenditures.... If the current year's quaified expenditures are more than the corporation's expenditure imit, (see Part 6, page 4) the excess is eigibe for an investment tax credit cacuated at the 20% rate. b) A corporation that is not a CCPC throughout the current taxation year that incurred quaified expenditures for SR&ED in: (i) any area in Canada after (ii) Newfoundand, Prince Edward Isand, Nova Scotia, New Brunswick or the Gaspé Peninsua, for certain expenditures incurred pursuant to an agreement in writing entered into by the taxpayer before February 22, (iii) any other area in Canada before % 20% 30% 20% 11B 3B 4B 4B

4 Page 4 of 6 Part 4 Components of the SR&ED Expenditure Limit Cacuation If the corporation is: i) not associated with any other corporations, enter the amount from ine A on page 3 (if the preceding taxation year is ess than 51 weeks, this amount must be grossed-up by the ratio of 365 divided by the number of days in the preceding taxation year) E ii) associated with other corporations, enter the tota of the grossed-up taxabe incomes from coumn 3 on page 2 of Form T F Enter amount from ine E or F (whichever appies) iii) not associated with any other corporations, enter your reduced business imit for the current taxation year (as determined under section 125) (if the current taxation year is ess than 51 weeks, this amount must be grossed-up by the ratio of 365 divided by the number of days in the current taxation year) G iv) associated with other corporations, enter the tota of the grossed up reduced business imit from coumn 5 on page 2 of Form T Enter amount from ine G or H (whichever appies) H Part 5 Quaified Expenditures for SR&ED Current expenditures Capita expenditures Repayments made in the year Tota (this must equa the amount from ine 296 on form T661) I J K Part 6 Cacuation of SR&ED Expenditure Limit for CCPC Throughout the Current Taxation Year Less: the greater of ine 468 above and $200, X 10 = Excess (if negative, enter ni) Line L X Line 470 $200,000 = Less: if you are associated with one or more corporations, enter the amount of the expenditure imit aocated to the other corporations as provided for on page 2 of Form T $4,000,000 * L M Your share of the SR&ED expenditure imit.... Where the taxation year of the corporation is ess than 51 weeks, cacuate the amount of the expenditure imit as foows: Line N X number of days in the taxation year = Your SR&ED expenditure imit for the year (enter ine N or ine O, whichever appies) * NOTE: amount M cannot be greater than $2,000,000. N O Part 7 Cacuation of Investment Tax Credits on SR&ED The esser of: current expenditures (ine I above) and ine 474 above * X 35% = Line I minus ine 474 (if negative, enter ni) X 20% = Line 474 minus ine I (if negative, enter ni) R The esser of: capita expenditures (ine J above) and ine R above.* X 35% = Line J minus ine R (if negative, enter ni) X 20% = P Q S T Repayments (amount K above) (If a corporation makes a repayment of any government assistance, non government assistance or contract X 35% = payments that reduced the amount of quaified expenditures X 30% = for investment tax credit purposes, the amount of the X 20% = repayment is eigibe for a credit at the rate that woud have Tota been appicabe to the expenditure.) Tota current year SR & ED Investment Tax Credits (tota of ines P, Q, S, T and U) * For corporations that are not CCPC's throughout the year, enter ni in ines P and S. U

5 Page 5 of 6 Part 8 Cacuation of Tota Current Year Investment Tax Credits (Refer to Part 1 on page 2) Quaified Property Quaified Property Certified Property Subtota Pus: Amount from ine 475 in Part 5 on page Tota (Code 12) x 15% = (Code 14) x 10% = (Code 3A) x 30% = Pus: Partnership aocations (see note 5 on page 1 for detais) V W X Tota current year investment tax credits (tota of ines 473, V, W, X, and 464) Part 9 Cacuation of Refund of Investment Tax Credits for Quaifying Corporations or an Excuded Corporation Compete this box ony if you are a quaifying corporation as determined at ine 467 on page 3 or an excuded corporation as defined in subsection 127.1(2). Credit baance before refund from Part 11 on page Current year investment tax credits (ine 452 above minus amount U from Part 7 on page 4).. Y Z Refundabe credits (esser of Y and Z above) * AA Amount P from Part 7 on page BB Less: Lesser of amounts AA and BB..... CC Net amount (if negative, enter ni) DD Amount DD x 40% EE Add: Amount CC above Refund of investment tax credit (Amount EE pus FF, enter this or a esser amount on ine 146 of your T2 Return and in Part 11 on page 6).. FF GG * If you are an excuded corporation (as defined in subsection 127.1(2)), this amount shoud be mutipied by 40%. Caim this or a esser amount as your Refund of Investment tax credit at ine GG. Part 10 Cacuation of Refund of Investment Tax Credits for CCPCs That Are Not Quaifying Corporations Compete this box ony if you are a CCPC that is not a quaifying corporation as determined at ine 467 on page 3. Credit baance before refund from Part 11 on page HH Amount P from Part 7 on page II Less: Lesser of amounts HH and II above... JJ Net amount (if negative, enter ni) KK Amount S from Part 7 on page LL Lesser of amounts KK and LL x 40% MM Add: Amount JJ above Refund of investment tax credit (Amount MM pus NN, enter this or a esser amount on ine 146 of your T2 return and in Part 11 on page 6) NN OO

6 Page 6 of 6 Name of corporation Account / Business Number Taxation year end Day Month Year Part 11 Cacuation of Current Year Credit and Account Baances Investment tax credit at end of preceding taxation year Deduct: Credit expired after 10 years Investment tax credit at beginning of taxation year Add: Tota current year credit from ine 452 in Part 8 on page Credit transferred upon amagamation or wind-up of subsidiary (Note: Certain restrictions appy to amagamation and wind-up investment tax credits.* ) Subtota Deduct: Credit deducted from Part 1 tax (enter on ine 221 of your T2 return) Credit carried back to the previous year(s) (see Part 12 beow) Credit deemed as a remittance of co-op corporations ony Credit transferred to offset Part VII tax iabiity Subtota Credit baance before refund..... Deduct: Refund of credit caimed (amount GG or OO from page 5) Investment tax credit cosing baance * For detais, see Interpretation Buetin IT-151, Scientific Research and Experimenta Deveopment Expenditures. Part 12 Request for Carryback of Credit Compete this area to request a carry back of investment tax credit earned in the current year. You can appy a credit earned in the taxation year against Part I tax payabe in any of the three preceding taxation years. You can carry back the credit ony if the credit was not deductibe in the year in which the corporation earned it. You can appy refunds arising from the credit carry back adjustments to amounts owing for this or any other taxation year. I hereby request a carry-back of the credit the corporation earned in the current taxation year, to be appied as foows: 3rd preceding taxation year 19 2nd preceding taxation year 19 1st preceding taxation year 19 Tota Refund code enter one of the foowing: 1 Refund overpayment 2 Transfer overpayment to a ater year's instament account 3 Appy to other iabiity (attach instructions) Printed in Canada