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This Act is current to June 20, 2018
See the Tables of Legislative Changes for this Act’s legislative history, including any changes not in force.

Income Tax Act

[RSBC 1996] CHAPTER 215

Part 7 — British Columbia Manufacturing and Processing Tax Credit

Interpretation

104   (1) In this Part:

"amalgamation" has the same meaning as in section 87 (1) of the federal Act;

"BC qualified property" of a qualifying corporation means property, other than excluded property,

(a) that

(i) is a prescribed building for the purposes of the definition of "qualified property" in section 127 (9) of the federal Act, to the extent that the building is acquired by the corporation after March 31, 2000 and before July 31, 2001, or

(ii) is prescribed machinery or equipment for the purposes of the definition of "qualified property" in section 127 (9) of the federal Act and is acquired by the corporation after March 31, 2000 and before July 31, 2001,

(b) that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the corporation, and

(c) that is to be

(i) used by the corporation in British Columbia primarily for the purpose of manufacturing or processing goods for sale or lease, or

(ii) leased by the corporation to a lessee that

(A) is a qualifying corporation and is related to the lessor corporation within the meaning of section 251 of the federal Act, and

(B) can reasonably be expected to use the property in British Columbia primarily for the purpose of manufacturing or processing goods for sale or lease;

"excluded property" means property acquired by a qualifying corporation in a taxation year 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;

"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 any other form of assistance other than as a tax credit under this Part;

"manufacturing or processing" does not include any of the activities listed in subparagraphs (i) to (iv) of section 127 (11) (a) of the federal Act or in subparagraphs (i) to (vi) of section 127 (11) (b) of the federal Act;

"non-government assistance" has the same meaning as in section 127 (9) of the federal Act;

"qualifying corporation" means, for a taxation year, a corporation that has a permanent establishment in British Columbia at any time during the taxation year, but does not include a corporation that

(a) is exempt from tax under section 27 of this Act,

(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.

(2) For the purposes of sections 105 and 106,

(a) BC qualified property is deemed not to have been acquired by a qualifying corporation before that property is considered to have become available for use by the corporation, and

(b) section 13 (27) and (28) of the federal Act applies for the purposes of paragraph (a) of this subsection except that section of the federal Act is to be read without reference to paragraph (c) of section 13 (27) of that Act and paragraph (d) of section 13 (28) of that Act.

Non-refundable tax credit available

105   (1) Subject to section 110, a qualifying corporation may deduct from its tax otherwise payable under this Act for a taxation year ending after March 31, 1997 an amount not exceeding the smaller of

(a) its BC manufacturing and processing tax credit at the end of the taxation year calculated in accordance with subsection (2) of this section, and

(b) the tax otherwise payable by it under this Act for the taxation year.

(2) The BC manufacturing and processing tax credit of a qualifying corporation at the end of a taxation year is the amount, if any, by which the total of

(a) an amount equal to 3% of the total of all amounts each of which is the capital cost to the corporation of a BC qualified property acquired by that corporation in the taxation year,

(b) an amount equal to 3% of the total of all amounts each of which is the capital cost to the corporation of a BC qualified property acquired by the corporation in any of the 10 taxation years immediately preceding, or the 3 years immediately following, the taxation year,

(c) an amount equal to the total of all amounts each of which is an amount required by section 106 [Partnerships] to be added in computing its BC manufacturing and processing tax credit at the end of the taxation year,

(d) an amount equal to the total of all amounts each of which is an amount required by section 106 [Partnerships] to be added in computing its BC manufacturing and processing tax credit at the end of any of the 10 taxation years immediately preceding, or the 3 years immediately following, the taxation year, and

(e) the total of all amounts each of which is 3% of that part of a repayment made by the corporation in the taxation year or in any of the 10 taxation years immediately preceding, or the 3 years immediately following, the taxation year that can reasonably be considered to be a repayment of government assistance or non-government assistance that under subsection (3) (b) of this section reduced the capital cost to the corporation of a qualified property,

exceeds

(f) the total of all amounts each of which is that portion of the amount deducted under subsection (1) from the tax otherwise payable under this Act by the corporation for a preceding taxation year that is in respect of property acquired by the corporation in the taxation year or in the 10 taxation years immediately preceding, or the 2 years immediately following, the taxation year.

(3) For the purposes of this section, the following rules apply:

(a) the capital cost to a corporation of a property is to be computed as if no amount were added to that cost by virtue of section 21 of the federal Act;

(b) the capital cost to a corporation of a property is deemed to be the capital cost to the corporation of the property determined without applying section 13 (7.1) and (7.4) of the federal Act, less the amount of any government assistance, or non-government assistance,

(i) that can reasonably be considered to be in respect of, or for the acquisition of, the property, and

(ii) that, at the time of the filing of the corporation's return of income for the taxation year in which the property was acquired, the corporation has received, is entitled to receive or can reasonably be expected to receive;

(c) if a corporation has acquired property from a person with whom the corporation was not dealing at arm's length at an amount in excess of the fair market value of the property at the time the corporation so acquired it, the corporation is deemed to have acquired it at that fair market value;

(d) if at a particular time a corporation that is a member of a partnership has received, is entitled to receive or can reasonably be expected to receive government assistance or non-government assistance, the amount of assistance that can reasonably be considered to be in respect of, or for the acquisition of, depreciable property of the partnership is deemed to have been received at that time by the partnership as government assistance or non-government assistance in respect of the property.

Partnerships

106   (1) If, in a particular taxation year of a qualifying corporation that is a member of a partnership, an amount would, if the partnership were a qualifying corporation, be determined in respect of the partnership under section 105 (2) (a), (c) or (e) for a taxation year ending in the particular taxation year, the appropriate portion of that amount must be added in computing the corporation's tax credit under this Part at the end of that particular taxation year.

(2) For the purposes of this section, the appropriate portion of the amount referred to in subsection (1) is that portion that may reasonably be considered to be the corporation's share of the tax credit.

(3) If the corporation is a limited partner in the partnership at the end of the partnership's taxation year, the portion that under subsection (2) may reasonably be considered to be the corporation's share of the tax credit is to be determined by applying section 127 (8.1) to (8.5) of the federal Act, except that, in addition to any other modifications required by the circumstances,

(a) section 127 (8.1) and (8.3) (a) is to be read as though it did not include any reference to paragraph (a.1) of the definition of "investment tax credit" in section 127 (9) of the federal Act,

(b) section 127 (8.2) (b) (i) is to be read without reference to clause (B), and

(c) section 127 (8.2) (b) (i) (A) is to be read as though the reference to "a specified percentage" were to "3%".

Renunciation of tax credit

107   (1) On or before the date by which a qualifying corporation is required under section 29 to file its return of income for a taxation year, the corporation may renounce all or part of the tax credit with respect to a qualified property acquired by the corporation in the taxation year.

(2) If a qualifying corporation renounces its entitlement to all or part of a tax credit under subsection (1), the corporation is deemed for all purposes never to have been entitled to receive, or have had a reasonable expectation of receiving, that credit or part of it.

Amalgamations and wind ups

108   (1) If a new corporation is formed by the amalgamation of 2 or more corporations, the new corporation is deemed to be the same corporation as, and a continuation of, each of its predecessor corporations for the purposes of applying this Part to the new corporation, except that this provision does not affect the determination of the tax payable by any predecessor corporation.

(2) Despite subsection (1), if a new corporation is formed by the amalgamation of a particular corporation and one or more of its subsidiary wholly owned corporations within the meaning of section 87 (1.4) of the federal Act, the new corporation is deemed to be the same corporation as, and a continuation of, the particular corporation for the purposes of applying this Part to the particular corporation.

(3) If a subsidiary corporation is wound up, within the meaning of section 88 (1) of the federal Act, the parent corporation is deemed to be the same corporation as, and a continuation of, the subsidiary corporation for the purposes of applying this Part to the parent corporation.

No credit available for year in which section 17 deduction made

109   A corporation that has made a deduction in accordance with section 17 for a taxation year may not add any amount under section 105 (2) (a) to (e) in respect of that taxation year.

Filing requirements

110   (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) In computing its tax credit under section 105 (2), a qualifying corporation is not entitled to include an amount in respect of a BC qualified property unless the corporation files the form containing the information required under subsection (1) of this section in respect of that amount within 18 months after the end of the taxation year in which the corporation acquired the property.

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