Income Tax Act s. 125(7): CCPC Definition

Only a Canadian-controlled private corporation (CCPC) qualifies for the enhanced refundable SR&ED investment tax credit; other corporations earn the credit at the lower, non-refundable rate. The definition in subsection 125(7) excludes any corporation controlled directly or indirectly by non-residents or public corporations, or listed on a designated stock exchange. Ownership changes, financings and stock-exchange listings can all put CCPC status, and with it refundability, at risk.

Text of the Provision

125(7) In this section,

“Canadian-controlled private corporation” means a private corporation that is a Canadian corporation other than

(a) a corporation controlled, directly or indirectly in any manner whatever, by one or more non-resident persons, by one or more public corporations (other than a prescribed venture capital corporation), by one or more corporations described in paragraph (c), or by any combination of them,

(b) a corporation that would, if each share of the capital stock of a corporation that is owned by a non-resident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation described in paragraph (c) were owned by a particular person, be controlled by the particular person,

(c) a corporation a class of the shares of the capital stock of which is listed on a designated stock exchange, or

(d) in applying subsection (1), paragraphs 87(2)(vv) and (ww) (including, for greater certainty, in applying those paragraphs as provided under paragraph 88(1)(e.2)), the definitions “excessive eligible dividend designation”, “general rate income pool” and “low rate income pool” in subsection 89(1) and subsections 89(4) to (6), (8) to (10) and 249(3.1), a corporation that has made an election under subsection 89(11) and that has not revoked the election under subsection 89(12);

Source: Income Tax Act (Canada), subsection 125(7), as consolidated September 19, 2012. Archived excerpt; subsequent amendments are not reflected. For the current text see the Income Tax Act at Justice Laws.