Principal Issues: Can an expenditure be taken into consideration for multiple purposes in computing the Ontario Apprenticeship Training Tax Credit, any of the Ontario research and development tax credits and the federal investment tax credit?
Position: It is a question of fact whether an expenditure qualifies for a particular credit. However, where an expenditure qualifies for the ATTC, any of the Ontario research and development credits and the federal ITC, the ATTC credit will reduce the expenditure base for an applicable Ontario research and development tax credit and the federal investment tax credits. However, the ATTC expenditure base should not be reduced by any federal ITC or any Ontario research and development tax credits.
Reasons: Under subsection 127(7) of the ITA, all Ontario tax credits are assistance. For the purposes of claiming the Ontario R&D credits and the ATTC, the relevant section of the XXXXXXXXXX TA deem federal ITCs not to be assistance and they also deem other Ontario credits not to be assistance. In calculating the expenditure base for the ATTC, subsection XXXXXXXXXX 89(19) of the TA specifically exclude from the definition of government assistance any tax credit under section 127 of the ITA as well as specific Ontario R&D credits.
August 25, 2009
CTAO Coordination Team Income Tax Rulings Directorate
Compliance Programs Branch Ontario Corporate Tax Division
Robert Dubis
905-721-5191
Attention: Jack Cao
2009-033375Ontario Apprenticeship Training Tax Credit
This is in reply to your e-mail dated March 19, 2009, wherein the Compliance Programs Branch requested clarification of the Ontario policy as it pertains to assessing claims for expenditures which qualify for both the Ontario Apprenticeship Tax Credit ("ATTC"), any Ontario research and development tax credits ("Ontario R&D credits") and Federal investment tax credits("ITC"). Ontario R&D credits include the Ontario Innovation Tax Credit, the Ontario Business Research Institute Tax Credit and the Ontario Research and Development Tax Credit. Specifically, you requested our views on the implications that Income Tax Ruling Document 2008-0285401C6 has for the purposes of assessing claims for the ATTC under XXXXXXXXXX section 89 of the Taxation Act, 2007(Ontario) ("TA").
IT Rulings document 2008-0285401C6 clarifies that an expenditure which qualifies both as a scientific research and experimental development expenditure under section 37 of the Income Tax Act ("ITA") and an apprenticeship expenditure under subsection 127(9) of the ITA may be taken into consideration twice for the purposes of computing investment tax credits at the end of a taxation year. Therefore it is possible, that two investment tax credits may be earned on the same salary or wages.
Based on our review, the statutory framework of XXXXXXXXXX TA as they pertain to the ATTC is such that an expenditure is not precluded from being used in the computation of multiple tax credits. Whether an expenditure qualifies for a particular tax credit is a question of fact.
For the purposes of calculating the Ontario R&D credits, XXXXXXXXXX the TA adopt the ITA definition of "government assistance". The ATTC is considered government assistance under the ITA. The XXXXXXXXXX TA legislation for each Ontario R&D credit deems specific credits not to be assistance for the purpose of that particular Ontario R&D credit. However, the ATTC is not one of the "deemed" exceptions. Therefore, although an expenditure may qualify for the ATTC, the Ontario R&D credits and the federal ITC, the ATTC will reduce the expenditure base for the relevant Ontario R&D credit or federal ITC. However, the expenditure base for purposes of calculating the ATTC is not reduced by any Ontario R&D credits or federal ITC earned in respect of those expenditures.
We trust these comments provide assistance to you.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
For Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch