Dear Sir:
Re: Subsection 127(9)
This is in reply to your letter of February 12, 1991 concerning the Province of Ontario Research and Development Super Allowance and the Ontario Current Cost Adjustment. These programs allow corporations subject to Ontario income tax to claim special deductions in computing taxable income. If the corporation qualifies for the Super Allowance deductions are allowed for expenditures on scientific research and experimental development carried out in Ontario. The Current Cost Adjustment is a deduction allowed for new manufacturing and processing capital machinery and equipment purchased after 1988 for use in Ontario.
The Super Allowance, the Current Cost Adjustment and the related provincial tax savings are not considered "government assistance" as that term is defined in paragraph 127(9) of the (Canadian) Income Tax Act (the "Act"). In addition, these amounts are not government assistance for the purposes of paragraph 37(1)(d), 12(1)(x) and subsection 13(7.1) of the Act.
We trust that these comments will be of assistance.
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch