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The Corporation Capital Tax Act
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This version is current as of May 24, 2017.
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C.C.S.M. c. C226

The Corporation Capital Tax Act

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

Definitions

1(1)        In this Act

"amount" means

(a) money expressed in terms of the amount of money, or

(b) rights or things expressed in terms of the value in money of the rights or things; (« montant »)

"amount taxable" means

(a) in the case of a corporation resident in Canada the taxable paid up capital of the corporation, and

(b) in the case of a corporation not resident in Canada the taxable paid up capital of the corporation employed in Canada; (« montant imposable »)

"AOCI" means accumulated other comprehensive income; (« CAERE »)

"business" means an undertaking of any kind whatsoever, and, without restricting the generality of the foregoing, includes a profession, calling, trade, manufacture, or an adventure or concern in the nature of trade; (« entreprise »)

"corporation" means any corporation however or wherever incorporated and, where any corporation or the whole or any part of the property thereof is placed in the hands or under the control of an agent, assignee, trustee, liquidator, receiver, or other official, includes such agent, assignee, trustee, liquidator, receiver, or other official, and includes an insurance corporation, with or without share capital and a Crown corporation with or without share capital, but does not include any other corporation incorporated without share capital; (« corporation »)

"Crown corporation" means a corporation, commission or association in which not less than 90% of the shares or capital is owned by Her Majesty in right of Canada or in right of a province or by a Canadian municipality, and includes a subsidiary wholly owned corporation to such a corporation, commission or association; (« corporation de la Couronne »)

"director" means the Deputy Minister of Finance or any Assistant Deputy Minister of Finance; (« directeur »)

"financial institution" means a bank, credit union, trust corporation or loan corporation; (« institution financière »)

"fiscal year" means the period for which the accounts of the business of a corporation are made up and accepted for the purposes of the Income Tax Act (Canada); (« exercice »)

"insurance corporation" means a corporation with or without share capital that carries on insurance business of any kind or nature whatsoever including

(a) the business of issuing annuities where carried on in conjunction with insurance business, and

(b) the business of issuing contracts all or part of the issuer's reserves for which vary in amount depending upon the fair market value of a specified group of assets where carried on in conjunction with insurance business; (« corporation d'assurance »)

"jurisdiction" means a province or territory of Canada or a state outside Canada having sovereign power; (« ressort »)

"lien note" means a chattel paper that creates a purchase money security interest, as those terms are defined in The Personal Property Security Act; (« billet portant privilège »)

"loan corporation" means a corporation whose principal business is the making of loans; (« corporation de prêts »)

"minister" means the Minister of Finance; (« ministre »)

"property" means property of any kind whatsoever whether real or personal or corporeal or incorporeal and, without restricting the generality of the foregoing, includes a right of any kind whatever, a share or a chose in action, and, unless a contrary intention is evident, money; (« biens »)

"resident in Canada" means resident in Canada within the meaning of the Income Tax Act (Canada); (« résident du Canada »)

"return" means the corporation capital tax return, complete with financial statements as presented to the shareholders of the corporation, copies of all schedules required by and filed with income tax returns under the Income Tax Act (Canada) and all other information to be disclosed in the return; (« déclaration »)

"security interest" means a security interest as defined in The Personal Property Security Act; (« sûreté »)

"share" means a share of capital stock of a corporation; (« action »)

"shareholder" includes a member of a corporation or other person entitled to receive payment of a dividend or to share in a distribution on the winding-up of the corporation; (« actionnaire »)

"subordinated indebtedness" means indebtedness of a financial institution that by its terms will, in the event of the insolvency or winding-up of the institution, be subordinate in right of payment to

(a) all deposit liabilities of the institution, and

(b) all other liabilities of the institution except those that, by their terms, rank equally with or are subordinate to such indebtedness; (« titre secondaire »)

"subsidiary controlled corporation" means a corporation more than 50% of the issued share capital of which, having full voting rights under all circumstances, is owned directly or indirectly by the corporation to which it is subsidiary; (« filiale contrôlée »)

"subsidiary wholly owned corporation" means a corporation where all the issued share capital of which, except directors' qualifying shares, is owned directly or indirectly by the corporation to which it is subsidiary; (« filiale en propriété exclusive »)

"tax" means the tax imposed under this Act; (« impôt »)

"taxation year" means that fiscal year in relation to which the amount of a tax under this Act is being calculated when the expression is used to distinguish it from another fiscal year; (« année d'imposition »)

"trust corporation" means a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee. (« corporation de fiducie »)

Meaning of "associated group for a calendar year"

1(2)        For the purpose of this Act, an associated group for a calendar year includes all the corporations that are associated with each other under section 256 of the Income Tax Act (Canada) at a time that, for each of them, is in a fiscal year that ends in the calendar year. A corporation might belong to more than one associated group for a calendar year.

S.M. 1992, c. 52, s. 2; S.M. 1993, c. 14, s. 76; S.M. 1993, c. 46, s. 2; S.M. 1998, c. 30, s. 2; S.M. 2000, c. 39, s. 2; S.M. 2002, c. 19, s. 2; S.M. 2002, c. 47, s. 22; S.M. 2004, c. 43, s. 2; S.M. 2005, c. 40, s. 2; S.M. 2009, c. 26, s. 3; S.M. 2012, c. 1, s. 2.

Administration and enforcement

1.1         Part I of The Tax Administration and Miscellaneous Taxes Act applies to the administration and enforcement of this Act.

S.M. 2005, c. 40, s. 3.

2 and 3     [Repealed]

S.M. 2002, c. 19, s. 3.

Permanent establishment

4(1)        In this Act "permanent establishment" includes a fixed place of business and, without restricting the generality of the foregoing, includes branches, mines, oil and gas wells, farms, timberlands, factories, workshops, warehouses, offices, and agencies.

Subsidiary's place of business

4(2)        For the purposes of this Act, the fact that a corporation has a subsidiary controlled corporation in a place or a subsidiary controlled corporation engaged in a trade or business in a place shall not of itself be deemed to mean that the first mentioned corporation is operating a permanent establishment in that place.

Place of permanent establishment

4(3)        For the purposes of this Act, and without restricting the generality of subsection (1),

(a) a corporation has a permanent establishment in the place designated in its charter or by-laws as being its head office;

(b) where a corporation carries on business through an employee, or through an agent who has general authority to contract for the corporation or who has a stock of merchandise owned by the corporation from which the agent fills orders, the employee or agent shall be deemed to operate a permanent establishment of the corporation;

(c) where a corporation, otherwise having a permanent establishment in Canada, owns land in a province, the land is a permanent establishment;

(d) the use by a corporation of substantial machinery or equipment in a particular place at any time in a fiscal year of the corporation constitutes a permanent establishment of the corporation in that place for the fiscal year;

(e) an insurance corporation has a permanent establishment in each jurisdiction in which the corporation is registered or licensed to do business;

(f) where a corporation which is not resident in Canada in a fiscal year produced, grew, mined, created, manufactured, fabricated, improved, packed, preserved, or constructed in whole or in part anything in Canada whether or not the corporation exported that thing without selling it prior to exportation, the corporation shall be deemed to maintain a permanent establishment at any place where the corporation did any of those things in the fiscal year; and

(g) where a corporation has no fixed place of business, it has a permanent establishment in the principal place in which the corporation's business is conducted.

S.M. 2007, c. 6, s. 2.

Rules for determining various amounts

5           In determining for the purposes of this Act the amount of a corporation's AOCI, its total assets, its cost of investments or its "any other surplus", the amount includes

(a) the amount by which any asset of the corporation is carried in the books of account of the corporation or on the balance sheet of the corporation in excess of the actual cost thereof; and

(b) the amount by which the value of any asset of the corporation has been written down and deducted from its income or undivided profits where that amount is not deductible, or if deductible has not been deducted in computing its income for the fiscal year or a previous fiscal year, under the Income Tax Act (Canada);

and excludes

(c) any amount by which the value of any asset of the corporation has been written down and deducted from its income or undivided profits where that amount is deductible and has been deducted in computing its income for the fiscal year or a previous fiscal year under the Income Tax Act (Canada) unless all or part of that amount is not permitted by the regulations to be deducted.

S.M. 1993, c. 46, s. 3; S.M. 2009, c. 26, s. 4.

Tax payable

6(1)        Subject to sections 13 and 13.1 (exemptions), a corporation with a permanent establishment in Manitoba — other than a corporation to which subsection (2) or (3) applies — must pay a tax for each fiscal year beginning before January 1, 2011, equal to

(a) if the fiscal year begins before January 2, 2007, the total of

(i) 0.3% of its amount taxable as at the close of the fiscal year, and

(ii) 0.2% of its amount taxable as at the close of the fiscal year in excess of $10,000,000.;

(b) if the fiscal year begins after January 1, 2007, and not after January 1, 2008,

(i) 0.3% of its amount taxable as at the close of the fiscal year, if the amount taxable does not exceed $10,000,000.,

(ii) $30,000. plus 2.5% of its amount taxable as at the close of the fiscal year in excess of $10,000,000., if the amount taxable exceeds $10,000,000. but does not exceed $11,000,000., or

(iii) 0.5% of its amount taxable as at the close of the fiscal year, if the amount taxable exceeds $11,000,000;

(c) if the fiscal year begins after January 1, 2008, and not after January 1, 2009,

(i) 0.2% of its amount taxable as at the close of the fiscal year, if the amount taxable does not exceed $10,000,000.,

(ii) $20,000. plus 2.4% of its amount taxable as at the close of the fiscal year in excess of $10,000,000., if the amount taxable exceeds $10,000,000. but does not exceed $11,000,000., or

(iii) 0.4% of its amount taxable as at the close of the fiscal year, if the amount taxable exceeds $11,000,000.;

(d) if the fiscal year begins after January 1, 2009, and not after January 1, 2010,

(i) 0.1% of its amount taxable as at the close of the fiscal year, if the amount taxable does not exceed $10,000,000.,

(ii) $10,000. plus 2.3% of its amount taxable as at the close of the fiscal year in excess of $10,000,000., if the amount taxable exceeds $10,000,000. but does not exceed $11,000,000., or

(iii) 0.3% of its amount taxable as at the close of the fiscal year, if the amount taxable exceeds $11,000,000.; or

(e) if the fiscal year begins after January 1, 2010,

(i) nil, if the amount taxable is $10,000,000. or less,

(ii) 2.2% of its amount taxable as at the close of the fiscal year in excess of $10,000,000., if the amount taxable exceeds $10,000,000. but does not exceed $11,000,000., or

(iii) 0.2% of its amount taxable as at the close of the fiscal year, if the amount taxable exceeds $11,000,000.

Fiscal year straddling December 31, 2010

6(1.1)      Despite clause (1)(e), if the fiscal year ends after December 31, 2010, the tax payable under that clause is the amount determined by the following formula:

Tax payable = T × A/365

In this formula,

T

is the tax otherwise payable under clause (1)(e);

A

is the number of days in the fiscal year that occur in 2010.

Tax payable by bank or trust or loan corporation

6(2)        A corporation that is a bank, a trust corporation, a loan corporation or a trust and loan corporation must pay a tax for each fiscal year equal to 6% of its amount taxable as at the close of the fiscal year.

Tax payable by Crown corporation

6(3)        A Crown corporation with a permanent establishment in Manitoba must pay a tax for each fiscal year that begins after January 1, 2008, equal to 0.5% of its amount taxable as at the close of the fiscal year.

S.M. 1989-90, c. 91, s. 12; S.M. 2006, c. 24, s. 2; S.M. 2007, c. 6, s. 3; S.M. 2008, c. 3, s. 2; S.M. 2010, c. 29, s. 4; S.M. 2012, c. 1, s. 3; S.M. 2013, c. 55, s. 2; S.M. 2015, c. 40, s. 1.

Apportionment of tax

7(1)        Where a fiscal year of a corporation has less than 364 days, the tax otherwise payable by the corporation under this Act, except for this section, for that fiscal year shall be reduced in accordance with the following formula:

T = P × F/365

In this formula

T

is the tax for the fiscal year payable by the corporation by reason of the reduction allowed under this section;

P

is the tax for the fiscal year otherwise payable by the corporation under this Act except for this section; and

F

is the number of days in the fiscal year of the corporation.

Limitation

7(1.1)      Subsection (1) does not apply to the fiscal year of a corporation to which subsection 6(1.1) or 13.1(2) applies.

Fiscal year end — ceasing to have a permanent establishment

7(2)        A corporation's fiscal year is deemed for the purposes of this Act to end on the day it ceases to have a permanent establishment in Manitoba.

Fiscal year end — sale of assets

7(3)        The minister, or a person designated by the minister for the purpose, may, for the purposes of this Act, deem a corporation's fiscal year to have ended on the day immediately before the day on which the corporation concludes any transaction or series of transactions that results in a sale, transfer or other disposition of more than 50% of its fixed assets and inventories.

S.M. 2000, c. 39, s. 3; S.M. 2010, c. 29, s. 5.

Capital of resident corporations

8(1)        The paid up capital of a corporation that is resident in Canada as at the close of a fiscal year is the aggregate of

(a) its paid up capital stock as at the close of the fiscal year, including

(i) any premiums received on the issue of its shares, and

(ii) for greater certainty, any preferred share liability,

but not including any discount allowed in accordance with the law on the issue of the shares;

(b) the earned surplus, capital surplus and any other surplus of the corporation as at the close of the fiscal year;

(c) all reserves of the corporation as at the close of the fiscal year, whether created from income or otherwise, including, for greater certainty, the corporation's AOCI and any deferred income tax or other deferred tax or royalty as recorded in the books of the corporation as at the close of the fiscal year but not including any reserve the amounts for the creation of which are permitted to be deducted from the income of the corporation under the Income Tax Act (Canada), unless the amount or a portion thereof is not permitted to be deducted by the regulations;

(d) all sums or credits advanced or loaned to the corporation by its shareholders directly or indirectly or by any other corporation and outstanding as at the close of the fiscal year, but not including its current accounts payable;

(e) all indebtedness of the corporation as at the close of the fiscal year, whether assumed or undertaken by it, represented by bonds, bond mortgages, debentures, mortgages, lien notes, and any other securities to which the property of the corporation, or any of it, is subject as at the close of the fiscal year, but not including its current accounts payable; and

(f) for fiscal years ending after April 20, 1994, all other indebtedness of the corporation as at the close of the fiscal year, whether secured or unsecured, including, for greater certainty, bankers' acceptances but not current accounts payable.

Current accounts payable

8(2)        For the purposes of clauses (1)(d), (e) and (f) and paragraph 9(1)(b)(ii)(B), current accounts payable of a corporation as at the close of the fiscal year include:

(a) its employee source deductions;

(b) its current income taxes payable;

(c) its wages and salaries payable;

(d) its cheques issued and outstanding in excess of funds on deposit;

(e) its dividends payable;

(f) its trade accounts payable reported as a current liability, but not including indebtedness to shareholders of the corporation, if

(i) the account is not outstanding for more than 90 days as at the close of the fiscal year, or

(ii) the account is not a portion or a current portion of a long term debt to another corporation; and

(g) its lien notes payable to another corporation, but not including indebtedness to shareholders of the corporation, as at the close of any fiscal year ending after June 30, 1981, if

(i) the corporation is engaged in the business of a retail automobile or truck dealership or a retail farm machinery and equipment dealership, and

(ii) the lien note represents financing by way of a security interest in itemized new or used motor vehicle inventory or on itemized new or used farm machinery and equipment inventory.

8(3)        [Repealed] S.M. 1994, c. 23, s. 2.

Capital of banks

8(4)        Notwithstanding subsections (1) and 10(1), the taxable paid up capital of a bank at the close of a fiscal year is the aggregate of

(a) its paid up capital stock, including

(i) any premiums received on the issue of its shares, and

(ii) for greater certainty, any preferred share liability,

but not including any discount allowed in accordance with the law on the issue of shares;

(b) its contributed surplus;

(c) its retained earnings;

(d) its reserves including, for greater certainty, its AOCI;

(e) any tax paid appropriations included in its "appropriation for contingencies" account; and

(f) its subordinated indebtedness that is evidenced by obligations issued for a term of at least five years.

Capital of trust and loan corporations

8(5)        Notwithstanding subsections (1) and 10(1), the taxable paid up capital of a trust and loan corporation, a trust corporation or a loan corporation at the close of a fiscal year is the aggregate of

(a) its paid up capital stock, including

(i) any premiums received on the issue of its shares, and

(ii) for greater certainty, any preferred share liability,

but not including any discount allowed in accordance with the law on the issue of shares;

(b) its earned surplus, capital surplus and any other surplus;

(c) all its reserves, whether created from income or otherwise, including, for greater certainty, the corporation's AOCI and any deferred income tax or other deferred tax or royalty as recorded in the books of the corporation but not including any reserve the amounts for the creation of which are permitted to be deducted from the income of the corporation under the Income Tax Act (Canada), unless the amount or a portion thereof is not permitted to be deducted by the regulations; and

(d) its subordinated indebtedness that is evidenced by obligations issued for a term of at least five years.

S.M. 1989-90, c. 91, s. 12; S.M. 1994, c. 23, s. 2; S.M. 1998, c. 30, s. 3; S.M. 2001, c. 43, s. 4 and 21; S.M. 2003, c. 4, s. 2; S.M. 2004, c. 43, s. 3; S.M. 2009, c. 26, s. 5; S.M. 2010, c. 29, s. 6.

Capital of non-resident corporations

9(1)        The paid up capital employed in Canada of a corporation that is not resident in Canada as at the close of a fiscal year is the greater of the amount calculated under the following clause (a) or the amount calculated under the following clause (b):

(a) The amount determined for that fiscal year in accordance with the following formula:

P = I x 12.5

In this formula

P

is the paid up capital employed in Canada of the corporation as at the close of the fiscal year if the amount is greater than the amount calculated under clause 9(1)(b); and

I

is the taxable income of the corporation earned in Canada in the fiscal year determined for the purposes of the Income Tax Act (Canada).

(b) The amount by which

(i) the amount of the total assets of the corporation in Canada as at the close of the fiscal year,

exceeds

(ii) for fiscal years ending

(A) before April 21, 1994, the amount of the indebtedness of the corporation relating to its permanent establishments in Canada as at the close of the fiscal year but excluding therefrom, as at the close of the fiscal year, any deferred income tax or other deferred tax or royalty as recorded in the books of the corporation, all amounts that are advanced or loaned to its permanent establishments in Canada by the corporation itself or by its shareholders directly or indirectly or by any other corporation, and all other indebtedness that is represented by bonds, bond mortgages, debentures, mortgages, lien notes, and any other securities to which the property of the corporation in Canada, or any of it, is subject, or

(B) after April 20, 1994, its current accounts payable as at the close of the fiscal year relating to its permanent establishments in Canada plus, in the case of an insurance corporation, its policy reserves as at the close of the fiscal year, to the extent that they are deductible in computing the corporation's income subject to tax under the Income Tax Act (Canada);

and, the greater amount so determined shall be treated as the paid up capital of the corporation employed in Canada as though

(c) the corporation had no permanent establishment outside Canada;

(d) the paid up capital employed in Canada as so determined were the total paid up capital of the corporation; and

(e) the taxable paid up capital employed in Canada were allocated among the provinces and territories of Canada in a manner prescribed by the regulations.

Certain accounts excluded

9(2)        For the purposes of paragraph (1)(b)(ii)(A) the following accounts are to be excluded:

(a) a trade account payable by a corporation and reported as a current liability, other than an indebtedness to shareholders of the corporation, shall not be included as indebtedness of the corporation relating to its permanent establishments in Canada as at the close of a fiscal year if

(i) the account is outstanding for more than 90 days as at the close of the fiscal year, or

(ii) the account is a portion or a current portion of a long term debt to another corporation; and

(b) a lien note payable by a corporation shall not be excluded as indebtedness of the corporation relating to its permanent establishments in Canada as at the close of any fiscal year of the corporation ending after June 30, 1981 if

(i) the corporation is engaged in the business as a retail automobile or truck dealership or as a retail farm machinery and equipment dealer, and

(ii) the lien note represents financing by way of a security interest in itemized new or used motor vehicle inventory or on itemized new or used farm machinery and equipment inventory.

Exclusions from paid up capital

9(3)        The paid up capital employed in Canada of a corporation that is not resident in Canada as at the close of a fiscal year shall not include any capital invested in a ship or aircraft operated by the corporation in Canada in the fiscal year if the corporation is entitled under paragraph 81(1)(c) of the Income Tax Act (Canada), in computing its income for the fiscal year to exclude the income earned in the fiscal year in Canada from the operation of that ship or aircraft.

S.M. 1989-90, c. 91, s. 12; S.M. 1993, c. 14, s. 76; S.M. 1994, c. 23, s. 3; S.M. 1999, c. 3, s. 2.

Deductions from paid up capital

10(1)       For the purpose of computing the taxable paid up capital of a corporation that is resident in Canada in respect of a fiscal year beginning before January 1, 2011, there shall be deducted from the paid up capital of the corporation as at the close of the fiscal year such of the following amounts as are applicable:

(a) an amount for goodwill and other intangible things included as assets to the extent that the goodwill or other intangible things, in the opinion of the minister, have no value, but this deduction applied to no more than the lesser of

(i) 25% of the book value of the goodwill and other intangible things of the corporation as at the close of the fiscal year, or

(ii) an amount calculated in accordance with the following formula:

D = S − (I × R)

In this formula

D

is the amount to be deducted from paid up capital of the corporation as at the close of a fiscal year under this clause if the amount is less than 25% of the book value of the goodwill and other intangible things of the corporation as at the close of the fiscal year;

S

is the paid up capital stock of the corporation as at the close of the fiscal year including any premium received on the issue of shares but not including any discount allowed in accordance with the law on the issue of shares;

I

is the taxable income of the corporation in the fiscal year determined for the purposes of the Income Tax Act (Canada); and

R

is 16.66 or such other factor as may be prescribed in the regulations;

(b) an amount for investment allowance calculated in accordance with the following formula:

D = C / (B − G) × (P − G)

In this formula

D

is the amount for investment allowance to be deducted from the paid up capital of the corporation as at the end of the fiscal year;

B

is the value of the total assets of the corporation as at the close of the fiscal year;

C

is the cost of investments held by the corporation at the end of the fiscal year in shares and bonds of and loans and advances to other corporations, and in bonds, debentures and other securities of any government, municipality or school corporation but not including

(i) cash on deposit with any financial institution that accepts deposits in the normal course of its business,

(ii) amounts due by a corporation with its head office outside Canada to its subsidiary controlled corporation or subsidiary wholly owned corporation taxable under this Act, or

(iii) loans and advances in the nature of certificates of term deposits, bearer deposit notes, bearer discount notes, swap deposits or banker's acceptance notes to any corporation doing the business of a financial institution, unless they were outstanding for more than 90 days as at the close of the fiscal year;

G

is the amount deductible from paid up capital at the end of the fiscal year under clause (1)(a); and

P

is the paid up capital of the corporation as at the end of the fiscal year;

(c) in respect of a fiscal year ending after December 31, l99l, the amount of Canadian exploration and development expenses incurred by the corporation in searching for minerals in Canada and that are deductible under the Income Tax Act (Canada), to the extent that such expenses have not been deducted by the corporation under the Income Tax Act (Canada) for the taxation year or for any prior taxation year, but this provision does not apply to a corporation in respect of a fiscal year ending prior to January 1, 1996, in which the corporation owned more than 50% of an operating mine in Manitoba.

Non-resident corporation

10(2)       The taxable paid up capital employed in Canada as of the end of the fiscal year of a corporation that is not resident in Canada is the paid up capital employed in Canada as at the end of the fiscal year of the corporation less any of the deductions permitted under subsection (1) that may reasonably be considered wholly applicable to its permanent establishments in Canada on the assumption that the only assets of the corporation were assets pertaining exclusively to its permanent establishments in Canada.

Definitions

10(3)       In this section,

"minerals" does not include petroleum, natural gas or related hydrocarbons, bituminous sands, oil sands or oil shale; (« minéraux »)

"other intangible things" means amounts expended on eligible capital expenditures as determined by paragraph 14(5)(b) of the Income Tax Act (Canada) or would have been considered eligible capital expenditures had that paragraph been in force when the expenditures were made. (« autres biens incorporels »)

Certain trade accounts excluded

10(4)        For the purposes of clause (1)(b) and for the calculation made under the formula set out in clause (1)(b) a trade account receivable by the corporation and reported as a current asset of the corporation shall not be considered as an investment as at the close of a fiscal year unless

(a) the account is outstanding for more than 90 days as at the close of the fiscal year; or

(b) the account was a portion or a current portion of a long term debt receivable from another corporation.

Deduction from paid up capital of Crown corporation

10(5)       In computing its taxable paid up capital as at the close of a fiscal year beginning after December 31, 2010, a Crown corporation may deduct, as an investment allowance, the amount calculated in accordance with the following formula:

P × C/B

In this formula,

P

is the paid up capital of the Crown corporation as at the close of the fiscal year;

C

is the cost of investments held by the Crown corporation at the end of the fiscal year in shares and bonds of, and loans and advances to, other corporations and in bonds, debentures and other securities of any government, municipality or school corporation, but not including

(a) cash on deposit with any financial institution that accepts deposits in the normal course of its business,

(b) a loan or advance in the nature of a certificate of term deposit, bearer deposit note, bearer discount note, swap deposit or banker's acceptance note to any corporation doing the business of a financial institution, unless it was outstanding for more than 90 days as at the close of the fiscal year, or

(c) a trade account receivable by the Crown corporation and reported as a current asset of the Crown corporation, unless

(i) the account was outstanding for more than 90 days as at the close of the fiscal year, or

(ii) the account was a portion or a current portion of a long term debt receivable from another corporation;

B

is the value of the total assets of the corporation as at the close of the fiscal year.

S.M. 1992, c. 52, s. 3; S.M. 1996, c. 66, s. 2; S.M. 1998, c. 30, s. 4; S.M. 2012, c. 1, s. 4.

Capital deduction

10.1(1)     In computing its taxable paid up capital for a fiscal year, a corporation may claim a capital deduction equal to

(a) if the corporation is a member of an associated group for the calendar year in which the fiscal year ends, nil or, subject to subsection (5), any greater amount allocated to the corporation for the calendar year under subsection (3) or (4); or

(b) in any other case,

(i) $5,000,000., if the fiscal year begins before January 2, 2007, or

(ii) $10,000,000., if the fiscal year begins after January 1, 2007.

10.1(2)     [Repealed] S.M. 2012, c. 1, s. 5.

Agreement among members of associated group

10.1(3)     A member of an associated group for a calendar year may file with the minister, on behalf of the members of the group and in a form approved by the minister or the director, an agreement that allocates among them for the calendar year an amount not exceeding the applicable amount under clause (1)(b). The agreement must be filed on or before the filing due date for the first return to be filed by any of them under subsection 17(1) for a fiscal year ending in the calendar year.

Minister may allocate capital deduction

10.1(4)     The minister may request a corporation that was a member of an associated group for a calendar year to file an agreement under subsection (3). If the corporation does not file the agreement within 30 days after receiving the request, the minister may allocate an amount not exceeding the applicable amount under clause (1)(b) among the members of the group for that calendar year.

Multiple allocations

10.1(5)     If more than one amount is allocated to a corporation for a calendar year, the amount allocated to the corporation for the year is deemed to be the least of the amounts so allocated.

Application

10.1(6)     This section applies to fiscal years that begin after January 1, 2004.

S.M. 2003, c. 4, s. 3; S.M. 2005, c. 40, s. 4; S.M. 2006, c. 24, s. 3; S.M. 2012, c. 1, s. 5.

11          [Repealed]

S.M. 1992, c. 52, s. 4; S.M. 2005, c. 40, s. 5.

11.1        [Repealed]

S.M. 1993, c. 46, s. 4; S.M. 2005, c. 40, s. 5.

11.2        [Repealed]

S.M. 1997, c. 49, s. 2; S.M. 2002, c. 19, s. 3.

12          [Repealed]

S.M. 1989-90, c. 91, s. 12; S.M. 1991-92, c. 31, s. 2; S.M. 1994, c. 23, s. 4; S.M. 1997, c. 49, s. 3; S.M. 1998, c. 30, s. 5; S.M. 2002, c. 19, s. 3; S.M. 2003, c. 4, s. 4; S.M. 2006, c. 24, s. 4; S.M. 2011, c. 41, s. 2.

Exemption for credit unions, co-operatives and family farm corporations

13(1)       No tax is payable under this Act by credit unions, co-operative corporations or family farm corporations as these expressions are defined in the regulations.

Exemption for corporations exempt from income tax

13(2)       Subject to subsection (3), no tax is payable by a corporation under this Act in respect of a fiscal year in which its total taxable income, determined for the purposes of the Income Tax Act (Canada), is exempt from income tax under subsection 149(1) of that Act.

Crown corporations

13(3)       Subsection (2) does not apply to any Crown corporation which, in the opinion of the minister, is engaged in a commercial operation.

Exemption for small financial institutions

13(4)       For a fiscal year ending after April 12, 2011, no tax is payable under this Act by a bank, loan corporation, trust corporation or trust and loan corporation if, at the close of the fiscal year,

(a) the corporation's taxable paid up capital is less than $4,000,000,000; and

(b) where the corporation is a member of an associated group for the calendar year in which the fiscal year ends, the total of the taxable paid up capital of those members of the group that are banks, loan corporations, trust corporations or trust and loan corporations is less than $4,000,000,000.

S.M. 2008, c. 3, s. 3; S.M. 2011, c. 41, s. 3; S.M. 2012, c. 1, s. 6; S.M. 2013, c. 55, s. 3.

Exemption for qualifying manufacturers

13.1(1)     No tax is payable under subsection 6(1) by a qualifying manufacturer for a fiscal year that begins on or after July 1, 2008.

Fiscal year straddling July 1, 2008

13.1(2)     For the fiscal year of a qualifying manufacturer that begins before July 1, 2008, and ends after that date, the tax payable is the amount determined by the following formula:

Tax payable = T × A/B

In this formula,

T

is the tax otherwise payable under subsection 6(1) for the fiscal year;

A

is the number of days in the fiscal year that occur before July 1, 2008;

B

is

(a) 366, if the fiscal year began before March 1, 2008, or

(b) 365, if the fiscal year began on or after that day.

"Qualifying manufacturer" defined

13.1(3)     For the purpose of this section, a corporation is a qualifying manufacturer for a fiscal year if the total of

(a) its cost of manufacturing and processing capital for the fiscal year; and

(b) its cost of manufacturing and processing labour for the fiscal year;

is more than 50% of the total of

(c) its cost of capital for the fiscal year; and

(d) its cost of labour for the fiscal year.

How to determine costs

13.1(4)     If the corporation is not a member of a partnership, the costs referred to in subsection (3) are to be determined in accordance with section 5202 of the Income Tax Regulations (Canada), with the following changes:

(a) the references to "taxation year" are to be read as "fiscal year";

(b) the references to "Canada" in the following provisions are to be read as "Manitoba":

(i) paragraph (c) of the definition "cost of capital",

(ii) paragraph (d) of the definition "cost of labour",

(iii) paragraphs (a) and (b) of the definition "qualified activities";

(c) the definition "cost of manufacturing and processing capital" is to be read without reference to "100/85 of";

(d) the definition "cost of manufacturing and processing labour" is to be read without reference to "100/75 of";

(e) the definition "qualified activities" is to be read as if the expression "manufacturing or processing" had the same meaning as in subsection 125.1(3) of the Income Tax Act (Canada), and did not include any activities of a corporation that in the fiscal year receives more than 50% of its funding directly or indirectly from the Government of Canada, the Government of Manitoba or a municipality, or from any combination of them.

How to determine costs — member of partnership

13.1(5)     If the corporation is a member of a partnership at any time in the corporation's fiscal year, the costs referred to in subsection (3) are to be determined in accordance with section 5204 of the Income Tax Regulations (Canada), with the following changes to that section and to section 5202 of those regulations as it applies to section 5204:

(a) the references in section 5204 to "taxation year" are to be read as "fiscal year";

(b) the references to "Canada" in the following provisions are to be read as "Manitoba":

(i) paragraph (d) of the definition "cost of capital" in section 5204,

(ii) paragraph (e) of the definition "cost of labour" in section 5204,

(iii) paragraphs (a) and (b) of the definition "qualified activities" in section 5202;

(c) the definition "cost of manufacturing and processing capital" in section 5204 is to be read without reference to "100/85 of";

(d) the definition "cost of manufacturing and processing labour" in section 5204 is to be read without reference to "100/75 of";

(e) the definition "qualified activities" in section 5202 is to be read as if the expression "manufacturing or processing" had the same meaning as in subsection 125.1(3) of the Income Tax Act (Canada), and did not include any activities of a corporation that in the fiscal year receives more than 50% of its funding directly or indirectly from the Government of Canada, the Government of Manitoba or a municipality, or from any combination of them.

S.M. 2008, c. 3, s. 4; S.M. 2009, c. 26, s. 6; S.M. 2010, c. 29, s. 7.

14          [Repealed]

S.M. 1989-90, c. 91, s. 12; S.M. 1991-92, c. 31, s. 3; S.M. 1994, c. 23, s. 5; S.M. 1997, c. 49, s. 4; S.M. 1998, c. 30, s. 6; S.M. 2002, c. 19, s. 3; S.M. 2003, c. 4, s. 5; S.M. 2006, c. 24, s. 5; S.M. 2011, c. 41, s. 4.

Deduction for capital used outside Manitoba

15          There may be deducted from the tax otherwise payable by a corporation for a fiscal year the amount determined by the following formula:

Deduction = T × P/A

In this formula,

T

is the tax otherwise payable for the fiscal year;

P

is the portion of the corporation's amount taxable as at the close of the fiscal year that is used by the corporation in jurisdictions outside Manitoba, determined in accordance with the regulations;

A

is the corporation's amount taxable as at the close of the fiscal year.

S.M. 1989-90, c. 91, s. 12; S.M. 2007, c. 6, s. 4.

No payments less than $1

16           Notwithstanding any other provision of this Act, where the balance of tax as calculated under clause 17(1)(b) is less than $1. no balance of tax is payable under that clause.

S.M. 2006, c. 24, s. 6.

Corporation to file return and pay tax

17(1)       For each fiscal year of a corporation in which it has a permanent establishment in Manitoba, the corporation, on or before the last day of the sixth month following the end of the fiscal year, must

(a) file a return with the minister; and

(b) pay to the minister the tax payable by the corporation for that year, less the total of the instalments paid by it on account of its tax payable for that year.

Quarterly instalments

17(2)       A corporation must pay quarterly instalments on account of its tax payable for a fiscal year if

(a) its estimated tax payable for that year exceeds $5,000. and it was not required to pay instalments for the immediately preceding fiscal year; or

(b) its tax payable for the immediately preceding fiscal year exceeded $5,000.

Due dates and amount of quarterly instalments

17(3)       The quarterly instalments payable under subsection (2) by a corporation for a fiscal year are payable on or before the 15th day of the 3rd, 6th, 9th and 12th months following the end of the immediately preceding fiscal year, and are equal to

(a) if clause (2)(a) applies, 25% of its estimated tax payable for that year; or

(b) if clause (2)(b) applies, 25% of the lesser of

(i) its estimated tax payable for that year, and

(ii) its tax payable for that preceding fiscal year.

Annual instalment

17(4)       If a corporation with tax payable for a fiscal year is not required to pay quarterly instalments for that year, the corporation must pay, as an instalment on account of the tax payable for that year, an amount equal to its tax payable for the immediately preceding fiscal year. The instalment is payable on or before the last day of the third month following the end of the fiscal year.

Transitional

17(5)       When applying subsection (2) to a fiscal year commencing before January 2, 2008, the references in that subsection to "$5,000." shall be read as "$2,400.".

Transitional — qualifying manufacturer's year straddling July 1, 2008

17(6)        If subsection 13.1(2) applies to a corporation for a fiscal year, the following rules apply in determining the amounts payable by instalment for that fiscal year:

(a) the amount of each instalment must be determined without reference to subsection 13.1(2);

(b) in the case of a quarterly instalment,

(i) if the due date is July 15, 2008, the amount of the instalment may be reduced by 1/3,

(ii) if the due date is August 15, 2008, the amount of the instalment may be reduced by 2/3, and

(iii) if the due date is after August 15, 2008, the amount of the instalment is nil;

(c) in the case of an annual instalment, the amount payable is that proportion of the amount otherwise determined that

(i) the number of full and partial months in the fiscal year and before July 1, 2008,

is of

(ii) the number of full and partial months in the fiscal year.

Transitional — year straddling December 31, 2010

17(7)       If subsection 6(1.1) applies to a corporation for a fiscal year, the following rules apply in determining the amounts payable by instalment for that fiscal year:

(a) the amount of each instalment must be determined without reference to subsection 6(1.1);

(b) in the case of a quarterly instalment,

(i) if the due date is January 15, 2011, the amount of the instalment may be reduced by 1/3,

(ii) if the due date is February 15, 2011, the amount of the instalment may be reduced by 2/3, and

(iii) if the due date is after February 15, 2011, the amount of the instalment is nil;

(c) in the case of an annual instalment, the amount payable is that proportion of the amount otherwise determined that

(i) the number of full and partial months in the fiscal year and before January 1, 2011,

is of

(ii) the number of full and partial months in the fiscal year.

S.M. 1989-90, c. 91, s. 12; S.M. 1991-92, c. 31, s. 4; S.M. 1993, c. 46, s. 5; S.M. 1994, c. 23, s. 6; S.M. 1997, c. 49, s. 5; S.M. 2005, c. 40, s. 5; S.M. 2007, c. 6, s. 5; S.M. 2008, c. 3, s. 5.

17.1        [Repealed]

S.M. 1994, c. 23, s. 7; S.M. 1997, c. 49, s. 6; S.M. 2007, c. 6, s. 5.

18 to 20    [Repealed]

S.M. 1991-92, c. 31, s. 5; S.M. 1997, c. 49, s. 7; S.M. 1999, c. 3, s. 3; S.M. 2005, c. 40, s. 5; S.M. 2007, c. 6, s. 6.

Change in fiscal year

21          A corporation shall not change its fiscal year for the purposes of this Act unless prior thereto it has notified the minister of the proposed change and obtained the concurrence of the minister to the proposed change.

22 to 50    [Repealed]

S.M. 1989-90, c. 91, s. 12; S.M. 1991-92, c. 31, s. 6 and 7; S.M. 1991-92, c. 41, s. 5; S.M. 1992, c. 52, s. 5 to 10; S.M. 1993, c. 46, s. 6 to 8; S.M. 1997, c. 49, s. 8; S.M. 1998, c. 30, s. 7 to 11; S.M. 2001, c. 41, s. 2 and 3; S.M. 2002, c. 19, s. 4; S.M. 2003, c. 4, s. 6 to 10; S.M. 2004, c. 43, s. 4 to 7; S.M. 2005, c. 40, s. 5 to 7; S.M. 2006, c. 24, s. 7; S.M. 2007, c. 6, s. 6.

Regulations

51(1)       For the purpose of carrying out the provisions of this Act according to their intent, the Lieutenant Governor in Council may make such regulations as are ancillary thereto and are not inconsistent therewith; and every regulation made under, and in accordance with the authority granted by, this section has the force of law; and, without restricting the generality of the foregoing, the Lieutenant Governor in Council may make regulations,

(a) and (b) [repealed] S.M. 1993, c. 46, s. 9;

(c) prescribing amounts or portions of amounts that are not permitted to be excluded from total assets, other surplus or cost of investments of a corporation under clause 5(c);

(d) defining "credit unions", "co-operative corporations" and "family farm corporations" for the purposes of subsection 13(1);

(e) prescribing a factor for use in the formula set out in clause 10(1)(a);

(f) prescribing rules for determining the value of that portion of the amount taxable of a corporation as at the close of a fiscal year that is used by the corporation in jurisdictions outside Manitoba for the purposes of section 15;

(g) prescribing anything else that by this Act is to be prescribed or is to be determined or regulated by the regulations;

(h) defining, for the purpose of the regulations, words not defined in the Act;

(i) prescribing certain classes of corporations resident in Canada that shall be deemed for the purposes of this Act or for the purposes of any specified provision of this Act to be deemed to be corporations that are not resident in Canada;

(j) prescribing rules governing the manner in which assets and liabilities of and capital used in any partnership or joint venture carried on by a corporation with some other person are to be reflected and accounted for in determining the amount taxable of the corporation;

(k) to (m) [repealed] S.M. 2005, c. 40, s. 7.

51(2)       [Repealed] S.M. 2005, c. 40, s. 7.

Effective date

51(3)       A regulation under this section may be made retroactive to the extent the Lieutenant Governor in Council considers it necessary in order to implement or give effect to

(a) a tax or administrative measure included in a budget presented to the Legislative Assembly; or

(b) an amendment to this Act.

S.M. 1989-90, c. 91, s. 12; S.M. 1993, c. 46, s. 9; S.M. 2003, c. 4, s. 11; S.M. 2005, c. 40, s. 7.

NOTE: This Act was enacted as part of the roll of statutes re-enacted by SM 1988, c. 1, and designated as the Re-enacted Statutes of Manitoba, 1988. Except as otherwise provided in those Acts, they came into force on October 19, 1988 (the day that SM 1998, c. 1 received royal assent).