Tax wiki
s. 125.2

PART I — Income Tax · DIVISION E — Computation of Tax · SUBDIVISION B — Rules Applicable to Corporations · Additional Tax on Banks and Life Insurers

Definitions

Not yet annotated · Text current to 2026-06-21 · section last amended 2024-06-20

Current text

(1)

The following definitions apply in this section.

adjusted business income, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (revenu rajusté tiré d’une entreprise)

cost of capital, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (coût en capital)

cost of labour, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (coût en main-d’oeuvre)

zero-emission technology manufacturing profits, of a corporation for a taxation year, means the amount determined by the formula

A × B × C

where

is the corporation’s adjusted business income for the taxation year;

is the fraction determined by the formula

D ÷ E

where

is the total of the corporation’s ZETM cost of capital and ZETM cost of labour for the taxation year, and

is the total of the corporation’s cost of capital and cost of labour for the taxation year; and

(a)

if the fraction determined for B is at least 0.9, the fraction determined by the formula

F ÷ G

where

is the amount determined for E, and

is the amount determined for D; and

(b)

1, in any other case. (bénéfices de fabrication de technologies à zéro émission)

ZETM cost of capital, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (coût en capital de FTZE)

ZETM cost of labour, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (coût en main-d’œuvre de FTZE)

Zero-emission technology manufacturing

(2)

There may be deducted from the tax otherwise payable under this Part by a corporation for a taxation year the amount determined by the formula

(A × B) + (C × D)

where

(a)

0.075, if the taxation year begins after 2021 and before 2032,

(b)

0.05625, if the taxation year begins after 2031 and before 2033,

(c)

0.0375, if the taxation year begins after 2032 and before 2034,

(d)

0.01875, if the taxation year begins after 2033 and before 2035, and

(e)

nil, in any other case;

is the least of

(a)

the corporation’s zero-emission technology manufacturing profits for the taxation year,

(b)

the amount of the corporation’s adjusted business income for the taxation year (determined without reference to section 5203 of the Income Tax Regulations) less

(i)

if the corporation was a Canadian-controlled private corporation throughout the taxation year, the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the taxation year, and

(ii)

in any other case, nil, and

(c)

the amount, if any, by which the corporation’s taxable income for the taxation year exceeds the total of

(i)

(ii)

the corporation’s aggregate investment income (as defined in subsection 129(4)) for the taxation year, and

(iii)

the amount determined by multiplying the total of the amounts deducted under subsection 126(2) from its tax for the taxation year otherwise payable under this Part, by the relevant factor for the taxation year;

(a)

0.045, if the taxation year begins after 2021 and before 2032,

(b)

0.03375, if the taxation year begins after 2031 and before 2033,

(c)

0.0225, if the taxation year begins after 2032 and before 2034,

(d)

0.01125, if the taxation year begins after 2033 and before 2035, and

(e)

nil, in any other case; and

(a)

if the corporation was a Canadian-controlled private corporation throughout the taxation year, the lesser of

(i)

the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the taxation year, and

(ii)

the amount determined by the formula

E − F

where

is the corporation’s zero-emission technology manufacturing profits for the taxation year, and

is the amount determined for B, and

(b)

nil, in any other case.

Source: Justice Laws Website. Not an official version.

Historic text

Immediately preceding version, in force from 2022-06-23 to 2024-06-19:

Show the text in force 2022-06-23 to 2024-06-19

Definitions

125.2 (1) The following definitions apply in this section.
adjusted business income
adjusted business income, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (revenu rajusté tiré d’une entreprise)
cost of capital
cost of capital, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (coût en capital)
cost of labour
cost of labour, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (coût en main-d’oeuvre)
zero-emission technology manufacturing profits
zero-emission technology manufacturing profits, of a corporation for a taxation year, means the amount determined by the formula
A × B × C
where
Ais the corporation’s adjusted business income for the taxation year;Bis the fraction determined by the formula
D ÷ E
where
Dis the total of the corporation’s ZETM cost of capital and ZETM cost of labour for the taxation year, andEis the total of the corporation’s cost of capital and cost of labour for the taxation year; and
Cis
- (a) if the fraction determined for B is at least 0.9, the fraction determined by the formula
  F ÷ G
  where
  Fis the amount determined for E, andGis the amount determined for D; and
- (b) 1, in any other case. (bénéfices de fabrication de technologies à zéro émission)
ZETM cost of capital
ZETM cost of capital, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (coût en capital de FTZE)
ZETM cost of labour
ZETM cost of labour, of a corporation for a taxation year, has the same meaning as in Part LII of the Income Tax Regulations. (coût en main-d’œuvre de FTZE)
Zero-emission technology manufacturing
(2) There may be deducted from the tax otherwise payable under this Part by a corporation for a taxation year the amount determined by the formula
(A × B) + (C × D)
where
Ais
- (a) 0.075, if the taxation year begins after 2021 and before 2029,
- (b) 0.05625, if the taxation year begins after 2028 and before 2030,
- (c) 0.0375, if the taxation year begins after 2029 and before 2031,
- (d) 0.01875, if the taxation year begins after 2030 and before 2032, and
- (e) nil, in any other case;
Bis the least of
- (a) the corporation’s zero-emission technology manufacturing profits for the taxation year,
- (b) the amount of the corporation’s adjusted business income for the taxation year (determined without reference to section 5203 of the Income Tax Regulations) less
  - (i) if the corporation was a Canadian-controlled private corporation throughout the taxation year, the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the taxation year, and
  - (ii) in any other case, nil, and
- (c) the amount, if any, by which the corporation’s taxable income for the taxation year exceeds the total of
  - (i) if the corporation was a Canadian-controlled private corporation throughout the taxation year, the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the taxation year,
  - (ii) the corporation’s aggregate investment income (as defined in subsection 129(4)) for the taxation year, and
  - (iii) the amount determined by multiplying the total of the amounts deducted under subsection 126(2) from its tax for the taxation year otherwise payable under this Part, by the relevant factor for the taxation year;
Cis
- (a) 0.045, if the taxation year begins after 2021 and before 2029,
- (b) 0.03375, if the taxation year begins after 2028 and before 2030,
- (c) 0.0225, if the taxation year begins after 2029 and before 2031,
- (d) 0.01125, if the taxation year begins after 2030 and before 2032, and
- (e) nil, in any other case; and
Dis
- (a) if the corporation was a Canadian-controlled private corporation throughout the taxation year, the lesser of
  - (i) the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the taxation year, and
  - (ii) the amount determined by the formula
    E − F
    where
    Eis the corporation’s zero-emission technology manufacturing profits for the taxation year, andFis the amount determined for B, and
- (b) nil, in any other case.

[NOTE: Application provisions are not included in the consolidated text
see relevant amending Acts and regulations.]
R.S., 1985, c. 1 (5th Supp.), s. 125.2
1994, c. 7, Sch. II, s. 102, Sch. VIII, s. 65, c. 21, s. 58
2013, c. 34, s. 265
2022, c. 10, s. 12

This version on Justice Laws

Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 125.2 links to the one before it.

Enacting and amending legislation

R.S., 1985, c. 1 (5th Supp.), s. 125.2; 1994, c. 7, Sch. II, s. 102, Sch. VIII, s. 65, c. 21, s. 58; 2013, c. 34, s. 265
2022, c. 10, s. 12
2024, c. 15, s. 33

Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.

Cross-references

This section refers to

s. 125 s. 126 s. 129

References are generated from the statutory text and list other sections of the Act only.

Citation

Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 125.2.