Schedule 49 – Agreement Among Associated Canadian-Controlled Private Corporations to Allocate the Expenditure Limit

If corporation is not registered enter "NR."

The type of corporation code will be “1” (CCPC) if the code selected in the drop-down list of the “Association code” field in the “General information – Related and associated corporations” section of the Related and Associated Corporations Workchart (Jump Code: 9 WORKCHART) is “1,” “2,” “5,” or, in the case of a cooperative or a credit union, “4,” and the check box The corporation is a cooperative or a credit union eligible for the SBD is selected. In the other situations, the type of corporation code is “2.”

Enter in column 4A the taxable income for each corporation for their last taxation year ending in the preceding calendar year. If the taxable income for the preceding taxation year is nil or a loss, enter nil in column 4A.

This column is used to calculate the amount on line 425, Amount A. This amount is taken into account when calculating the business limit of the filing corporation and each associated corporation.

Because associated corporations do not always have the same taxation year end, a separate calculation for each corporation is performed by the program. The result will be updated to the applicable line in column 4B.

According to subsection 127(10.2) ITA, the SR&ED expenditure limit is no longer phased out when:

• the taxable income of the corporation and its associated corporations for the previous taxation year is between $500,000 and $800,000; and
• the taxation year of the corporation ends after March 18, 2019.

In column 4 enter the amount of the expenditure limit allocated to each corporation that has a type of corporation code "1" in column 3. If a CCPC has more than one taxation year ending in a calendar year and is associated in more than one of those years with another CCPC that has a taxation year ending in the same calendar year, the expenditure limit for the second (and subsequent) taxation year(s) will be equal to the expenditure limit allocated for the first taxation year ending in the calendar year, subject to prorating if the taxation year is less than 51 weeks.

When the eligible associated corporations do not have the same taxation year end, the total expenditure limit amount can vary from one corporation to the next and the total expenditure limit will have to be allocated taking this factor into account.

You must allocate the total SR&ED expenditure limit in column 4B among the eligible associated corporations in column 4, Expenditure limit allocated.

Enter the total of all taxable capital employed in Canada of all associated corporations for their last tax year ending in the preceding calendar year (in the section of Schedule 9 WORKCHART that relates to Schedule 23) less $10,000,000. If this amount is negative or nil, enter “0.” If this amount is over $40,000,000, enter “40,000,000.” This amount is taken into account when calculating the business limit of the filing corporation and each associated corporation.

If Schedule 49 is not applicable at the time data is entered in the workchart, the name of the corporation (line [100]) is not updated to the section of Schedule 49. Enter data in one of the entry fields (taxable income, business limit, or expenditure limit); the name of the corporation, the business number, and the taxation year end will be automatically updated, provided the reporting corporation is a CCPC and the corporation is associated (relationship code 1, 2 or 3 of line 400 of Schedule 9). You do not have to use an override to enter this data. Schedule 49 will now become applicable and the data concerning this schedule will be automatically carried over for each associated corporation.