CO-1136, Calculation of Paid-Up Capital

Elimination of the Tax on Capital for Manufacturing Corporations

A manufacturing corporation whose proportion of activities attributable to manufacturing and processing activities (PAMP), for a given taxation year, is 50% or more may claim a deduction in calculating its paid-up capital to completely eliminate its tax on capital. This deduction is reduced linearly when the PAMP is between 50% and 20%. If the corporation is in this situation, select code 08 in Section 5, and the program will calculate the deduction when you enter the PAMP. The paid-up capital to use when calculating the deduction for a manufacturing corporation must be determined once the other deductions are done. For example, a corporation that would have a paid-up capital of $300,000 and a deduction for a small and medium-sized manufacturing business in remote resource regions of $65,000 should use a paid-up capital of $235,000 when calculating the manufacturing corporation deduction.

Here is the meaning of the formula’s acronyms used to determine the PAMP:

CMPC	is the cost of manufacturing and processing capital
CMPL	is the cost of manufacturing and processing labour
CC	is the cost of capital
CL	is the cost of labour

When the filing corporation meets the requirements allowing it to qualify as a small manufacturer (Schedule 27), the PAMP is deemed to be 100%.

The paid-up capital used to determine the eligibility of a corporation to a tax assistance measure, or to the granted amount, is the amount calculated before this deduction.