Income Tax Regulations

2902 For the purposes of the definition qualified expenditure in subsection 127(9) of the Act, a prescribed expenditure is

• (a) an expenditure of a current nature incurred by a taxpayer in respect of

  • (i) the general administration or management of a business, including

    • (A) administrative salary or wages and related benefits in respect of a person whose duties are not all or substantially all directed to the prosecution of scientific research and experimental development, except to the extent that such expenditure is described in subsection 2900(2) or (3),

    • (B) a legal or accounting fee,

    • (C) an amount described in any of paragraphs 20(1)(c) to (g) of the Act,

    • (D) an entertainment expense,

    • (E) an advertising or selling expense,

    • (F) a conference or convention expense,

    • (G) a due or fee in respect of membership in a scientific or technical society or organization, and

    • (H) a fine or penalty, or

  • (ii) the maintenance and upkeep of premises, facilities or equipment to the extent that such expenditure is not attributable to the prosecution of scientific research;

• (b) an expenditure incurred by a taxpayer in respect of

  • (i) the acquisition of property that is qualified property or qualified resource property within the meaning assigned by subsection 127(9) of the Act, or

  • (ii) the acquisition of property that has been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer;

• (c) an expenditure made to acquire rights in, or arising out of, scientific research and experimental development;

• (d) an expenditure on scientific research and experimental development in respect of which an amount is deductible under section 110.1 or section 118.1 of the Act; or

• (e) an expenditure of a taxpayer, to the extent that the taxpayer has received or is entitled to receive a reimbursement in respect of it from

  • (i) a person resident in Canada, other than

    • (A) Her Majesty in right of Canada or a province,

    • (B) an agent of Her Majesty in right of Canada or a province,

    • (C) a corporation, commission or association that is controlled, directly or indirectly in any manner whatever, by Her Majesty in right of Canada or a province or by an agent of her Majesty in right of Canada or a province, or

    • (D) a municipality in Canada or a municipal or public body performing a function of government in Canada, or

  • (ii) a person not resident in Canada to the extent that the said reimbursement is deductible by the person in computing his taxable income earned in Canada for any taxation year.