CO-771, Calculation Of The Income Tax Of A Corporation

To determine the SBD rate for which the corporation qualifies, first determine the highest number of hours among the following:

• Number of paid hours of the employees of the corporation in the taxation year entered on line a;

• If the taxation year includes days after March 14 but before June 30, 2020, the number of paid hours indicated on line a1;

• If line a1 has not been completed and the taxation year is shortened, the number of paid hours indicated on line b;

• Number of paid hours of the employees of one of the partnerships of which the corporation is a member, for the fiscal period of the partnership ended in the corporation’s taxation year, entered on line c*;
• Number of paid hours of the employees of the corporation and corporations with which it is associated for the previous taxation year indicated on line 07b.

The SBD rate is then calculated as follows on line 98n in Section 9.2 of the form:

• If the number of hours determined above is higher than or equal to 5,500, the corporation qualifies for its full SBD rate calculated on line 98i for a given taxation year;
• If this number of hours is higher than 5,000 and less than 5,500, the SBD rate is reduced linearly;
• If this number of hours is less than or equal to 5,000, the corporation does not qualify for the SBD.

* Note that the paid hours of the employees of a partnership of which the corporation is a designated member should not be included on that line. In addition, if the highest number of hours is the one on line c, the number of hours indicated on lines a, b and 07b is less than or equal to 5,000 and the corporation is not a corporation in the primary sector or the manufacturing sector, only the partnership income will qualify for the SBD. In order for the calculations to be performed correctly, answer the questions Is the number of paid hours of the employees of the partnership in the fiscal period ending in the taxation year of the corporation greater than 5,000 hours? and Does the partnership carry on its activities in the primary sector or in the manufacturing sector? in Section 3.2.1 of Form CO-771.2.1.2 (Jump Code: 771212).