Calculation of Canadian Manufacturing and Processing Profits Deduction
(2019 and later tax years)
Tax year-end
Corporation's name
Business number
Year
Month
Day
• Small manufacturing corporations that meet requirements 1 through 4 in Part 1 of this schedule should complete Part 1. Corporations that only generate
electrical energy for sale or produce steam for sale must complete Part 10 on page 5. All other corporations should complete Part 2.
• All legislative references are to the Income Tax Act and the Income Tax Regulations.
• Income that is eligible for the small business deduction is not eligible for the manufacturing and processing profits deduction.
• See page 7 for notes and definitions to help you complete this schedule.
Part 1 – Small manufacturing corporations
See
notes 1 to 7
on page 7.
To qualify as a small manufacturer, you have to meet all of the following requirements:
1. your activities during the year were mainly manufacturing or processing in Canada of goods for sale or lease;
2. the following calculation totals $200,000 or less:
your active business income minus active business losses for the year [this includes your share of active
business income and active business loss for the fiscal period of each partnership of which you were a member
Total (line 100 plus line 105) (cannot exceed $200,000 under section 5201 of the regulations)
110
3. you were not engaged at any time during the year in any activities as set out in subsections 5201 (c) to (c.3) of the regulations; and
4. you did not carry on any active business outside Canada at any time during the year.
If you meet requirements 1 through 4, your Canadian manufacturing and processing profits are equal to line 100 above.
Enter this amount on line 200 in Part 9.
If you do not meet requirements 1 through 4, complete Part 2 below.
Partnerships and associated corporations
If it applies, please give the following information on a separate sheet of paper attached to this form:
i) Partnerships – give the name, business number, and total income or loss from each active business carried on by each partnership of which you were
a member at any time in the year.
ii) Associated corporations – give the name, business number, and total income from each active business for the tax year carried on by each Canadian
corporation with which you were associated in the year.
Part 2 – Corporations that do not qualify as small manufacturers
Complete this part using all eligible activities other than generating electrical energy for sale or producing steam for sale.
See
note 6
on page 7.
Canadian manufacturing and processing profits (MP)
ADJUBI
× [
+
]
=
(Part 3, line 130)
MC (Part 5, line 150)
ML (Part 7, line 170)
MP
[
+
]
C (Part 4, line 140)
L (Part 6, line 160)
Enter amount MP on line 200 in Part 9.
Page 1 of 7
T2 SCH 27 E (19)
(Ce formulaire est disponible en français.)
Clear Data
Schedule 27
Code 1901
Protected B
when completed
Calculation of Canadian Manufacturing and Processing Profits Deduction
(2019 and later tax years)
Tax year-end
Corporation's name
Business number
Year
Month
Day
• Small manufacturing corporations that meet requirements 1 through 4 in Part 1 of this schedule should complete Part 1. Corporations that only generate
electrical energy for sale or produce steam for sale must complete Part 10 on page 5. All other corporations should complete Part 2.
• All legislative references are to the Income Tax Act and the Income Tax Regulations.
• Income that is eligible for the small business deduction is not eligible for the manufacturing and processing profits deduction.
• See page 7 for notes and definitions to help you complete this schedule.
Part 1 – Small manufacturing corporations
See
notes 1 to 7
on page 7.
To qualify as a small manufacturer, you have to meet all of the following requirements:
1. your activities during the year were mainly manufacturing or processing in Canada of goods for sale or lease;
2. the following calculation totals $200,000 or less:
your active business income minus active business losses for the year [this includes your share of active
business income and active business loss for the fiscal period of each partnership of which you were a member
Enter this amount in Part 2, and Part 10 if applicable.
Part 7 – Cost of manufacturing and processing labour (ML)
See
notes 3, 5, and 12
on page 7.
Part of salaries and wages (included in amount 6I) that was paid or payable to employees for services directly engaged in qualified
7A
activities of the corporation during the year, or of the partnership during its fiscal period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part of other payments (included in amount 6U) that was paid or payable to non-employees for performing functions that would be
directly related to qualified activities of the corporation during the year or of the partnership during its fiscal period, if they had been
Footnote 1: Applies only if you are a Canadian-controlled private corporation throughout your tax year. If your tax year begins before 2019, use line 427.
If your tax year begins after 2018, use line 428.
Footnote 2: Calculate the amount of foreign business income tax credit without reference to the corporate tax reductions under section 123.4.
Footnote 3: General tax reduction for the year being 13% since January 1, 2012, the equation 1/(0.38 – X) becomes: 1/(0.38 – 0.13) = 1/(0.25) = 4.
Page 4 of 7
Clear Data
Protected B when completed
Corporations that generate electrical energy for sale or produce steam for sale
• A corporation that only generates electrical energy for sale, or produces steam for sale, will need to complete Part 10. If the corporation has other eligible
activities besides generating electrical energy or producing steam, it will need to complete Part 2 and Part 10.
• Complete Part 10 using all manufacturing and processing profits, including generating electrical energy for sale or producing steam for sale.
• Complete Part 2 using all eligible activities other than generating electrical energy for sale or producing steam for sale.
Part 10 – Corporations that generate electrical energy for sale or produce steam for sale
Canadian manufacturing and processing profits (MPA)
ADJUBI
(Part 3,
× [
]
MPA
MCA (Part 11, line 205)
+
MLA (Part 12, line 206)
=
line 130)
[
]
C (Part 4, line 140)
L (Part 6, line 160)
+
Enter amount MPA on line 210 in Part 13.
Part 11 – Cost of all manufacturing and processing capital (MCA)
Include capital used directly in generating electrical energy for sale or producing steam for sale.
Cost of manufacturing and processing capital (MCA)
205
(amount 11B multiplied by 100 divided by 85, cannot be more than amount 11A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter this amount in Part 10.
Part 12 – Cost of all manufacturing and processing labour (MLA)
Include labour used directly in generating electrical energy for sale or producing steam for sale.
See
notes 3, 5, and 12
on page 7.
Part of salaries and wages (included in amount 6I) that was paid or payable to employees for services directly engaged in qualified
12A
activities of the corporation during the year, or of the partnership during its fiscal period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part of other payments (included in amount 6U) that was paid or payable to non-employees for performing functions that would be
directly related to qualified activities of the corporation during the year or of the partnership during its fiscal period, if they had been
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