The tax incentive programs related to Scientific Research and Experimental Development claims have gone through many changes over the years and will likely continue to do so. It’s important for claimants and SR&ED service providers to stay abreast of the current policies and trends.
In March 2012 the federal budget released some significant changes to be implemented to the SR&ED tax incentive program. Certain tax measures from the 2013 budget further extend potential risks for both taxpayers and preparers in relation to filing SR&ED claims. This legislation (ITA 162 (5.1) to (5.3)) provides for penalties for false or incomplete information disclosure, defines the roles and responsibilities of the preparer and claimant, and the measure of culpability under which these penalties apply effective from January 1, 2014 onward. Additionally, claimants have seen an overall increase in the number of and depth of Canada Revenue Agency reviews of SR&ED claims.
CRA – What’s new – SR&ED
CRA – SR&ED Information seminars and webinars
February 19, 2021
The Government of Canada released new incentives for Canadian businesses facing hardship as a result of Covid-19. As a result, the Canada Revenue Agency published guidance on how the Covid19 Wage Subsidies (CEWS/TWS) affect SR&ED claims.
Guidance: How the Canada emergency wage subsidy affects SR&ED claims – Canada.ca
January 21, 2021
In this Canada Revenue Agency release The Scientific Research & Experimental Development (SR&ED) Program is highlighted, outlining how the program helps Canadian businesses grow and succeed. This release covers several SR&ED success stories and provides guidance to services, tools and tax incentives to help other Canadian businesses do the same.
Scientific Research and Experimental Development – Success stories – Canada.ca
January 1, 2021
Alberta Innovation Employment Grant
Effective January 1, 2021 Alberta introduced the Innovation Employment Grant (IEG) which encourages economic growth by supporting small and medium-sized businesses that invest in research and development (R&D) with a grant worth up to 20% of qualifying expenditures.
The Alberta IEG is a refundable tax credit that a qualified corporation may deduct from tax otherwise payable. In general, the IEG is equal to 8 per cent of the lesser of the corporation’s eligible expenditures in respect of SR&ED carried out in Alberta after December 31, 2020, and the corporation’s maximum expenditure limit for the year. The corporation will be eligible to claim an additional amount equal to 12 per cent of any such amount in excess of a base amount (determined by calculating the corporation’s average eligible expenditures for the two preceding taxation years).
Expenditures of a partnership, trust, or individual in respect of SR&ED are not eligible for the IEG.
October 30, 2020
The CRA issued revised forms T1145, T1146, and T661 to remove lines related to capital expenditures, as SR&ED investment tax credits can no longer be earned on expenditures of a capital nature.
March 10, 2020
Quebec Budget Update – Enhancing Research & Development Tax Credits
At present, there are three Research and Development Tax Credits available for qualified expenditures relating to research contracts entered into with a university, a public research centre or a research consortium, for private partnership research projects and for fees and dues paid to a research consortium.
In 2014, Quebec announced amendments to the tax legislation that reduced the level of assistance concerning SR&ED expenditures, including an expenditure exclusion threshold. To further foster collaboration among Quebec’s innovation players, the 2020 Budget proposes to eliminate the eligible expenses thresholds (with certain exclusions) relating to Research and Development tax activities carried out after March 10, 2020.
December 23, 2019
The Canada Revenue Agency acknowledges their commitment and responsibility for the collection and retention of personal information and the use thereof (including data disclosure to and from associated agencies), for the safeguarding of the information, as well as ongoing examinations of privacy risks associated with the Scientific Research and Development Program.
Scientific Research and Experimental Development Program v 3.0 – Privacy impact assessment summary – Canada.ca
October 25, 2019
On October 24, 2019, Alberta announced the elimination of tax credits as a part of the province’s 2019 budget. The Scientific Research and Experimental Development Tax Credit (SR&ED) will be eliminated starting in 2020, with expenses incurred after Dec. 31, 2019 no longer being eligible. (See the January 1, 2021 highlight (above) regarding the subsequently announced Alberta Innovation Employment Grant)
September 23, 2019
The Canada Revenue Agency has introduced a new document “SR&ED Claims made by physicians and Medical Professional Corporations – Information for Claimants” Guide
SR&ED claims made by physicians and Medical Professional Corporations – Information for claimants – Canada.ca
March 19, 2019
The 2019 Federal Budget was tabled on March 19, 2019. Included in the new budget measures was a change to the treatment of taxable income as a factor in determining a CCPC’s annual expenditure limit for the purpose of the enhanced 35% tax credit.
The budget specifically repeals the use of the prior year’s taxable income to reduce the enhance tax credit.
This new measure will apply to tax years ending on or after March 19, 2019.
Previously, the enhance tax credit was gradually reduced where the taxable income in the previous year was between $500,000 and $800,000. Tax years ending prior to March 19, 2019 will still be subject to the rules surrounding the tax credit limits related to prior year taxable income.
April 1, 2018
The Canada Revenue Agency has established new service standards reducing the times for processing scientific research and experimental development claims.
Service Standards for SR&ED Claims
March 16, 2017
The Canada Revenue Agency announced improvements to the pre-claim consultation process, making it easier to request a consultation.
Learn more about the Pre-Claim Consultation Service
Access the CRA’s new simplified Pre-Claim Consultation Online Request Form
August 2, 2016
CRA Release – Pre-Claim Review Launch
This new service responds to stakeholder requests for more predictability and consistency in the SR&ED program. The consultation program replaces the Pre-Claim Project Review Program and the Account Executive services. This Pre-claim Consultation is an on-demand service that allows potential claimants to have a preliminary review of the work they are doing and receive a determination on the eligibility of the SR&ED claim before it is filed. With pre-determined eligibility the claimant is assured that the CRA will accept the claim as filed.
May 30, 2016
CRA Release – Guidelines for Resolving Claimants’ SR&ED Concerns
This release sees the implementation of the guideline document, Form RC532 – Administrative Review Form, and the birth of a National SR&ED Administrative Review Intake Centre.
Form RC532 allows taxpayers to request an administrative review after such time that they have received the initial proposal letter.
Form RC532 – Administrative Review Form
November 16, 2015
CRA Release – New Claimant Tool – Self Assessment and Learning Tool (SALT) designed to help claimants understand eligibility requirements of the SR&ED program is presented as two standalone interactive PDF forms. This downloadable 2-part tool is for claimant use only. Information entered into the tools is not transmitted to the CRA.
June 25, 2015
CRA Release – Public (severed) Version of the Financial Claim Review Manual – Review Procedures for Financial Reviewers.
Financial Claim Review Manual (for Financial Reviewers)
April 29, 2015
CRA Release – The SR&ED Technical review: A Guide for Claimants
SR&ED Technical Review Guide (for Claimants)
April 21, 2015
New Release – Claim Review Manual (CRM) for Research and Technology Advisors (RTA)
Claim Review Manual (for Research and Technology Advisors)
December 18, 2014
The CRA releases new SR&ED policy documents. Visit our “SR&ED Resources” page to learn more. http://vinerrnd.com/sred/sred-resources/
September 19, 2014
CRA releases a new video series directly related to Scientific Research and Experimental Development Tax Incentive Program.
Video 1: Who can claim SR&ED tax incentives?
Video 2: What work qualifies for SR&ED tax incentives?
Video 3: How do you calculate your SR&ED expenditures and investment tax credit?
Video 4: How to apply for SR&ED tax incentives?
February 11, 2014
RCMP charge seven in alleged CRA fraud
October 31, 2013
Changes to the T4088 – Guide to Form T661
October 31, 2013
October 31, 2013
Changes to Form T1145 – Agreement to Allocate Assistance for SR&ED Between Persons Not Dealing at Arm’s Length
October 31, 2013
Changes to Form T1146 – Agreement to Transfer Qualified Expenditures Incurred in Respect of SR&ED Contracts Between Persons Not Dealing at Arm’s Length
September 18, 2013
CRA Draft Examples of Eligibility of Work for SR&ED ITC’s
January 24, 2013
CRA delivers enhanced administration and predictability for SR&ED claimants