The following CRA summary from the SR&ED Investment Tax Credit Policy has been updated to reflect the 2014 changes (The original referred to the 20% Federal ITC rate which has been reduced to 15% for 2014 and subsequent years. The enhanced rate continues to be 35%. As well, the details on capital expenditures have been eliminated since they are no longer eligible from 2014 on)
Type of Claimaint:
QualifyingCorporations (b)
other than excluded
corporations (c)
Nature of Expenditure:
CurrentRates on SR&ED Expenditure up to Expenditure Limit:
35%Refund Rate:
100%Rates on SR&ED Expenditures Over ExpenditureLimit (a):
15%Refund Rate:
40%Type of Claimaint:
Excludedcorporations
Nature of Expenditure:
CurrentRates on SR&ED Expenditure up to Expenditure Limit:
35%Refund Rate:
40%Rates on SR&ED Expenditures Over ExpenditureLimit (a):
15%Refund Rate:
40%Type of Claimaint:
Canadian-controlledprivate corporations
(CCPCs)(d) other
than qualifying or
excluded corporations
Nature of Expenditure:
CurrentRates on SR&ED Expenditure up to Expenditure Limit:
35%Refund Rate:
100%Rates on SR&ED Expenditures Over ExpenditureLimit (a):
15% (e)Refund Rate:
0%Type of Claimaint:
All othercorporations not
included above
Nature of Expenditure:
CurrentRates on SR&ED Expenditure up to Expenditure Limit:
15%Refund Rate:
0%Rates on SR&ED Expenditures Over ExpenditureLimit (a):
15%Refund Rate:
0%Type of Claimaint:
Individuals, certaintrusts and unincorporated businesses
Nature of Expenditure:
CurrentRates on SR&ED Expenditure up to Expenditure Limit:
15%Refund Rate:
40%Rates on SR&ED Expenditures Over ExpenditureLimit (a):
15%Refund Rate:
40%Type of Claimaint:
Partner of a partnershipNature of Expenditure:
CurrentRates on SR&ED Expenditure up to Expenditure Limit:
15%Refund Rate:
40% (f)Rates on SR&ED Expenditures Over ExpenditureLimit (a):
15%Refund Rate:
40% (f)Notes
- Expenditure limit is a maximum threshold of $3 million per year.
- Qualifying Corporation as set out in ss. 127.1(2) is generally a CCPC that is within certain income and capital limits.
- Excluded Corporation as set out in ss. 127.1(2) is typically a corporation that is controlled by persons exempt from tax.
- CCPC as set out in ss. 125(7) is a private corporation that is not controlled by either a non-resident nor a public corporation or any combination of the two.
- It is possible that all of a CCPC's (other than a qualifying or excluded corporation) investment tax credits (ITCs) will be earned at the basic rate.
- Only partners that are qualifying corporations, individuals, and certain trusts may be refunded their allocated ITC at the rate of 40%. The ITC allocated to a member of a partnership that is a corporation, other than a qualifying corporation, cannot be refunded. For more information, please refer to theSR&ED Claims for Partnerships Policy.
Provincial Incentives
Most provinces offer incentives for SR&ED that can be claimed in addition to the Federal Incentives. When claiming provincial incentives, some planning may be necessary to maximize the refundable portions available to the corporation.