Transcript Slide 1

Scientific Research and Experimental
Development (SR&ED) Tax Incentive
Program
What is the SR&ED Program?
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A tax incentive program designed to encourage
R&D in Canada
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Annually, the program provides over $4 billion in
Investment Tax Credits (ITC’s) to over 18,000
claimants.
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How can the Program benefit
my company?
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The program provides financial incentives that
help to:
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Fund the scientific and technological advances that
keep your company competitive
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Better position your company for future SR&ED
projects
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What are the Incentives?
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The incentive is in the form of an Investment Tax
Credit (ITC) which is earned on qualifying
expenditures.
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The ITC earned may be at a rate of 20% or 35%
and may be up to 100% refundable
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Expenditures incurred (including capital) qualify
for immediate write off, or indefinite carry forward
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Pooling concept for both Expenditures and ITC
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Who is Eligible
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Canadian Controlled Private Corporations
(CCPC)
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Corporations, other than, Canadian Controlled
Private Corporations
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Proprietorships, Partnerships and Trusts
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What is SR&ED?
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The work must fall into one of the following
categories:
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Basic Research – Work done to advance scientific
knowledge without a specific practical application in
view
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Applied Research – Word done to advance scientific
knowledge with a specific practical application in view
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Experimental Development – Work done to achieve
technological advancement for the purpose of
creating new, or improving existing, materials,
devices, products or processes
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What is SR&ED?
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Support Work - Work that is commensurate with and in
direct support of the above which includes only these 8
activities:
- engineering
- operations research
- design
- mathematical analysis
- data collection - computer programming
- testing
- psychological research
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What is not SR&ED?
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Market research or sales promotion
Quality control or routine testing of materials and
devices
Research in the social sciences or humanities
Prospecting, exploring or drilling for, or producing
minerals, petroleum or natural gas
Commercial production of a new or improved
material, device or product or the commercial
use of a new or improved process
Style changes
Routine data collection
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What are the Eligibility
Requirements?
The work must be:
1. A systematic investigation or search
2. Carried out by means of experimentation or
analysis
3. In a field of science or technology
4. Undertaken for:
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Achieving technological advancement
or
Advancing scientific knowledge
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What Expenses Qualify?
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Wages
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Materials
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Contracts
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Equipment
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Third Party Payments
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Overheads
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Overhead Claiming Methods
Proxy
• expenses claimed are limited to direct costs, no
overheads
• in lieu of overheads, claim 65% of direct labour
costs
Traditional
• claim direct costs plus incremental overheads
costs
• must track incremental overheads.
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How do I make a Claim?
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A claim is normally filed with the Income Tax
Return for the year.
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Two forms must be completed and filed with the
Tax Return, forms T661 and T2038 (Sch 31).
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Form T661 provides a technical write-up of the
project(s) and costs claimed.
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Form T2038 (Sch 31) calculates the amount of
ITC and any refund claimed.
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What is the Review Process?
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When a claim is received it may be subject to a
two part review:
1) A Science review determines the eligibility of the
activities undertaken.
2) A Financial review ensures the costs for the activities
are correctly allocated.
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What are the Service Standards?
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For CCPC’s our goal is to process the claim
within 120 days of receiving a complete claim
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For non-CCPC’s our goal is to process the
claim within 365 days of receiving a claim
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Partnering - Our Respective Roles
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CRA Responsibility:
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Maximize client participation
Streamline program administration
Maintain the program’s fiscal integrity
Claimant Responsibility:
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Self awareness of the program and its requirements
File the claim on time
Maintain proper books and records
Work with program representatives to maximize
benefits
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Services We Provide
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First time claimant service
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Pre-claim Project Review (PCPR)
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Account Executive Service
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Who can I contact?
Jim Simpson
Financial Review Manager
Edmonton Tax Services
Office
(780) 495-2595
Email: [email protected]
Website:
www.cra-arc.gc.ca/sred
Scientific Research and Experimental
Development (SR&ED) Tax Incentive
Program