Pierre Beaudoin, President of Bombardier Inc., delivered a speech to business leaders in Toronto on Wednesday, Nov. 13, as part of the Maclean’s Thought Leadership series. During this speech, he suggested that the taxable income and capital thresholds to qualify for the small business refundable Scientific Research and Experimental Development (SR&ED) tax credit of 35% should be raised to alleviate some of the pressure faced by pioneering SMEs. Beaudoin believes that this would directly benefit the cash- strapped SMEs who have few options for securing the early-stage funding needed to advance their innovative ideas.
The recent Ontario Economic Update included proposed measures intended to promote capital investment including replacing existing R&D tax credits (SR&ED) with an incentive that would reward incremental R&D spending. This new credit would redirect support to incremental R&D expenditure growth, to encourage businesses to increase R&D and expand research operations in Ontario.
Ontario also proposed “pay or play” tax incentives, such as a special corporate tax
that could be eliminated or reduced through investments in new equipment or other eligible investment expenses, and a payroll tax that could be eliminated or reduced by employer investments in employee training or training programs.
The T661 form, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, has been revised to include additional prescribed information for SR&ED claim preparers. If a claim preparer was engaged with the preparation of the SR&ED claim, the information below will need to be disclosed in part 9:
- The name of each claim preparer that has accepted consideration to prepare or assist in the preparation of the SR&ED claim;
- The business number of the claim preparer. For individuals, the Goods and services tax (GST) or Harmonized sales tax (HST) number of the claim preparer must be provided;
- The billing arrangement code for the claim preparer as described in Form T661 Part 9 in the list of Billing arrangement codes;
- The billing rate;
- Any other billing arrangement (if other than those identified under Billing arrangement codes in the T661 Part 9); and
- The total fee paid, payable or expected to pay.
Part 9 must be signed and dated by the authorized signing officer of the corporation, and Part 9 must be completed with Form T661. For claims filed on or after January 1, 2014, a penalty of $1,000 may be assessed for each SR&ED claim that has incomplete, missing, or inaccurate claim preparer(s) information.
Gowling Lafleur Henderson LLP, Ingenuity, and Finalta Capital will be hosting a seminar on SR&ED in Ottawa on October 29, 2013. Topics to be covered will include:
- Upcoming changes to SR&ED
- Commonly missed eligible expenditures
- SR&ED documentation
- CRA assistance programs
Date: October 29, 2013
Time: 7:30 am – 9:00 am ET
Location: Gowling Lafleur Henderson LLP; 160 Elgin St., 26th floor; Ottawa, ON
Carole Chouinard, Partner, Gowling Lafleur Henderson LLP
Maxime-Jean Gérin, President and CEO, Finalta Capital
Elizabeth Lance, CEO, The Ingenuity Group
The CRA has recently released an administrative update on the SR&ED filing requirements for partnerships with corporations as members.
Under policies effective as of January 1, 2011, the Form T661 Scientific Research and Experimental Development Expenditures Claim should be filed at the partnership level along with the Partnership Information Return. The T661 should now be filed no later than 12 months after the earliest tax filing due date out of all the members of the partnership (for the tax period in which the partnership’s fiscal period falls). Each member would then be able to meet the deadline to claim the SR&ED investment tax credit (ITC) allocated to them.
A corporation that is a member of a partnership should no longer file Form T661 for the partnership along with its T2, Corporation Income Tax Return. ITCs allocated to corporations by partnerships must be supported by an information slip T5013, Statement of Partnership Income for the ITCs to be processed by the CRA.
A member of a partnership can still file the Form T661 on behalf of the partnership but the SR&ED claim will not be processed unless a partnership information return, in agreement with the Form T661, has been filed.