Canadian Institute of Chartered Accountants submits SR&ED Contingency Report to CRA

Canada’s Institute of Chartered Accounts (CICA) has submitted a report summarizing their views on the impact of contingency fees on the Scientific Research and Experimental Development (SR&ED) program.  CICA has found that contingency-based fee arrangements are a vital component of Canada’s tax incentive system for promoting SR&ED. 

Amongst their key findings were that:

  • As per a poll of Canada’s 7 largest professional services firms, the portion of the SR&ED credits paid to firms’ preparers under contingency-based arrangements is a nominal 2.3% of the SR&ED program’s annual $3.6 billion cost.
  • When compared to hourly-based or flat fees, contingency-based fees were comparable to fixed fee and hourly rate fee engagements of equivalent scope.  Contingency-based fees are estimated to be on average 58% of standard billing rates.
  • Almost half of those who had paid contingency-based fees would have likely not made a SR&ED claim under an alternative fee arrangement.
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