According to Gabe Hayos, the Vice President of the Canadian Institute of Chartered Accountants (CICA), the CICA Tax Policy Committee believes that contingency fee arrangements are a vital component of Canada’s SR&ED tax credit system. Consultants play a valuable role in encouraging taxpayers to participate in the program and increase their investments in innovation. Gabe explains that many SMEs that do not have sufficient in-house resources are able to participate in the SR&ED program without upfront cash relay, due to third party contingency-based consulting services. These arrangements also make possible a form of SR&ED financing, which allow SMEs to devote more effort into their innovation and growth.
The Canadian Department of Finance and the CRA are currently consulting Canadians on the use of contingency-related fees for third-party preparers of SR&ED claims. The government is currently investigating whether third-party contingency fees are diminishing the impact of SR&ED tax credits to Canadian businesses.
CICA is preparing a submission to Finance Canada and the CRA, and Gabe welcomes all CICA members to send him feedback.