The 2012 federal budget proposed several changes to the SR&ED program, some of which will come into effect in 2013. Ryan Mackiewich from MNP has some year-end tips to plan for SR&ED in the upcoming year.
- Pay wages for work performed instead of bonuses. Wages generate proxy, whereas year-end profit bonuses generally do not qualify for SR&ED.
- Ensure 2012 wages are paid before the end of the year. The proxy amount drops from 65% to 60% on January 1, 2013.
- Consider front-loading contractor workloads to be completed before December 31, 2012, as contractor inclusion for SR&ED drops from 100% to 80% on January 1, 2013.
- Plan for capital purchases, because they will no longer be eligible for SR&ED in 2013.
- Ensure complete documentation of all SR&ED activities.
- Manage taxable income to maximize refundable SR&ED tax credits.
- Accelerate planned projects, because the tax credit rate for large corporations, public corporations, and foreign-owned corporations drops from 20% to 15%, effective January 1, 2014.
