|
Most companies want to ensure that they take advantage of all government grants and assistance for which they qualify. Now, more than ever, companies need to become aware of which programs the governments are providing to business.
Generally speaking, we believe most of our clients who claim SR&ED tax credits, are more than likely eligible for other government assistance or programs. Given the wide range of programs now available, we highly recommend that you contact RDP for a quick review of which programs apply to your business.
Many of the programs require an "expression of interest", which companies must respond to within a relatively tight deadline. It is therefore important that, if companies are interested in government assistance, they act quickly to determine which programs may be available to them.
RDP can assist companies to determine
- Which programs are applicable to their business
- The likelihood of receiving funds under a particular program
- Providing assistance to make application for the programs where the fit is warranted.
We invite you to contact Chris Bodnar at RDP to learn more about government programs and to determine which programs best apply to your business. Chris is at
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
or 416-368-9341 ex 247. |
|
The most recent Federal budget brought down in January 2009, had a few incentives that are worth noting.
While there was no substantial additional funding regarding SRED tax credits, there were a few changes worth mentioning.
- Industrial Regional Assistance Program (IRAP)
Just when we thought IRAP was dead, the SME grant program received $200M over two years to expand its activities. In mid-2008, the IRAP coffers were virtually depleted. Companies were frustrated in receiving any certainty or commitment from IRAP, as to funding upon application. It now appears that the IRAP field workers are open for business and actually soliciting for projects in which they can invest.
- SRED Expenditures Limit
This change relates to the fact that the limit of the taxable income phase out range of the expenditure limit, for the enhanced Investment Tax Credit (ITC) rate of 35% on qualified SRED expenditures, increases to between $500,000 and $800,000. This change applies where the previous taxation year ends after 2008.
- Corporate Tax Return E-File
Mandatory electronic filing will be required for income tax returns of corporations that have annual gross revenue in excess of $1M, for taxation years that end after 2009. SRED claims will also have to be made electronically. It is hopeful that this will actually be advantageous, as we should receive immediate feedback that the SRED claim is complete.
- Small Business Limit and Quick Write-offs
The small business limit has increased to $500,000 as of January 1, 2009. For eligible new computers and system software used in Canada, acquired after January 27, 2009 and before February 2011, a CCA rate (i.e. tax depreciation) of 100% applies with no half-year rule.
In the past we cautioned against looking at IRAP, given their lack of funding and the uncertainty that businesses could generate a successful application. However, with this large injection of funding, IRAP appears worth a second look.
If you do have an R&D project which you are anticipating carrying out in the next six months, it may be well looking at IRAP.
If you need any assistance with this, please do not hesitate to contact Christopher Bodnar on
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
or 416-368-9341 ex 247. |
|
|
The Innovation Connection ProgramTM is a program that helps you connect your innovation with your bottom line. Created by RDP Associates Inc., our program is for growth-oriented corporations that are focused on technology improvements and are looking to seize and maximize opportunities that will increase cash and profits.
RDP has developed the The Innovation Connection Program to harnesses your technical expertise and allow RDP to identify SR&ED projects to ensure claims are maximized by including all eligible R&D activities and costs.
One of the key features of the The Innovation Connection Program is when RDP meets with our clients periodically during the year the SR&ED is carried out. This accomplishes a number of objectives:
- We are meeting with clients as SR&ED is conducted and therefore is fresh in everyone's mind.
- We can update deficient documentation of the SR&ED at that time. Lack of documentation is the number one reason SR&ED claims are adjusted downward.
- The SR&ED claim is virtually prepared right at year end. This provides timely filing of the claim.
To date we have found an overwhelming positive response to the Innovation Connection Program.
For more information on RDP Associates Inc. please visit us at www.rdpassociates.com. We are more than happy to assist you in a full claim preparation, or review your own claim prior to submission. To discuss this matter in more detail or any other SR&ED tax credit related matter please contact Chris Bodnar at 416-368-9341 ex 247.
"We all know that chance, fortune, fate or destiny - call it what you will - has played a considerable part in many of the great discoveries in science. We do not know how many, for all scientists who have hit on something new have not disclosed exactly how it happened".
Alexander Flemming From his 1945 Nobel Prize Speech, delivered seventeen years after his accidental discovery of the antibacterial properties of penicillin mould. He shared the prize with Howard Florey and Ernst |
|
Canada Revenue Agency ("CRA") has been looking at ways to improve the administration of the SR&ED tax credit program. As part of this process, changes were made to Form T661 to attempt to simplify the process for filing SR&ED claims. Form T661 is the main SR&ED tax document whereby a taxpayer, in summary format, lists and describes its eligible SR&ED projects and costs. However, the question remains as to whether the revised form will achieve its objective of simplifying reporting requirements for companies making SR&ED claims.
On the positive side, the form has the following benefits:
- Old Form T661 had a number of schedules which were appended to the main form; however, they were often overlooked and not completed by taxpayers. The new form now incorporates all these schedules into the main document.
- Previously, old Form T661 outlined the report requirements to assess the SR&ED criteria against each eligible SR&ED project. What was known as the "project description" was generally suggested by CRA to be approximately 2 or 3 pages in length per project. New Form T661 has stringent word requirements that, in total, require a taxpayer to write no more than approximately 1,400 words for an experimental development project, and approximately 1,050 words for a scientific knowledge project.
- While not currently available, the form has been restructured as a preliminary step to accept E-Filing.
- Legislative references have been removed from the form and the wording appears to be more user-friendly.
While there are definitely benefits to the new form, the question is whether they are material enough to make a noticeable difference to claimants. We think the answer is to be "NO" for the following reasons:
- The rules and administrative positions behind the form have not changed. The new forms do not mean that the taxpayer has to keep less documentation, nor do they in any way absolve the taxpayer of proving its R&D claim.
- While on the face of it, the requirement to reduce the number of words in each project description to approximately 1½ pages appears to be an easing of the burden of filing, it remains to be seen whether claimants will be able to convey the essence of the SR&ED carried out within this restriction. Certainly, any company that previously submitted the top 20 projects (and now have to submit a description for all projects), will suffer under this new requirement.
- There have been subtle changes to the form including the names of individuals who took part in the preparation of the claim, as well as moving the certification signature to the end of the form. We believe CRA is in a crackdown mode on SR&ED claims. CRA wants to be in a position to enforce regulations where they believe a claim is abusive. In this regard, they want the names of the people who are involved in preparing the claim.
We believe that companies need to concentrate less on the actual completion of Form T661 and spend more time properly documenting SR&ED claims. As CRA notes in its guideline, contemporaneous documentation is the best documentation to support a claim. RDP is working with clients on a real-time basis throughout the year to assess this, documentation and, where deficient, works with the client to improve the documentation to CRA standards.
RDP believes that the best defence for a site review by CRA on a SR&ED claim is solid documentation, and not a well-written project description in Form T661.
For more information, or to discuss how this may impact your organization, please contact Christopher Bodnar on 416-368-9341 ex 247 or
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
|
|
Newsletter 
