Recently we’ve had a few companies unaware of an important rule change in 2019 that pertains to SR&ED. Before 2019 companies over $800k in taxable income would have their federal SR&ED credit rate reduced to 15% non-refundable. The $800k taxable income limit was lifted, meaning CCPC’s are eligible for a federal 35% refundable tax credit regardless of taxable income for up to $3 million in qualifying SR&ED spend, provided Taxable Capital remains below $10 million.
As taxable capital increases above $10 million the amount eligible for the federal 35% tax credit is reduced. This greatly benefits Canadian companies who may have stopped claiming SR&ED due to the previous taxable income rule.
At the provincial level, it varies between provinces as to whether they follow the Federal rule change. For information about R&D tax credits at the provincial level, please contact us.
If you have any questions please feel free to reach out.