At RDP Associates, we’re committed to staying ahead of regulatory changes that impact SR&ED tax credits and government funding. A recent legislative update and a subsequent clarification from the Canada Revenue Agency (CRA) could offer significant benefits to your business. Here’s everything you need to know about the Bill C-69 update, its impact on concessional loans, and how you can take advantage of these changes in your SR&ED claims.
Key Update: Changes to the Definition of Government Assistance
On June 20, 2024, Bill C-69 was enacted, bringing an important shift in how government loans are treated for SR&ED claims. Previously, non-interest-bearing government loans—such as those from FedDev, ACOA, and Western Diversification—were considered government assistance and required companies to reduce their SR&ED expenditures accordingly.
However, Bill C-69 introduced a key change: bona fide concessional loans (loans with reasonable repayment terms) made after January 1, 2020, by public authorities are now excluded from the definition of government assistance. This means businesses are no longer required to net these loans against their SR&ED expenditures, which can result in a more accurate representation of project costs eligible for tax credits.
CRA Clarification – November 13, 2024
While Bill C-69 introduced the change, it didn’t initially clarify whether businesses could amend their SR&ED claims from previous tax years to reflect the new treatment of concessional loans. On November 13, 2024, the CRA confirmed that businesses impacted by this change can amend their SR&ED claims for affected tax years—even if the SR&ED reporting deadline has passed, as long as the tax year is not statute-barred.
If your business received concessional loans after 2019 and deducted these amounts from your SR&ED costs in previous years, you may now be eligible to amend your claim. By removing these loans from your SR&ED expenditures, you could potentially increase your Investment Tax Credits (ITCs) and recover more from past tax filings.
Why This Change is Beneficial for Your Business
This update is a welcome change for businesses that previously had to reduce their SR&ED claims due to government loans. The new law allows businesses to keep the full amount of their SR&ED expenditures eligible for tax credits, which could significantly enhance your funding. It’s a valuable opportunity to maximize your tax credits and potentially recover additional funds from past tax returns.
How RDP Associates Can Help
At RDP Associates, we specialize in helping businesses navigate the complexities of SR&ED tax credits and government grants. With these recent changes to the definition of government assistance, it’s crucial to ensure your SR&ED claims are accurate and optimized. Our team can assist you with:
- Amending your SR&ED claims: If your business received concessional loans after 2019 and netted those amounts against your SR&ED costs, we can help amend your claim to reflect the new treatment of these loans, potentially increasing your ITC amount.
- Maximizing funding: We ensure that your claims are fully optimized to secure the maximum available funding, giving you the best opportunity to recover additional taxes or offset future liabilities.
Get in Touch
If you’re unsure how these updates might affect your SR&ED claims or need assistance with the amendment process, don’t hesitate to reach out to RDP Associates. Our team of experts is here to guide you through the steps and help ensure your claims are fully optimized to secure the maximum available funding.
Click here to learn more about our SR&ED services.