Grants of $50,000 for up to 100% of internal labour costs plus items like patent application costs
The National Research Council has run the Industrial Research Assistance Program (IRAP) for a number of years. Companies which are eligible for SR&ED credits have also received IRAP funding, but IRAP reduces the amount of the SR&ED credits. However, IRAP’s new Small Project Accelerated Review Process may offer companies the ability to get support from both programs. This program can fund up to $50,000 and covers up to 100% of internal labour costs (with 65% overhead added), 75% of external contractor costs and 75% of total costs. The most important change is that the IRAP covers a wide variety of activities beyond those eligible for SR&ED. These would include patent application costs, financial restructuring, competitive market intelligence studies and many other activities. A company can ask IRAP to fund these activities which complement the SR&ED eligible activities, thus still allowing the full financial advantage of each program.
This blog entry provides two quick tips regarding SR&ED claims.
The first one has to do with broadband lines and access equipment.
Remember to include the leasing costs of broadband lines and access equipment in your SR&ED claim. The amount that can be claimed will depend upon whether it is: used All or Substantially All (ASA; > 90%) for SRED; it is Shared Use Equipment (SUE 50% < x < 90%); or neither.
The second tip has to do with Ontario Investment Tax Credits.
Companies in Ontario should remember to also claim the Ontario Investment Tax Credit while they are claiming their federal SR&ED credits. Failure to do so will be expensive, as CRA will automatically assume that the company has applied for this the previous year and will include this in the next year’s federal SR&ED submission as “Government Assistance”, thus reducing the current year’s claim. McLarty & Co’s SR&ED team provides its clients with documentation templates that assist in the claim and audit process. To learn about the latest administrative changes to the SR&ED program please contact Kevin Goheen.
This blog entry is about the Canada Revenue Agency’s new version of the T661 form.
Every SR&ED claim involving a taxpayer’s fiscal year which ends on or after January 1st, 2009 MUST use this revised T661.
There are two significant changes in the new T661.
CRA has demanded substantive changes from taxpayers with regards to “Evidence…(the taxpayers) have to support (their) claim” which they have generated WHILE the SR&ED was in progress, in that it must be declared to belong to one of 12 categories.
These documents must prove:
the technological advancement sought;
the technological obstacles;
the work done;
the start and end dates; and
the employees or contractors involved.
CRA has indicated which types of documents support which types of filing requirements e.g. records of trial runs cannot substantiate technological obstacles.
As a result, contemporaneous creation of correct project documentation is crucial.
Another major change is the elimination of free format technical descriptions. Instead, projects must be described in two or three text boxes, with severe word limits on each section. In our opinion, this word limit does not allow taxpayers to either describe the business context of their SR&ED projects nor describe the systematic aspects of complicated projects involving manufacturing trials or complicated software development cycles.
We anticipate that as a result, many more technical reviews will be performed, as CRA seeks further information about the projects. As a result, the prudent way for taxpayers to proceed is to write their technical descriptions as was done in previous years, then cut, paste and edit the appropriate material into the new T661, but retain their original technical description, as it will be useful information to give to the CRA technical reviewer.
McLarty & Co’s SR&ED team provides its clients with documentation templates that assist in the claim and audit process. To learn about the latest administrative changes to the SR&ED program, please contact Kevin Goheen.
