7 Ways SR&ED Has Changed in 2014
Written by:
Kelsey Allen,Technical Writer
If you are planning on filing a SR&ED claim any time soon, there are a few things you should be aware of. As of January 2014, the Canada Revenue Agency has redacted elements of the Income Tax Act and SR&ED eligibility guidelines in addition to modifying the T661 form for filing claims. It is important that you become knowledgeable about these changes so you can get the most out of the program. Here are the highlights of the modifications:
1. Capital Assets Removed – In previous years, capital assets were partially eligible for SR&ED tax credits. Beginning this January, capital assets are no longer eligible SR&ED expenditures.
2. Reduction In Contractor Expenses – As of January 2013, the SR&ED contract amount for an arms-length contractor that can be claimed is capped at 80%.
3. Reduction In Basic Investment Tax Credit - the basic investment tax credit (ITC) rate has been lowered from 20% to 15%. The enhanced ITC rate, however, remains at 35%.
4. Prescribed Proxy Method Changes – The Prescribed Proxy Method (PPM) is one of two methods acknowledged by the CRA for calculating overhead costs. As of January, the overhead allocation for the PPM has been reduced to 55% from 60% in 2013, and from 65% in 2012.
5. T661 Changes – A new section has been added to this claim form. Titled “Claim Preparer Information,” this section requires that the business disclose the use of any third parties during their claim preparation. Amongst the information collected in this section is the claim preparer’s business number and detailed information regarding the engagement fees. Failure to complete this section accurately may result in a $1,000 penalty.
6. T661 Format – Minor changes have been made to the flow of the document to better reflect the development process of projects and the connectedness of scientific research and experimental development.
7. First Time Claimant Advisory Service (FTCAS) – The CRA has introduced this service to assist first-time participants. The FTCAS provides the claimant with a mandatory meeting wherein CRA staff review the claim and offer relevant advice in order to ensure accuracy and relevance of the claim.
As you can see, the SR&ED claim process is quite complex. But you don’t have to do it alone. Northbridge is a Professional Engineering Firm with over 20 years of experience preparing successful SR&ED claims for businesses across various industries. Give us a call. You deserve more.
