With a number of changes promised to the SR&ED program over the past several years, 2024 has seen several updates in the form of increased expenditure limits, expanded eligibility, the ability to make amended claims based on new government assistance definitions, and the implementation of a client portal system.
Upcoming SR&ED Reforms
A $1.9 billion investment was proposed to enhance and reform the SR&ED as part of the 2024 Fall Economic Statement released on Monday. The reforms proposed are based on several consultations held to understand the thoughts of key stakeholders in increasing access to the credit.
As part of this, several changes are proposed to be implemented for taxation years beginning on or after December 16, 2024, including:
- Increasing expenditure limits for the 35% refundable credit, going from $3 million to $4.5 million.
- Increasing the taxable capital phase-out thresholds for determining expenditure limits from $10 million to $15 million, and $50 million to $75 million.
- Expanding eligibility for the 35% refundable credit to Canadian public corporations, with the same increased expenditure limit of $4.5 million.
- Restoring the eligibility of capital expenditures for the deduction against income and ITC components of SR&ED.
This funding will support reforms to the SR&ED program over the next six years, with the potential to significantly both existing eligible claimants, as well as public corporations, with major increases to possible claim amounts.
Filing Amended Claims
Following up on proposals made in the 2023 Fall Economic Statement, the Canada Revenue Agency (CRA) announced changes to the definition of government assistance through the 2024 Budget Implementation Act (Bill C-69). Specifically, the bill stated that low-/no-interest loans with reasonable repayment terms delivered through public authority would not be considered government assistance, applied retroactively to loans made starting on January 1, 2020, onwards. This can include funding from the Regional Development Agencies (RDAs), such as FedDev, PacifiCan, and ACOA.
Initially, Bill C-69 did not specify the impact of this change on SR&ED claims from previous tax years. The CRA has since clarified that SR&ED claimants from the affected years will be able to submit amended claims, regardless of whether the SR&ED deadline has passed. While no new expenditures can be claimed, funding that was previously considered government assistance can now be removed from Line 431 of the T661 form, which may impact SR&ED claim amounts.
Eligible businesses interested in how these changes may increase their SR&ED funding should review past claims to determine whether past loans affected returns received since 2020.
Client Portal
A client portal system was launched in October to assist SR&ED claim preparation, serving as an organizational tool, with access to pre-claim consultations and an updated Self-Assessment and Learning Tool.
Learn More
For assistance with assessing eligibility and submitting an amended claim, understanding your expenditure limits, accessing the client portal, and determining your eligibility, contact one of our SR&ED experts.