SR&ED publications - 13 December, 2008

Scientific Research and Experimental Development program is a single largest source of government financial assistance provided to Canadian Controlled Private Corporations.

With so many companies depending on SR&ED funding, Canada Revenue Agency modifies submission requirements starting Jan 1, 2009.

So what major changes should we expect from the newly(CRA) released `simplified`

T661 Form? Practically, a simplified project description requirement would limit on number of words used for a single project submission with the description to be part of the 661 thus allowing electronic submission. The accounting rules on the other hand become stricter with the requirements to specify the contracting details of the transactions for contractors involved in the SR&ED activities. Similar details were required for the amounts acceding 30,000 per contractor in previous years. In addition, the names of the people involved with the projects and the consulting engineers would need to be noted on the 661.

For claims ending Dec 31, 2008 old form of the T661 can still be filed. So called transitional period incorporates all of the technicalities as per the past regulations, including the so called "free from" of the technical submission as well as softer accounting filing requirements.

So what issues remain non-addressed? Being the most generous tax incentive in the world, SR&ED program is yet lacking attractiveness for multi-national corporations. Taking into the account that such companies provide with somewhat powerful capabilities where a larger portion of the overall budget is spent towards R&D as well as advancement in a variety of fields of applied science, such can contribute significantly to the creation of a climate of innovation on the domestic market. Present incentives for such corporations are not fully engaged due to non-profitability of the Canadian divisions as a result of a lower corporate taxation rates provided in the foreign taxation systems.

For more information on new regulations, please visit http://science-experts.ca or contact Dmitry Shaprber, Science Experts Consulting Inc.