Since January of 2013 moving forward the federal government proposed a number of changes to the SR&ED program in an attempt to make the SR&ED program more cost effective and efficient allowing less administrative efforts of businesses and the Canada Revenue Agency.
The following are 5 tips to assist you adapting with new proposed changes :
- The proxy amount (the gross up of wages to cover overhead) dropped from 65% down to 60% effective January 1, 2013. To recover this, employers can add bonuses to their employees’ income.
- Consider your arm-length contractor relationships. Contractor expenses for SR&ED dropped from 100% down to 80%. It is recommended to hire self-employed contractors to work as full-time or part-time employees for recovering the reduced rate.
- Capital equipment will no longer be eligible for SR&ED inclusion after December 31, 2013. It is strongly suggested making sure your SR&ED budgeting addresses capital purchasing for the next year and beyond.
- Supporting evidences and documentation are now highly essential parts of SR&ED claims. Make sure your information available to support SR&ED claims. Request project tracking templates from Kelid™.
- Accelerate completion of your planned SR&ED projects. The tax credit rate for large corporations (non-CCPC) will drop from 20% down to 15% effective January 1, 2014.