With the June deadline fast approaching to claim your 2012 SR&ED expenditures*, we wanted to remind you about the SR&ED program changes that impact your current work. Here’s a quick summary of the updates that took effect on January 1, 2014, so you can keep them in mind as you move forward with your R&D projects this year:
2014 SR&ED Program Updates:
1. All claimants now answer the same three questions in Section B (Project Description), whether your work involves Basic Research, Applied Research, or Experimental Development. The order of the questions has also changed to the following:
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What scientific or technological uncertainties did you attempt to overcome – uncertainties that could not be removed using standard practice?
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What work did you perform in the tax year to overcome the scientific or technological uncertainties described in Line 242? (Summarize the systematic investigation or search)
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What scientific or technological advancements did you achieve as a result of the work described in Line 244?
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2. The proxy overhead rate (one of two ways to allocate overhead costs for your R&D) has been lowered from 60% to 55%.
3. Capital expenditures and rights to use capital property are no longer eligible for claims.
4. The federal SR&ED credit rate for large corporations and foreign-owned companies (non-CCPCs) has dropped from 20% to 15%.
5. If you use a third party to prepare your SR&ED claim, you must complete Part 9. This section collects more details about your SR&ED claim preparer and their fees. Failing to provide this information may result in a penalty.
And don’t forget: document, document, document. Good documentation not only strengthens your claim if it’s reviewed, but can also help you identify eligible expenses you might have missed.
*for companies with a December fiscal year-end
For a detailed explanation and our take on how these changes could affect your 2014 SR&ED claim, check out our blog post: “How Will the Form T661 Changes Affect My SR&ED Claim?”
