Resolutions 76 to 78
Under the current Scientific Research & Experimental Development (SR&ED) program, qualifying expenditure deductions are fully deductible in the year they are incurred and eligible for an investment tax credit. This credit is larger and refundable for corporations that are Canadian-controlled private corporations (CCPCs) for the first $3 million in eligible expenditures. However, the amount eligible for the enhanced credit is reduced once a CCPC’s taxable income for the previous year reaches $500,000 (before being eliminated at $800,000) and once a CCPC’s taxable capital employed in Canada reaches $10 million (before being eliminated at $50 million).
Budget 2019 proposes to eliminate the taxable income reductions currently set out in 127(10.2) of the ITA. Under the new regime, CCPCs claiming SR&ED credits will only be subject to reductions in their enhanced SR&ED credits based on their taxable capital employed in Canada. The purpose of this amendment is to provide a more predictable reduction in the enhanced SR&ED credit for CCPCs.
This amendment will apply to taxation years ending on or after March 19, 2019.
Applies to taxation years ending on or after March 19, 2019
About W.J. Oliver and Associates
W.J. Oliver and Associates provides Canadian and international income tax recovery services to individuals, businesses, and trusts.