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.

Applicability

Applies to taxation years ending on or after March 19, 2019

Legislation

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