As a follow-up to our first blog on potential changes coming to the SR&ED program, we wanted to add a little more detail as to what the questions the consultation process considered and what became of that process.
As a background, the Department of Finance embarked on a process of consultations with Canadian business, economists, and other stakeholders to find cost-neutral ways to modernize and improve the SR&ED program. Cost-neutral meant that whatever changes were to be made, it wouldn’t change to total outflow of money through the program, up or down.
Some key questions that were to be answered were:
- How can the SR&ED program better support the growth and success of R&D intensive Canadian businesses going forward?
- What improvements could be made to the eligibility criteria?
- How can the SR&ED program ensure the retentions of intellectual property within Canada?
After Phase 1 of the consultations, the Government decided that the cost-neutral stipulation was too restrictive, and with the Budget 2024, an additional $600 million over four years was announced for the program starting in 2025-26, with $150 million per year ongoing.
Phase 2 consultations then began with this enhancement in mind, running from April 25, 2024 to May 27, 2024. The consultation is now closed to input, and although the Department of Finance has yet to release their analysis and proposed changes, some of the enhancements that are being considered are:
- Enhanced eligibility of activities to include some that would have been previously denied as being too close to commercialization, or for the purchase of equipment (something that was previously supported by SR&ED).
- Providing support for a “patent box” model which could provide a lower tax rate on revenues resulting in new Canadian intellectual property.
- Expanding refundable credits to public companies that were only eligible for non-refundable credits in the past.
How can Progression Capital help you maximize your SR&ED claims?
Changes to government programs like SR&ED are constantly happening, whether a result of a new government, or industry consultations like this one. Progression Capital takes an active part in these consultations and is always at the forefront of new announcements and changes. We can help you prepare now to ensure your R&D activity meets the definitions of the program now. By working with you, we can develop a simple process of planning and documenting your work in a way that has been proven acceptable to CRA. Contact us to find out more on how we can help you maximize your claims, allowing you to further invest in and benefit from research and development in your business.
