Scientific research and experimental development investment tax credit (SR&ED ITC)
For tax years ending after 2013, the SR & ED ITC basic rate will decrease from 20% to 15%. It will be prorated for tax years that straddle December 31, 2013. The enhanced SR&ED ITC rate applicable to the expenditure pool balance that does not exceed the expenditure limit of eligible Canadian-controlled private corporations will remain unchanged at 35%. Capital expenditures made after 2013, including lease payments for property that would have been a capital expenditure if the business has purchased it directly, can no longer be claimed for SR&ED purposes. Those expenditures will be given the treatment otherwise applicable to such expenditures under the Income Tax Act, the rate used to calculate the prescribed proxy amount for overhead expenses is decreased to 60% for the 2013 calendar year, and to 55% after. For qualified expenditures incurred after 2012, the amounts to be included in the qualified expenditure pool of the payer are reduced by 20% of the arm's length contract payment. Qualified expenditures incurred after 2012 for third party payments and agricultural check-offs will also be reduced by 20%. -The above information from www.cra.gc.ca
Author: Ann Guo
