Ch. 25 SRED Flashcards
What is considered qualifying SR&ED Expenditures?
Anything that adds value that is related to experiment or analysis carried out for science or tech.
For example:
Engineering and design work
Operations research
Mathematical analysis
Computer programming
Data Collection
What is not included:
Market research or promotion
Quality control or routines
Prospecting, exploring, or drilling for producing, minerals, petroleum, or natural gas
Commercial production of a new or improved material
How do you calculate the SR&ED pool?
Beg. Bal
+ SRED expenditures added to the pool
SRED expenditures deducted in the year
SRED ITCs claimed on the previous year
= Ending Balance
What is the ITC for SRED? And what is the limit?
35% on CCPC’s up to a limit of 3 mil, and anything above is 15%
But the 3 mil can be ground down by the following:
3,000,000 x [(40,000,000 - A)/$40,000,000]
A is the lesser of:
i) 40,000,000
ii) amount by which corporation’s taxable capital exceeds $10,000,000
How much can a taxpayer deduct?
Lesser of:
ITCs avaliable
Part 1 Tax PAyable
Can be carried back 3 years or forward 20
When is SRED refundable?
CCPCs can received a refund if it cannot be used to reduce federal tax payable.
ITCs earned at 35% rate - 100% for both CCPCs and non-qualifying
ITCs earned at 15% rate - 40% for CCPCs only, nothing for non-qualitfying
What can you do with SRED?
You can either deduct it in the year as NIFTP or carry it forward as a tax credit