SRED Tax Credit Changes
Federal SRED Legislative Changes
There have been a number of changes to the SR&ED program as it relates to tax credit amounts. These changes were first introduced in 2012, and have recently come into effect under Bill C-43. The new changes in the program aim to focus the tax credits solely at the project, rather than capital expenditures.
Announced changes include:
- Capital expenses no longer will qualify towards SRED tax credits
- The overhead SRED expenditure rate through the proxy method of claiming will be reduced from 65% to 55% over two years.
- Third-parties and contracts towards SRED expenditures will only be eligible for a total tax credit of 80%.
- The 20% credit for SRED expenditures will be reduced to 15%
There are a number of other changes to the SR&ED program, and changes that will continue to be rolled out in the coming years. It’s important to read and understand the full legislation, or use a SR&ED consultant that will be able to give you the expert guidance needed to fully explore the SR&ED tax incentive program.