Budget 2010 contained no new improvements or new modifications to the SR&ED tax credit program. The Budget contained the information that is printed at the bottom of this entry, which is largely a restatement of previously announced policies.
At his time there is a lot of controversy surrounding the administration of the program. It is our understanding that the former Minister of National Revenue, Jean-Pierre Blackburn, had commissioned a study of the administration of the SR&ED tax credit program before he left that position. It is our understanding that this was initiated at least in part by taxpayer’s complaints about the consistency of decisions made by CRA.
The Office of the Taxpayer Ombudsman has also received a number of complaints about the SR&ED program and opened a systematic review of the program asking for public input. It is now wrapping up its review based on input from taxpayer’s received up to February 19th, 2010.
Recently Keith Ashfield replaced Jean-Pierre Blackburn as Minister of National Revenue. This follows the October 13, 2009 appointment of Mrs. Linda Lizotte-MacPherson as Commissioner and Chief Executive Officer of the Canada Revenue Agency. It is difficult to determine at this time how these changes might affect the administration of the SR&ED tax credit program or the response to the Minister’s and the Office of the Taxpayer’s Ombudsman’s reviews.
The timing of these administrative issues is not particularly good, considering the current fragile state of the economy. We are aware of more than a few companies that are not being reviewed consistently on a year to year basis that are suffering serious financial setbacks as a result.
Scientific Research and Experimental Development: “Changes will be made to improve the program,” declares Minister Blackburn
Hamilton, Ontario, January 13, 2010… Today, while addressing the 13th Annual Tax Practitioner Information Session, the Honourable Jean-Pierre Blackburn, Minister of National Revenue and Minister of State (Agriculture and Agri-Food), announced improvements to the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program.
“Our Government understands the importance of research and innovation to our country’s present and future economic prosperity. By offering generous investment tax credits, we are encouraging Canadian corporations to invest in innovation and to develop new products, services, and technologies,” said Minister Blackburn.
“I am pleased to announce that the Canada Revenue Agency (CRA) will soon be implementing a number of improvements to the program. This July, the CRA will begin to report quarterly, through its Web site, on the time it takes to review an SR&ED claim from start to finish. It will improve on accuracy and on the mutual goal of achieving the timely resolution of a claim,” indicated Minister Blackburn.
“CRA officials will also spend more time better explaining the SR&ED program requirements, process, and decisions to the claimants and their representatives. The emphasis on working with claimants is reflected in the new manual, which will become effective on April 1, 2010.
In addition, I am pleased to announce that when, in the course of their review, CRA officials discover that a company has not claimed work that appears to be eligible for the credit, they will now inform the claimant of their finding so that companies can resubmit their claim if within the reporting deadline. This is also reflected in the SR&ED claim review manual and will be effective as of April 1, 2010.
The issue of consistency in our decisions has often been raised by claimants and tax practitioners. I want to assure you that I have listened carefully to these concerns, and I have asked CRA officials to continue working in this area and to propose additional solutions. I will be soon be announcing further enhancements to the SR&ED program as a result,” added Minister Blackburn.
Budget 2010 – Copy of Information Included in the Budget Papers
Following public consultations on the SR&ED Tax Incentive Program that were undertaken in 2007, Budget 2008 enhanced the support that this program provides for small and medium-sized businesses and extended the tax credit to certain expenditures incurred outside Canada. It also announced new funding for improvements to the administration of the SR&ED program in order to address challenges that were identified by stakeholders in the areas of accessibility, predictability and consistency. The Canada Revenue Agency (CRA) has taken steps to implement these measures. In November 2008, a new self-assessment tool and a new claim form and guide were introduced that are helping businesses determine the eligibility of their projects and making it easier for businesses to benefit from the SR&ED program. The CRA has also increased the number of technical reviewers who determine program eligibility and provide claimant services. The CRA is providing technical reviewers with more training and support, enhancing the quality assurance methodology, and reviewing the dispute resolution procedures.
In addition, as announced in January 2010, the CRA will begin to report quarterly, through its website, on the time it takes to review an SR&ED claim from start to finish. A new manual for CRA reviewers will become effective on April 1, 2010. This manual will emphasize how the CRA will work closely with claimants so that they may better understand the SR&ED program requirements and process.
The CRA continues to work with stakeholders to identify ways to improve the administration of the SR&ED program.
Final Comment
The SR&ED tax credit program is an excellent support for companies that are developing new products and creating new jobs in Canada. Our productivity is lagging our trading partners and at this time, perhaps more than any other time in our history, we need the support provided by the program to continue. I hope that the consistency problems are identified quickly and dealt with in an appropriate manner.