Webinar – The SR&ED Program explained: Key changes, challenges and opportunities for your company

The Scientific Research and Experimental Development (SR&ED) tax credit program is an important pillar of innovation in Canada, providing essential financial support to companies conducting research and development. Currently under review, this program could undergo significant changes in the years to come. Nicholas Garcia, Senior Innovation Funding Manager for Leyton, explains these changes and also discusses the challenges and opportunities your company could face.

It highlights several points in particular:

• ▪️The public companies would now be eligible for a 35% refundable credit, with an increased expenditure limit of $4.5M, a modified taxable capital scale of $15M to $75M, and capital expenditures would once again become eligible, after their exclusion in 2014.
• ▪️The new rules proposed in the December budget have yet to be voted on by parliament, and, if adopted, would apply to fiscal years starting after December 16, 2024. Nevertheless, they remain subject to modification or non-implementation depending on the outcome of the elections.
• ▪️The current credit rates vary according to the type of business, and while state-owned companies were previously subject to a 15% non-refundable rate, they would now be eligible for 35% refundable credits, even in the event of losses.
• ▪️The current limit on eligible expenses for 35% credits is $3M, but this depends on the overall taxable capital of the company and its associated entities, and would be increased to $4.5M under the new rules, with modified taxable capital limits of $15M to $75M.
• ▪️Before 2014, capital expenditures were eligible for the SR&ED program, but were excluded from that year onwards. The proposed new rules would make them eligible again, but details of their implementation and the capitalization and recapture rules have yet to be defined.
• ▪️The implementation of the new rules depends heavily on the outcome of the forthcoming federal elections.