Dear Clients and Friends,

The Fall Economic Statement introduced several updates aimed at enhancing the value of the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program.

The expenditure limit for the 35% enhanced refundable credit available to qualifying Canadian-controlled private corporations (CCPCs) is increasing from $3 million to $4.5 million.

The eligibility for the enhanced refundable credit will also be extended to include eligible Canadian public corporations. Furthermore, Canadian-resident corporations that are predominantly owned by one or more eligible Canadian public corporations will also qualify. Public corporations will have a $4.5 million expenditure limit, which will phase out based on their gross revenue.

These changes related to the enhanced refundable credit will apply to taxation years beginning on or after December 16, 2024.

The Fall Economic Statement also proposes reinstating eligibility for capital expenditures, allowing them to be both deducted from income and eligible for the investment tax credit. The new rule will apply to property acquired on or after December 16, 2024, as well as lease payments due on or after this date.

For the income deduction, eligible expenses will include those incurred to acquire depreciable property that is intended to:

• Be used predominantly in the performance of SR&ED in Canada throughout its expected life; or
• Contribute substantially to the corporation’s value in carrying out SR&ED in Canada.

For CCPCs claiming the enhanced refundable credit, capital expenditures will qualify for a refundability rate of up to 40%, as opposed to the current 100% refundable rate for regular expenditures.

If you have any questions, please do not hesitate to contact us at:

✉️ info@clearhouse.ca

📲 (647) 969 7382

Kindest regards,

Your Clearhouse Team