Filing Requirements for SR&ED Partnerships With Corporate Members (2011)
At SREDucation, we’re taking the time to document all of the changes that have occurred to the SR&ED program over the years. In our “From the Archives” series, you’ll be able to see how the program has evolved since its inception in 1986. For a timeline of these events, check out the SR&ED Tax Credit page on Facebook. Stay current with the program by understanding the historical context.
On Jan. 1, 2011, the Canada Revenue Agency (CRA) implemented new guidelines for filing SR&ED claims where partnerships were involved, specifically those that include corporate members.
“Under the new requirements, a partnership that has a corporation as a member must now file a partnership information return,” the CRA stated. “For the purposes of SR&ED, such a partnership must file a completed Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim with this return.”
They continued: “A corporation that is a member of a partnership can no longer file Form T661 for the partnership along with its T2 Corporation Income Tax Return. Investment tax credits allocated to corporations by partnerships must now be supported by a completed Form T5013, Statement of Partnership Income.”
Reasons for Changing the SR&ED Requirements
The CRA also released a guidance document explaining the technical aspects of filing the new partnership information, as well as its rationale for making the changes.
Since 1989, the CRA stated, there was a regulation that all Canadian partnerships must “file an annual information return.” But partnerships with fewer than six members could be exempted under some circumstances; those conditions were not specified in the document.
“Since the Canadian economy and business landscape have evolved over the last 20 years, the CRA has reviewed the conditions for a partnership filing exemption,” the document stated.
“The CRA’s review showed that the amount of both business activity and assets held by a partnership, as well as the complexity of a partnership’s structure, are of more significance than the number of partners. The changes being introduced allow the CRA to focus on the complexity of partnership activities rather than the number of partners.”
This article is based upon a Government of Canada notice issued at the time: Revised SR&ED filing requirements for partnerships with corporations as members.