On January 1, 2011 new SR&ED filing requirements for partnerships came into effect. The requirements for filing a Partnership Information Return apply to partnerships with fiscal periods ending on or after January 1, 2011. For partnerships with fiscal periods ending on or before December 31, 2010, the prior criteria still applies.
New Partnership Requirements for SR&ED Tax Credits
Under the requirements, a partnership that has a corporation as a member must now file a Partnership Information Return. 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. 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.
Background On Changes To SR&ED Partnership Requirements
In 1989, a regulation was added to the Income Tax Regulations that requires all Canadian partnerships to file an annual information return. Since that time, the CRA has provided, under certain conditions, an exemption from the filing requirement for partnerships with fewer than six partners. However, in light of the changes in the Canadian economy over the last two decades, the CRA has chosen to focus on specific financial thresholds rather than the number of partners in any one partnership. Specifically, a T5013 must be filed if the partnership has an absolute value of revenues plus an absolute value of expenses of more than $2 million, or has more than $5 million in assets.
The requirements for partnerships remain complex – please visit the CRA SR&ED website for additional information or access to the required forms.