Attention: Policies May Have Been Updated
*** Some of the policies referenced were updated 2021-08-13. We are working to update this article and others. ***
This post outlines SR&ED program updates from April-June 2020, including administrative, policy, tax law, and court cases. COVID-19 dominated the entire country for the quarter. We have identified some key trends to watch in the SR&ED environment.
The COVID-19 pandemic has impacted the entire world. On March 17, 2020 the province of Ontario – which houses the Tax Court of Canada along with several large Canada Revenue Agency tax offices – declared a state of emergency and tens of thousands of employees were sent home, many without a way to continue working. As a result, many of our articles for this quarter focused on the impacts on Canada and the SR&ED program. The government of Canada stopped processing claims for months, emergency funding became available for some corporations, and some filing deadlines (not all) were extended. On June 25, 2020, the CRA released a statement that the reporting deadline for SR&ED did not change and corporations still have 18 months after their tax year-end to file their SR&ED claim. The second quarter of 2020 could also be known as “the Quarter everything stopped while we figured out how to work remotely”.
SREDucation spent the April-June spring months discussing the effects of COVID-19 on SR&ED, drilling down into the forms to explain the various key lines in our blog posts, in the interest of further de-demystifying the application process for researchers and claimants.
- First, the Canadian Advanced Technology Alliance (CATA) asked the Canadian government for emergency relief for tech firms in Breaking News: CATA asks CRA for Emergency Aid for Tech Firms.
- Next, we looked at how SR&ED payments were being affected by the shutdown caused by COVID-19 in SR&ED Payments and COVID-19.
- Additionally, we broke down the CEWS program in CEWS and SR&ED – What you need to know.
- Next, we looked at proposed legislation regarding time limits due to COVID-19 in Draft Legislative Proposals Regarding Time Limits Due to COVID-19.
- We then had a guest Op-ED from the CATA Alliance in Canadian Government Hesitation To Significantly Support The Technology Sector Will Cost Us All.
- Additionally, we looked at how audits and appeals have affected non-SR&ED filings (as the impacts seen elsewhere could later affect (SR&ED) in Collections, audits, objections and appeals: CRA and COVID-19.
- Next, we looked at the proposed program CATA has put forth in CATA Proposes Resilience Rebound Emergency (RRE) Program.
- Finally, we were able to announce that the CRA began processing SR&ED claims once again in Breaking News: CRA Processing SR&ED Claims.
Following along the success of our Q1 blogs, we continued to focus on questions that our clients frequently ask during the course of the SR&ED claim process. These delve into topics of interest and serve to demystify the SR&ED application process for prospective claimants. We took a deep dive into the form T661 to provide some additional guidance and insight for future claimants.
- To begin with, we explain the importance of arm’s length contracts and who can claim the SR&ED work in Discussing “On Behalf Of” in SR&ED Contracts.
- Additionally, we discussed the importance of supporting evidence in Line 270-282: Prove it! Supporting Evidence for SR&ED.
- Next, we discussed claims with multiple projects in Filing the T661 – Describing 20 projects vs. describing all.
- We also discussed a topic that can often be confusing, third-party and contract payments, in SR&ED Third-Party Payments vs. Contracts (T661 Line 340, 345 and 370).
- Next, we looked at the importance of scientific or technological advancement in your claim in Getting Ahead: Scientific or Technological Advancement (Line 246).
- We then looked at the importance of documentation and evidence in your claim in Line 270-282: Prove it! Supporting Evidence for SR&ED.
- Next, we discussed why listing your SR&ED claim preparer is important in Fine or Fined? Listing your SR&ED Claim Preparers (T661 Part 9).
- Finally, we explained how specified employees are treated in regards to your SR&ED claim in Specified Employees in SR&ED: Restrictions and Regulations.
To round out our blog posts for Q2, we announced the creation of a new page, took a look at the privacy act assessment from the CRA and discussed government funding.
- We announced a new page which focuses on SR&ED and agricultural check-offs/levys in New Page – SR&ED and Agriculture: Hidden Tax Credits from Levy and Check-Off.
- Additionally, we took a closer look at the privacy impact assessment released by the CRA last quarter in SR&ED Program v 3.0 – Privacy impact assessment summary.
- Finally, we looked at government support and how accepting it can affect your SR&ED claim in Government Support Doesn’t Mean Less Government Funding.
2020 SREDStakeholder Webcast
In May, we invited readers to join us in the annual SREDstakeholders virtual conference. Our very own Elizabeth Lance was a presenter this year. Medical SR&ED policies, new government funding programs (CEWS) for COVID-19, SR&ED statistics, and recent legal rulings were discussed and analyzed. We provided a summary for those unable to attend in Summary of 2020 SREDStakeholder Webcast, as well as links to the recordings. Additionally, we discussed “concrete lessons learned” from a legal ruling presented at the webcast in Beton Mobile du Quebec (BMQ) Analysis and Lessons Learned.
Administrative, Policy, and Legislative
The second quarter of 2020 brought some SR&ED news and information updates from CRA. While the program and policies remained constant, the CRA released information about the Canada Emergency Wage Subsidy (CEWS) program, as well as, an update stating that SR&ED filing deadlines remained unchanged in light of COVID-19 (both linked above).
From April-June 2020 the CRA posted two updates, one on June 19, 2020, and one on June 25, 2020, on their “What’s New – SR&ED Program” website.
On June 19, 2020, the CRA released information about the Canada Emergency Wage Subsidy (CEWS) program including a link to the Canada Emergency Wage Subsidy application guide. This 10% Temporary Wage Subsidy for Employers are considered government assistance and was created in light of the COVID-19 pandemic.
In terms of judicial proceedings, Q2 was quiet with no SR&ED court rulings released or on the docket due to the Tax Court of Canada’s closure due to COVID-19.
Summary of SR&ED Updates
SR&ED updates from April-June 2020 were busy as the country dealt with the pandemic. As in the prior three months, we continued our educational mandate, writing twenty more informative blog posts and creating one new page to help our organizations with their questions. Check back for more updates as 2020 unfolds.