On March 25, 2021, over 150 Scientific Research and Experimental Development (SR&ED) stakeholders participated in the 2021 SREDStakeholder webcast. A variety of topics were covered including SR&ED Medical issues, Technological Advancement (TA) in Patents, recent SR&ED court cases, SR&ED statistics and initiatives, and Tax Court Strategies in Covid. It was enlightening to hear varying perspectives on SR&ED issues that impact stakeholders.
SR&ED Medical Issues
The 2021 SREDStakeholder webcast discussed that the SR&ED medical issues presented from 2016-2020 have been partially resolved. The presenter also discussed a recent legal ruling that dealt with a medical professional corporation (MPC) Andre Lamy Medicine Professional Corporation v. The Queen (2020). The precedents set by this case will help MPCs claiming SR&ED in years to come. The judge ruled that an individual doctor should be able to act on behalf of an MPC even if they are the sole employee.
Technological Advancement (TA) in Patents
Next, a different perspective of innovation was discussed – patents. The presenter was a patent lawyer and they discussed a case of R&D patent law. The speaker discussed how patents can be utilized to show that technological advancements have been achieved. Additionally, the presenter illustrated that it is important to establish a knowledge base before SR&ED work is started. This knowledge base can show gaps and technological uncertainties.
SR&ED Legal Rulings – Technological Losses
Next, Elizabeth Lance presented two legal ruling that were ruled as losses. She examined Indusol Industrial Control Ltd. v. The Queen and National R&D Inc. v. The Queen. Both cases were presided over by the same judge and the five questions from Northwest Hydraulic were used to determine technological eligibility. The Appellants in both cases were unable to prove they had identified a technological uncertainty and sought to reduce or eliminate that uncertainty through experimentation or analysis in all of their projects. To be eligible for SR&ED Investment Tax Credits (ITCs), work must be approached through a systematic investigation where hypotheses formed using the existing knowledge base are tested through experimentation and analysis and documentation is kept throughout the process.
SR&ED Statistics & COVID-19 effects
Additionally, there was a presentation on SR&ED Statistics & COVID-19 effects. According to CRA, the ITCs for 2021 are back to the level they were at in 2014, totally over $4 million. The program has seen a total increase of $1.23 Million from 2020 to 2021. The increase was across all claimant types. Non-refundable claimants increased dramatically over the last two years to from $1142062 in 2020 to $1902907 in 2020 despite the number of claims in that category decreasing by 24.5%. The reviews in 2021 are approximately half of what occurred in 2020. Assessment times have decreased from 103 to 64 days. Those taking advantage of Pre-Claim Consultations have decreased but Pre-Claim Reviews have increased.
Canadian Emergency Wage Subsidy (CEWS) was discussed and the guidance set forth by the CRA was also illustrated.
Tax Court Strategies in COVID-19
Finally, new tax court procedures due to COVID-19 were discussed. First, the presenter discussed TCC Rules (General Procedure) and (Informal Procedure) with an emphasis on costs. Next, the rules for Hearings by Videoconference or Teleconference were presented. Finally, the SR&ED Analysis in 2021 Department of Finance Tax Expenditure Report was explained.
This was an informative conference presented by a dynamic group of presenters. The topics covered were applicable to today’s SR&ED issues. If you missed the live 2021 SREDStakeholder webcast, you can watch the replay or download the slides. Stay tuned for information next spring on the 2022 conference.