The fiscal world has an abundance of more or less complex rules, so much so that it’s not surprising that the uninitiated lose themselves easily. This article will mainly be on the various policies surrounding the taxation period for the SR&ED tax credit.

It’s important to mention that the CDAE tax credit is managed differently than other types of tax incentives.

Here are the main policies concerning the taxation period:

Revenu Québec:

According to the refundable tax credit standardization and taxation rule, the amount of the credit is considered at the moment when it reduces the tax to be paid for a taxation year. This measure is applied for all the expenditures starting after November 20^th, 2012.

It’s also important to mention that this new standardization rule has made taxable all refundable tax credits without exception. Click here to know the refundable tax credits touched by this measure.

The Canadian Revenue Agency:

The Canadian Revenue Agency considers that a tax credit or a reduction in the tax calculation has been received at the first of the following circumstances:

• At the moment when it is applied in reduction of the tax installment to be paid by the tax payer, if it is credited to his account as a tax installment by the fiscal authority.
• When all the obtaining conditions are met, at the first of the following element:
  1. At the moment when the credit reduces the tax to be paid for a taxation year.
  2. At the moment when the credit is paid if it allows to obtain or increase a tax repayment.

What needs to be retained

When we take into account those legislations, we note that the amount of SR&ED tax credit and its taxation period can differ between the different government levels. Let’s stress that in March 2003, the CRA has published an information card detailing that some provincial tax credit would no more reduce the SR&ED expenditures eligible for the investment tax credit (ITC) planned by the ITA. The CRA, therefore, specified that the provincial tax credits other than those relative to the SR&ED, as the e-business development repayable tax credit, would not reduce the SR&ED expenditures eligible to the ITC. This measure aimed at preventing the combination of the fiscal assistance asking for the same expenditures, many tax credits.

Finally, to understand well the numerous existing fiscal rules, being whether provincial or Canadian, one must analyze in depth each particular case. Corporation directors would be well advised to understand well particularities relating to taxation to avoid some problems. The services of an expert can, therefore, be very useful in case of lack of understanding.