CATAAlliance Legislative Alert
Date: October 30, 2007
Attn: Companies Participating in the federal Government’s SR&ED Program
From: John Reid, President, CATAAlliance
Re: ++ Call to Action: Develop your company’s submission to the Joint Finance Canada – Canada Revenue Agency (CRA) Consultation
Note: Please contact email@example.com for copies of the Surveys described in the Call to Action Memo. Put SR&ED Surveys in the Header.
The Federal Government has announced the pre-budget consultative process on how the SR&ED tax incentive program can be improved. Suggestions are being sought no later than November 30th in terms of both the need for legislative changes and administrative refinements.
For details on the joint Finance Canada - Canada Revenue Agency (CRA) consultation, see the Department of Finance Canada web site at http://www.fin.gc.ca/news07/07-078e.html.
Since the closing date for submissions is only a month away, your company’s input is important. This Memo provides important background for your submission and an Action Note on how to develop your company’s submission (see below).
As part of the CATAAlliance’s effort to support the Federal Government’s effort to find ways to maximize the effectiveness of the incentives for your business, we have conducted web consultations on the impact of the CRA’s administrative practices on the ability of the tax credits to function as an incentive.
In our opinion, the commentary we received indicates serious problems with the administration of the SR&ED program. A re-examination of CRA’s own 2005 client satisfaction survey suggests that these problems are more pronounced for larger companies than for smaller companies.
We have discussed these results with the ministerial staff of both Ministers with responsibilities for the program, that is, the staff of Minister O’Connor and Minister Flaherty.
These discussions have convinced us that there is a real window for change if solutions can be articulated and the need supported.
The web consultations that CATA conducted last year (2006) focused on the need for legislative improvements in the SR&ED incentives. This is a good starting point for seeing what others had to say. For a copy of the 2006 consultations, please go to CATA’s web site at http://www.cata.ca/files/pdf/resource_centres/sred/sred2006consultrpt.pdf
Call to Action: Develop your company’s submission to the Joint Finance Canada – Canada Revenue Agency (CRA) Consultation
For details http://www.fin.gc.ca/news07/07-078e.html
Closing date for submissions is November 30, 2007
Your company’s submission need not be long and should focus on the key changes that would help your company and why.
Please contact firstname.lastname@example.org for copies of the Surveys described in the Call to Action MEMO. Put SR&ED Surveys in the Header.
What you can do
Finance needs to understand the importance of the SR&ED tax credits in influencing investment decisions in your company.
Finance needs to understand what changes are important, why and specific options useful to your company.
Provide evidence of the impact of administrative practices on the reviews and the resolution of concerns related to your company’s claims.
Need suggestions for improvements/solutions.
Possible areas for comment
Consistency, certitude, your experiences and impact on investment decisions in your company
Advantages and disadvantages of establishing groups of sector specific reviewers dedicated to the larger files.
Possible clarification of the definition of SR&ED so that if the conditions outlined in 248(1) (a, b, c, d) are met, associated activities are not considered “commercial activities”.
Universal access to refundable credits with some sort of cap
Your experiences both positive and negative with the SR&ED program
Possible optional election as to which party to a contract will claim any associated SR&ED
Clarification of the definition of SR&ED costs to establish that the costs are those that can be reasonably allocated to SR&ED projects from normal business records
Whether the technical reviewers of the larger files are demonstrating the required understanding of R&D in your environment to effectively understand what you do
Objectivity and fairness of current processes to resolve concerns/disputes with the claims
Possible creation of an ombudsman for SR&ED reporting directly to the Minister of National Revenue or elsewhere. The ombudsman would be responsible for concern/dispute resolution, program evaluations and technical policy development
Advantages and disadvantages of moving the technical assessments to a department, etc. more closely aligned with economic development and technology policy
The need to develop sector consensus guidelines/standards on what documentation is reasonable to expect companies to retain to support their claims.
Next step - Complete your company’s submission