Weekly tax highlights - September 29, 2011
September 29, 2011
The CRA reveals SR&ED review guidelines
Early in 2010, the Canada Revenue Agency (CRA) issued a new internal directive for the Scientific Research & Experimental Development (SR&ED) program – the Claim Review Manual (CRM). The CRM sets out detailed instructions for CRA reviewers on every aspect of a technical review including joint financial/technical considerations. Its stated objectives include consistency of review procedures, the proper application of policy, improved claimant compliance, and audit process efficiency. A few weeks later a concise guide for claimants (SR&ED Technical Review: A Guide for Claimants) was placed on the CRA website, together with a version of the CRM edited for public viewing. An Access to Information and Privacy review has now been completed, and a revised version of the CRM that includes some previously blocked material has been posted. Read more in Deloitte’s latest issue of R&D Tax Update.
The CRA seeks input on five SR&ED policy documents
As part of its SR&ED Policy Review Project, the CRA is requesting comments on the draft versions of these policy documents:
- Pool of Deductible SR&ED Expenditures Policy — clarifies the administrative position of the CRA on the pool of deductible SR&ED expenditures
- Recapture of SR&ED Investment Tax Credit Policy — provides the position of the CRA regarding the recapture of SR&ED investment tax credits (ITC)
- SR&ED Claims for Partnerships Policy — clarifies the position of the CRA regarding SR&ED claims for partnerships
- SR&ED Investment Tax Credit Policy — explains the position of the CRA regarding the SR&ED investment tax credit
- Total Qualified SR&ED Expenditures for Investment Tax Credit Purposes Policy — states the position of the CRA regarding total qualified SR&ED expenditures for ITC purposes
The government invites comments from stakeholders on any element of these five draft policy documents by November 5, 2011 – instructions are available here. The CRA intends to review all comments and revise the draft policy documents accordingly, with all policy documents expected to be finalized by December 31, 2012.
It is essential to review and monitor the documents being released and make recommendations as deemed appropriate. Deloitte professionals are available to discuss these matters with you.
B.C. Jobs Plan features enhanced business tax incentives
On September 22, 2011, the Government of British Columbia released the B.C. Jobs Plan with a view to attracting investment, opening new markets for the province’s products and services and creating new jobs. The following tax measures were announced:
- A $3 million boost to B.C.’s budget for its Small Business Venture Capital tax credit program, which targets direct investment in new businesses by “angel investors”. Currently, the program provides investors with a 30% refundable tax credit for investments in eligible businesses involved in clean tech, community ventures, new media, export manufacturing, destination tourism or research and development of proprietary technology. The additional $3 million boost to the program would allow up to $10 million in additional equity capital for eligible new small businesses, supporting in total up to $110 million in investments per year.
- A three-year extension of the B.C. Apprentice Training Tax Credit program, which is aimed at helping employers and apprentices obtain the necessary skills and training. The program, which was set to expire after December 31, 2011, will provide the funding for the tax credit through 2014.
In addition, as part of a broader review of the province’s tax system, the Department of Finance will consult with the business community to develop recommendations for Budget 2012 that ensure that the tax system fosters “a globally competitive, diverse economy that supports jobs and innovation within the Province’s balanced budget framework”.
White House releases draft statutory language on growth plan
On September 23, 2011, the Obama Administration released draft statutory language for the President’s Plan for Economic Growth and Deficit Reduction (the “Plan”). The Administration submitted the Plan on September 19, 2011 to the Joint Select Committee on Deficit Reduction – informally known as the “super committee.” It is estimated that the Plan would cut the federal deficit by USD 3.2 trillion over the next 10 years. Read more in the latest issue of United States Tax Alert, published by Deloitte International Tax.
Prescribed interest rates for Quebec and Ontario are unchanged
Revenue Quebec has published the interest rates that will apply on debts and refunds for the October 1, 2011 to December 31, 2011 period. The rate applicable to amounts owed to Revenue Quebec remains at 6% and the rate applicable on refunds payable by Revenue Quebec remains at 1.50%.
The Ontario Ministry of Revenue has also published the interest rates that will apply on debts or overpayments for the October 1, 2011 to December 31, 2011 period. Rates are unchanged from the previous quarter. The rate on debts owing to Ontario Revenue is 6% while the rate applicable on overpayments is 0%. For taxes or refunds resulting from a successful appeal or objection the rate is 3%.
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