Impacts of COVID-19 on your existing SR&ED and E-Business tax credit claims
These are undoubtedly challenging times for many companies, and we would like to provide our clients with our preliminary observations regarding the impacts of the COVID-19 crisis on your existing Scientific Development and Experimental Development (SR&ED) and E-Business (CDAE in French) tax credit claims. As experts in financing technology companies, Emergex SR&ED Subsidies closely monitors ongoing government releases concerning business subsidies.
For starters, regarding delays in the processing of existing applications, the Canada Revenue Agency (CRA) has clearly indicated that the SR&ED program continues to be a priority. To ensure that the highest levels of support are provided to businesses that are neither publicly nor foreign-owned, i.e., Canadian-controlled private corporations (CCPC), processing of their refundable tax credits will be prioritized. For now, no new reviews or audits will be conducted, and those already in progress will be finalized as soon as possible to ensure that businesses receive their credits faster. Nevertheless, applications that are approved during this period could subsequently be reviewed or audited for a posteriori eligibility confirmation.
As for taxpayers, even though rules have been relaxed to allow the deferral of tax payments, the deadlines for SR&ED and E-Business claims remain unchanged. Finally, the onsite visit normally undertaken by Investissement Québec (IQ) following the first E-Business application will now only take place when subsequent claims are made. As a relief measure, IQ will issue tax credit eligibility certificates without the payment of fees which are postponed to a future unspecified date. Finally, Revenu Québec has not announced any changes in how it processes credit applications.
The following are some recommendations we believe you should be following right now:
- In the present context, you must not delay filing your SR&ED and E-Business claims! The sooner you file after the end of your financial year, the faster you will receive your refunds. Take advantage of the slowdown in activities to accelerate your cash inflows and boost your working capital.
- To facilitate communications with the CRA, we recommend that you create an account at My Business Account as soon as possible. It takes about ten days to complete the account creation process, during which you will receive a code by mail. You will need it for effective communication with the CRA in case of future audits or to apply for The Canada Emergency Wage Subsidy. We will soon be putting out an article with details of this program, so watch for our email blasts!
- If your business is applying for one or more government aids, we invite you to hold on to all relevant documents, as they will be needed when calculating future SR&ED and E-Business tax credits, and could be requested by tax authorities in the event of an audit. This subject will also be covered in full in a future article we will be putting out.
Finally, since we are currently living through very exceptional and fluid conditions, the information provided in this article could change at any time. We ask you nevertheless to rest assured that Emergex SR&ED Subsidies is closely monitoring the situation and will always be on top of any new information put out by the governments that could have a significant impact on your claims. We remain at your disposal during this crisis and are ready to answer any questions you may have.