Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Basic information on SRED tax credit
Position: Basic information provided
Reasons: For information only
March 8, 2000
Assessment & Collections Branch Income Tax Rulings Directorate Ministerial Correspondence P.G. Lynch 101 - Tower C, 25 McArthur
Brenda Roberts/François Côté 2000-00170
Insert - XXXXXXXXXX, #2000-01231
We have been asked to provide an insert with respect to the above-referenced ministerial correspondence. As discussed with you (Côté/Lynch) we have not been provided with your draft reply but have been advised that you are seeking general information on the scientific research and experimental development tax credit.
The Income Tax Act (the Act) provides incentives to encourage expenditures on scientific research and experimental development (SR&ED). One such incentive is an investment tax credit on certain qualifying expenditures of a taxpayer. Under subsection 127(5) of the Act, a taxpayer may deduct from the tax otherwise payable by the taxpayer for a taxation year the amount of the investment tax credit. (However, if the amount of the investment tax credit exceeds the taxpayer's tax otherwise payable, the amount that may be deducted cannot exceed the amount of tax otherwise payable.)
We note that other provisions of the Act also provide for amounts to be deducted from a taxpayer's tax otherwise payable (i.e. tax credits). For example, individuals may deduct an amount for the federal political contribution tax credit and the labour-sponsored funds tax credit (see lines 410 and 414 of T1 General, Income Tax and Benefit Return) and corporations may deduct an amount for the small business deduction and the manufacturing and processing profits deduction (see lines 430 and 616 of the T2 Corporation Income Tax Return).
We trust this will be of assistance and invite you to contact Paul Lynch at 957-3493 should you have additional questions.
R.S. Biscaro, CA
Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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