Late January, 2009

Recently Purvoy Wood Treatment Ltd.. (name changed) was notified by the federal government of the approval of its claim for a $63,450 refund of costs against the research and development work they did last year.

Purvoy had filed SR&ED claims before, but came to see that they had been leaving dollars on the table by not claiming as much as they were entitled to.  “We were concerned that if we were aggressive in our claims CRA would audit us” explained Len Schatz, the company’s CFO, “and while we have nothing to hide we just didn’t want the hassle.  The other problem was that we really didn’t understand the rules.  For example, we didn’t consider that the cost of the wood we were using in testing our preservative was an eligible SRED expense until SRED Consultants explained it and claimed it. They picked up on some activities,  which we didn’t realize were SRED expenses.”



The account above has had details changed to protect client’s identity.



BUDGET 2009

The budget introduced to Parliament on January 27 increases the annual business limit to $500,000.  This means that a Canadian controlled private corporation (“CCPC”) will have a preferential tax rate of the first $500,000 of its taxable income rather than $400,000 as is was the case.

An SRED claim is severely eroded for a CCPC when its immediately preceding year’s taxable income exceeds the annual business limit.   It is important to a CCPC claiming SRED to utilize available elections in its tax filings to move income from a year in which its taxable income would exceed the business limit into a year in which its taxable income is less than the business limit.

Contact: 250-479-4925

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