On August 14, 2013, the CRA released an administrative update revising the SR&ED filing requirements for partnerships with corporations as members. The text below addresses only this scenario.
Under policies effective as of January 1, 2011, the Form T661 Scientific Research and Experimental Development Expenditures Claim should be filed at the partnership level along with the Partnership Information Return. The T661 should now be filed no later than 12 months after the earliest tax filing due date out of all the members of the partnership (for the tax period in which the partnership’s fiscal period falls). The T661 and Partnership Information Return must be in agreement and must both be received before the deadline for a claim to be considered to be filed on time.
Corporations that are members of a partnership will no longer be required to file a T661 for the partnership’s activities with their Form T2 Corporate Income Tax Return. Instead, partners claiming ITCs will be expected to support these allocations by providing information slip T5013 Statement of Partnership Income. Note that any corporation engaged in SR&ED outside the partnership must still submit a T661 with their T2 to cover those activities.
Further information on this topic is available at: Revised SR&ED filing requirements for partnerships with corporations as members – Update. The CRA expects to update the two primary SR&ED policies related to this issue in the near future. These are the: SR&ED Filing Requirements Policy and SR&ED Claims for Partnerships Policy.
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Readers are cautioned that requirements for claiming SR&ED for partnerships can vary depending on a number of factors not discussed here. Furthermore, as a result of the August 14, 2013 changes, it is possible that some members of partnerships may now be able to claim SR&ED benefits for which the previous filing deadline had passed. Conversely, some members of partnerships may have now lost the opportunity to claim certain SR&ED benefits. TSGI recommends that taxpayers participating in SR&ED partnerships seek professional advice to assess the impact of these revisions and explore possible remedial actions.
Note: TSGI does not maintain this news article after its initial posting. Readers are further advised that the information presented here may not be sufficient for unassisted tax planning. Please contact a TSGI representative if you require clarification or other assistance regarding this topic.