Several industries have already faced the brunt of the ongoing COVID-19 crisis, with the SRED tax credit industry being no exception. This pandemic has created uncertainty in the financial market and business community. To protect Canadians’ health and businesses against financial harm, you can take several immediate and proactive steps to manage the cash flow during challenging times. Some of these comprise tax planning, using extended tax deadlines, and access to government incentives.
SRED and the Impact of COVID
This is a challenging time for most companies, which also includes the impact of the crisis on the SRED tax credit claims. So it is vital that you select a competent professional. They will help in your tax calculations and aid to streamline the process better.
Businesses, especially startups, have faced a delay in processing the existing application to which SR&ED CRA has indicated clearly that the priority will continue to be with the SRED program. To ensure that businesses that are not foreign-owned or publicly owned receive the utmost support, the CCPC (Canadian-controlled private corporations) will prioritize refundable tax credits processing. There will be not many new audits or new reviews, while those in progress will soon get finalized to make sure that the business receives quick credits. On the other hand, approved applications at the time of the crisis will be audited or reviewed subsequently for that posteriori eligibility confirmation.
In the case of a taxpayer, despite the relaxation of rules to allow the tax payment deferral, the deadlines for e-business claims and SRED remain unchanged. The onsite visit that the IQ undertakes following the initial e-business application will now occur only when there are subsequent claims. In the form of relief measures, the IQ will provide a tax credit eligibility certificate sans the payment of the fee will get postponed to a later date. The RevenuQurbec finally has not announced changes yet regarding its credit application procedure.
Recommendations during the Crisis
The bottom line is to follow specific recommendations during the crisis. First and foremost, do not delay filing your e-business and SRED tax credit claims. The sooner you apply, the faster you can enjoy the refunds. Make the most of the delay in activities to accelerate the inflow of cash and increase your working capital. To create a form of communication, especially with the CRA, it is highly suggestive that you quickly open an account on the My Business Account. The entire account creation process will take around 10 full days.
During this duration, you will get a code through email. This mail will act as good communication, especially with the CRA during any audits in the future. If, for instance, you apply for one or above government aids, it is vital to have all the pertinent documents. You will need them to calculate e-business and SRED tax credits in the future. The tax authorities during an audit may ask for it.
The COVID impact on SRED tax credits will soon be back to normal.