The Department of Finance announced in the March 19, 2019, Federal Budget that for tax years ending after March 18, 2019, the use of the previous year taxable income is removed as a factor in determining a canadian-controlled private corporation’s $3 million annual expenditure limit for the purpose of the refundable enhanced SR&ED investment tax credit (35%).
Additional information on the change is available on Federal SR&ED legislative proposals status.
In determining the amount of the 35% refundable investment tax credit, canadian-controlled private corporations must file Schedule T2SCH31, Investment Tax Credit – Corporations (2017 and later tax years). For tax years ending after March 18, 2019, do not include an amount on line 390 of this schedule.
For corporations that must allocate the expenditure limit, when filing Schedule T2SCH49, Agreement Among Associated Canadian-Controlled Private Corporations to Allocate the Expenditure Limit (2012 and later tax years), include $500,000 for Amount A (line 425) of this schedule.
An update to the SR&ED Investment Tax Credit Policy is being prepared.