Claiming an SR&ED Tax Credit as a CCPC vs. Non-CCPC
May 4, 2021
What is a CCPC and a Non-CCPC?
- A CCPC is a Canadian-controlled private corporation with ownership in Canada. The CCPC is not registered on the stock exchange nor does it have ownership in a foreign country. With relation to the SR&ED Tax Credit, a CCPC will maintain its status as long as the taxable capital is less than $50 million.
- A Non-CCPC can be a public company incorporated in Canada, owning shares on the stock exchange, having foreign ownership, or having a taxable capital larger than $50 million.
Does CRA require different forms for applicants?
- CRA does not require different forms when claiming SR&ED as a CCPC or Non-CCPC. All companies are required by CRA to complete financial and technical forms relating to the SR&ED projects conducted by the applicant.
Is there a different SR&ED filing deadline?
- All companies across Canada have the same filing deadlines. The original filing deadline is 6-months from a company’s year-end and amended filing is 18-months from a company’s year-end. Once the 18-month deadline has passed, the company can no longer claim that fiscal year-end. For further information on SR&ED filing deadlines, please click here (SR&ED filing deadlines).
What is my companies return on investment (ROI)?
- The biggest difference between a CCPC and a Non-CCPC is the return on investment. A CCPC will receive a Federal return of 35% on their SR&ED expenditures (expenditures include, labour, materials, subcontractors, and third-party payments all related to the SR&ED project). This return will be a cash refund paid in one installment directly to the applicant. The applicant can use the cash as they please.
- With a Non-CCPC a company will receive a Federal return of 15% on SR&ED expenditures. This return is not a cash refund but a credit refund that can be utilized against any corporation taxes owing. The company can also carry forward the credit for up to 20 years before utilizing and 3 years back to recoup taxes paid.
SR&ED Federal Refund for a CCPC and Non-CCPC
| Expenditures | CCPC with TC < $50M | Non-CCPC |
| Technical staff related to SR&ED | 10 | 10 |
| Average salary of technical staff | $50,000 | $50,000 |
| Percentage of time spent on SR&ED | 50% | 50% |
| Materials consumed | $100,000 | $100,000 |
| Subcontractors paid | $100,000 | $100,000 |
| Third-party payments | $0 | $0 |
| Federal Return | $176,339.00 (Cash) | $82,146.00 (Credit) |
Please note that the SR&ED calculation is a rough estimate only of the tax refund your business could be entitled to. There are several additional calculations required for various provinces, different legal entities, employee payment thresholds, and other special rules. This calculation should be used as a guideline only and not in place of professional or accurate consultation.
Interested in estimating your companies next SR&ED Tax Credit? ABGi Canada’s SR&ED calculator will provide a rough estimate on your companies Federal and Provincial return as well as show the difference between a CCPC and a Non-CCPC refund. Try ABGi Canada’s SR&ED calculator today! SR&ED Calculator.
For more information on the SR&ED Tax Credit or assistance on how to determine if your company is a CCPC or Non-CCPC, please contact ABGi Canada.
