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What administrative salaries or wages can be claimed under the traditional method of calculating investment tax credits?

From the CRA's Application Policy 2002-01:

"The purpose of this Application Policy is to clarify what administrative salaries or wages are "directly related" to the prosecution of SR&ED, under the traditional method of calculating investment tax credits. The comments in this paper apply to all claimants, including dedicated SR&ED performers."

"TASKS/DEPARTMENTS THAT ARE DIRECTLY RELATED TO SR&ED WORK:

  • Financing of SR&ED (is "directly related" if the funds are used to perform SR&ED)
  • Evaluating, recruiting and hiring of SR&ED personnel
  • Technical implementation and control of scientific projects; defining future SR&ED direction; supervision of SR&ED group and SR&ED project selection/evaluation. Such tasks are usually performed by a VP Technology.
  • Evaluating the technological feasibility of a product and the potential SR&ED efforts and costs involved
  • Technological planning for on-going SR&ED projects (assignment of technological personnel, job priority, development of technological strategies, assessment of quality of materials used)
  • Work performed by clerical staff for tasks directly related to payroll, purchasing and accounting."

"TASKS/DEPARTMENTS THAT ARE GENERALLY NOT DIRECTLY RELATED TO SR&ED WORK:

  • Bidding costs
  • Purchasing (other than direct purchasing of material/SR&ED equipment)
  • Taxation and Legal services
  • Sales, marketing and advertising
  • Employee relations
  • Development of benefits program for SR&ED personnel
  • Corporate secretary and reporting to shareholders
  • Initiating and closing of licensing agreements
  • Feasibility studies (non-technological) leading to potential SR&ED collaborations and assessing the commercial feasibility of a given technology
  • Commercialisation of existing intellectual property
  • Review and approval of SR&ED budgets
  • Patent application"

This policy paper is further discussed in MEUK Newsletter 2002-1 where several potentially confusing or 'grey' areas are pointed out:

  • "financing of SR&ED" is eligible but "review and approval of SR&ED budgets" is not. Most SR&ED performers would agree that it is hard to "finance" SR&ED without a "budget".
  • Work performed "by clerical staff for tasks directly related to payroll, purchasing and accounting" is eligible, but "development of benefits program for SR&ED personnel" is not.