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.