Experts say the policy has had the perverse effect of prompting companies to pay out income in salaries to employees rather than reinvesting in the business – just to stay below the income threshold.“For small companies, it was a pretty common problem,” said Bruce Ball, vice-president of taxation for the Chartered Professional Accountants of Canada. “This will be a welcome change for them.”
The government’s Scientific Research and Experimental Development Program offers small Canadian-controlled private companies refundable tax credits of up to 35 per cent on the first $3-million a year they spend on R&D expenditures and non-refundable credits of 15 per cent for all other companies. The program costs the government roughly $3-billion a year and is used by more than 20,000 companies.
The budget eliminates the income test, effective with the current tax year. The government is keeping in place a $10-million limit on how much capital a company can have to qualify for the refundable credit.
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Source: macleans - 🏆 19. / 71 Read more »