Developments: Scientific Research and Experimental Development (SR&ED) Work Outside Canada

In the 2008 federal budget, the Department of Finance made an important tax policy change to the scientific research and experimental development (SR&ED) investment tax credit (ITC) program. Under the new policy, certain salary and wages of Canadian-resident employees carrying on SR&ED work outside Canada will qualify for ITCs. Previously, SR&ED work carried on outside Canada did not qualify, although administratively the Canada Revenue Agency (CRA) did allow certain expenditures for work outside Canada as overhead costs if the traditional method (rather than the proxy method) was used for claiming overhead type expenditures.

The following publication provides further details on the policy change.

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