RD-1029.7, Tax Credit for Salaries and Wages (R&D)

The method of calculating the SR&ED credit rate requires you to provide the total amount of assets of the corporation for the preceding year, including the amounts for associated corporations. These figures are entered on the lines provided below question 18 on the CO-17 screen.

The rate of this tax credit is 30% for a taxation year, with respect to a Canadian-controlled corporation whose assets, including the assets of associated corporations, do not exceed 50 million dollars for the preceding taxation year, which is reduced linearly to 14% where assets vary between 50 million and 75 million dollars.

Note that the enhanced rate varies between 14% and 30%, depending on the amount of the asset.

The 30% enhanced rate only applies on the first 3 million dollars of R&D expenditures incurred.

When the corporation is associated to other corporations, the expenditure limit amount, on line 168 in Part 5, “Qualified expenditures giving rise to the higher rate of the tax credit,” is calculated based on data entered in Form RD-1029.7.8, Agreement Between Associated Corporations Regarding the Expenditure Limit (Jump Code: 102978).

The expenditure limit amount allocated to the corporation must be apportioned between the applicable copies of Form RD-1029.7, Tax Credit for Salaries and Wages (R&D).

Information about subcontractors dealing at arm's length with the taxpayer

A check box has been added to permit the transfer of information in Part 5, “Payments made to arm’s-length subcontractors,” of Form RD-222 (Jump Code: Q222), with regards to a given subcontractor to Part 2, “Information about subcontractors dealing at arm’s length with the taxpayer,” of Form RD-1029.7, Tax Credit for Salaries and Wages (R&D) (Jump Code: 10297), when the information required in those two forms pertain to the same person. A drop-down menu allowing you to select the copy of Form RD-1029.7 to link in order to transfer data has also been added. After having selected this check box, fill the lines Identification number (QST) and Total amount of consideration to complete the information required in Form RD-1029.7 with regard to this subcontractor.The status of this new check box and, where applicable, the election with regard to the destination form will be retained when rolling forward the client file.