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Claim Review Manual for Research and Technology Advisors SR&ED Program Previous Chapter CRM Table of Contents Next Chapter Chapter 6.0 Documenting the review Table of contents 6.1.0 Summary of chapter 6.2.0 Requirements of chapter 6.3.0 Users of the RTA's documents 6.4.0 Definitions / explanation of terms 6.5.0 Basic principles 6.6.0 Types of working papers and supporting documentation 6.6.1 Documents received from the tax centre 6.6.2 Documents received from the Control Function 6.6.3 Review plan 6.6.4 Records of communications 6.6.5 Correspondence 6.6.6 Documentation related to outside consultants 6.6.7 Results of RTA's work 6.6.8 Other Supporting Evidence 6.7.0 Documents supporting the RTA's decisions 6.7.1 General requirements 6.7.2 Detail required to support the RTA's work 6.7.2.1 No technical issues but the FR requires some assistance 6.7.2.2 All issues resolved in claimant's favour, no on-site visit made 6.7.2.3 All issues resolved in claimant’s favour, following an on-site visit 6.7.2.4 Not all issues resolved in claimant's favour 6.8.0 The SR&ED Review Report 6.8.1 Identification 6.8.2 Summary of results by tax year 6.8.3 Review issues 6.8.4 Review methodology 6.8.5 Information and supporting evidence reviewed 6.8.6 Review observations, determinations, conclusions, and other decisions 6.8.6.1 Documenting eligibility determinations 6.8.6.2 Documenting Unsubstantiated claims 6.8.6.3 Formal statements to be used in section 6 of the SR&ED review report 6.8.6.4 What to avoid in documenting determinations 6.8.7 Working with the claimants 6.8.8 Claimant concurrence 6.8.9 Recommendations for future claims 6.8.10 Other financial review considerations 6.8.11 Signatures 6.9.0 Other methods to document the RTA's work 6.9.1 Memos 6.9.2 Short SR&ED review report 6.9.3 SR&ED review report for a partnership 6.9.4 SR&ED review report addendum 6.10.0 Formatting and indexing the TF98 file 6.1.0 Summary of chapter Documenting the review carried out by the research and technology advisor (RTA) is discussed in this Chapter. ... Nevertheless, this section provides an additional opportunity for the RTA to do so. 6.8.10 Other financial review considerations The purpose of this section is to document any concerns about the claim believed to require the attention of the FR but which are not elsewhere indicated in the SR&ED review report. ... Other financial review considerations" – if the names of the individual partners, their Business numbers/ SINs, and their percentage of ownership is known, this information can be placed in the body of this section. ...

Table of contents 1.0 Purpose 2.0 Overview 3.0 Meaning of terms 3.1 Amount received 3.2 Entitled to receive 3.3 Reasonably be expected to receive 4.0 Government and non-government assistance 4.1 Definitions 4.1.1 Government assistance 4.1.2 Non-government assistance 4.2 General considerations 4.2.1 Factors used to determine whether an amount is assistance 4.2.2 The context of the assistance agreement 4.2.3 Example – Forgivable loan 4.3 Application of the rules 4.3.1 The pool of deductible SR&ED expenditures 4.3.2 Qualified SR&ED expenditures 4.3.3 Example – Reduction of qualified SR&ED expenditures 4.4 Assistance received or receivable by a non-arm's length party 4.4.1 Allocation of assistance 4.4.2 Example – Allocation of assistance 4.5 Provincial and territorial research and development tax credits 4.5.1 Treatment of assistance related to the prescribed proxy amount and impact on the pool of deductible SR&ED expenditures 4.5.2 Treatment of assistance related to the prescribed proxy amount with respect to qualified SR&ED expenditures 4.5.3 Quebec's R&D tax credits 4.5.4 Ontario's R&D tax credits 4.5.5 Super-allowance benefit amount 4.6 Repayment of assistance 5.0 Contract payments 5.1 Overview 5.2 Definition of a contract payment 5.3 Differences between assistance and contract payments 5.4 Who is entitled to an investment tax credit? ... Although consideration should also be given to the nature of the functions performed by an entity, a public authority is generally an entity that: has a duty to the public; is subject to a significant degree of government control; and uses its profits for the benefit of the public. ... Legislative References Income Tax Act Paragraph 12(1)(x) Inducement, reimbursement, etc Subsection 127(9) Definition of “non-government assistance” 4.2 General considerations 4.2.1 Factors used to determine whether an amount is assistance Determining whether an amount received by a claimant is assistance will depend on the particular facts of the case. ...

Table of contents 1.0 Purpose 2.0 Overview 3.0 Meaning of terms 3.1 Amount received 3.2 Entitled to receive 3.3 Reasonably be expected to receive 4.0 Government and non-government assistance 4.1 Definitions 4.1.1 Government assistance 4.1.2 Non-government assistance 4.2 General considerations 4.2.1 Factors used to determine whether an amount is assistance 4.2.2 The context of the assistance agreement 4.2.3 Example – Forgivable loan 4.3 Application of the rules 4.3.1 The pool of deductible SR&ED expenditures 4.3.2 Qualified SR&ED expenditures 4.3.3 Example – Reduction of qualified SR&ED expenditures 4.4 Assistance received or receivable by a non-arm's length party 4.4.1 Allocation of assistance 4.4.2 Example – Allocation of assistance 4.5 Provincial and territorial research and development tax credits 4.5.1 Treatment of assistance related to the prescribed proxy amount and impact on the pool of deductible SR&ED expenditures 4.5.2 Treatment of assistance related to the prescribed proxy amount with respect to qualified SR&ED expenditures 4.5.3 Quebec's R&D tax credits 4.5.4 Ontario's R&D tax credits 4.5.5 Super-allowance benefit amount 4.6 Repayment of assistance 5.0 Contract payments 5.1 Overview 5.2 Definition of a contract payment 5.3 Differences between assistance and contract payments 5.4 Who is entitled to an investment tax credit? ... Although consideration should also be given to the nature of the functions performed by an entity, a public authority is generally an entity that: has a duty to the public; is subject to a significant degree of government control; and uses its profits for the benefit of the public. ... Legislative References Income Tax Act Paragraph 12(1)(x) Inducement, reimbursement, etc Subsection 127(9) Definition of “non-government assistance” 4.2 General considerations 4.2.1 Factors used to determine whether an amount is assistance Determining whether an amount received by a claimant is assistance will depend on the particular facts of the case. ...

Claim Review Manual for Research and Technology Advisors SR&ED Program Previous Chapter CRM Table of Contents Next Chapter Chapter 6.0 Documenting the review Table of contents 6.1.0 Summary of chapter 6.2.0 Requirements of chapter 6.3.0 Users of the RTA's documents 6.4.0 Definitions / explanation of terms 6.5.0 Basic principles 6.6.0 Types of working papers and supporting documentation 6.6.1 Documents received from the tax centre 6.6.2 Documents received from the Control Function 6.6.3 Review plan 6.6.4 Records of communications 6.6.5 Correspondence 6.6.6 Documentation related to outside consultants 6.6.7 Results of RTA's work 6.6.8 Other Supporting Evidence 6.7.0 Documents supporting the RTA's decisions 6.7.1 General requirements 6.7.2 Detail required to support the RTA's work 6.7.2.1 No technical issues but the FR requires some assistance 6.7.2.2 All issues resolved in claimant's favour, no on-site visit made 6.7.2.3 All issues resolved in claimant’s favour, following an on-site visit 6.7.2.4 Not all issues resolved in claimant's favour 6.8.0 The SR&ED Review Report 6.8.1 Identification 6.8.2 Summary of results by tax year 6.8.3 Review issues 6.8.4 Review methodology 6.8.5 Information and supporting evidence reviewed 6.8.6 Review observations, determinations, conclusions, and other decisions 6.8.6.1 Documenting eligibility determinations 6.8.6.2 Documenting Unsubstantiated claims 6.8.6.3 Formal statements to be used in section 6 of the SR&ED review report 6.8.6.4 What to avoid in documenting determinations 6.8.7 Working with the claimants 6.8.8 Claimant concurrence 6.8.9 Recommendations for future claims 6.8.10 Other financial review considerations 6.8.11 Signatures 6.9.0 Other methods to document the RTA's work 6.9.1 Memos 6.9.2 Short SR&ED review report 6.9.3 SR&ED review report for a partnership 6.9.4 SR&ED review report addendum 6.10.0 Formatting and indexing the TF98 file 6.1.0 Summary of chapter Documenting the review carried out by the research and technology advisor (RTA) is discussed in this Chapter. ... Nevertheless, this section provides an additional opportunity for the RTA to do so. 6.8.10 Other financial review considerations The purpose of this section is to document any concerns about the claim believed to require the attention of the FR but which are not elsewhere indicated in the SR&ED review report. ... Other financial review considerations" – if the names of the individual partners, their Business numbers/ SINs, and their percentage of ownership is known, this information can be placed in the body of this section. ...

Contents Application Summary Discussion and Interpretation General (¶s 1-2) Taxable dividends paid (¶s 3-6) Refundable dividend tax on hand (¶ 7) Refundable portion of Part I tax (¶s 8-9) Canadian and foreign investment income (¶s 10-19) Other considerations (¶s 20-22) Dividend refund rate Refundable dividend tax on hand Part I tax addition to RDTOH Definitions Aggregate investment income Eligible portion Foreign investment income Income or loss Refundable tax on CCPC's investment income Explanation of Changes Application This bulletin cancels and replaces Interpretation Bulletin IT-243R3 dated May 21, 1985, and the Special Release to IT-243R3 dated December 30, 1987. ... Other considerations ¶ 20. When determining the required tax instalments for a taxation year under section 157, paragraph 157(3)(b) allows each instalment to be reduced by one-twelfth of the dividend refund for that taxation year. ...

Contents Application Summary Discussion and Interpretation General (¶s 1-2) Taxable dividends paid (¶s 3-6) Refundable dividend tax on hand (¶ 7) Refundable portion of Part I tax (¶s 8-9) Canadian and foreign investment income (¶s 10-19) Other considerations (¶s 20-22) Dividend refund rate Refundable dividend tax on hand Part I tax addition to RDTOH Definitions Aggregate investment income Eligible portion Foreign investment income Income or loss Refundable tax on CCPC's investment income Explanation of Changes Application This bulletin cancels and replaces Interpretation Bulletin IT-243R3 dated May 21, 1985, and the Special Release to IT-243R3 dated December 30, 1987. ... Other considerations ¶ 20. When determining the required tax instalments for a taxation year under section 157, paragraph 157(3)(b) allows each instalment to be reduced by one-twelfth of the dividend refund for that taxation year. ...

Contents Application Summary Discussion and Interpretation General (¶s 1-2) Taxable dividends paid (¶s 3-6) Refundable dividend tax on hand (¶ 7) Refundable portion of Part I tax (¶s 8-9) Canadian and foreign investment income (¶s 10-19) Other considerations (¶s 20-22) Dividend refund rate Refundable dividend tax on hand Part I tax addition to RDTOH Definitions Aggregate investment income Eligible portion Foreign investment income Income or loss Refundable tax on CCPC's investment income Explanation of Changes Application This bulletin cancels and replaces Interpretation Bulletin IT-243R3 dated May 21, 1985, and the Special Release to IT-243R3 dated December 30, 1987. ... Other considerations ¶ 20. When determining the required tax instalments for a taxation year under section 157, paragraph 157(3)(b) allows each instalment to be reduced by one-twelfth of the dividend refund for that taxation year. ...

Although automobile taxable benefits, including standby charges, may not involve an expenditure incurred in the year, in practice an amount in respect of such benefits can be included as salary or wages if the amount represents a reasonable estimate of the actual costs incurred and does not include any GST / HST or PST (unless no input tax credit refund was claimed) and the automobile expenses and CCA to which the standby charge relates are not included in calculating business income. 3.2 GST / HST or PST considerations Some taxable benefits (for example, non-cash benefits) included on the employee's T4 slip may include a GST / HST or PST component. ... Generally, the corporation is to reduce the related expenditure by the amount, if any, by which (i) the fair market value of the share exceeds (ii) that portion of the amount of the consideration that the issuing corporation has received for issuing the share that is added to, and not deducted because of a provision of the Income Tax Act from, the paid-up capital of the class of shares that includes the share. ... The nature and sources of available information will be a key consideration in developing an appropriate labour allocation method. ...

Slide 25 – Anti-terrorism considerations Dylan: Like all activities that a charity enters into, a charity is responsible for making sure that it does not support terrorist activities, including by making a grant to an individual or group that is engaged in or supports terrorist activities. ...

Although automobile taxable benefits, including standby charges, may not involve an expenditure incurred in the year, in practice an amount in respect of such benefits can be included as salary or wages if the amount represents a reasonable estimate of the actual costs incurred and does not include any GST / HST or PST (unless no input tax credit refund was claimed) and the automobile expenses and CCA to which the standby charge relates are not included in calculating business income. 3.2 GST / HST or PST considerations Some taxable benefits (for example, non-cash benefits) included on the employee's T4 slip may include a GST / HST or PST component. ... Generally, the corporation is to reduce the related expenditure by the amount, if any, by which (i) the fair market value of the share exceeds (ii) that portion of the amount of the consideration that the issuing corporation has received for issuing the share that is added to, and not deducted because of a provision of the Income Tax Act from, the paid-up capital of the class of shares that includes the share. ... The nature and sources of available information will be a key consideration in developing an appropriate labour allocation method. ...