Software/IT Sector Guidance

"Guidance on Eligibility of Software Projects for the SR&ED Tax Credits and Developing and Documenting Claims".

Representatives of the software/information technology industry, in close consultation with the CCRA, have developed guidance on various aspects of software claims, as one of the initiatives to improve the administration of the SR&ED Program. Industry participants included national and regional associations*, as well as the Steering Committee's Software Working Group. The CCRA was involved throughout the development process to ensure consistency with the spirit, intent and interpretation of the legislation.

The guidance presents concepts and principles on eligibility of software development work, and recommends practices for developing and supporting claims. Rather than presenting legal interpretations, the guidance draws on real-world situations to convey concepts. The material contains no policy change, and the guidance is fully supported by the Income Tax Act. The CCRA agrees with the concepts underlying the guidance, and urges all stakeholders in the SR&ED Program to take advantage of the material. The full text of the material can be viewed on-line, or down-loaded as a pdf file for printing. There is also a very brief summary.

To ensure effective understanding and application of these concepts, the material is being supported by joint CCRA/industry training, open to all users of the program. Workshops have been held throughout the country, and will continue; for dates and locations, see http://www.cra-arc.gc.ca/taxcredit/sred/seminar-e.html. The library of slides used in the workshop presentations is also available in pdf format.

The material is evergreen. Refinements and additions will be made as necessary, especially to the examples used to illustrate eligibility, to maintain the relevance of the guidance in a rapidly changing industry. Local committees have been established, with a mandate to provide timely feedback, so that any issues that may arise can be quickly identified and corrective actions taken. For details, contact your local Coordinating Tax Services Office.

If you have any questions or comments on the material and its application, please contact the national sector specialist for software, Ted Wierzbica, (514) 283-5365, Ted.Wierzbica@cra-arc.gc.ca, or one of the participating associations

The CCRA is committed to making effective use of this guidance in the claim review process. Industry is committed to effective use of the guidance to enhance self-compliance and the adoption of best practices for claim preparation and substantiation.

For further information on the background of this initiative, and details of the consultative process, see Part 4.

* Participating associations:

*CATAAlliance;
Information Technology Association of Canada (ITAC);
Information Technology Association of Nova Scotia (ITANS);
The B.C. Technology Industries Association of Canada (TIA);
Vancouver Island Advanced Technology Centre (VIATeC);
Canadian Information Processing Society (CIPS).