Manitoba Research and Development (R&D) Tax Credit: Clarification on Renunciation Deadlines

This document summarizes the temporary agreement between the Canada Revenue Agency and Manitoba Finance allowing corporations to renounce the Manitoba Research and Development Tax Credit up to 18 months after its tax year end.

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Some Manitoba claimants have been renouncing their Manitoba Research and Development tax credit at the time of claiming the federal Scientific Research and Experimental Development Investment Tax Credit (SR&ED ITC).  While the SR&ED ITC may be claimed up to 18 months after a corporation's tax year end, both the federal and Manitoba Income Tax Acts require that taxpayers renounce the provincial R&D credit no later than six months after the end of their tax years.

Manitoba Finance and the Canada Revenue Agency have agreed to allow corporations to renounce the Manitoba R&D Tax Credit on or before 18 months of their tax year end for a temporary period.  For SR&ED claims submitted after March 31, 2009, the renunciation deadline set out in Manitoba’s Income Tax Act will be enforced.  Taxpayers who have questions about the requirements should call the SR&ED Information Line at 403-691-5890 or contact the Canada Revenue Agency office that has dealt with their previous SR&ED claims.

Background

The Manitoba R&D tax credit is government assistance under the federal Income Tax Act.  The federal SR&ED ITC is calculated based on qualified SR&ED expenditures less the government assistance amount. Renouncing the Manitoba R&D Tax Credit allows a corporation without taxes payable to maximize its qualified SR&ED expenditures and consequently its federal SR&ED ITC. 

The government assistance received, receivable or entitled to be received, by a corporation is determined at six months from the end of its tax year.  This is aligned with the six month filing deadline to renounce the Manitoba R&D tax credit.   If a renunciation of the Manitoba R&D tax credit is not made on or before the six month filing deadline, the renunciation will be disallowed and the corporation will have a lower federal SR&ED ITC because the Manitoba R&D credit will be included as government assistance.

The six month filing deadline for renouncing Manitoba’s credit and for determining government assistance under the federal SR&ED ITC rules applies despite the 18 month filing deadline for filing the federal SR&ED ITC under the federal Income Tax Act and the 18 month filing deadline for filing the Manitoba R&D Tax Credit under the Manitoba Income Tax Act.

SR&ED Information Line: 
Calgary Tax Services Office
Phone number: 403-691-5890
Fax number: 403-691-6625

Manitoba Finance:  
http://www.gov.mb.ca/finance/taxnews.html