It has come to Ryan’s attention that, in Québec, some medical doctors feel that their professional corporations are not entitled to claim Scientific Research and Experimental Development (SR&ED) tax credits. Specifically, it seems there is a notion that the SR&ED program regulations are different in Québec compared to the rest of Canada – this is incorrect. SR&ED is a federal program and the eligibility criteria are the same across the entire country. While the province of Québec can conduct its own review of an SR&ED tax credit claim, this is for financial purposes only – determining the correct amount of a claim. There are no deviations in the eligibility criteria between provinces.
Some of the confusion may be a result of the positions taken by the Canada Revenue Agency (CRA) over the last several years, especially when it comes to SR&ED claims filed by medicine professional corporations (MPCs). Essentially, the CRA’s position on government assistance received in respect of SR&ED and whether an MPC has the right to claim an SR&ED tax credit has resulted in a significant number of claims being disallowed. However, during the past year, there has been significant movement on this front because of the decision in Andre Lamy Medicine Professional Corporation v. The Queen.1 In this case, Justice D’Arcy ruled in favour of the MPC and we have seen a large number of appeals get resolved based on the reasoning in this decision. For further discussion on the implications of the Lamy decision, please see Ryan’s article titled “Tax Court of Canada Rules Valuable Credits Available to Medicine Professional Corporations.”
Rest assured that the findings of the Tax Court of Canada apply equally to MPCs located in Québec. If you have any questions about an MPC’s eligibility for SR&ED tax credits or want to discuss your situation further, please reach out to Mohamed Parpia at mohamed.parpia@ryan.com.
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1 Andre Lamy Medicine Professional Corporation v. The Queen, 2020 TCC 61 (CanLII).