Minimize CEWS deduction from your SR&ED
The Canada Revenue Agency has confirmed that money received through the Canadian Emergency Wage Subsidy (CEWS), will claw back SR&ED funding. This poses a huge problem for many companies. If you received the Canadian Emergency Wage Subsidy (CEWS) in 2020 or 2021, your SR&ED claim will be complicated by CEWS money received. This will result in loss of SRED funding and/or significant SRED audit risk.
If you deducted too little (or zero) CEWS from your 2020 SRED, that’s a clear-cut CRA audit red flag. Call g6 immediately to fix these errors and to “audit-proof” you. More likely, you OVER-deducted CEWS from your 2020 filed SRED. This scenario is more fun! The CRA instructions from June 16, 2020 regarding CEWS receipts and SR&ED eligible expenditures state the following:
From the CRA: “The Canada Emergency Wage Subsidy and the 10% Temporary Wage Subsidy for Employers are considered government assistance. Assistance received under either wage subsidy reduces the amount of expenses eligible for SR&ED investment tax credits”
G6 Consulting has developed Canada’s first software that programmatically disentangles all SR&ED from CEWS removing the overlap and only the overlap between SR&ED and CEWS monies received. This allows businesses to preserve the bulk of their SR&ED claim and remain fully compliant with CRA rules.