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The Honourable Jim Flaherty, Minister of Finance and the Honourable Gail Shea, Minister of National Revenue, today launched consultations regarding the impact that contingency fees may have on the Scientific Research and Experimental Development (SR&ED) tax incentive program.

This follows on the Government’s commitment in Economic Action Plan 2012 to study contingency fees charged by tax preparers for SR&ED claims.

“The SR&ED tax incentive program is the single largest federal program supporting business research and development in Canada, providing more than $3.6 billion in tax assistance in 2011,” said Minister Flaherty. “The feedback from this consultation will be important in ensuring that the program continues to benefit Canadian businesses and the economy.”

“The Canada Revenue Agency, which administers the SR&ED tax incentive program, will work closely with the Department of Finance throughout this consultation process,” said Minister Shea. “We continue to strive to make improvements to the administration of the SR&ED program and look forward to hearing from taxpayers and tax preparers on any initiatives that could allow us to make further progress.”

The consultations seek input from stakeholders to better understand:

  • why firms hire third-party tax preparers on a contingency-fee basis;
  • why these tax preparers charge contingency fees;
  • the prevalence of this practice;
  • the amounts charged; and
  • the impacts of this practice on the effectiveness of the SR&ED tax incentive program.