Reducing your corporate income tax through government incentives .

1. Reducing your corporate income tax through government incentives. 政府的鼓勵措施減輕企业稅負 Overview of SR&ED and Digital Media Tax Credits Mark McQueen, MSc(Eng), P.Eng Senior Manager Sherry Guo, MBA Analyst

2. What is SR&ED?什麼是“SR&ED”？ • 科研及試驗開發稅收優惠項目（簡稱“SR&ED”）是加拿大政府向進行科學研究和技術開發投資的企业進行稅收減免的優惠政策 • 此優惠政策，旨在鼓勵加拿大的公司和個人通過從事科學研發活動，在科學和技術上穫得新進展，或對現有的產品和生產工藝不斷加以改進 • 此項目每年為加拿大1.8萬家企业提供約45億加元的稅收補貼，服務對象涵蓋大中小型企业，其中3/4為中小企业 • 大部分符合SR&ED稅收優惠條件的項目都屬於商业化生產，並不要求實體的科研實驗室 • The Scientific Research and Experimental Development (SR&ED) Program provides tax incentives to Canadian businesses that advance technology. • Intended to encourage businesses to conduct SR&ED that will lead to new, improved, or technologically advanced products or processes, including incremental improvements. • Program awards approx. $4.5B to 18,000 Canadian companies annually. 75% of these are small businesses. • Majority of claims occur in a commercial setting; don’t require research labs Overview of SR&ED and Digital Media Tax Credits

3. SR&ED BenefitsSR&ED項目如何使企业受惠 ？ • 申請者用於科研革新的費用支出，符合條件部分可穫得SR&ED投資退稅額(INVESTMENT TAX CREDITS 簡稱 ITC)： • 除了聯邦政府，安省政府還提供本省內的SR&ED稅務優惠計劃，公司某些符合條件的開支可以穫得附加稅務減免。 • 稅收減免比例及退稅額度受企业所有權和規糢影響。 • 加拿大公民控股的公司 • 符合條件的公司，退稅額可高達科研和實驗開發人工支出費用的68% • 公司必須在SR&ED費用發生之財政年度結束後18個月內遞交SR&ED退稅申請 • 非加拿大公民控股的公司或個人 • 可享有不可返還的稅務抵免額，數額為科學研發人工費用的33% • 個人或者獨立經營的申請者須在SR&ED費用發生之自然年度結束後的17個半月內遞交SR&ED退稅申請 • Investment tax credits for qualifying expenditures • Provincial and federal credits available • Qualifying rate and refundability depends on ownership and size • Canadian-owned corporations • Earn $68 for every $100 spent in labour, refunded as cash • Corporate claims must be filed within 18 months of the fiscal year end • Foreign-owned corporation/personal • Earn $33 for every $100 spent in labour, reduces tax payable • Personal/self-employed claims must be filed within 17.5 months of the calendar year Overview of SR&ED and Digital Media Tax Credits

4. SR&ED Qualifying Expenditures可穫得SR&ED投資退稅額的費用支出 • 直接參與科技研發員工的薪水及工資 • 間接費用 – 研發人員薪資的65% • 用於研發的原材料 • 科研支出中對外分包的部分 • 用於研發的資本支出 • 用於研發所租用機械/裝備的費用 • 用於大學科研的捐助款 • Salaries • Proxy Overhead – 65% of salaries • Materials • Contractors • Capital Assets • Leased Equipment • Donations to universities for research Overview of SR&ED and Digital Media Tax Credits

5. What is Experimental Development? 什麼是科研和實驗開發？ • 為取得技術領先而開發新的或者改進現有的材料，設施，產品和生產工藝所進行的測試、改良工作 • 科技上的進步，即要進行的工作能嘗試明晰不確定的問題；對當前的科技有更深的認識；或增強解決某個問題的能力 • 即使最終結果未取得成功，但只要其目的達到上述要求，仍可符合SR&ED項目的標準而享受稅收優惠 • 這些試驗或研究工作必須是在科學和技術領域內進行 • 通常符合SR&ED性質的活動都在商业生產中發生；經常屬於商业活動的一部分 • Work done to achieve a technological advancement to create, or improve, new materials, devices, products or processes • An advancement is the attempt to resolve uncertainty, or an increase in knowledge, or a new capability • Eligibility does not require a successful outcome: failure is OK • Must be in a field of science or technology • Normally carried out in a commercial setting; often is part of the commercial work Overview of SR&ED and Digital Media Tax Credits

6. 2012 Federal Budget: Changes to the SR&ED Program 2012年聯邦預算對SR&ED項目的影響 • 自2013年起，科研外包費用的80%可穫得稅收優惠 • 用於研發的資本支出或租用機械/裝備的租金自2014年起將不再享受稅收優惠 • 自2014年起，可穫得稅收優惠的間接費用降至研發人員薪資的55% • 自2014年起，非加拿大公民控股的公司或上市公司可穫得的SR&ED投資退稅率從20%降至15% • 加拿大公民控股的公司可享有的SR&ED投資退稅率維持不變 • Contracts claimable at 80% of expenditures after 2012 • Capital/lease no longer claimable after 2013 • Proxy overhead reduced to 55% after 2013 • ITC rate reduced from 20% to 15% for foreign and publically owned corporations after 2013 • No ITC rate change for Canadian-owned corporations Overview of SR&ED and Digital Media Tax Credits

7. SR&ED Claim ProcessSR&ED稅收優惠申請過程 • 實際研發費用發生後即可申請相關稅收優惠 • 申請表格與公司報稅表一起遞交 • 在財政年度終了後的18個月內遞交申請表 • 遞交後的審理時間需120到365天 • 稅務局可能會審查遞交的申請並評估該申請是否滿足科研條件 • Claims for credits are filed after expenditures are incurred • Schedules filed with corporate tax return • Can look back up to 18 months based on fiscal year end • Credits processed between 120 days and 365 days from filing • CRA may review the submission and assess the technical eligibility Overview of SR&ED and Digital Media Tax Credits

8. Ontario Interactive Digital Media Tax Credit (OIDMTC) 安大略省數字互動產品稅務優惠 • 符合該優惠的產品必須用於提供教育，信息或娛樂 • 須至少具有以下兩種屬性：圖像，聲音，文字 • 旨在供個人使用 • 須能產生收入（例如按點擊量計算的廣告收入） • 可包括：遊戲，電子化學習，藝術與娛樂，新聞，網站 • Primary purpose must be to educate, inform, or entertain • Must contain at least two of: images, sound, text • Intended to be used by individuals • Must generate revenue (click-based advertising, etc.) • Examples: games, e-learning, arts & entertainment, reference, news, websites. Overview of SR&ED and Digital Media Tax Credits

9. Ontario Interactive Digital Media Tax Credit (OIDMTC)安大略省數字互動產品稅務優惠 • 符合規定的產品開發和推廣費用可以穫得退稅優惠 • 產品開發必須在安省常設機構中進行 • 產品不能用於： • - 人際溝通 • - 介紹或宣傳申請公司 • - 介紹，宣傳或推銷申請公司的產品或服務 • Refundable tax credit for the development and commercialization of an eligible product • Product development must occur at a permanent establishment in Ontario • The product is not used primarily: • for interpersonal communication • to present or promote the qualifying corporation • to present, promote or sell the products or services of the qualifying corporation Overview of SR&ED and Digital Media Tax Credits

10. Ontario Interactive Digital Media Tax Credit (OIDMTC) – Labour Expenditures 人工費用 • 公司員工從事產品開發活動的薪水和工資 • 支付給獨立合同工的費用亦可申請 • 從事產品開發的個人必須是安省居民才符合申請條件 • Salaries or wages for employees’ time spent conducting eligible activities • Amounts paid to eligible arm’s length contractors that is attributable to the salaries and wages of the contractor’s employees • Paid for the cost of services rendered by individuals who are residents of Ontario. Overview of SR&ED and Digital Media Tax Credits

11. Ontario Interactive Digital Media Tax Credit (OIDMTC) – Marketing Expenditures 市場開發費用 • 非特定產品的廣告宣傳及發行費用 • 不包括訂單處理及產品運輸費用 • 每個產品的市場推廣費用可申請的最高額度為10萬元 • Advertising, promotion, and distribution of non-specified products • Not for processing orders or shipping costs • Limited to $100,000 per product Overview of SR&ED and Digital Media Tax Credits

12. Ontario Interactive Digital Media Tax Credit (OIDMTC) – Application Process 申請過程 • 產品完成後即可申請該優惠 • OMDC將評估產品是否符合申請條件 • 申請批準後 OMDC 將向申請者發放資格認定證書，此證書必須與相關報稅表一起遞交給CRA來穫得退稅 • 可在任何未過法定時效的稅務年度申請（通常為三年） • 稅收優惠率在過往數年中逐年遞增 • Apply for credits after product is completed • Product eligibility is assessed by OMDC • OMDC issues certificate of eligibility for Ontario tax credit which is filed with corresponding tax schedules with CRA • Can make claims for any taxation years that are not statute-barred (approx. 3 years) • Rates at which the credit is earned has been increased over the years Overview of SR&ED and Digital Media Tax Credits

13. Treatment of Tax Credits不同稅收優惠的處理方法 • SR&ED稅收優惠的申請者穫得的其他政府補貼（如IRAP，OIDMTC等）會相應減少可申報SR&ED稅收優惠的額度 • OIDMTC稅收優惠的申請者穫得的其他政府補貼（如SR&ED，安省電影電視稅收優惠等）會相應減少可申報OIDMTC稅收優惠的額度 • 以上兩種稅收優惠被視作政府補貼，需繳納聯邦和省政府所得稅 • For SR&ED, any government assistance (i.e. IRAP, OIDMTC) received in respect of the qualifying costs would reduce the costs that can be claimed. • For OIDMTC, any government assistance (i.e. SR&ED, Ontario film & television tax credit) received in respect of the qualifying costs would reduce the costs that can be claimed. • These tax credits are considered government assistance for income tax purposes and are subject to federal and provincial income tax. Overview of SR&ED and Digital Media Tax Credits

14. Questions歡迎諮詢– 聯繫我们 Mark McQueen, MSc(Eng), P.Eng (905) 315-6744 mamcqueen@deloitte.ca Sherry Guo, MBA (905) 315-6713 ruguo@deloitte.ca Overview of SR&ED and Digital Media Tax Credits

15. Overview of SR&ED and Digital Media Tax Credits