CPA Canada’s position: Contingency fees for third-party preparers of SR&ED claims

Review this submission paper to learn about Chartered Professional Accountants of Canada (CPA Canada)’s position on the issue of contingency fees for third-party preparers of claims for the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program.

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Many organizations hire accounting firms to help them navigate the complex criteria of the SR&ED program and prepare their claims. These organizations then pay the accounting firms a contingency fee, calculated as a percentage of the tax credit they receive. Concerns have been raised, however, that an excessive amount of government stimulus spending is being diverted to third-party consultants.

CPA Canada has responded with this submission paper to the federal Department of Finance that explains how and why contingency-based fees encourage more taxpayers to participate in the program and ultimately increase their SR&ED investments. As this document makes clear, these arrangements enhance the overall tax system’s fairness, effectiveness and efficiency, without significantly diverting an undue proportion of the government’s innovation funding.

You will learn about:

  • the impact of contingency-based fees
  • the rationale for contingency-based fee arrangements
  • the prevalence of contingency-based fees
  • the impact on SR&ED claim preparation costs
  • potential restrictions on contingent-fee arrangements