Calculate pool of deductible expenditures
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Deduct some or all of your expenditures
Once you have calculated your allowable SR&ED expenditures, you calculate the available pool of deductible expenditures that you may deduct against the business income that you earned.
To determine your pool of deductible expenditures, you need to adjust your allowable expenditures according to amounts you may have received or repaid.
The pool concept gives you the option to deduct some or all of the available pool balance for the tax year. Any balance you don’t claim can be carried forward to future years.
If you used the proxy method to calculate your allowable expenditures, the prescribed proxy amount (PPA) is not included in the pool of deductible expenditures.
If you are a partner in a partnership
In a partnership, the pool of deductible expenditures is deducted at the partnership level.
Partnerships must claim all of the available pool of deductible expenditures in the year. They may not carry forward a pool of expenditures to future tax years.
To learn more about how partnerships calculate their pool of deductibles, review Partnerships, T4088 guide to SR&ED Expenditures Claim.
Adjusting your pool of deductible expenditures
Deduct amounts you receive
You will need to deduct any government and non-government assistance linked to your allowable SR&ED expenditures that you received, expect to receive, or are entitled to receive in the tax year.
This assistance may include:
- Provincial and territorial assistance (if not renounced in your province or territory)
- Other government or non-government assistance
- Any SR&ED investment tax credit (ITC) claimed the previous year (refunds, applied or carried back)
For detailed information, review Section C, T4088 Guide to SR&ED Expenditures Claim
Add repayments and other amounts
You will need to add any repayments you made in the tax year for government or non-government assistance that reduced your pool previously.
You must also add the previous year’s pool balance of deductible expenditures and any SR&ED expenditure pool transfers (amalgamation or wind-up) or investment tax credit (ITC) recaptured in the previous year, if applicable.
If you have a negative pool balance
If there is a negative balance in the pool at the end of any tax year, you must bring it into that tax year’s net income.
The pool of deductible SR&ED expenditures at the beginning of a tax year cannot be a negative amount.
For detailed information about deductible expenditures, review Pool of Deductible SR&ED Expenditures Policy.
Get support with deductible expenditures
Review the policy for deductible expenditures
Review the policy for partnerships
Review the guide to the SR&ED expenditures claim
Call us if you have any questions about the SR&ED program or calculating your pool of deductible expenditures.
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