Contingency Fees at Risk for Select Tax Credits

By: BeneFACT Marketing in Uncategorized

May 29th, 2014

Risk UncertaintyJust when you thought it was okay to stop and take a breath, the contingency fees issue forced itself to the top again. Although not directly related to SR&ED tax credits, this new development is worth keeping an eye on.

Contingency Fees in Hot Water

Earlier this month, Bill C-462 was introduced by MP Cheryl Gallant. This bill restricts the percentage promoters of the disability tax credit can charge for their services. In some cases, promoters are said to be charging up to 40%. This bill has received wide support across the board from all members of parliament and is expected to be law. Yes, it is important to make sure those in need are not being taken advantage of. But is this the first definitive move toward making contingency fees extinct for all tax credits, including SR&ED?

The contingency fee payment system in the SR&ED community has experienced much debate in the past few years. In 2012, the CRA asked for feedback about practitioner fees and saw no major problems with the fee structure at this time. What has been implemented is the new Part 9 section. This information is to be filled out as part of the required tax forms for submitting a claim. Part 9 requires an outline of 3rd party consultants involved in the claim as well as fees that were charged.

Could SR&ED be next?

There has been a small amount of worry about whether or not this may set a precedent for other tax credits, primarily SR&ED tax credits. For now it appears that SR&ED contingency fees are fair in the eyes of the regulators; however who knows where talk will lead and it’s definitely something to be vigilant about.

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