Income Tax Act s. 37(1)(d): Government Assistance Reduces the SR&ED Pool

Section 37(1) establishes the pool of deductible SR&ED expenditures, and paragraph 37(1)(d), reproduced below, is the subtraction that reduces that pool by government and non-government assistance the taxpayer has received, is entitled to receive or can reasonably be expected to receive. The timing matters: assistance is netted against the pool as soon as it can “reasonably be expected”, well before any money arrives.

Text of the Provision

37(1) … exceeds the total of

(d) the total of all amounts each of which is the amount of any government assistance or non-government assistance (within the meanings assigned to those expressions by subsection 127(9)) in respect of an expenditure described in paragraph 37(1)(a) or 37(1)(b) that, at the taxpayer’s filing-due date for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive, …

Source: Income Tax Act (Canada), paragraph 37(1)(d), as consolidated May 14, 2010. Archived excerpt from the subsection 37(1) formula; subsequent amendments are not reflected, and the surrounding paragraphs appear in the PDF. For the current text see the Income Tax Act at Justice Laws.