For owners (specified employees) performing SR&ED-eligible work, experience has shown that the CRA is less apt to question a salary when it paid regularly, as opposed to a situation when an accrual is made at year-end and paid within the 180 day prescribed limit. “Salary or wages” means a T4 has been issued and source deductions have been paid. Amounts paid after year-end may be argued to be remuneration based on profits or bonuses – which are NOT eligible (which may trigger a SRED or payroll review, or both.) A “Bonus” is defined as a payment that is not earned and is gratuities to an employee beyond his/her normal pay. In addition, contract payments by an owner to another company in lieu of salary are also NOT eligible. CRA will check payroll journals to determine the regular salary amounts versus what was paid as a bonus.
Owner Salaries for SR&ED
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