We did the tax credit work for Carl (thanks for the shoutout man!).
Between 2 CDN entities, only 1 can claim SRED. So if QC Inc did all of its work on behalf of another CDN company, usually the person paying claims the tax credits.
If a US company sub-contracts to you, there's no way the US Co. can claim SRED, so you can. You have to be CDN-controlled to get the biggest tax credit, i.e. the US Co cannot own more than 50% of you. What the CDN Co does with its IP is irrelevant. You can always choose to sell/license your IP to any other company for $1.
If you have any questions, just shoot me an email: rluk[at]flowventures.com
This is of some immediate interest to me, so I've been digging into it a bit this morning -- I've been reading CRA's internal guide for SR&ED reviewers, and other fun things. Seems like a nice structure, if it works, i.e. if it stands up to audit scrutiny. It seems to me counterintuitive that a CDN consulting firm taking no financial risk when doing SR&ED for a US customer would be eligible.
Many of the CRA guidance docs cite IP ownership as an eligibility condition. They also point to forms T1145 and T1146 as the mechanism to transfer SR&ED costs & credits between non-arms-length parties, but these apply when both parties are Canadian. In your case you've got non-arms-length parties, one US and one CDN. I can't find any specific CRA statement that applies.
But ultimately all those CRA docs are just guidance,and the ITA prevails. Can you point to the section of the ITA that blesses what you're doing here?
