[Pablo85]

I'm using Profile T2 for tax return where SR&ED activiites have taken place. I have looked at Schedule 1 after doing GIFI import and it seems wrong to me.

Example:
Net income for corp was, say, -$50k per the financial statements yet on the Sched 1, there is an entry on line 411 which is a deduction, for the total SRED expeditures which were $70k but those SRED expenditures were already included as wages in the financial statements to generate the -$50k. So the net loss for income tax purposes is -$120k which is double counting the expenditures on SR&ED. There doesn't appear to be an offseting addition on the Schedule 1 for those expenditures to offset it although there is a line 118 which is labeled "Scientific research expenditures deducted per financial statements"

Is this the case of a super-deduction or should there be an entry on S1 (line 118 perhaps) that offsets the expenditures so they are not double counted? Profile doesn't seem to fill it in automagically so it could be a bug or perhaps valid.

I can't find any guidelines or help with T2 Schedule 1 forms, in Intuit help or CRA.

Anyone out there familiar with this issue?
thanks,
Pablo

[JohnNP]

Pablo85, on Sep 21 2009, 11:40 AM, said:

I'm using Profile T2 for tax return where SR&ED activiites have taken place. I have looked at Schedule 1 after doing GIFI import and it seems wrong to me.

I would never recommend a GIFI import from anywhere. Manual is far more certain that each item is getting the attention it deserves.

Have your corporation's accountant prepare the corporation's T2 - (presumably he has already properly prepared the Financial Statements?)
He may or may not use Profile as a calculating tool in his tax practice to speed up tax preparation, but he will get the T2 correct.

For Tax information and other studies, check out acounting educational institutions in your area and ask one of the professional accounting bodies, but you are looking at several years of intensive study first before getting a basic handle on tax issues.

(Quicktax T2 is the Intuit product for Accountants who work for a corporation, Profile T2 is the Intuit product for Accountants in public tax practice)

[Marcello]

Hey Pablo85. Hope that answer helped. Let me know how the several years of training go. If your looking for straight answers here, you may or may not get them. It depends who's answering. :P

[JohnNP]

Marcello, on Sep 23 2009, 12:02 PM, said:

Hey Pablo85. Hope that answer helped. Let me know how the several years of training go. If your looking for straight answers here, you may or may not get them. It depends who's answering. :P

FYI, Pablo85 is an engineer.

I believe that it is difficult to teach a multi-year corporation tax course comprehensively in a single forum paragraph, but of course you may disagree.

[David Blue]

JohnNP, on Sep 23 2009, 07:33 PM, said:

FYI, Pablo85 is an engineer.

I believe that it is difficult to teach a multi-year corporation tax course comprehensively in a single forum paragraph, but of course you may disagree.

John: It has been brought to my attention many times that an Engineer and/ or a School teacher can do everything and anything.

[unknown]

As always, David, enjoy your sense of humor....

[BalancedBooks]

David Blue, on Sep 23 2009, 05:25 PM, said:

John: It has been brought to my attention many times that an Engineer and/ or a School teacher can do everything and anything.

You are so right about the school teachers.

Don't forget to include the Non-deployed Military Personnel on your list. Living very close to an Air Base has taught me that they are all extremely well versed in the tax codes.

If I had a $1 for every time I heard..." my buddy has been claiming his hair cuts for years so you should be claiming them on my tax return.", I wouldn't have to do any more tax returns.

Dan

[daytrader152]

Pablo85, on 21 September 2009 - 11:40 AM, said:

I'm using Profile T2 for tax return where SR&ED activiites have taken place. I have looked at Schedule 1 after doing GIFI import and it seems wrong to me.

Example:
Net income for corp was, say, -$50k per the financial statements yet on the Sched 1, there is an entry on line 411 which is a deduction, for the total SRED expeditures which were $70k but those SRED expenditures were already included as wages in the financial statements to generate the -$50k. So the net loss for income tax purposes is -$120k which is double counting the expenditures on SR&ED. There doesn't appear to be an offseting addition on the Schedule 1 for those expenditures to offset it although there is a line 118 which is labeled "Scientific research expenditures deducted per financial statements"

Is this the case of a super-deduction or should there be an entry on S1 (line 118 perhaps) that offsets the expenditures so they are not double counted? Profile doesn't seem to fill it in automagically so it could be a bug or perhaps valid.

I can't find any guidelines or help with T2 Schedule 1 forms, in Intuit help or CRA.

Anyone out there familiar with this issue?
thanks,
Pablo

Hi Pablo,

I am having the same issue that you had a year ago. Have you ever figured out the double-counting in schedule 1 due to SR&ED and GIFI import?

Many thanks,
George

[Tim Parris]

My boss had a discussion with a CRA in respect to SR&ED and, I gather from her, that the senior officers handling SR&ED are generally of the opinion that no software package is able to correctly calculate the SR&ED credit. Now, I could be mis-interpreting this but I gather that they were of the opinion that only hand-prepared calculations were correct.

[TaxDog]

I checked with Taxprep and they claim that there are no issues with their software,and in fact they created an import template

http://www.taxprep.c...ts/t2/index.asp

[Pablo85]

Wow, good thing I got too immersed in completion of my return to follow the thread from my original question, which had very little to do with my question.

JohnNP, thanks for the stock answer "ask your accountant and if you dont' have an accountant call 1-800-john". Probably good advice, but I'm an engineer ;-)

Here's some answers to my own and other questions that popped up:

I was able to clarify that double counting issue which was the source of my original problem. I had entered a value for R&D expenditures directly on the schedule 1 and then it also imported the GIFI data from QB. Stemmed from the fact that I started the return then decided to do the GIFI import, which is actually a very good and reliable way to sync your return and your books. Using GIFI forces you to address the proper codes up front in your books and once done, it is highly reliable. Now, I have not tried to complete the complex returns of the superAccountant top contributers like JonhNP ;-) but it worked just fine for my simple case. Actually, the question was more about the functioning of the import than about tax laws so I chose to forgo the multi year tax course and concentrate the remainder of my year developing "technical things".

Profile T2 (one pay) is perfectly suited to filing returns which include SR&ED claims. Quicktax T2 does not include the SRED specific information forms so you would have to do a lot of stuff manually and couldn't file easily. I purchased quicktax t2 first, because it appeared to cover that type of return but the T661 form was greyed out with no explanation until I contacted Intuit support.

Profile T2 had one bug which I discovered and was new to the folks at Intuit/Profile. It had to do with the miscalculation of the ORDTC pool available for future years. I contacted SR&ED and they confirmed how the pool was to be calculated and suggested I use an override. I have yet to see if that is fixed on this year's Profile updates. I would say that means Engineers 1, Accountants 0....Booya!

And finally, I did not try to claim haircuts, so my return and SR&ED claim passed the litmus test. I touch wood now because the criteria for claims is completely subjective, almost arbitrary and could be reversed, refused at any time, but not because of bad accounting.

--Pablo