Prescribed proxy amount (PPA)

Prescribed proxy amount (PPA) is a notional amount on which SR&ED ITC can be earned with respect to SR&ED overheads (and other expenditures). It is calculated as a percentage of a salary base. The PPA is only applicable when the claimant elects to use the proxy method.

The PPA is used in lieu of actual SR&ED overhead expenditures when calculating qualified SR&ED expenditures to earn SR&ED ITC. The PPA is not included in the pool of deductible SR&ED expenditures.

With the proxy method, actual SR&ED overhead expenditures can be deducted from business income as ordinary business expenses.

PPA = 65% of the salary base (prior 2013).

PPA = 50% of the salary base (starting from 2013)

What expenditures are eligible for SR&ED investment tax credit?



Additional information