According to recent research, over 58% of companies in Canada have not followed up on the opportunity to claim a part of the $3 billion in R&D funding offered by the Federal Government of Canada each year.
This missed opportunity can happen for several reasons. Company leaders who assume that R&D funding programs are restricted to technology companies, companies performing laboratory research, or large companies with massive research budgets, are just a few reasons for overlooking these amazing opportunities to fund further innovation or improve the company’s bottom line.
Which industries are benefiting?
The fact is that most companies complete activities during the course of business that may be eligible for R&D funding, such as SR&ED. In general, if some of your staff are engaged in overcoming technological problems for which a solution is not readily available, there is a good chance that the work they are doing is fully or partially eligible for SR&ED.
Over all, the companies who receive funding span a wide range of industries including, but not limited to: manufacturing, agri-business, food manufacturing, oil and gas service companies – and of course start-ups and tech companies.
Who is Eligible for R&D funding?
Almost any Canadian company can be eligible to apply for Scientific Research and Experimental Development (SRED). The CRA outlines three requirements your business must complete to earn SR&ED credits:
- You attempted to overcome a technological uncertainty
- You used systematic research and development to solve the problem
- You aimed to advance a science or technology in the process
- Your Research & Development took place within Canada
- You have proof of expenditures related to the claimed projects, for example T4s, and/or invoices
- You have ownership of the Intellectual Property resulting from the project
- You are in good standing with government financial reporting
- Your project expenses were incurred within 18 months of the fiscal year-end as of filing
How much R&D funding is possible?
The amount of funding depends on the amount you spent of eligible projects conducted in Canada. Since salaries are a big part of the claim, entrepreneurs who do not pay themselves a salary can be diminishing the size of their claim.
Enhanced Capital Recovery can help you set up your company for success by showing you how to structure your company and document your projects to maximize success. Outsourcing work overseas can also diminish the size of your funding opportunities, since eligible expenses must occur in Canada.
What expenses can be claimed?
A large portion of salaries of all employees and a portion of the shareholder’s salaries engaged in the projects, contractor fees as well as cost of all materials used or consumed in the course of the research work may be recoverable under one of the funding programs.
Companies may also claim cost of any prototype equipment or facilities developed for undertaking the project. The SR&ED program, for example, allows a claim of up to 65% of the salaries and expenses related to the project.
Enhanced Capital Recovery’s goal is to assist companies such as yours to truly understand all R&D funding options available, what areas in your organization may be eligible, and to assist you through the entire process.