According to recent research, some myths about the Scientific Research and Experimental Development tax credit have led over 58% of companies in Canada to ignore the $3 billion + per year opportunity offered by the Federal Government of Canada.
As examples, many companies fail to make an SRED claim because they assume the program is restricted to technology companies, companies performing laboratory style research, or large companies with massive R&D budgets.
The truth is that virtually every company completes some activities during the course of business that may be eligible for SR&ED funding. In general, if some of your staff are engaged in solving 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 SRED.
Over all, the companies who receive SRED credits span a wide range of industries from manufacturing to Agri-business, to food manufacturing, oil and gas service companies – and of course tech companies.
Who is Eligible for SRED funding?
Almost any Canadian company can be eligible to apply for Scientific Research and Experimental Development (SRED). Here are the details of the criteria from a company perspective:
- Your R & D 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 can I expect from a SRED claim?
The amount returned through SRED 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 SRED 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 SRED return, since eligible expenses must occur in Canada.
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 this program. Companies may also claim cost of any prototype equipment or facilities developed for undertaking the project. The program allows you to claim 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 what SR&ED is, what areas in your organization may be eligible under the program, and then assist you through the entire process.
Please call us at 1-800-470-0235, visit us online at www.enhancedcapitalrecovery.com or email us at firstname.lastname@example.org for a no obligation consultation today!