There are two main Government of Canada research and development (R&D) funding sources designed to help Canadian companies undertake technology innovation: Industrial Research Assistance Program (IRAP) and Scientific Research and Experimental Development (SRED). IRAP funding is granted on a pre-approved basis to fund a project, whereas SRED is a tax credit covering up to 68% of eligible expenditures.
For companies contemplating projects that would demonstrate technological innovation, and would like to have the project funded, IRAP may be a good option.
IRAP Eligibility criteria
To be considered for IRAP funding, the company must meet some basic criteria and consult an Industrial Technology Advisor from the National Research Council who will assess each project individually based on the strength of the company and specific aspects of the project.
- be a small and medium-sized enterprise in Canada, incorporated and profit-oriented;
- have 500 or fewer full-time equivalent employees; and
- have the objective to grow and generate profits through development and commercialization of innovative, technology-driven new or improved products, services, or processes in Canada.
Assessment of the Company and Project:
- the business and management capabilities of the firm and the company’s potential to achieve the expected results and outcomes associated with the proposed project;
- the financial capabilities of the firm and its plan to commercialize the developed technologies; and
- the technical aspects of the project and its potential impact on the firm.
SRED may be a better Government R&D Funding option for companies who are already making technological breakthroughs in the course of their business activities.
SRED Eligibility criteria
The CRA outlines three requirements your business must complete to earn SR&ED credits:
- You attempted to overcome a technological uncertainty
- You used unfamiliar, systematic research and development to solve the problem
- You aimed to advance a science or technology in the process
While the experiments must be conducted with a measurable goal, they can involve basic or applied research. This could include many types of research and experimental activities, so don’t be dissuaded if you’re not conducting pure scientific research. For example, experimentation around the goal of improving an artificial flavouring for food or beverage could be eligible.
Your projects do not need to be successful to qualify for funding, as long as you can provide evidence of the attempt.
Unlike IRAP, SRED claims must be completed without the guidance of a Government consultant and often requires an in-depth understanding of the program to take maximum advantage of it.
Although the SR&ED program is an amazing financial opportunity, with over $3 Billion dollars in funds distributed yearly to businesses across all industries, complex legislation and complex report preparation have created barriers for businesses which are otherwise eligible to take advantage of it.
In fact, it is normal for businesses preparing their own SR&ED claims to experience significant difficulty in determining which expenditures are eligible. This may lead to eligible expenses going unclaimed.
Who is Enhanced Capital Recovery
Professional consultants such as those at Enhanced Capital Recovery are available to help clients capitalize on their applications and benefit most from the company they worked hard to build.
Our team has brought success to numerous organizations, including those whose claims were initially turned down by the Canadian Revenue Agency. Your company will work with SR&ED Consultants knowledgeable in the industry to recover the most funding possible.
For more information about SRED, IRAP or Province specific R&D funding opportunities, please submit a contact form and our team will arrange a free assessment of your case.