Software developers employ more than 300,000 Canadians in an industry that contributes nearly $30 billion to domestic growth, and the Canadian Revenue Agency (CRA) is rewarding these companies with increased SR&ED funding.
Many Canadian software development companies already qualify for a R&D tax credits through their routine business activities. Enhanced Capital Recovery can determine how much funding your business is eligible for and our professional consultants can take care of the complicated claim procedure for you.
Software projects that qualify
The SR&ED program accepts a variety of software development projects, ranging from improving your company’s employee scheduling program to developing a smart phone app—as long as the basic research and development criteria are met.
More important than your project’s success is the knowledge your company gained about the technology. Being able to express what your employees discovered in an area they didn’t initially understand is vital to a successful claim.
Checklist of activities related to software development that qualify for SR&ED tax credits?
If your company is currently involved in any of the following activities, it is likely that you would qualify for SR&ED:
- Advanced technology in operating systems, programming languages, data management, communications software and software development tools.
- Conducted research into methods of designing, developing, deploying, or maintaining software.
- Produced advances in generic approaches for capturing, transmitting, storing, retrieving, manipulating, or displaying information.
- Filled a technology gap in order to develop a software program or system.
- Conducted research and development into software tools or technologies in specialized areas of computing (i.e. image processing, geographic data representation, character recognition, artificial intelligence).
- Attempted to improve the performance, speed or functionality of our application.
- Encountered unexpected technical uncertainties during our development efforts (i.e. hardware / software incompatibilities).
Essential materials used in the project can be claimed, including hardware used for testing new software, or equipment used for data collection, analysis, or research undertaken during development.
Salaries of employees is one of the major areas of most SR&ED claims. A portion of staff salaries directly involved with the SR&ED project can be recovered. The amount depends on the percentage of time the employee devoted to the project—developers that spent 60% of their time on the project could claim a significant portion this time.
Note that routine or non-technical tasks, such as marketing, advertising, customer support, or day-to-day business tasks cannot be recovered on your SR&ED claim.
Taking the next step with Enhanced Capital Recovery
The ECR tax consultant you work with is not only knowledgeable in SR&ED standards, but is an expert in the software development industry as well. The CRA expects your claim to be submitted using industry-specific terminology—something most in-house accountants have difficulty accomplishing.
Let Enhanced Capital Recovery assist you in discovering how much of your expenses can be recovered through the SR&ED program. To speak with an industry-expert consultant, contact us for a no-risk assessment today.