You have probably heard of the Scientific Research & Experimental Development (SR&ED) program, but you may have some questions. What is research and development, exactly? What kinds of activities apply? Why is the government funding these projects?
There is a good chance that a task your employees have performed in the recent past, or carry out on a daily basis, qualifies for SR&ED funding. Here are the answers to common questions about the program, and how your business may be eligible to recover expenses today.
What is research and development?
The Canadian Revenue Agency (CRA) rewards businesses of all sizes and in all industries for conducting research and experiments with the goal of advancing technology. From the outset, the project must be undertaken to overcome a technical obstacle with an element of uncertainty in the outcome.
Whether or not your experiments were successful does not matter—the CRA bases its funding on the attempt alone—so long as they were conducted systematically and there was an element of uncertainty in the outcome.
The CRA will expect your business to have a technical uncertainty in mind before conducting the R&D, and you must be able to prove this “technical content.” For this reason it is very important to be aware of what needs to be documented and seek an experienced SR&ED consultant.
What types of projects qualify?
For many businesses, eligible projects are often a form of experimental development. An owner of a sporting goods shop who improved a point-of-sale system to track online sales, or a commercial fishery that developed a better canning process could both qualify.
Eligible scientific research doesn’t need to involve microscopes and lab coats (though that certainly counts). Researching your farm’s water use to develop a more efficient irrigation process, for example, could be a qualifying activity.
Why is the CRA rewarding R&D?
The federal government has long since been rewarding research and development by Canadian companies. Beginning as a traditional tax credit program in the 1940s, interest in technological advancement on Parliament Hill has since adapted into the SR&ED program.
The Canadian government strongly feels that domestic research and development keeps Canada competitive in the global marketplace. The SR&ED program is therefore an investment: funding Canadian-owned companies to advance technology for a strong economy.
I think my company is eligible—what do I do now?
The SR&ED application process is becoming stricter each year and since SR&ED is about technical innovation and new knowledge, it is advantageous to engage a specialist who can understand your technical obstacles as well as what CRA requires for a successful SR&ED claim.
If you think your business could qualify for SR&ED funding, contact Enhanced Capital Recovery today for a free consultation to confirm you qualify and perhaps to see how much of your expenses can be recovered. Call Enhanced Capital Recovery at 1-800-470-0235, visit us online at www.enhancedcapitalrecovery.com or email us at firstname.lastname@example.org.
At ECR, a SRED firm in Edmonton, Vancouver and Toronto, you will work with an industry-expert consultant who knows how to maximize your claim in your specific field. We look forward to hearing from you!