Businesses in Canada have long been taking advantage of the benefits of the Scientific Research and Experimental Development (SR&ED) program. With up to 60% of funding provided for innovative research and development in commercial applications, this program has assisted many Canadian companies in funding their R&D projects and remaining competitive in the both local and global markets.
Tax credits can apply to any business in Canada that meets the requirements. Lately there has been a trend of businesses claiming for gluten-free product development. Bakeries and manufacturers that develop gluten-free products have the opportunity to receive funding from the Federal government for their work. Where ongoing R&D is occurring as a part of business activities, this may not only be a one-time claim, but can translate into an annual one.
If your company does one or more of the following activities, you may qualify for SR&ED tax credits:
- Work on improved shelf life and durability of products
- Create new products, recipes or packaging
- Work to make your products more nutritious and more appetizing
- Work to improve the food safety of your products
- Develop more consistent products
- Produce samples for sensory evaluation
- Try to make your processes and products faster
- Work through challenges of increasing the scale of production
- Reduce the environmental impact of manufacturing processes
- Reduce waste and scrap material
SR&ED bakery example: a chocolate maker
A chocolate maker decided to try and make a new line of gluten free chocolates. The two major problems were taste along with product shelf life. The taste on the initial batches was far from acceptable especially based on their customers’ expectations based on their existing products. In addition the initial prototypes had a much shorter shelf live than their existing products.
During testing they also had a problem with the wrapping paper sticking to the each chocolate masking it hard to unwrap them. After nine months of R&D they were able to solve all of these problems and they actually won an international award for their new gluten free chocolates. A SRED claim was successfully submitted, for all three of their R&D projects, in the amount of $130,000.
SR&ED claims require specialized knowledge
In order to first maximize your funding, the person preparing the claim must understand the intricacies of SR&ED and other R&D incentive programs. Understanding which incentives the business qualifies for requires both time commitment and knowledge of the Canadian Revenue Agency’s (CRA) criteria.
For organizations with a small, specialized staff, the majority of their energy is directed towards working on their projects. In these circumstances, it makes sense to consider hiring an expert SR&ED consultant to manage the claim.
SR&ED consultants, like Enhanced Capital Recovery, can manage the claim end-to-end and in most cases greatly improve the amount of your claim. Contact us today for a free, no risk consultation to see if your company is eligible for SR&ED.